Hawaii Microgrid Tariff

In the wake of Kilauea’s recent eruptions on Hawaii Island – where transmission lines and distribution equipment have been destroyed by lava – Hawaii Electric Light (HELCo), the area’s utility, is planning a small microgrid to serve isolated communities and vacation areas. Kilauea has been erupting continuously for more than 30 years but whereas lava typically flows directly into the sea, it is now coming up through cracks that have opened up in the residential subdivisions of Leilani Estates and Lanipuna Gardens due to the increased number of earthquakes, unsettling the land. Simultaneously, the Hawaii Public Utilities Commission opened a docket, Instituting a proceeding to Investigate Establishment of a Microgrid Services Tariff, where Hawaiian Electric Cos. (HECO) and its three utilities, along with the state's consumer advocate, are named parties. Hawaii is the first state to begin a proceeding to create a tariff to pay microgrid owners and streamline the interconnection process. The docket follows the Governor signing legislation, Act 200, directing the Public Utilities Commission to study the tariff and grid resource after extreme weather and volcanic activity on Hawaii Island have threatened to cut off several communities, or make access extremely difficult. The act references the fact that Hawaii is more vulnerable than other states to disruptions in its energy systems due to extreme weather events. The urgency of climate change effects in Hawaii has started discussions of emergency power generation that could provide community scale power without connection to the island-wide grid. A microgrid tariff would allow for easier development of customer-sited, grid-tied systems. Hawaii has existing functioning microgrids on several of its islands which are already in place and are already helping to make the state’s electric grid more resilient and maintain reliability.

With Kilauea being active for over 30 years, Leilani Estates has long been considered a high-risk zone, keeping big construction developers at bay, and also keeping home prices low.  In the midst of an affordable housing crisis, Leilani Estates is sought after by low income residents as their only chance of owning a home. Hawaii has one of the highest poverty rates in the nation; in 2016, one in six residents was living in poverty, and, according to Census Bureau data, 30% of Leilani Estates' population (estimated to be around 1,600 people) live below the poverty line. Both residents and insurance companies are well aware of the lava hazards in Leilani Estates, and few companies provide plans that cover damage from lava flows.

Microgrid development has been hindered by a number of factors, including “interconnection barriers and a lack of standard terms regarding the value of services exchanged between the microgrid operator and the utility,”[4] Hawaii’s microgrid tariff should make projects like the HELCo microgrid more feasible for third party developers looking to serve public purposes. Public benefits resulting  from a microgrid grid connection include strengthening the grid and climate resilience, while all customers benefit, justifying payment within utility rates to support the tariff. Hawaii also sees this is an opportunity to facilitate the achievement of Hawaii’s existing clean energy policies. The docket is exploring a number of issues, including streamlining interconnection, islanding rules, establishing standard terms for valuing resilience, how to pay for the standby energy capacity needed to serve a microgrid, should its distributed generation fail, making sure that microgrids do not increase costs for customers outside the service, which is likely to overburden low income customers the most. In 2020, after six months of discussion, HECO proposed a microgrid tariff of $5/kW annual charge for microgrid operators who are contemplating utilizing the microgrids to coordinate dispatch and islanding during the emergency situation.

 

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