Hawaii-2018-SB660-Introduced

SECTION 1. In 2013, the Hawaii green infrastructure loan program was established, according to the strongly supportive testimony of the public utilities commission, to "serve as a potential source of capital for a range of clean energy technology users, including renters and residents that have not been able to take advantage of current financing programs and may now take advantage of increasing opportunities to install clean energy technology".

However, the State has seen a significant shift in opportunities for investment in renewable energy since 2013. The popular Net Energy Metering (NEM) program is now closed and the grid supply tariff has several limits on enrollment. Furthermore, the self-supply tariff, which only allows for the installation of a renewable energy system which does not export energy to the grid, requires at least some energy storage for most systems to operate efficiently. Energy storage adds considerable cost to renewable energy systems, and the added cost and other restrictions have resulted in slow adoption of the self-supply tariff. At the same time, the development of energy storage is seen as a crucial next step toward the development of a smart, updated electrical grid which can accommodate more renewable energy resources, help customers take charge of their bills, and contribute to overall grid resiliency and reliability as we work toward our one hundred per cent Renewable Portfolio Standard (RPS) goal.

Due to these changes in the energy market and other factors, the Hawaii green infrastructure loan program has deployed less than 1.3 per cent of its loan funds as of January 1, 2017. The residential photovoltaic loan product currently offered by GEMS and available to underserved customers as originally envisioned by the legislature in 2013 is no longer relevant as NEM has closed and the grid supply tariff is limited by an enrollment cap. These challenges have resulted in a GEMS program that has not yet recognized its mission nor established truly viable products for the underserved markets, such as renewable energy offerings suitable for low to moderate income homeowners, renters, churches, and non-profit organizations.

The purpose of this Act is to assist all of Hawaii's electric ratepayers, including Hawaii's underserved residents and businesses, by broadening the scope of the GEMS authority and by repurposing a portion of the dormant funds to help accelerate the market transformation and adoption of energy storage technologies that can be utilized now.

The GEMS authority was created to accelerate the adoption of renewable energy and to ensure that all ratepayers could receive the benefits of renewable energy investments. This Act further provides guidance to maintain and strengthen the GEMS authority as an intact body, while also broadening the scope of the authority to include an updated mandate for renewable energy adoption in the State.

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding two new sections to part IV to be appropriately designated and to read as follows:

"§196-A Energy storage market acceleration program; energy storage rebate program. (a) There is established the Hawaii energy storage market acceleration program that shall be administered as a rebate program by the authority in a manner consistent with this part. The authority shall:

(1) Prepare any forms that may be necessary for the energy storage system owner to claim a rebate from the energy storage system fund and shall post these forms on a publicly available website;

(2) Require the energy storage system owner claiming a rebate under this section to furnish reasonable information to ascertain the validity of the claim, including but not limited to documentation necessary to demonstrate that the system for which the rebate is claimed is an eligible energy storage system;

(3) Allow each energy storage system owner to establish income eligibility, as necessary, through a declaration asserting that the information provided is true and correct and made under penalty of law;

(4) Make best efforts to post on a publicly available website, within regular and reasonable periods of time, the current amounts remaining in the energy storage system fund;

(5) Establish guidelines necessary to effectuate the purposes of this section; provided that the establishment of such guidelines shall not be subject to chapter 91;

provided that the authority may contract with a third party for services to assist with administering the energy storage market acceleration fund and such procurement of services shall be exempt from the requirements of chapter lO3D.

(b) Each energy storage system owner who provides third party financing to an energy storage system user, or purchases and installs in this State an eligible energy storage system, may apply to the authority, within twelve months of the eligible energy storage system's being first placed into service, for a rebate from the energy storage system fund, subject to the following:

(1) The maximum eligible rebate for each residential energy system where the federal adjusted gross income of the energy storage system user is $75,000 or less for single filers or $150,000 or less for joint filers in the preceding tax year in which the rebate is claimed shall be the lesser of $10,000 or;

(A) 75 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after July 31, 2017, and before January 1, 2020;

(B) 65 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2019, and before January 1, 2021; or

(C) 55 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2020, and before January 1, 2022;

(2) The maximum eligible rebate for each residential energy system where the federal adjusted gross income of the energy storage user is greater than $75,000 for single filers or greater than $150,000 for joint filers in the preceding tax year in which the credit is claimed, shall be the lesser of $10,000 or;

(A) 60 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after July 31, 2017, and before January 1, 2020;

(B) 50 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2019, and before January 1, 2021; or

(C) 40 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2020, and before January 1, 2022;

(3) The maximum eligible rebate for each multi-family energy storage system shall be the lesser of $10,000 or;

(A) 60 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after July 31, 2017, and before January 1, 2020;

(B) 50 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2019, and before January 1, 2021; or

(C) 40 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2020, and before January 1, 2022;

(4) The maximum eligible rebate for each commercial energy storage system, shall be the lesser of $10,000 or;

(A) 60 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after July 31, 2017, and before January 1, 2020;

(B) 50 cents per watt-hour of the system's warranted capacity of stored energy if applicable, for systems first placed in service after December 31, 2019, and before January 1, 2021; or

(C) 40 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2020, and before January 1, 2022;

(5) The maximum eligible rebate for each energy storage system that is co-sited and electrically connected to an eligible community-based renewable energy project as defined by the public utilities commission pursuant to section 269-27.4 shall be the lesser of $250,000 or;

(A) 45 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after July 31, 2017, and before January 1, 2020;

(B) 35 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2019, and before January 1, 2021;

(C) 25 cents per watt-hour of the system's warranted capacity of stored energy for systems first placed in service after December 31, 2020, and before January 1, 2022;

(d) This section shall apply to eligible energy storage systems that are installed and first placed in service after July 31, 2017.

§196-B Energy storage market acceleration special fund. (a) There is established the energy storage market acceleration special fund into which shall be deposited appropriations from the Hawaii green infrastructure special fund.

(b) The moneys in the special fund shall be used to provide rebates through the energy storage system rebate program pursuant to section 196-A and for any administrative costs related to the program.

SECTION 3. Chapter 196, Hawaii Revised Statutes, is amended by amending the title of part IV to read as follows:

"[[]PART IV.[]] GREEN INFRASTRUCTURE LOANS AND ENERGY STORAGE MARKET ACCELERATION PROGRAM"

SECTION 4. Section 196-61, Hawaii Revised Statutes, is amended by adding six new definitions to be appropriately inserted and to read as follows:

""Eligible energy storage system" means any identifiable facility, equipment, or apparatus that:

(1) Receives electricity generated from another source or other sources, stores that electricity within a battery, and delivers the energy back at a later time to the energy storage system user, an electric utility, or the Hawaii electric system as defined in section 269-141;

(2) Is permanently fixed to a residential or commercial property and electrically connected to an energy storage system user's load or generation, or an energy storage system that is co-sited and permanently fixed to property and electrically connected to an eligible community-based renewable energy project;

(3) Has a continuous battery charge and discharge capacity of at least five kilowatt-hours of stored energy at time of purchase;

(4) Has a maximum battery charge and discharge power of no more than four megawatt-hours at time of purchase;

(5) Is protected by a manufacturer's warranty of at least ten years or a minimum of three thousand cycles;

(6) Is not owned by an electric utility; and

(7) Is connected to an electric utility grid.

"Energy storage market acceleration fund" means the special fund established pursuant to section 196-B for the purpose of providing rebates for eligible energy storage systems through the energy storage system rebate program.

"Energy storage market acceleration program" means the program established by section 196-A to fund rebates for eligible energy storage systems from the storage market acceleration special fund.

"Energy storage system property owner" means the person, individual, partnership, corporation, association, or public or private organization other than an agency that holds legal title to the energy storage system. An energy storage system property owner shall include the owner of third-party financed energy storage systems. All of the energy storage behind a single meter shall be counted as one system.

"Energy storage system user" means the property owner, or the property owner's lessees or tenants, that use the energy discharged by the eligible energy storage system on the property where the eligible energy storage system is located or on contiguous property owned or leased by the property owner without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way.

"First placed in service" has the same meaning as title 26 Code of Federal Regulations sections l.l67(a)-11(e) (1)."

SECTION 5. Section 196-64, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196-64[]] Functions, powers, and duties of the authority. (a) In the performance of, and with respect to the functions, powers, and duties vested in the authority by this part, the authority, as directed by the director and in accordance with a green infrastructure loan program order or orders under section 269-171 or an annual plan submitted by the authority pursuant to this section, as approved by the public utilities commission may:

(1) Make loans and expend funds to finance the purchase or installation of green infrastructure equipment for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure, programs, and services;

(2) Hold and invest moneys in the green infrastructure special fund in investments as permitted by law and in accordance with approved investment guidelines established in one or more orders issued by the public utilities commission pursuant to section 269-171;

(3) Hire employees necessary to perform its duties, including an executive director. The executive director shall be appointed by the authority, and the employees' positions, including the executive director's position, shall be exempt from chapter 76;

(4) Enter into contracts for the service of consultants for rendering professional and technical assistance and advice, and any other contracts that are necessary and proper for the implementation of the loan program;

(5) Enter into contracts for the administration of the loan program, without the necessity of complying with chapter 103D;

(6) Establish loan program guidelines to be approved in one or more orders issued by the public utilities commission pursuant to section 269-171 to carry out the purposes of this part;

(7) Be audited at least annually by a firm of independent certified public accountants selected by the authority, and provide the results of this audit to the department and the public utilities commission; and

(8) Perform all functions necessary to effectuate the purposes of this part.

(b) The authority shall submit to the public utilities commission an annual plan for review and approval no later than ninety days prior to the start of each fiscal year. The annual plan submitted by the authority shall include the authority's projected operational budget for the succeeding fiscal year.

(c) Notwithstanding subsections (a) and (b), the authority shall make available from the Hawaii green infrastructure special fund any amounts appropriated for deposit into the energy market acceleration special fund for the energy storage market rebate program."

SECTION 6. Section 196-65, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Moneys in the Hawaii green infrastructure special fund may be used, subject to the approval of the public utilities commission, for the purposes of:

(1) Making green infrastructure loans;

(2) Paying administrative costs of the Hawaii green infrastructure loan program;

(3) Paying any other costs related to the Hawaii green infrastructure loan program; [or]

(4) Paying financing costs, as defined in section 269-161, to the extent permitted by the public utilities commission in a financing order issued pursuant to section 269-163[.]; or

(5) Deposit into energy storage market acceleration special fund; provided that approval by the public utilities commission shall not be required for such deposit."

SECTION 7. Section 269-170, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The authority shall submit an application to the public utilities commission for the use or other disposition of amounts deposited or held in the green infrastructure special fund pursuant to section 196-65 prior to the allocation, use, expenditure, or other disposition of any such amounts; provided that this subsection shall not apply to the following:

(1) The expenditure of amounts deposited or held in the green infrastructure special fund that have been reviewed and approved by the public utilities commission for operational or administrative expenses of the authority pursuant to section 196-64[.]; and

(2) The expenditure of amounts deposited or held in the Hawaii green infrastructure special fund for deposit into the energy storage market acceleration special fund for purpose of funding the energy storage market rebate program, pursuant to section 196-65(b)."

SECTION 8. (a) The legislature finds and declares that the appropriation of funds under this Act is in the public interest and for the public health, safety, and welfare.

(b) The department of business, economic development, and tourism and the green infrastructure authority shall develop any forms and guidelines necessary for the implementation of the energy storage market acceleration program created by section 2 of this Act no later than December 31, 2017.

(c) To the extent there is any conflict between this Act and part III of chapter 39, Hawaii Revised Statutes, this Act shall prevail.

SECTION 9. There is appropriated out of the Hawaii green infrastructure special fund established pursuant to section 196-65, Hawaii Revised Statutes, the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2017-2018 and the same sum or so much thereof as may be necessary for fiscal year 2018-2019 to be deposited into the energy storage market acceleration fund.

SECTION 10. There is appropriated out of the energy storage market acceleration fund the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2017-2018 and the same sum or so much thereof as may be necessary for fiscal year 2018-2019 for making energy storage system rebate program payments pursuant to section 196-A, Hawaii Revised Statutes, and paying the authority's administrative costs for operating the energy storage system rebate program.

The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 11. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 12. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 13. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 15. This Act shall take effect on July 1, 2017.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	660
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII