Hawaii Public Utilities Commission (PUC) Approves Emergency Demand Response Program, Offering Lucrative Incentives for Energy Storage Systems

Summary:

The Hawaii PUC recently approved an Emergency Demand Response Program (EDRP) to swiftly incentivize energy storage projects to help replace a 180-megawatt (MW) coal plant in Oahu being retired in September 2022. The Aloha state’s EDRP and Scheduled Dispatch Program Rider (SDP) is taking a proactive approach to help Hawaiian Electric Company (HECO) alleviate reduced resources ahead of a coal plant closure that currently provides about 15% of the demand on the island.  

Key Provisions:

• The EDRP includes a 50-megawatt Scheduled Dispatch Program Rider (SDP) which has an updated start date slated for August 1, 2021. 
• The EDRP incentive for storage projects will be paid upfront, with payment levels stepping down as follows:
  • $850 per kW for the first 15 MW of capacity
  • $750 per kW for the next 15 MW of capacity
  • $500 per kW for the final 20 MW of capacity 

• During the initial phase, scheduled dispatch will be required for two hours every day, coinciding with peak grid demand from 6 pm to 8 pm. The dispatch hours are expected to be hard scheduled into the customer’s battery. 
• Customers will commit to 10 years in the program including the 2-year Initial Phase. Once the Initial Phase closes (December 2023), customers will either choose to stay in the SDP program or enroll in a next-generation program. Details of the next-generation programs have yet to be confirmed by the PUC.  
• The Program is open to both new and existing customers who can add new battery storage capacity to their current PV system. Existing customers will also be allowed an additional 5 kW of “post inverter AC” PV generation capacity without impacting their current tariff status 
• The SDP is treated as an amendment or rider to the customer’s existing tariffs (e.g., NEM, CGS, CGS+, Smart Export). Meaning energy export compensation will remain the same as the customer’s existing program. 

What’s the bottom line?

The EDRP program offers a great opportunity for customers to install an energy storage system. It is a big win for the Hawaii Solar Energy Association (HSEA) and other clean energy advocates who lobbied for the program’s adoption. We expect that the lucrative incentive levels will create strong demand, very likely consuming the entire 50 MW’s of program capacity, possibly quite quickly. Coupling an EDRP incentive with a federal (26%) tax credit on the cost of the energy storage system would combine to offset the majority of the system cost. Not to mention the customer would still be able to capture additional utility bill savings, for example by preventing solar exports to the grid on a successor Net Metering tariff.  

Given that Hawaii has some of the highest per-capita penetration rates of solar PV in the country, it is expected that many existing solar customers will apply for EDRP incentives. Considering the expedited SDP approval process for current PV customers, it’s possible that existing PV customers will move quickly to reserve a majority of program capacity.  

Updates in ETB Developer:

• All the EDRP incentive levels have been added into our ETB Developer incentive database and are now selectable for projects in Hawaii. 
• Because the EDRP program launch is imminent and our expectation is that incentive capacity will go quickly, our team has custom designed a bridge solution that allows us to manually upload an energy storage, Acumen EMS™ dispatch simulation that is EDRP compliant for a specific customer proposal. The 365-day dispatch simulation will charge from solar PV and prevent exports (if possible) and complete a full 2-hour dispatch in the 6 pm – 8 pm system peak window to meet the program requirements. The simulation and savings analysis will capture any additional utility bill savings from preventing PV exports and/or TOU arbitrage based on the customer’s rate schedule.  
• Further terms and conditions on having the ETB run a custom EDRP compliant dispatch simulation on your behalf:  

• • Custom EDRP dispatch simulations are free and unlimited for ETB Developer users. 
  • We will precisely model projects for any C&I customer utility rate schedule and Net Energy Metering tariff combination. Acumen EMS™ currently does not support residential applications. 
  • We will only run custom EDRP dispatch simulations that utilize our Acumen EMS™ controls software, utilizing an ESS hardware provider that we are integrated with, including BYD, Dynapower, Delta, CPS, and ask about others. 
  • Data you will need to provide us to run a custom simulation: (i) whether they are a new or existing PV customer, (ii) customer usage data (either bill data or interval data), (iii) if this is an ESS retrofit we need PV system specifications and/or PV interval data, (iv) the customer’s NEM program and utility rate tariff. 
  • Reach out to Jordyn Fenner atjordyn.fenner@energytoolbase.com and/or your Account Manager for us to run a free EDRP compliant, Acumen EMS dispatch simulation for your project(s). 

Webinar: 

Energy Toolbase is hosting a webinar on Tuesday, July 27th to provide an overview of the program including how to precisely model, optimize and propose projects using ETB Developer’s custom-designed EDRP workflow. We will review C&I case studies that illustrate the project economics of participating in this program for both new and existing customers. Our guest presenter, Rocky Mould, Executive Director of Hawaii Solar Energy Association (HSEA), will provide insight into the program and the history of how we got to where we are today.Register here for free. 

Key Links: 

• Hawaii Electric Company –EDRP Draft Implementation Plan 
• Hawaii Public Utility Commission –Decision and Order on Emergency Demand Response Program (EDRP)
• Utility Dive:Hawaii OKs emergency demand response to avoid energy shortfalls following AES coal plant closure
• ETB webinar registration link:Modeling & Proposing Energy Storage projects on Hawaii’s new (EDRP) Emergency Demand Response Program