What is a NEM? What is a DER? A Beginner’s Guide to Solar in Hawaii

Most people know it’s a good investment to go solar in Hawaii, but why? How does it save money? Isn’t solar expensive? And we want to help so here’s a beginner’s guide to solar in Hawaii.

The Good Old Days

When solar first took off in Hawaii, the compensation for sending power back to the grid was the best offer the islands ever experienced. This first-generation agreement was called a NEM.

NEM stands for Net Energy Metering. Solar only generates power during the day so when most families are at work & school there’s very little energy being consumed in the daytime. The extra power has to go somewhere, and back onto the grid it went.

A credit was issued for this daytime surplus of power, and when families return home in the evening to start cooking, doing laundry, watching TV, turning lights on, and such and began to need that power back, they received a full credit (watt for watt). So as long as your system produced more in the daytime than you used at night, you wouldn’t have any charges for power and a nice $17 or $25 connection fee was the only charge from the utility.

Talk about a good deal.

“There’s Too Much Power!”

With the sudden boom in popularity because of the NEM agreement, the power grids of the islands began to fill up. To prevent overload & eventual failure, the utility had to do something to curb this growing surplus.

A plan was hatched. Hawaii has a goal to reach 100% clean energy by 2045 and residential solar is a great way to do this. The utility didn’t want to stop people from being able to go solar, but the daytime power surplus was an issue that needed to be addressed.

Enter the DER

In October of 2015 the utility & the Public Utilities Commission worked together to create, in essence, the NEM 2.0.

Called Distributed Energy Resources or DER for short, it still provided value to customers, but it also set a cap on how much could be built. There were 2 programs created, Customer Grid Supply (CGS) & Customer Self Supply (CSS) and we’ll look at these more later.

25mW was the cap for Oahu. 25 Megawatts, or 25,000 Kilowatts was set. Thats about 5,000 average sized homes with 5kW systems. It didn’t seem like much at the time, but at least it kept solar alive. Maui & the Big Island had their own caps which corresponded to their grid capacity as well.

The DER credit wasn’t as lucrative as the NEM credit as residents received only a $0.15 credit per kWh (a Kilowatt Hour is using 1000 watts for 1 hour & is the unit at which the utility charges you) used to encourage more daytime use of the power. So if you have a NEM, you can’t afford NOT to get solar.

The DER program solved 2 problems: It diminished the amount of daytime surplus power sent back to the grid & reinforced conscious energy usage by customers when they get the best rate for their power… During the day.

Capped Out

In September of 2016 the 25mW cap on Oahu was reached, and the utility closed the enrollment into the DER program. Maui & the Big Island capped out shortly prior to this and the solar industry began to wonder what the future looked like.

We mentioned earlier there were 2 DER programs created. CGS & CSS. The CGS had the cap placed on it because those systems feed energy back to the grid.

In the CSS program no energy is fed to the grid, therefore no cap was set, and no enrollment limits are in effect.

But if you don’t feed back to the grid, how do you get credit for the energy you don’t use?

Since CSS systems don’t feed back to the grid & the power has to go somewhere, many people began to see the future… Home Batteries. But as little as many people knew about how solar worked, even less people understood batteries on a home-sized scale.

Power storage solutions began to take the forefront & solar companies soon understood in order to stay in the game it was necessary to become a battery expert.

Currently for new solar customers who don’t have a NEM or DER a home battery is required to make the solar switch.

A Bright Future Indeed

So with batteries becoming a necessary component for going solar, a new era of energy independence is here for Hawaii. While it does add cost to a solar project, the benefits outweigh the expense.

Solar in Hawaii is here to stay, and there will still be a good number of companies to turn to for support, and you can count on them (and us) to be here when you need!

Do You Have a NEM or DER & Are Unsure of What’s Next?

If you have a NEM or a DER and aren’t sure what the next step should be connect with us today! (BANNER AD WITH CALL TO ACTION WITHIN IT)