Keith Cronin, of Island Energy Solutions,
says Hawai'i needs to be as aggressive in promoting alternative
sources of energy as it is in urging residents to conserve
power. Cronin's own home is loaded with alternative power
sources, such as these solar panels.
"The state and the utilities are very
active in (controlling the amount of power used), but
the generation pieces never get discussed. I think the
state has a long way to go," said Keith Cronin, of
Island Energy Solutions, whose own home is loaded with
alternative energy technology.
Even in the oil-producing state of Texas,
critics say, the electric utility Austin Energy pays customers
a rebate of $5 per watt for energy generated by solar
power. The utility estimates that covers 50 percent to
80 percent of the cost of installing a solar photovoltaic
system.
But in Hawai'i, a residential photovoltaic
system gets a $1,750 tax rebate—perhaps 5 percent
of the cost of the system. It's not nearly enough, said
Marco Mangelsdorf, president of ProVision Technologies,
a Hilo-based solar power firm.
• Oil: 89.12 percent
• Coal: 5.6
• Biomass: 1.82
• Municipal solid waste (H-Power): 1.52
• Solar water heating: 1.31
• Hydroelectric: 0.34
• Geothermal: 0.25
(Does not add up to 100 because figures
are rounded.)
Source: State Department of Business, Economic Development
and Tourism.
"The residential market is kind
of the holy grail for alternative energy," said
Mangelsdorf, who recommends the maximum residential
rebate for solar, wind, hydroelectric or other alternative
energy systems be upped to $8,000. He also suggests
the state should support having utilities give other
alternative energy rebates like the ones given for solar
hot water systems.
He and other critics say Hawai'i has
a long way to go.
Said Rick Reed, president of the Hawai'i
Solar Energy Association, "Look, if you put in
a 4-kilowatt solar system and a solar hot water system,
it's going to cost $30,000 to $40,000, but you're done
(with paying power bills). If oil goes to $150 a barrel,
you're still done."
The state is providing adequate incentives,
said state Strategic Industries Division chief Maurice
Kaya. He said record power prices in the Islands mean
many existing programs already should be sufficient
incentives.
"There are contrasting points of
view on this matter," Kaya concedes.
Either way, the state has no plans to
bring major alternative energy initiatives before the
2005 Legislature.
Kaya said he anticipates some fine-tuning
of existing alternative energy incentives, and perhaps
some new programs promoting conservation and energy
efficiency.
Lowell Kalapa, president of the Tax Foundation
of Hawai'i, said he doesn't object to the idea of government
helping support alternative energy, and is himself a
strong supporter of conservation and alternative energy.
He said he has cut his home power bill to about $34
a month by using solar water heating, gas cooking, no
air conditioner and drying his wash on a clothesline.
Support programs:
Here are some Hawai'i programs that support
alternative energy:
• Residents installing alternative
energy systems, whether solar water heating, solar photovoltaics,
wind or hydroelectric, can claim tax credits of 35 percent
of the cost of the system up to a maximum of $1,750.
Businesses can get 35 percent of the cost
up to a maximum of $250,000. Residential applications
of solar water heating can also get utility rebates
of $750 to $1,000, depending on the island on which
they live.
• The state's net metering
law allows residents to install alternative power systems
up to 50 kilowatts in size, and to hook up to the utility
grid — essentially running their electric meters
backward when they're providing more power than their
households use.
• The state's renewable portfolio
standards, strongly supported by Gov. Linda Lingle,
require that the state's electric utilities be providing
20 percent of the state's power from alternative or
renewable sources by the year 2020. That's the same
thing Austin, Texas, required of its utility by 2020.
In New York state, the goal is more aggressive: 25 percent
renewable by 2013.
• Under a state law known as Act
96, alternative automotive fuels avoid 75 percent of
highway taxes. Biodiesel, a fuel that runs in diesel
vehicles but is made from recycled vegetable oil, is
being manufactured on Maui and O'ahu and qualifies for
the tax break.
• The state has mandated that 85
percent of the gasoline sold in Hawai'i be 10 percent
ethanol by April 2006. Ethanol manufacturers can get
an annual tax credit of 30 cents per gallon of plant
capacity, which they can take each year for up to eight
years or until the tax break reaches the total cost
of the plant. Ethanol blends are also exempt from the
state 4 percent excise tax.
• Commercial firms that install
renewable energy systems can take advantage of five-year
accelerated depreciation, which, in addition to a 10
percent federal investment tax credit and other tax
breaks, can pay 80 percent of the cost of a system.
But "the problem with using the tax
code to incentivize people to do it is that you don't
have the same level of accountability," he said.
"You don't know who's going to use it or how much
it will be used until people apply.
"The cost of photovoltaics is still
rather expensive. What if, instead of doling out tax
credits, the state used its bulk buying power to purchase
solar panels, and perhaps subsidized the cost of systems.
Then you have a better idea of the kinds of systems
going in, and more accountability over the costs to
government."
Hawai'i leads the nation in one area: per-capita installation
of residential solar water heating systems. A state
tax credit and utility rebates can cut a solar hot water
system's cost of roughly $5,000 by half.
But if a resident wants to put up a solar photovoltaic
system capable of producing all of an average home's
power, which can cost $30,000 to $40,000, the maximum
state tax credit is $1,750 — the same as for a
water heating system.
By contrast, if a business wants to install photovoltaics
or other alternative energy systems, it can get credits
of 35 percent of the cost, up to a maximum of $250,000.
Kaua'i resident Moksha McClure found a unique way to
take advantage of that in developing her pet-sitting
business, Whiskers Resort.
McClure said her leased agricultural site at Kipu is
far from the nearest utility pole.
"For me, it would have been really expensive to
bring in electricity. I estimated $40,000 cost,"
she said.
She wanted to install a solar photovoltaic system, with
a backup power generator that would burn biodiesel—fuel
made from recycled vegetable oil. Total system cost,
roughly $30,000, and total potential tax credit, $10,500.
It would provide all her business's power requirements.
But McClure said she did not expect her business to
produce enough profit in its first years to take advantage
of the tax credit. So she arranged for Bank of Hawaii
to buy the system and lease it to her. This way, the
bank could take the tax credit and would reduce her
lease payments accordingly.
"My lease rent is something like negative 18 percent,"
she said.
Activities to promote renewable energy in many states
is high, said Lewis Milford of the Clean Energy States
Alliance, a states' group promoting renewable energy.
When Peter Jones, a resident of South Burlington, Vt.,
put a $21,000 solar photovoltaic system on his roof,
the state government paid a third of the cost. He no
longer has electric bills. Vermont pays up to $12,500
toward solar photovoltaic or windpower systems and $7,500
toward solar hot water systems.
New Jersey's Clean Energy program pays up to $5.50 a
watt as a rebate for qualified solar power systems.
The New York Incentives for Renewable Energy program
pays up to $4.50 a watt. Florida Power and Light's Green
Pricing Program in 2002 initiated a system paying $2
to $4 a watt.
California offers a range of rebates for systems, depending
on size and the technology used. Small photovoltaic
systems qualify for $3.20 a watt. Small hot water systems
get $3.60 a watt. Small wind energy systems can get
$2.10 a watt.
Hawai'i's strong solar water heater program has been
used in about 75,000 residential units statewide. But
the less aggressive solar electric program has produced
only about 50 legal net-metered systems across the state,
said Reed, the Hawai'i Solar Energy Association president.
Gov. Linda Lingle has been supportive of alternative
energy systems and has strongly backed the state's renewable
energy portfolio standards, which require the utilities
to produce 20 percent of all their power from nonifossil
fuel sources by the year 2020. The state energy office
estimated the state was at 8.2 percent renewable in
2003.
But that doesn't necessarily mean the state will dramatically
expand the generation of renewable energy to reach that
goal. It could also use conservation to get there.
"Hawai'i also defines renewable energy as electrical
energy savings brought about by the use of solar and
heat-pump water heating, seawater air conditioning,
district cooling systems, solar air conditioning and
ice storage, quantifiable energy conservation measures,
use of rejected heat from small-scale cogeneration,
and customer-sited combined heat and power systems,"
the state energy office said in a report to the federal
Department of Energy.
Lingle said that both generation and reduced demand
meet the goal. "It makes common sense to me that
we do everything to reduce reliance on energy that's
imported," Lingle said. "To sit here and stay
as we are is not an option."
Many in the industry are frustrated particularly by
the state's failure to support increases in solar photovoltaics.
"We would like to see the power of photovoltaics
fulfilled," Reed said. He said that if the state
fairly priced the costs of oil, including air pollution
and the cost of carbon-dioxide emissions promoting global
climate change, it would find solar cells to be a good
investment.
USA Today contributed to this report.
Reach Jan TenBruggencate at: jant@honoluluadvertiser.com
or (808) 245-3074.
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