Feed-in-Tariff

Summary

Note: In August of 2013 the Hawaii Public Utility Commission initiatied an investigation into the Feed-In-Tariff Program in Docket No. 2013-0194 2013-0194.

In September 2009, the Hawaii Public Utilities Commission (PUC) issued a decision that established a feed-in tariff in Hawaii. The feed-in tariff is offered by the three investor-owned utilities: HECO, MECO and HELCO. The rates for the feed-in tariff, schedule, and standard interconnection agreements were approved on October 13, 2010. This program will be reviewed by the PUC two years after the start of the program and every three years thereafter. The FIT for Tiers 1 and 2 opened November 17, 2010 for HECO and November 24, 2010 for HELCO and MECO. Rates for Tier 3 were approved November 22, 2011 and revised tariffs were filed by December 30, 2011. Currently, in-line hydropower's eligibility for Tier 3 has been deferred. Concentrating solar power Tier 3 projects are capped at 33% of the aggregate feed-in tariff cap for each of the HECO companies.

To apply for the feed-in tariff, applicants must register and apply online at the Independent Observer FIT web site. After January 3, 2012, systems must file a building permit application on the same day, or before applying for the feed-in tariff, unless no building permit is required by the county.

Several renewable energy technologies are eligible for the feed-in tariff, including solar photovoltaics (PV), concentrating solar power (CSP), on-shore wind and in-line hydropower. Under this program, qualified projects will receive a fixed rate over a 20-year contract. There are three tiers for rates, with the tiers and rates differentiated by technology and system size. The maximum caps on system size vary by island and by technology. Tier 1 includes all islands and technologies where the project is less than or equal to 20 kilowatts-AC (kW-AC) in capacity. Tier 2 includes systems sized greater than 20 kW-AC and less than or equal to: 100 kW-AC for on-shore wind and in-line hydropower on all islands; 100 kW-AC for PV and CSP on Lanai and Molokai; 250 kW-AC for PV on Maui and Hawaii; 500 kW-AC for CSP on Maui and Hawaii; and 500 kW-AC for PV and CSP on Oahu. Tier 3 covers all systems larger than the Tier 2 caps, up to 5 megawatts-AC (MW-AC) on Oahu and 2.72 MW-AC on Maui and Hawaii. Wind projects on Maui and Hawaii are subject to the Tier 2 caps. The rates are as follows:

Background
In January 2008, the U.S. Department of Energy (DOE) and the State of Hawaii signed a Memorandum of Understanding (MOU) establishing the Hawaii Clean Energy Initiative. This agreement established an aggressive goal to help Hawaii greatly increase its renewable and clean energy production capabilities, and to transition exclusively to renewable energy use on the smaller islands. Although the MOU is not legally binding, it has the potential to help reduce oil consumption in Hawaii by 72% if implementation is successful. In October 2008, the PUC opened a Docket No. 2008-0273 to review the development of a feed-in tariff. The creation of the feed-in tariff is in accordance with the Hawaii Clean Energy Initiative, and serves to formalize some of the goals established in 2008. All PUC orders pertaining to the feed-in tariff can be found in this docket.

* These rates are based on a system taking the 35% tax credit; if the tax credit refund option is used, there are higher rates allowed. See HECO's tariff for more information.

** Biofuel projects and hybrid projects using conventional fuels or biofuels are not eligible for the FIT.