9 thoughts on “Analysts mixed on whether NextEra takeover will boost or hinder continued growth of renewables”

1. Allen N. December 10, 2014 at 10:22 am

   These articles show two things:

   1). When it comes to PR spin, HEI’s propaganda machine is very well oiled. Pity their engineers aren’t anywhere near as proficient when it comes to meeting the demand for integrating rooftop solar to the grid.

   2). That the Sunshine State has such a dismal record when it comes to residential PV system installation is something that should sound the alarm for Hawaii residents with this proposed NextEra takeover. These guys may have an interest in solar and other forms of renewable energy sources, yes. But do they intend to let consumers reap the benefits and savings from harnessing these sources, or are they trying to figure out ways to extract exorbitant profits by limiting and controlling access to renewables?

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   1. Curtis Beck December 3, 2015 at 9:36 am

      Regarding No. 1: How would you know, sir? Are you a professional engineer? If so, please provide your professional license number indicating license to practice responsible engineering in Hawaii. Many of HELCO’s engineers possess just such a license and that is their credibility in this matter.

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2. compare and decide December 11, 2014 at 12:51 am

   The original paradigm for solar power was pairing it with batteries, not feeding the grid.

   http://www.greentechmedia.com/articles/featured/Storage-Is-the-New-Solar-Will-Batteries-and-PV-Create-an-Unstoppable-Hybri

   Storage Is the New Solar: Will Batteries and PV Create an Unstoppable Hybrid Force?
   Once a dominant force in solar, batteries were pushed aside in favor of grid-tied systems. But that dynamic may be changing.
   by Stephen Lacey

   When Wes Kennedy started engineering solar systems in the mid-1990s, he pretty much had one integration option: batteries. At that time, Kennedy designed and installed systems for Jade Mountain, a Colorado-based distributed energy retailer that eventually merged with Real Goods Solar. With very little policy support from utilities, the off-grid market was the dominant driver of business in the U.S. and globally. The vast majority of PV was paired with lead-acid batteries and sold to people who wanted to disconnect from the grid, or who had no other choice for electricity.

   That’s the way it was from the 1970s onward for a couple of decades, until a steady march of state-level policies and interconnection laws made tying solar into the grid more attractive. In typical first-mover fashion, California offered some of the first U.S. incentives for solar systems connected to utility wires in 1996. A handful of other states followed, extending net metering to solar and creating state rebate programs. At that time, Germany and Japan also beefed up promotion laws, creating a strong burst of activity for the grid-tied market globally. In 1997, nearly two-thirds of worldwide solar deployment was off-grid. Three years later, grid-tied installations outpaced off-grid installations globally for the first time. In 2005, the market finally flipped for the U.S. as state promotion policies blossomed. Over the last decade and a half, battery storage went from being the core enabler of solar PV to a marginal technology. Battery-based systems now only represent around 1 percent of yearly solar installations in America and throughout the world.

   “Sometimes people forget that storage was the roots of the solar industry,” said Kennedy. But the industry is getting back to those roots and embracing storage once again. As lithium-ion batteries get cheaper and more abundant, solar penetration reaches high enough levels to worry utilities, and electricity markets evolve to reward storage, attention has suddenly turned back to batteries.

   Hawaii plays a role in what might be an energy revolution.

   However, projections suggest that the combination will be a major force in electricity markets over the coming decade. According to a recent analysis from the Rocky Mountain Institute and CohnReznick, tens of millions of customers around the country could be cost-effectively served by solar PV and batteries by 2024 — making them a “real, near and present” threat to traditional power providers. And that’s under a scenario that doesn’t take into account changes to business models or dramatic improvements to technology. “Millions of customers, commercial earlier than residential, representing billions of dollars in utility revenues will find themselves in a position to cost-effectively defect from the grid if they so choose,” wrote the authors.

   As SolarCity’s Peter Rive spelled out in a blog post in April, his company “has no interest in this scenario.” Solar companies understand the value of the grid, and are not looking to entirely displace customers. But the potential to defect will realistically be there for a growing number of people — putting more than $30 billion at risk for utilities. “In conversations with utilities, they’re terrified,” said SMA’s Kennedy. “It’s certainly not mainstream, but the solar-storage option seems to be coming.”

   Utilities may be nervous, but storage providers are thrilled at the prospect of leading solar companies embracing solar. Because penetration of solar has been so low in the U.S., the industry historically resisted talking about the need for batteries. But high PV saturation on circuits in Hawaii and worries about over-generation of solar in California are now forcing a discussion about the need for more storage. Improving technology economics have facilitated that discussion, encouraging a shift in tone among solar leaders.

   Here’s a guy in Hawaii who completely got off the grid with solar and batteries.

   http://www.bloomberg.com/news/2014-10-30/getting-off-the-grid-in-hawaii-becoming-a-family-affair.html

   He Ripped Their House Off the Grid and He’s No Hippie: Tales of the Solar Middle Class
   By Mark Chediak Oct 29, 2014 2:00 PM GMT-1000

   David Greene woke up one day and fired his power company. It wasn’t that hard to do. Greene, 48, is neither a hippie nor a survivalist and his environmental leanings are middle of the road. He runs an air-conditioning repair service out of his home and lives in the suburbs, not the woods. It’s just that his three-bedroom house near Honolulu is in a place with America’s highest electricity rates — 38 cents a kilowatt-hour compared with the 13-cent national average. Fed up, Greene put solar panels on his roof and batteries in the garage to store the excess juice. He told his utility to come get his power meter. “I enjoy being off the grid,” Greene said. “It’s an independence thing. It’s cool to say you don’t have an electric bill.” Even better, Greene calculates he’s spent about $58,000 on a system that will pay for itself in six to eight years — factoring in that he now mostly avoids gas stations by charging his hybrid Toyota Prius from the rooftop solar system.

   Getting completely off the grid does sound risky. In fact, the hybrid electric car was designed to allay fears of breaking entirely away from the security of gasoline. Along those lines, the model of the future might not be getting off the grid (like this guy), or feeding the grid (like the utilities want), but drawing from the grid minimally and also generating and storing power at home. It would be like having two insurance policies. In fact, emergency services like hospitals, police stations and fire departments might opt for this dual strategy (and folks in rural areas).

   Does NextEra want to break into Hawaii to get in on the ground floor of distributed generation, or to nip it in the bud? Libertarians say that government should only do what business cannot. But are modern utilities failing at their mission even by that standard of minimalist government? Should the local utility be run as a county agency (like Seattle)?

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3. Wil Welsh December 11, 2014 at 11:20 am

   The Kauai Island Utilities Cooperative (KIUC) is working fairly well here on Kauai, though no reduction of rates has yet resulted. KIUC is aggressively pursuing alternatives to Diesel-driven generators and doing a good job there. At least there is some accountability to the power users (all “members” of KIUC). Should Oahu consider this alternative?

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4. Doug December 13, 2014 at 10:04 am

   Did you receive a copy of the same letter I got yesterday from the company to customers explaining how the sale to NextEra is going to be wonderful for everyone?

   If so, did you read the 3rd page of the letter, which was essentially a lot of legalistic language explaining that the first two pages are not guarantees, and providing a (non-exhaustive) list of everything that could prevent the first two pages from coming true?

   The disclaimer about the “forward-looking statements” is also shown immediately when browsing their new website:
   http://www.forhawaiisfuture.com/

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5. compare and decide December 24, 2014 at 5:58 pm

   Addressing the main question of your post, the answer might be expected to be “no”, the NextEra takeover of HECO would generally not be expected hinder the growth of renewables in Hawaii. First, the 2008 Hawaii Clean Energy Initiative mandates that the utility in Hawaii achieve ambitious goals for switching to renewables (70% by 2030) or else face strict fines from both the state and federal government. Second, the genie of renewable energy is out of the bottle. Once a certain fraction of the population has solar power or drive hybrid cars, even the most cautious, stodgy segment of society loses its resistance to alternative energy (in fact, they seek to jump on the bandwagon). Also, the price of solar is going down because it is being adopted widely.

   The more relevant question(s) might be, What kind of renewables will be fostered – distributed generation versus centralized generation, and distributed storage versus centralized storage? The notion of ‘path dependence’ makes this even more relevant.

   http://en.wikipedia.org/wiki/Path_dependence

   Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant.[1] In economics and the social sciences path dependence can refer either to outcomes at a single moment in time or to long run equilibria of a process. In common usage, the phrase implies either:
   • (A) that “history matters”—a broad concept,[2] or
   • (B) that predictable amplifications of small differences are a disproportionate cause of later circumstances. And, in the “strong” form, that this historical hang-over is inefficient.[3]
   The first usage, (A): “history matters” is trivially true in the explanatory context; everything has causes. And, in these fields, the direct influence of earlier states isn’t notable[4] (compare “path dependent” options in finance, where the influence of history can be non standard). It is the narrow concept, (B), that has the most explanatory force and which is covered in this article.

   The standard economic understanding since Adam Smith is that countries specialize on a product in which they have a ‘comparative advantage’ (e.g., the British produce wool because their climate is perfect for sheep, and trade it for port wine from Portugal, which excels in that niche). But the notion of path dependence suggests that an area of excellence is based on chance and early adoption. For example, in the 16th century, the Swiss city of Geneva was taken over by the religious leader John Calvin, who banned jewelry – with the exception of watches, which because status symbols; the Swiss are still famous for their luxury watches. A potential current example might be the recommendation that Hawaii turn to medical tourism by attracting travelers who would seek to have plastic surgery; this opportunity is now probably foreclosed with this market being cornered by South Korea, perhaps permanently. Also, conservatives in the US long griped that building the Tennessee Valley Authority’s centralized energy grid under the New Deal quashed decentralized energy technology (a complaint that conservatives do not make about current energy policy). Another classic case might be the widespread adoption of VHS format video tape, despite the technical superiority of Beta (in terms of clarity), because the owners of the patent on Beta refused to license their technology. VHS was therefore widely adopted and prevailed. But this is, importantly, an ambiguous example.

   Consider as an example the videotape format war; Two mechanisms independent of product quality could explain how VHS achieved dominance over Betamax from a negligible early adoption lead:
   • A network effect: videocassette rental stores observed more VHS rentals and stocked up on VHS tapes, leading renters to buy VHS players and rent more VHS tapes, until there was complete vendor lock-in.
   • A VCR manufacturer bandwagon effect of switching to VHS-production because they expected it to win the standards battle.
   An alternative analysis is that VHS was better adapted to market demands (e.g. having a longer recording time). In this interpretation, path dependence had little to do with VHS’s success, which would have occurred even if Betamax had established an early lead.[5] Positive feedback mechanisms like bandwagon and network effects are at the origin of path-dependence. They lead to a reinforcing pattern, in which industries ‘tip’ towards one or another product design. Uncoordinated standardisation can be observed in many other situations.

   First of all, VHS had longer play times, and was sought after by some consumers for that quality, so it did have merits. Second, there is the notion of ‘disruptive innovation’, that the cheaper, inferior technology finds a niche and gradually improves and later vanquishes the prevailing technology; VHS might fit that pattern. Third, VCRS are now obsolete (indeed, DVDs are becoming obsolete because of live streaming); two competing paths might each become irrelevant.

   Along these lines, an interesting question might be, To what extent might Hawaii’s example – with its rapid adoption of solar power, with the potential to get off the grid – pose a challenge to centralized production and distribution? Might a new decentralized developmental pathway emerge in Hawaii if it were fostered by the government as opposed to a corporate monopoly invested in the status quo? Moreover, is the adoption of decentralized ‘distributed’ generation and storage inevitable? In that case, investing in an undersea, interisland cable might be the equivalent of buying a $1 billion Beta VCR machine.

   Another issue is the falling price of oil, and the status of natural gas. IIRC, Saudi Arabia can make a profit on oil as long as oil is above $54 a barrel; this was once seen as the floor below which oil prices would not (could not) fall. But oil is expected to fall below $40 a barrel. This is widely seen as part of a concerted effort to drive American natural gas producers out of business (and punish Iran and Russia, etc., etc.). So while there is controversy over whether or not natural gas is really ‘clean’ and carbon-emission reducing, as well as over the environmental damaged caused by fracking, these issues might become less relevant if natural gas production in the US is largely crippled over the long run. Hawaii might need to recommit itself to renewables even more than it already has.

   http://oilprice.com/Energy/Oil-Prices/Did-The-Saudis-And-The-US-Collude-In-Dropping-Oil-Prices.html

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6. compare and decide January 4, 2015 at 12:49 pm

   Ian, your question was whether the NextEra takeover in Hawaii will lead to a diminished commitment to renewables locally. My response was that the question is, rather, whether the growth of renewables will be centralized or distributed. Here is an article from last May that answers my question.

   http://www.greentechmedia.com/articles/read/hawaii-crosses-the-energy-rubicon

   Hawaii Passes the Point of No Return on Distributed Generation
   Hawaii’s governor lays out the reality of the state’s grid: “The energy Rubicon has been crossed.”
   Bentham Paulos May 21, 2014

   When Hawaiian Electric Company submitted its integrated resource plan on April 29, it was the last straw for regulators.

   Shortly after HECO’s inadequate plan was released, the Public Utilities Commission issued four regulatory orders and a white paper outlining how HECO should evolve.

   “Throughout the country, there’s a keen awareness that energy systems are changing,” said PUC chair Hermina Morita at a press conference announcing the orders. “In Hawaii, this is not an abstract concept. With a high penetration of renewables on our electric system, high energy costs, changing customer expectations and evolving technologies, we are at the bleeding edge of this energy transformation.”

   The PUC was backed up by Governor Neil Abercrombie, who appeared at the press conference with regulators. “Today we are going to turn the corner on the energy transformation. There’s no turning back. This is the most significant day for Hawaii and its energy future that we have ever had. The time for talk has ended; the time for action is upon us. The energy Rubicon has been crossed.”

   The energy revolution in Hawaii – which has repercussions around the world – represents not just a technological revolution, but a revolutionary change in local attitudes. Not so long ago, the PUC was often described locally as the handmaiden of the local utility. That does not seem to be the case anymore. It also does not seem like the relationship between the utility and the policy makers will revert to its earlier form.

   Hawaii’s electricity rates are three times the national average. If you look at the comments on articles in the national media that address this, there is a stunned reaction – “How did that happen in Hawaii?” – by commenters across the political spectrum. One gets the impression that there is no practical, technical or geographic reason for how that came about. The source of the problem would seem to be a complacent local political system that is oriented toward monopoly. That seems to be changing, and the change might be irreversible at this point.

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7. David greene February 25, 2015 at 11:17 pm

   It’s already started, I have been off grid for 2 years now. Yes it’s more expensive than renting your electricity, but I am so sick of politicians following the money, YOURE ALL FIRED!!!! I’m long gone off the grid. Later- 😉

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   1. David greene February 26, 2015 at 12:37 am

      Nice to know that here in America, we have the freedom to choose where we get our power from, now that is freedom! Making your own power system is not cheap, but you won’t have to worry about the utility changing the rules of the game. I have found that the only way to shield yourself from them is to get rid of them altogether. My poor neighbors all have grid tie systems, I tried to warn them that the utility will change the game rules on them.

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