Hawaii has had one of the more aggressive clean energy plans in the United States for two main reasons. First, its electricity rates rank as the highest in the country, since the local utilities rely on expensive fuel imports—especially with its heavy use of petroleum for power generation. In addition, the state’s dependence on the tourism industry makes it vulnerable to climate change risks. Therefore the state is considering a bill that would mandate renewables fuel 100% of its power needs by 2040. To that end, Panasonic Eco Solutions, Clean Power Finance and Coronal Group have launched a public-private partnership that aims to make solar power more affordable to businesses and non-profits.
The three organizations will work with Hawaii’s Green Energy Market Securitization Program (GEMS) to roll out this financing option to otherwise underserved customers throughout the state. Together these three organizations will finance up to US$100 million in solar projects, with priority first given to non-profits, small business and then residential customers.
The GEMS program in Hawaii is unique because of its reliance on financing instead of tax rebates. Two options are available to potential solar customers. The first is through the use of rate reduction bonds (RRB), which utilities have used since the early 1990s. A typical RRB is a securitized cashflow stream funded by fees that utilities charge to their customers. Such a financing structure allows GEMs to access a large pool of bond capital that in turn minimizes the costs of installing solar power systems.
The second financing option is through on-bill repayment, which gives customers the opportunity to pay for their solar installations over time via both their monthly electricity bills and energy savings. Both methods are a workaround for small businesses who otherwise do not have the capital to invest in solar, as well as for non-profits that cannot benefit from government rebates because of their tax-exempt status. The fees collected on Hawaiians’ monthly utility bills that will help run this program average about US$4.55 a month.
Panasonic and Coronal are tasked with the tax equity, engineering, procurement and construction services to solar installers in Hawaii that will launch these projects. Clean Power Finance will manage the deployment of capital as well as leading the underwriting services.
With fossil fuel prices continuing to be volatile, Hawaii’s search for new ways to diversity its energy portfolio could become a model for other states seeking to increase investment in renewables—at a time when governments are decreasing the amount of rebates available to homes and businesses. This democratization of solar will help scale its adoption, a trend already underway because of its costs already on a downward trajectory because of cheaper solar panels.
Based in Fresno, California, Leon Kaye is a business writer and strategic communications specialist. He has also been featured in The Guardian, Clean Technica, Sustainable Brands, Earth911, Inhabitat, Architect Magazine and Wired.com. When he has time, he shares his thoughts on his own site, GreenGoPost.com. Follow him on Twitter and Instagram.
Image credit: Hawaii State Energy Office
Leon Kaye, Executive Editor, has written for Triple Pundit since 2010. He is also the Director of Social Media and Engagement for 3BL Media, and the Editor in Chief of CR Magazine. His previous work can be found at The Guardian, Sustainable Brands and CleanTechnica. Kaye is based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas.