Net Energy Metering in Hawaii

Net Energy Metering (or NEM) is one way to lessen Hawaii’s dependence on imported oil by encouraging the greater use of eligible renewable energy sources like solar (photovoltaic), wind, biomass, or hydroelectric power for electrical generation by residential and commercial customers. Hawaiian Electric Company, Maui Electric Company, and Hawaii Electric Light Company support Net Energy Metering and recognize their roles to help Hawaii transition from fossil fuels to more renewable energy resources. Here is information that we hope will be helpful.

1.  What is net energy metering?

According to Hawaii state law (Hawaii Revised Statues (HRS) Section 269-101 - 269-111), all residential and commercial utility customers who own and operate an eligible renewable energy generation system up to a generating capacity of 100 kW and intend to connect to utility grid,  must register their systems with their utility by executing a NEM agreement.  The executed agreement allows the NEM customer to connect their renewable generator to the utility grid, allowing it to export surplus electricity into the grid, and to receive credits at full retail value which can be used to offset electricity purchases over a 12-month period.  

NEM customers are billed for net energy purchased, which is determined by subtracting the excess energy exported to the utility grid from the total energy supplied by the utility. Here is the formula:

2.  What is the value of NEM?

NEM allows you to offset all or part of your electricity purchases from the utility by energy produced by your eligible renewable generation system and export any excess electricity to the utility grid at the retail rate.

NEM gives value to the excess electricity you produce with your renewable generation system. Electricity generated by your renewable generator would first supply power for your own needs and any additional power you need would be purchased from the utility. When a NEM customer generates more electricity than what is consumed, excess energy produced can be exported back to the utility at full retail value which can be used to offset electricity purchases over a 12-month period.

This is in contrast to other non-NEM customers with renewable energy generation systems. If they have a power purchase agreement, they are compensated for power exported to the utility grid at a lower wholesale rate. Standard interconnection customers must consume all electricity that is self-generated, and not allow to export surplus energy to the grid nor be compensated. With NEM, you are in effect being given the retail credit for excess power which you generate.

3.  What types of generators are eligible?

Hawaii law specifies that NEM applies to solar, wind, biomass or hydroelectric generation facilities, or a hybrid system of two or more of these technologies, with a capacity up to 100 kW. (For more information about these technologies, visit the website of the State of Hawaii, Department of Business, Economic Development and Tourism, Strategic Industries Division, Energy Branch).

The Hawaii Public Utilities Commission (PUC), by rule or order, can change the maximum allowable capacity.

4.  I am installing a solar water-heating system.  Does that qualify for net energy metering?

No. NEM applies only to systems that generate electricity. Solar electric systems, known as photovoltaics (PV), use solar cells to convert the sun’s light into electricity. By contrast, solar water-heating systems use heat from the sun directly to heat water for your use. Since solar water-heating systems do not produce electricity, they cannot feed into the grid and do not qualify for NEM.

5.  How many customers can sign up?

By current PUC order, the cap on the total power producing capacity of generators that can sign up to take advantage of NEM is summarized below by island:

The PUC, by rule or order, can change this percentage.

6.  Why is the number of customers who may sign up limited?

The cap is specified by the PUC. When customers use NEM, they receive credit at the retail rate for self-produced electricity. The retail electric rate that the utility charges includes not only recovery of the cost of producing electricity, but also the cost for facilities (e.g., lines, substations, etc.) to deliver power to customers, for maintaining and operating these facilities, and for administrative and other operating costs, such as billing.

Those customers who produce their own electricity on-site only incur the cost of generating the electricity, not additional delivery and other costs. By receiving credit at the full retail rate, in essence, the customer who net meters is receiving a subsidy from all other customers. By providing a cap, the subsidy can be kept to a reasonable level and still help to support small to medium renewable energy producers. Setting aside a percentage of the cap for smaller systems assures that a few larger systems will not deprive smaller generators of the benefits of NEM.

7.  Do I need a new meter and, if so, do I need to pay for it?

New and existing NEM systems will require a new bi-directional meter capable of measuring the energy supplied by your utility and the excess electricity from your renewable energy generation system exported to the grid. The utility will provide the meter at no cost to you when the NEM agreement is executed.

If you are planning to install a qualified renewable energy generation system and have an existing electric meter with a digital display, please call your utility (Hawaiian Electric Company at 543-4760) to confirm if your meter is compatible to ensure proper credit can be given. Your existing meter may have to be replaced before your system can be energized. If you have an existing mechanical meter, it will be replaced when the NEM agreement is executed.

See meter handout to learn how to read a Net Energy meter.

8.  What are the requirements for execution of the NEM agreement?

For qualified renewable energy generation systems less than 10 kW:

For qualified renewable energy systems greater than 10 kW but not more than 100 kW:

9.  How do I get County building permits closed?

Call the contractor who installed your renewable energy generation system and have the contractor set an appointment with the electrical and building inspectors. The licensed electrician who completed the work does have to be present during the inspection. Closure of the building permit signifies that your system has been inspected and found to be designed and installed in conformance with applicable codes for safe operation. Final inspection and approval by both the building and electrical inspectors are required and are a vital part of executing a NEM agreement.

In accordance with Rule 18 of the tariffs, the utility will not execute a NEM agreement without approvals and closure of applicable permits. Please check with your County permit office to determine the status of your permits. On Oahu, you can review the status of your permit by accessing the Honolulu Department of Planning and Permitting website.

Enter your address or permit number on the form and click “GO” to search the permit database for the status of all permits on this site. Please call your utility to inform them when your inspection has been completed and the permit has been closed.

10.  What happens to my electric bill if I generate more electricity than I use from the utility?

Billing is on a monthly basis and you are responsible for a minimum charge even if you export more electricity than you take from the utility. The minimum charge covers some of the fixed costs of maintaining your electric account, including reading your meter and billing.

The NEM agreement allows the customer to carry over unused credits (excess net generation expressed as a monetary value) to future bills within a 12 month period, starting from when the agreement is executed. Unused credits left at the end of each 12- month reconciliation period may not be carried over to the next 12-month period.

11.  What do I have to do to sign up?

In general, for systems up to 10 kW, you will need to enter into a simple NEM agreement with the utility which may be completed after your renewable energy generation system has been installed. Your contractor or electrician must obtain a building permit and have a licensed electrical contractor sign and certify your renewable energy generation system meets the necessary safety standards.

The building and electrical inspectors from the County office on your island will conduct an inspection to verify your renewable energy generation system meets required safety standards and they will proceed to close the building permit accordingly. See question 9 above for more information.

For systems over 10 kW up to 100 kW, the utility will perform an interconnection review. Unless more detailed study is needed, this review will be at no charge. It is highly recommended that you contact your utility early in your planning process to determine if they can accommodate the additional electrical loads from your renewable energy generation system. Any additional costs for facilities needed to complete the interconnection review will be the responsibility of the customer.

Also for systems over 10 kW but not more than 100 kW, you must enter into a more detailed customer agreement (see question 8 under download Rule 18 – Net Energy Metering Appendix II) that specifies the technical requirements necessary to ensure your renewable energy generation system can safely be connected to the utility grid. You will also need to provide proof of a commercial general liability insurance policy. The agreement must be signed by the licensed electrical contractor who installed your renewable energy generation system to certify that your renewable energy generation system meets the necessary safety standards and that an electrical permit was issued.

For photovoltaic energy generation systems up to 100 kW, the interconnection process is more streamlined especially if your system has an approved DC-AC inverter. Here is a list of approved inverters.

Mail completed Net Energy Metering forms for Oahu installations to:

Hawaiian Electric Company
Attn: Net Energy Metering, CP10-SR
P.O. Box 2750
Honolulu, HI 96840-0001

12.  Why are these requirements necessary?

If your renewable energy generation system mistakenly back-feeds power into an electric line that utility crews think is de-energized, the crews can be seriously injured or even killed. The interconnection study also helps assure the utility that you and other customers continue to receive reliable service and good power quality, avoiding potentially disruptive swings in voltage levels that could damage your equipment and that of the utilities.

Whether you are installing a new renewable energy generation system or considering NEM for an existing renewable energy generation system, compliance with all safety and other codes are required.

13.  How are requirements established for NEM?

The 2005 Legislature, by Act 104, gave the Hawaii Public Utilities Commission authority to set requirements and limits as well as safety, performance, and reliability standards for NEM by order, tariff, or rule.

14.  How can I get more information about renewable energy systems that might qualify for NEM?

Please call the utility or check their websites (by clicking on the company links below) on your island for more information:

For information on how to obtain a building permit on Oahu (if needed), call: City & County of Honolulu 768-8239

Here is a printable NEM brochure (in PDF format).