Solar rebates face dim future
Hawaii incentives might cease, in light of a NextEra subsidiary's push to end a program in Florida
Honolulu Star Advertiser - December 28, 2014
By: Kathryn Mykleseth
Juno Beach, Fla.-based NextEra Energy Industries, which plans to buy Hawaiian Electric Industries for $4.3 billion, does not favor tax rebates for renewable energy projects.
Renewable energy incentives should be phased out over time, said NextEra Energy CEO Jim Robo in an interview after the Dec. 3 announcement.
"We are probably a little different from the rest of the industry," Robo said. "I think the solar investment tax credit should be phased out over time. Ultimately all of these, all energy sources, have to be able to compete on a straight-up basis. I am a big believer that renewables are economic and are getting more economic and will be able to stand on their own."
Hawaii has a state tax credit of 35 percent of the cost for a solar power system installation, up to $5,000 per system. There also is a 30 percent federal tax credit available to Hawaiian Electric Co. customers who install solar systems before Dec. 31, 2016.
NextEra Energy's subsidiary, Florida Power & Light, and three other Florida electric utilities pushed this year for ending a solar rebate program.
The program offered a $2 rebate for every watt of energy created through solar power, up to $20,000. Florida Power & Light paid the rebates but capped the payments at $15.5 million per year. The Florida Public Service Commission ruled in November that the rebate program will end Dec. 31, 2015.
"The programs are not cost-effective," the commission said in its Nov. 25 ruling. "Consumers have continued to install systems without any rebates."
Robo said that the tax credits can negatively affect the renewable energy market.
"I am not a big fan of incentives that distort the market," Robo said.
Despite NextEra Energy's views on renewable energy rebates, the company lobbied for utility-scale renewable tax credits in 2013.
NextEra Energy campaigned for a one-year extension of the Production Tax Credit, a federal incentive for wind projects. This performance-based incentive was available to owners of wind farms when projects become operational before 2013. The tax credit expiration date was pushed back to 2014.
As of the end of September, NextEra Energy received $132 million credit from the Production Tax Credit in 2014, according to a company filing with the U.S. Security and Exchange Commission.
The company's history with federal rebates for wind projects contradicts its present view on Hawaii's solar rebate program, said Robert Harris, Hawaii spokesman for the Alliance for Solar Choice, an advocacy group for rooftop solar systems.
"NextEra is happy to take hundreds of millions of dollars of tax credits each year, but they don't want the average Hawaii resident to receive approximately $5,000 per solar system," Harris said. "That's hypocrisy."
NextEra has said it favors utility-scale projects, such as solar farms and wind farms because they can produce electricity cheaper than rooftop solar.
"This is a business where scale matters," Robo said. "In Hawaii where land is at a premium, distributed (rooftop) solar makes sense, too. It's one of the few markets where distributed solar is actually economic. If you can build grid scale, it is more economic."
Robo said he wants to do whatever will bring down prices for customers.
"We are big believers in doing the right thing for customers and delivering the lowest cost of renewable (energy) for customers. I am agnostic whether it is utility scale or distributed. I'm not agnostic about doing what is right for customers and having the lowest-cost solutions."
HECO has also argued that Hawaii's rebate program is generous and puts too much emphasis on rooftop solar.
Alan M. Oshima, HECO's president and chief executive officer, said, "A lot of what we do here has been driven by public policy. The solar tax credit being one, the state tax credit on top of federal tax credits. The public policy here, including what we pay the net energy meter rate at retail rates, is a very generous policy to incent getting rooftop solar in our state."
"I think the emphasis on rooftop solar here is way out of proportion to all of the efforts that are being made in renewable energy as a whole," Oshima said. "They (rooftop solar) constitute 11 percent of our user base. We have 89 percent of customers still on our system that deserve reliable power at an affordable rate. That is why that whole issue needs to be talked about in different terms."
Rooftop solar is popular in the islands, with 50,000 solar systems expected to be installed by the end of this year. HECO has 451,000 customers on Oahu, in Maui County and on the Big Island.
Florida Power & Light has 4.7 million customers, and only 3,000 have solar systems.
NextEra Energy's history at its Florida utility does not fit with Hawaii's energy plans, said state Rep. Cynthia Thielen (R, Kailua-Kaneohe Bay).
"The more I learn about NextEra, the more I realize their objectives are not our local Hawaiian objectives," Theilen said. "The company has an abysmal record with (photovoltaic) in Florida. Look under the glib talk and you'll see a company that wants to replace individual renewable energy systems with its windmills on Maui, its costly underseas cable, and import LNG (liquefied natural gas) to our islands. NextEra will kill Hawaii's renewable energy progress with its big-style mainland industrial projects."
The current tax credits are good for the people of Hawaii and would be vital to future community solar projects, state Sen. Mike Gabbard (D, Kapolei-Makakilo), chairman of the committee on Energy and Environment.
"I want to continue seeing people reduce their electricity bills in a big way from solar PV," Gabbard said. "I've been a big supporter of the PV tax credit."
Gabbard said he welcomes NextEra's promise to help reduce energy bills but hopes the company will consider what Hawaii residents value.
"We do things a special way here in Hawaii. I'm hoping that they'll consider local expertise having a say," Gabbard said.