The Florida-based energy giant that plans to buy Hawaiian Electric Industries makes no bones about wanting to exert its own economies of scale to provide reliable, affordable electricity to Hawaii customers who currently pay among the highest rates in the nation.
That’s a laudable goal, but NextEra Energy Industries should achieve it without impeding rooftop solar systems favored by a growing number of Oahu customers, who are spurred on by state and federal tax incentives that make the out-of-pocket installation costs feasible, especially when the cumulative savings on future monthly electric bills are taken into account.
There’s a 30 percent federal tax credit available to Hawaiian Electric Co. customers who install solar power systems by Dec. 31, 2016, and a Hawaii state tax credit good for 35 percent, up to $5,000, of the cost of a solar power system installation.
How long the state tax break should continue is a topic of ongoing discussion, heightened lately by the fact that NextEra, which is offering $4.3 billion for HEI, has opposed personal tax rebates for consumers who adopt renewable energy systems.
NextEra Energy CEO Jim Robo asserted in Honolulu last month that Hawaii’s solar investment tax credit should be phased out over time, saying that he was "not a big fan of incentives that distort the market" and that renewable energy was becoming economical enough to compete on its own in the market.
In Florida, a NextEra subsidiary and three other electric utilities successfully pushed to end a solar rebate program, which now will expire on Dec. 31, 2015.
Yet NextEra took a wholly different approach when the utility was the one getting the tax break. In 2013 it successfully campaigned for a one-year extension of the Production Tax Credit, a federal incentive for wind energy projects.
As of the end of September, NextEra Energy had received a $132 million via the credit in 2014, according to a filing with the U.S. Securities and Exchange Commission.
NextEra’s critics accuse the company of hypocrisy, and fear the demise of Oahu’s popular rooftop solar programs and the associated jobs and clean energy they produce if the company prevails in its purchase.
Caution is warranted, especially knowing that a mere 3,000 of NextEra’s 4.7 million customers in Florida have solar power, known as distributed energy systems.
But it’s just as important to remember that NextEra’s view aligns with HECO’s, which has long argued that Hawaii’s generous tax rebate and other public policies overemphasize rooftop solar while ignoring the fact that 89 percent of HECO’s customers rely on conventional energy sources — and deserve reliable, affordable electricity, too.
NextEra has been open about its preference for utility-scale renewable energy sources, such as solar farms or wind farms, because they can produce more electricity, more cheaply, than individual rooftop solar systems.
It seems just as obvious that one of the attractions of the remote, isolated Hawaii market is that this state, where suitable land is so scarce and expensive, is one of the few where rooftop solar systems make economic sense.
NextEra should be able to drive innovation here, in solar power and other renewable energy sources, that it’s been unable to attain in Florida and elsewhere, where other energy sources are so much cheaper.
Assuming the HEI sale goes through, it will be up to the policymakers who helped put Hawaii’s pro-solar financial incentives in place to decide how long to preserve them, based in part on consumer demand, which is sure to grow even more as battery units become more feasible for solar-energy storage, and progress toward the state’s clean energy goals.
State lawmakers and the Public Utilities Commissionmust not buckle to HEI’s or NextEra’s wishes, but neither should they dismiss valid efforts to lower electricity costs for a broader segment of Hawaii’s consumers.
As for energy rebates, they should go to customers, not corporate giants
