SolarCity Snaps Up Opportunities in Hawaii’s Energy Sector

Hawaii’s ambitious clean energy goals are opening the door to a number of market opportunities.
Published: Thu 03 Mar 2016

Last year, Hawaii became the first US state to enact into law a 100% renewable requirement, which is to be achieved no later than 2045. [Hawaii Looks To 100% Renewables]. Already there are signs that the state is on track to meet this ambitious goal.

For instance, Kauai island currently meets 17.5% of its electric demand with solar PV-this is roughly twice the amount that Italy gets, as the leading nation for integration of high levels of solar. Just recently, Kauai Island Utility Cooperative (KIUC) boasted that 90%-plus of its electricity came from renewables on four separate occasions during the month of January. [Kauai Island Utility Cooperative On Track for Renewables Goal of 50% by 2022].

Exploring Hawaii’s grid storage opportunities

These impressive figures have caught the eye of SolarCity, an American supplier of energy services.  Among its primary services, the company designs, finances, and installs solar power systems. Recognising the need for energy storage in Hawaii has teamed up with Tesla Energy to supply batteries for KIUCs first-of-its-kind solar array and energy storage system. No surprises here since Tesla Energy is part of Tesla Motors. SolarCity Chairman Elon Musk founded and serves as CEO of Tesla Motors, and his cousins founded and serve as executives at SolarCity. The Kauai project could certainly serve as an excellent showcase for Mr Musk’s various business interests.

The proposed SolarCity/Tesla project is believed to be the first utility-scale system in the US to provide dispatchable solar energy. This means that the utility can rely on the fact that electricity will be available around the clock-even after the sun sets.  By using stored solar energy instead of diesel generators, KIUC can expect to reduce its consumption of imported fossil fuels, as well as cut its greenhouse gas emissions.

Tesla will supply a 52MWh Powerpack lithium-ion battery storage system to accompany SolarCity's 13MW solar PV project. The storage system will feed up to 12MW of electricity onto the grid to reduce the reliance on conventional power generation between 5pm and 10pm. The Powerpack is Tesla’s product for commercial and utility-scale installations, and uses a modular design adapted from the technology used in Tesla’s electric cars.

Under the terms of the 20-year contract announced in September 2015, KIUC will pay SolarCity 14.5 cents per kWh, only slightly more than the cost of energy from KIUC's two existing 12MW solar arrays, whose output is available only during the day. This price certainly highlights the increasing competitiveness of utility-scale solar PV and battery storage.

The array and battery storage facility will be built on 20ha of land owned by Grove Farm Company, Inc. adjacent to KIUC's Kapaia power station off Mā'alo Road, just north of Līhu'e.

The project has already received state and county approvals and now awaits approval by the Hawaii Public Utilities Commission.

SolarCity expects to complete its solar and storage project by the end of 2016, and by 2018 KIUC expects to be meeting 25% of demand with solar PV.

SolarCity enables smarter home energy management in Hawaii  

But, SolarCity hasn’t stopped at grid energy storage. The company has also introduced its Smart Energy Home system to Hawaii’s residential customers to help reduce their dependence on the grid.

The package includes solar PV, battery storage, smart electric water heaters and the Nest Learning Thermostat. A home gateway controls the battery, water heater, thermostat and inverter to maximize solar PV generation and self-consumption.

The system helps to store excess electricity generated from the solar power system during the day which is then drawn at night or cloudy days. The smart electric water heater uses solar PV to heat water during the day and store it for later use.

Using the battery, smart electric water heater and thermostat, the system can automatically modify energy usage based on how much solar power is available to stop energy from being exported back to the grid.

System size, as well as the combination of technology and number of batteries can vary according to customers’ individual energy consumption.

Hawaii-an ideal market for solar power

Hawaii’s electricity costs are high due to the fact that it relies on expensive oil imports to supply over 75% of its electricity. Residential customers pay the highest average retail electricity rates in the country of $0.37/kWh, double the rates in Alaska ($0.185/kWh), the runner-up.

Based on these figures, solar energy was always inevitable especially since the state enjoys an abundance of sunshine.

The government also put a finance programme (GEMS Financing Programme) in place to help residential energy consumers pay the upfront costs of solar technology.

Add this to state and federal tax credits and rebates, it is a matter of time before more companies like SolarCity really explore Hawaii’s market potential.