Net Energy Metering in Hawaii

Net energy metering or NEM is a way to encourage the use of eligible renewable energy electricity generators by residential and commercial customers. Hawaiian Electric Company, Maui Electric Company and Hawaii Electric Light Company support net energy metering as mandated by Hawaii state law. Here is information that we hope will be helpful.

1. What is net energy metering?
If you own or lease an eligible renewable energy generator, you may enter into an agreement with your utility to connect your generator to the utility grid, allowing it to export surplus electricity into the grid. Net energy metering means that any kilowatt-hours your renewable energy generator feeds into the grid will be subtracted from the kilowatt-hours of electricity you obtain from your utility to determine the net amount of kilowatt-hours. You will be billed only for the net kilowatt-hours. Here is the formula:

2. What’s the value of net energy metering?
Net energy metering allows you to get more value from the electricity you generate with your renewable system. It allows you to offset the purchase of electricity from your utility against excess electricity produced by your renewable system at the retail rate.

Net metering gives value to the excess electricity you produce from your renewable system. You would use the electricity generated by your system to supply your own needs and purchase any additional power you need at the regular retail rate. At certain times, your system may generate excess power that it feeds into the grid. Without net metering, if you had a power purchase agreement from your electric utility, you would be compensated for that power only at the lower wholesale rate.

3. What types of generators are eligible?
Hawaii law specifies that net energy metering applies to solar, wind, biomass or hydroelectric generating facilities, or a hybrid system of two or more of these technologies, with a capacity up to 100 kilowatts. (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 Public Utilities Commission (PUC), by rule or order, can increase the maximum allowable capacity. At the PUC’s instruction, the utilities will also develop a limited pilot program for larger NEM systems.

4. I am installing a solar water heating system. Does that qualify for net energy metering?
No. Net energy metering applies only to systems that generate electricity. Solar electric systems, known as photovoltaics, 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 net energy metering.

5. How many customers can sign up?
Under the law, the cap on the total power producing capacity of generators signed up to take advantage of net energy metering is set at one percent of each electric utility’s system peak demand. The PUC, by rule or order, can increase this percentage. The actual number of customers who can sign up before this cap is reached depends on the combined size of the individual renewable energy systems. On Oahu, 40 percent of the cap is reserved for systems of 10 kW or smaller; on Maui and Hawaii Island, 40 percent of the cap is reserved for smaller systems.

6. Why is the number of customers who may sign up limited?
The cap is provided in the law. When customers use net energy metering, they receive credit at the retail rate for self-produced electricity. The retail electric rate that the utility charges includes recovery of not only the cost of producing electricity, but also the cost for facilities (e.g., lines, substations, etc.) to deliver power to customers, and for maintaining and operating these facilities, and administrative and other operating costs, such as billing.

Those 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 in the law, 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 net metering systems will require new meters that are able to track the amounts of electricity returned to the grid. Your electric utility will provide the meters at no cost to you. You may be required to provide space for additional metering sockets if added meters are required.  See handout to learn how to read a Net Energy meter.

8. 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 use from the utility. The minimum charge covers some of the fixed costs of maintaining your electric account, including reading your meter and billing.

Unused credits (excess net generation expressed as a monetary value) are carried over monthly for 12 months. Unused credits left at the end of each 12-month reconciliation period may not be carried over to the next 12-month period. Under the law, you can only receive actual payment for electricity exported to the grid if you have a purchase power agreement (different from the net energy metering agreement) with the utility.

9. What do I have to do to sign up?
In general, for systems up to 10 kilowatts, you will need to enter into a simple customer agreement with the utility which may be completed after your system is installed. And you must obtain an inspection by a licensed electrical contractor to certify your renewable system meets the necessary safety standards. You can download the form you need. Forms are also available from your electric utility.

For systems over 10 kilowatts and up to 100 kilowatts, your electric 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. Additional costs for facilities needed to complete the interconnection are the responsibility of the customer. Of course, you must obtain any building permits needed in your county.

Also for systems over 10 kilowatts and up to 100 kilowatts, you must enter into a more detailed customer agreement that specifies the technical requirements necessary to ensure your system can safely be connected to the utility grid. You will also need to provide proof of a commercial general liability policy. The agreement will require you and the licensed electrical contractor who installed your system to certify that your renewable energy systems meets the necessary safety standards and that an electrical permit was issued. You may download the forms you need. Forms are also available from your electric utility.

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

Mail the completed form to:

10. Why are these requirements necessary?
If your generator 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 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 generator or considering net energy metering for an existing generator, compliance with all safety and other codes is required.

11. How are requirements established for net energy metering?
The 2005 Legislature, by Act 104, gave the Public Utilities Commission authority -- by order, tariff, or rule – to set requirements and limits as well as safety, performance, and reliability standards for Net Energy Metering.

12. How can I get more information about renewable energy systems that might qualify for net energy metering in Hawaii?
Please call for more information:
HECO (Oahu) 543-4760
HELCO (Hawaii Island)
General questions, 969-0118
Billing questions, Hilo -969-6999, Kona – 329-3584, Waimea 885-4605
Engineering or technical questions, Hilo- 969-0358, Kona 327-0519, Waimea 969-0356
MECO (Maui) 871-8461 or (toll-free from Molokai and Lanai) 1-877-871-8461

For information on how to obtain a county building permit (if needed), call:
523-4505 (Oahu)
961-8331 (Hilo), 327-3520 (Kona)
270-7250 (Maui County)

Here is a printable brochure (in PDF format) version of this information.

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