Introduction: Oahu Demand Response and Scheduled Dispatch Battery Bonus
Being an island in the middle of the Pacific Ocean is one of the things that makes Hawaii one of the most beautiful places in the world, but it is also the reason why electricity costs so much, and power outages are so frequent. In an effort to address these problems Hawaiian Electric (HECO) developed a Demand Response Scheduled Dispatch Battery Bonus program that will allow homeowners to add more solar and receive a cash incentives to add a residential solar batteries!
To speed up its transition from fossil fuel power production, HECO is being pushed to close down one of its coal-burning power plants in 2022.
By closing one of Oahu's largest electricity production facilities, many experts are concerned that electricity rates will increase and power outages will increase. Hawaii already has the highest electricity rates in the nation and one of the least reliable grids, making the concerns of these experts especially concerning.
HECO has pushed for large-scale industrial battery storage, like the Kapolei Energy Storage porject, as a solution to this challenge. Unfortunately, these types of projects are costly and time-consuming.
In working with Public Utilities commission, HECO developed an exciting Demand Response Scheduled Dispatch Battery Bonus program, that will allow for the rapid addition of solar and home batteries to the Oahu grid. The additional solar will allow for more power production, and the batteries allow the power to be stored and deployed when the grid needs it most! Helping to improve grid reliability and hopefully avoid massive utility cost increases.
For homeowners the program is especially exciting because it will provide them with an upfront payment of thousands of dollars to add a solar battery and gives them the best solar savings program possible, increasing the benefit to send solar electricity back into the grid.
These factors make Demand Response a revolutionary step for residential solar and batteries. Let's learn about demand response and how homeowners on Oahu can benefit by adding solar and batteries.
What is Demand Response?
Managing the production and demand of electricity is highly complex. Every second and moment of the day, the demand and production of electricity is changing. Most of the time, utilities are able to mange these shifts but power grids can be knocked offline when massive or unexpected shifts happen.
Demand Response programs are agreements between the utility and homeowners that allow the utility to shift how homeowners use or store power to help the utility stabilize the electricity grid, decreasing power outages, and helping reduce the cost of running expensive peak power plants.
Because each Hawaiin island is a standalone grid, each island is especially susceptible to power outages because of natural disasters or shifts in the grid voltage.
The recent power outages in Texas caused by a winter storm are a good example of the devastation that can occur when electricity companies lose control of voltage and electricity production. That power outage caused $113 billion in economic damages and has been found to be the cause of death for between 151 and 700 people. This tragedy most likely could have been avoided with a well-designed Demand Response program.
As more and more Hawaiin homeowners added solar, this altered how the Hawaiin Electric Grid worked. For example, residential solar under Net Energy Metering, the original solar program in Hawaii, was based on homeowners sending solar power back into the grid during the day.
Because the grid in Hawaii is so sensitive to shifts in power production, HECO argued that it could not handle any more electricity being sent back into the grid from residential solar systems. As a result, Hawaiin Electric mandated that homeowners who wanted to add solar also have to add a battery to store the electricity that the solar system produces so that solar electricity does not flow back into the grid.
Since this mandate, HECO has run into problems trying to shift its power production from coal and fossil fuel-based power plants to renewable alternatives. As a result, during the shift to Kapolei Energy Storage Project, Hawaiin Electric realized that they would not have the ability to keep the grid stable.
Demand Response provides HECO with a way to get a large amount of energy production and storage to the grid quickly while also providing a benefit to homeowners.
How does the HECO Demand Response program work for Oahu homeowners?
With HECO closing one of its largest coal-fired power plants that produce a fifth of Oahu's electricity in 2022, HECO has been working with the Public Utilities Commission to find a way to make up for the losses electricity production. In addition, the Demand Response program is designed to help expand solar power production for thousands of homeowners throughout the island to help speed up Hawaii's shift towards more renewable energy.
The program will allow homeowners with a NEM system to add up to 5 kw of additional solar under the original NEM program. This means that homeowners who have not been able to add additional solar panels can now increase the number of solar panels they have in the most economically beneficial way. During the day, these homeowners will send solar power back into the grid and receive full credits for this power.
In addition to adding additional solar panels, these homeowners will also be provided a massive upfront financial payment for adding a solar home battery like the Tesla Powerwall 2 or the LG Chem RESU 10H (if you are interested in learning about how these two batteries compare, read our review). In exchange for agreeing to allow HECO to pull power from the battery when needed, customers can receive a one-time payment of up to $4,250 per battery!
The Demand Response battery payment could cover over half the cost of the battery cost (separate from the installation cost) and that is before additional tax credit incentives are factored in. When all the incentives are combined the cost of installing a solar home battery becomes extremely affordable for Oahu homeowners.
By staking the incentives, homeowners on Oahu will be receiving some of the highest levels of financial compensation in the nation. This does not make up for the fact we have been paying the highest electricity rates in the country but it will make the switch to home solar and batteries more attractive to more people
When combined with the Sunrun Brightbox offering, homeowners can get a battery at no upfront cost, receive a financial incentive to add batteries and protect themselves from power outages.
HECO is still outlining the program's exact details, but the ability to support the grid and the homeowners of Hawaii is a revolutionary moment for Oahu. Customers benefit from a huge financial payment for adding the battery, better savings from solar, and battery backup protection.
In addition, HECO gets more electricity production from residential solar power and can pull from homeowner's batteries when needed, limiting the need to build expensive and carbon-emitting local power plants.
The Demand Response agreement will last for a specific amount of time, allowing HECO to pull power from the battery during that period. If the homeowner decides they no longer want to be a part of the program before the end of the agreement, they will pay HECO back a pro-rate portion of the payment they received for the battery installation.
What will the Oahu Demand Response program do for the HECO power grid?
With the clock ticking on the closing of the Kalaeloa Coal Pant, the need to get electricity production and storage capacity online quickly pushed HECO to implement the Demand Response program as quickly as possible. Similar programs, like the California's Self-Generation Incentive Program (SGIP) battery rebate program, have been extremely successful.
Public Utilities Commission Chairman Jay Griffin explained, "We're talking thousands, not dozens or hundreds" of new or expanded solar systems, "So it's going to have to mobilize quickly."
Griffin has made the point for Hawaii to accomplish the state's goal of 100% renewable energy by 2045, HECO will also need to develop more large-scale solar and battery storage projects.
At the same time, Griffin does acknowledge that residential Demand Response solar and battery storage programs could be a solution for the future of Hawaii's electricity production "That's what we're putting to test in real terms," Griffin said. "But we're not going to be putting all our eggs in one basket."
What challenges will the Oahu Demand Response program have?
This program is anticipated to push a new wave of mass solar and home solar battery adoption across the Oahu. Many areas of the island, including parts of Ewa Beach, Manoa, Kailua, and the North Shore, were limited in terms of the solar options that homeowners had available from HECO because of the high percentage of homes that had solar.
With the circuits that had been restricted from getting solar and the rest of Oahu now being open to the program, some experts project as many as 10,000 homes could be looking to add more solar and batteries to their homes.
An influx of this many solar projects could present some challenges for the state and, by extension, homeowners.
One factor that is sometimes not thought about is the timeline for building permits. Honolulu's Department of Planning and Permitting may be hit with a massive influx in the number of applications for solar and energy storage. As a result, projects might be delayed because HDPP may not have the ability to process such a significant increase in permit applications.
From a project execution perspective, equipment availability may become an issue on the battery side. Affordable solar batteries are notoriously hard to keep in stock. For smaller solar companies, this could lead to issues getting the solar batteries that they sell. Luckily for Alchemy Solr and our customers, Sunrun is the largest solar company in the state and, as a result, has buying power that other solar contractors cannot compete with. Sunrun's ability to get solar batteries should help to limit product shortages for Alchemy Solar's customers.
Another factor that may present challenges for some customers is the cost of purchasing a solar and battery system, even with the new incentives. As a result of our relationship with Sunrun, Alchemy Solar can offer customers a $0 down solar lease, Prepaid Power Purchase Agreement, Cash, and Solar Loan options.
Flexibility on the solar and battery financing side helps ensure that Alchemy Solar will have a solution for every customer interested in getting access to HECO's new Demand Response program.
HECO has also outlined that the amount homeowners receive will step down as more batteries and solar are installed across the island. It is important for customers to understand this because if they delay the decision to add solar and energy storage, they will not see the same level of financial savings.
Conclusion: Oahu Demand Response Battery Compensation Program
Hawaii has been at the forefront of solar and energy storage for over a decade now. HECOs new Demand Response program is the next step in this leadership position.
By offering homeowners a sizable upfront payment to add a home solar battery, Hawaiin homeowners are in a unique position to get battery back up protection and utility bill savings without the high cost that many people on the mainland have to absorb.
By creating a program that allows the grid to be supported by rooftop solar and home batteries, HECO is also pushing forward a new model of utility interaction that will allow the utility to utilize lower-cost, clean, renewable energy to help stabilize the grid. Hopefully, the days of HECO building dirty and expensive coal or fossil fuel power plants are behind us.
If you are a homeowner on Oahu who is interested in learning more about the Demand Response program and if you qualify for the upfront solar battery rebate, schedule a free consultation with Alchemy Solar today!