State senators grilled the state Department of Business, Economic Development and Tourism director Tuesday about the costs of a failed $150 million renewable financing program intended to help residents who have trouble owning renewable energy.
Hawaii lawmakers created the Green Energy Market Securitization, or GEMS Opens in a new tab program, in 2013 to make rooftop solar systems more affordable. GEMS raised roughly $150 million through a bond sale and was to have lent that money by the end of November.
To date it has lent roughly 1 percent of the funds, while the bond revenue and $33 million in interest is being repaid by Hawaii ratepayers to the tune of $1.50 on every monthly electrical bill.
DBEDT Director Luis Salaveria testified before members of the Senate Committee on Ways and Means defending the program, saying it has experienced a spike in interest.
“What we do see is that the market is changing,” Salaveria said. “We’ve now funded and started to fund a lot more commercial-related renewable energy … especially in what we consider underserved areas, which are condominiums.”
Salaveria said the program granted approximately $2 million for recent commercial renewable-energy projects. Before the two projects, the program had loaned $191,678.57, according to Senate Ways and Means Committee Chairwoman Jill Tokuda (D, Kaneohe-Ahuimanu).
Tokuda said a big concern was that the program was “basically spending more than (it was) giving out.”
Sen. Donna Mercado Kim (D, Kapalama-Aiea) also voiced concerns about the time it has taken to lend the money.
“It seems like government takes a lot longer than if this was in the private sector,” Mercado Kim said. “It is really mind-boggling. … It has taken you two years to get your loan service agreements in order.”
Some solar companies offer customers the ability to install a rooftop solar system without paying upfront costs, but paying it off over a 20-year period.
“I think one of the things that is important to understand about the program is that it does require quite a bit of approval to go through the process,” Salaveria said.
Salaveria said one challenge for the program is that it has to get approval from the state Public Utilities Commission if it wants to change the eligibility requirements.
“This can be a long process in preparing the necessary documents,” he said. “It is one of the challenges the program has right now.”
THE Hawaii Green Infrastructure Authority, the agency that controls GEMS, recently applied to make battery systems eligible to receive GEMS funds, but the request was suspended by the Public Utilities Commission. The PUC said it needed more detailed analysis from the agency.
Salaveria said the initial high costs the senators were concerned about were for setting up the program and would reduce over time.
“There was a lot of upfront costs that were incurred by the program, but these costs are not expected to be on an ongoing basis,” he said. “Once we set up and establish the loan agreements, these are one-time startup costs.”
Salaveria said there is opportunity for the program, including funding efficiency programs for large-scale consumers such as the state government.
“We see that as an opportunity to reduce the state’s electric consumption because taxpayers are also ratepayers,” he said.
Sen. Lorraine Inouye (D, Waikoloa-Waimea-North Hilo) said she wants the department to submit a bill this year to address the concerns.
“I think we should do something this year if we are going to address any changes,” she said.
