On-bill financing of solar systems

A program would let customers avoid the upfront cost of installing the systems

Hawaiian Electric Co. is seeking regulatory approval for a program that would help customers tackle their soaring electric bills without having to pay the upfront cost of solar water heater installations.

Under the proposed Simply Solar program, HECO would pay the cost of installing a solar water heating system for qualified residents in Honolulu, Hawaii and Maui counties. The customers would pay HECO back over 12 years via a surcharge on their electric bill. Even with the surcharge, the customers' bills will be less than before solar was installed because of the reduced power consumption.

Hawaii leads the nation in solar water heaters on a per capita basis with units installed on an estimated 85,000 homes, or one-fourth of all residences statewide. However, installation of solar water heaters has slowed in recent years in part because of the initial expense of installing a system.

The $6,600 average cost for a solar water heating system can be cut to about $2,050 with a $750 instant rebate and an estimated $3,800 savings in the form of state and federal tax credits. But even with the incentives the financing may still be difficult for some utility customers since it often takes months before they can realize the benefit of the tax credits. That's the group HECO is targeting, according to utility officials.\

Under the proposal submitted to the Public Utilities Commission for approval, HECO would own and maintain the systems, which would be installed by independent contractors chosen through a competitive process. The bill for customers using 600 kilowatt-hours a month under the Simply Solar program would be an estimated $10 to $15 a month lower than what they currently pay the utility.

The potential savings that can be achieved with solar water heaters and other alternative energy technologies increases as the cost of utility-generated electricity increases. HECO's residential rates hit a record 35.1 cents a kilowatt-hour last month, largely due to the high cost of fuel oil that the utility uses to generate about 75 percent of its power.
Customers would have to meet several criteria to qualify for the program, including having never had a solar water heating system installed in the past. HECO estimates at least 1,850 customers on Oahu, 450 on Hawaii island and 250 in Maui County will qualify for the program over its three-year lifetime.
In most households water heating is the largest single item on a utility bill. By switching to solar water heating, a household can reduce its monthly electricity consumption by 25 percent to 35 percent, according to HECO.

Gov. Neil Abercrombie welcomed HECO's proposal, saying it would "bring much-needed relief to consumers who have been faced with continued rising electricity costs."
"By increasing our use of clean energy, like the sun, we are lessening our dependence on fossil fuels and moving the state forward in our energy goals. This program will result in installation jobs now and immediate savings for the consumer."

The HECO proposal is similar to an "on-bill financing" program that is being considered by the PUC. That program, pushed by the Blue Planet Foundation, would be available to a larger group of households and would apply to a wider range of energy-efficient devices.

"Blue Planet appreciates all efforts to make clean energy more accessible to customers, particularly with the astronomically high electricity rates tied to imported oil," said Jeff Mikulina, Blue Planet executive director.

"Hawaiian Electric has now proposed a limited on-bill financing program, indicating the utility's interest in providing this financing option. We look forward to implementing the most effective program to bring clean energy home for residents and businesses statewide," Mikulina said.