Due to limited land availability for utility-scale wind and solar projects, utilities in Hawaii are counting on many thousands of present and future rooftop photovoltaic customers to get them to the state's 100% renewable energy goal, Hawaiian Electric Industries Inc. utility officials told investment analysts.
During a Feb. 13 fourth-quarter and full-year 2019 earnings call, HEI President and CEO Constance Lau said rooftop solar and other customer-sited energy resources are so essential for meeting renewable energy goals that the company's utility subsidiaries — Hawaiian Electric Co. Inc., Hawaii Electric Light Co. Inc. and Maui Electric Co. Ltd., known collectively as HECO — have created dedicated customer energy resources services specifically to assist customers connecting to the grid with rooftop solar and other devices. "With limited land, especially on Oahu, we cannot achieve 100% renewable energy without private rooftop solar and other customer-sited resources," Lau said.
Hawaiian Electric Co. President and CEO Alan Oshima said his company is looking forward to increased penetration of private rooftop solar combined with behind-the-meter storage. "We are dependent on an increased percentage of private rooftop solar, given the very small relative land base in Hawaii that's available for renewable projects," Oshima said.
Lau said the HECO utilities are focused on developing new programs to facilitate customer participation in the clean energy transformation, offering innovative energy solutions and creating a modern grid and technology platform.
"Given our ambitious renewable plans, we need modernized grids with enhanced technologies capable of integrating large amounts of both utility-scale and customer-sited renewables," Lau continued. She noted that the state Public Utilities Commission in 2019 approved the first phase of HECO's multi-year grid modernization strategy and that the utilities now are executing that plan.
Energy sales from renewables have reached 28%, driven by new utility-scale solar and a nearly 5% increase in rooftop solar, Lau said, noting that the companies in 2019 had their largest single-year increase in solar capacity. The PUC approved seven power purchase agreements for the lowest-cost solar plus storage resources Hawaii has seen to date, she said.
Also, HECO launched its largest-ever combined renewables, storage and grid services request for proposals and is evaluating the responses from more than 75 bidders, she continued.
Turning to performance-based ratemaking, Lau said utilities and stakeholders have submitted design proposals to encourage increased cost-effective renewable energy and improved customer service. Hawaiian Electric Co. Vice President of Regulatory Affairs Joseph Viola said the PUC asked parties to propose incentive mechanisms specifically related to the integration of distributed energy resources. The PUC has indicated that it expects to make a decision on those proposals in December, he said.
HEI CFO, Executive Vice President and Treasurer Gregory Hazelton said HECO invested $450 million in capital expenditures in 2019 as it accelerated some investments it originally planned to make in 2020. The capex for 2020 is now forecast at $360 million, but the company expects average capex expenditures of $400 million in each of 2021 and 2022 with investments needed to achieve grid modernization, resilience and reliability goals, he said.
"Our capital investments remain focused on maintaining reliability and resilience as we integrate more renewable energy and modernize our grid," Hazelton said.