American Utility Companies Play Spoilsport to the Spread of Solar Energy | Financial Buzz

American Utility Companies Play Spoilsport to the Spread of Solar Energy

Solar EnergyThe spread of solar energy as a viable source of electricity in the US seems to have hit a road block. Many American utility companies are reportedly trying to stall the expansion of roof top solar energy harvesting equipment with their retrograde policies. Here is an example from Hawaii.

William Walker lives on Oahu Island, Hawaii with his wife. There is a scarcity of shade where he lives and homes here can get quite hot. 24 hour air conditioning is almost a necessity. Hawaii meets most of its electricity needs through oil and imports a large quantity of it every month. The result, electricity is very expensive in Hawaii and the island has the highest rates for utilities across the entire US.

Solar energy becoming popular in Hawaii

Hawaii is rich in solar energy. Like so many others in Hawaii, Mr. Walker has also installed equipment on the roof of his house to tap into this energy. The state promotes the capture of solar energy and even subsidizes as much as 65 percent of the cost of installation of the equipment.  Without this subsidy, the cost of installation of solar power equipment can be very prohibitive.

The system that the Walkers have installed costs $35,000 and can produce 5.9 kW of power. Hawaii has a facility called net metering, wherein the residents who have installed solar energy systems can deduct the cost of the electricity produced by their solar equipment from their utility bill and even sell excess energy back to the state. The Walkers were all set to connect their system to the state grid under the facility when their utility company played spoilsport.

How the utility company has become a hurdle

Their utility company, Hawaii Electric Industries Inc. (NYSE: HE) told them that they cannot connect their solar energy systems to the grid, at least for now. This means people like Mr. Walker will have to pay both the power bill and the cost of installment of their roof top solar equipment, until the utility company relents and allows them to connect their solar equipment to the grid. Note that the utility company has not said that it will never allow Mr. Walker to connect his system to the grid, but that it needs time to go over the matter.

The situation elsewhere

Utility companies in the US, supply power worth more than $360 billion every year to individuals and companies. With the rapid rise of solar power, they seem to think that their hegemony is being threatened and they are fighting back with bureaucratic hurdles. In California, where more than 626,000 people have installed roof top solar panels, utility companies are pushing the government to allow them to charge grid fees. If this is allowed, users will actually see about $120 added to their power bills.

In Arizona, the Arizona Public Service utility company is trying to impose a $50 monthly fee on new solar installations. More than 1,000 protestors turned up at the state capital recently to lobby against the proposed fees. Finally, after hectic parleys over two days, the utility company was allowed to charge new solar connections $4.90 a month from the beginning of the next year.