Hawaii’s decades-old model of centralized electricity production and distribution is getting some competition from a small but growing movement among homeowners and businesses using mostly solar panels to generate their own power.

Rising oil prices, generous state and federal tax incentives for renewables, and new financing schemes are making alternative energy a more attractive option than ever before. The amount of energy generated from residental photovoltaic systems statewide doubled nearly every year between 2005 and 2010, according to data compiled by the Hawaii Solar Energy Association.

To be sure, the amount of energy generated by rooftop photovoltaic systems is still just a small fraction of the centralized electricity production statewide. But bit by bit — with the help of policies like the state’s new "feed-in tariff" program, which makes it easier for businesses to generate electricity and sell it to their utility — the transition toward a more decentralized energy system is gaining momentum.

On the mainland, decentralized or "distributed generation" generally refers to small-scale energy production from a variety of sources, from renewables to natural gas-fueled micro-turbines to diesel generators. In Hawaii, distributed generation mainly consists of rooftop PV systems.

Distributed generation reduces the amount of energy lost in transmitting electricity because the electricity is generated near where it is used. It also reduces the size and number of power lines that must be built and gives consumers more control over their energy costs.

The state’s two main electic utilities, Hawaiian Electric Co. and the Kauai Island Utility Cooperative, are at the center of the transition, working under the mandate of the Hawaii Clean Energy Initiative, which requires the state to generate 40 percent of its energy from nonfossil fuel sources by 2030.

For advocates of distributed generation, the clean energy mandate represents a golden opportunity to bring about changes in the way Hawaii’s utilities are structured. They maintain that HECO’s preference to fill a big chunk of its renewable energy portfolio with large-scale wind proj­ects on Lanai and Molokai highlights the utility’s reluctance to give up control of its monopoly.

HECO has invested heavily in power plants and transmission lines and needs to continue using them to recoup that investment.

The same dynamic is true in most areas where distributed generation is gaining momentum, said Adam Brow­ning, executive director of The Vote Solar Initiative, a San Francisco-based solar advocacy group.

"There is a tension today between utilities that are monopoly service providers and distributed energy generators," Browning said. "It’s between those who would like to go further and faster with renewable energy production and those who believe it would eat into their business."

Browning said utilities need to remember that they are granted monopoly status to serve the public interest. "Part of the social compact is to reflect the needs and desires of all stakeholders, including customers. If that means developing more renewable distributed generation, then that’s what they should be doing. It’s clear not enough is being done in the area of renewables," he said.

For their part, HECO officials acknowledge a transition to greater decentralization is under way. But they say any perception that the utility is putting its self-interest ahead of the interests of its customers is wrong.

"From the electric company’s standpoint, our role is going to be to make sure that we can accommodate that distributed power generation, maintain the power reliability and maintain the safety," said Scott Seu, HECO’s vice president for energy resources.

"It’s going to be a mixture. It can’t just be distributed generation. It’s going to be a combination of DG plus solar farms, plus wind farms, plus biofuel plants and smart grid to better control and communicate with all of these different resources," Seu said.

"We’re pretty comfortable in the role of supporting distributed generation. We’re pretty comfortable in the role of supporting the big, larger wind farms. We’re very comfortable, obviously, in running the firm generation (traditional oil-fired power plants)."

However, there are a few barriers that are slowing the state’s push toward energy self-sufficiency, said Todd Geor­go­pa­pa­da­kos, a partner in RevoluSun, one of the state’s top designers and installers of photovoltaic systems.

Georgopapadakos said that while the feed-in tariff program has been a boon for RevoluSun, the company has been severely constrained by a regulation that effectively limits the amount of PV generating capacity that can be connected to any one of the 465 circuits on Oahu that make up HECO’s grid. When the amount of PV on a circuit reaches 15 percent of the total capacity, HECO requires the homeowner or business seeking to install the system to conduct an interconnection study. The specter of having to do the costly study often kills the proj­ect, he said.

"We would literally be able to do at least double the number of proj­ects but for this restriction," Geor­go­pa­pa­da­kos said.

On Oahu the 15 percent trigger point has been reached or exceeded on 11 of the island’s circuits, according to HECO. On the Big Island, 18 of the island’s 140 circuits are at or above the limit, while on Maui that is true for three out of 90 circuits.

The 15 percent threshold, which also is used by utilities in California, is a level that has been recommended by the Institute of Electrical and Electronics Engineers, according to HECO.

The utility says the regulation is needed to protect the integrity of its grid. Because alternative energy sources such as solar power are intermittent in nature, they can have a negative impact on HECO’s efforts to balance the load on its grid. Thus, the utility requires a study to determine how any particular proj­ect exceeding the threshold will affect other customers on the circuit.