The Hawaii Oahu Battery Bonus program is a great way to save on battery storage

If you’re a Hawaiian living on Oahu, Hawaiian Electric Company (HECO) really wants you to get a home solar battery. In fact, they want it so badly that they’re willing to pay you thousands of dollars to do it.

Why? Because HECO is looking to use a lot of small batteries to reduce power draw on the grid during times of peak demand. It will save the company and its customers money, reduce carbon pollution, and ensure that all Hawaiians have power. This battery program will have a substantial impact on HECO’s efforts in reaching a 100% renewable energy future in Hawaii.

Below we’ll cover a little bit about the program and its benefits for homeowners, as well as the new changes effective June 1, 2022. If you’re looking for the short version, here it is: Hawaii is one of the best places to get a home solar battery.

How the program works

The Battery Bonus program is designed to encourage people living on Oahu to add home energy storage to a solar installation by offering upfront and ongoing incentive payments. 

The program allows for batteries of any size. It also allows homeowners with an existing solar system to add additional solar panels up to twice the battery size and keep their current billing plan (e.g. net metering, customer self-supply, customer grid-supply, etc).

The program requires those who sign up to agree to have their battery activated daily, during a two-hour period (specified by Hawaiian Electric during signup), between the hours of 6 PM and 8:30 PM. 

Battery owners commit to discharging a certain number of kilowatts (kW) of power during that time. You can choose to commit any number of kW as long as your battery has the capacity, and you have enough solar to charge it. The length of this commitment is 10 years, but you can cancel early as long as you repay a prorated portion of the incentive.

So say you’re a homeowner who agrees to participate in the program. HECO tells your contractor to set the discharge period to 6:15-8:15 PM, and you agree to serve 5 kW continuously during those two hours. The installer sets your battery for the discharge capacity and duration, and the battery discharges 10 kWh of energy each day. 

Incentive payments and amounts

The Battery Bonus program was originally set up in 2021 but only included a one-time upfront incentive. The program was not as popular as HECO hoped it would be, so they worked with the Hawaiian solar industry to develop new incentives. 

Beginning on June 1, 2022, system owners will be paid monthly incentives for the full 10 years of the program, in addition to the upfront incentives already in place. They can also earn bill credits when their batteries send energy to the grid. 

Here are details on the program incentive amounts:

• Upfront incentive payments of $850 per kW of power committed

• Ongoing capacity payments of $5 per kW per month for 10 years (effective June 1, 2022)

• Bill credits for exported energy, equal to the retail rate at the time of export, for the first three years of participation (effective for non-net metering customers June 1, 2022)

Going back to our earlier example in which you committed to 5 kW of daily discharge, let’s look at how your payments would break down. You would receive: 

• $4,250 upfront incentive

• $25/month ($3,000 total over 10 years) capacity payments

• As much as $0.51/kWh sent to the grid (on HECO’s Time-of-Use billing program) 

That’s a lot of money back just for owning a battery! It’s important to note that the battery is designed to serve your home’s needs before sending electricity to the grid, so the amount of energy you export will vary based on your needs during the daily discharge period.

Why HECO is offering this program

The reasons HECO wants its solar customers to install batteries is simple: as the sun sets late in the day, homes with solar panels start to draw energy from the grid. This also happens to be the time of day most people return home from work and start using appliances. 

All these homes with increasing needs around the same time make it so that HECO has to quickly ramp up its energy production. That can cost a lot of money and increase pollution from fossil fuel plants used to meet high demand. So rather than have an increasing number of its customers demanding energy at the same time, HECO wants solar customers to charge their batteries during the day and use that stored energy at those peak times.

In this way, customers with solar and batteries use more of their own clean energy while saving everyone who uses the grid from high costs of fast-ramping fossil fuel plants. It’s a win-win.

What’s the catch?

Well, the catch is that you have to discharge the battery every day - weekends and holidays included. You’ll have a big battery installed at your home, but only be able to reserve some of its capacity for backup power in case of an outage. 

For example, if you get an LG 16H Prime home battery and commit to discharging 5 kW of power for two hours, you’ll discharge 10 kWh total (read more about kW and kWh here). The 16H Prime holds a total of 16 kWh of energy, meaning that you’d only have 6 kWh left over at the end of the peak discharge period.

That’s not so bad, though. The incentive payments can be enough to pay for the long-term costs of owning the battery, even if you commit to serve less than the full capacity over the daily discharge period. And you can commit any number of kW, as long as your battery can handle the continuous output (again, you receive the incentive amount based on the number of kW you commit, so keep that in mind).

Also, as long as your system has at least 1 kW of solar generation for every 2 kWh of battery, you won’t be penalized for discharging less than the full amount on days where there’s not enough sun to fully charge your batteries.  

As a final note of caution, the upfront incentive payment is considered income. HECO requires participating customers to fill out a W-9 form, and will report information about incentive payments to the IRS and Hawaii Department of Taxation.

Failure to perform 

In case your system fails to deliver the agreed-to amount of power, HECO may conduct a review to ensure the system is operating properly. This review is only triggered if the amount of power discharged by the system is more than 125% different than the baseline. 

If the review discovers that the system is not compliant with the program requirements, HECO will issue a Failure to Perform notice. The system owner will have 30 days to respond with data showing the problem has been fixed. If the system owner fails to notify HECO of a remedy, the company will add a $100 penalty on each of the customer’s monthly bills until they resolve the issue.

Early termination 

It hardly qualifies as a “catch”, but it’s important to know that you can’t back out of participating in the program without repaying some of the incentive. Specifically, you can opt out with a 60-day notice to HECO, but you must repay a prorated portion of the incentive based on how long you’ve had your battery.

How do you sign up and get paid?

To sign up for the Battery Bonus program, you need to work with a solar contractor to install the system. 

As we mentioned above, if you already have solar panels installed, you can keep your current billing plan and add more solar capacity to charge the battery without incurring a penalty. Even people currently on the Customer Self-Supply (no export) plan can add a battery and get paid for estimated excess energy.

Solar contractors will apply for permits, submit an application through HECO’s Customer Interconnection Tool, and install and configure the battery. You must fill out and submit a W-9 form as part of the application. 

After the system is operational, the contractor must gather and submit seven days’ worth of operational data to HECO. Once that’s submitted and approved, HECO will pay you the incentive within 30 days. If you have any questions, you can send them to HECO at connect@hawaiianelectric.com.

The program is designed to pay incentives for a maximum of 50 MW of battery capacity. The $850 incentive level is available for the first 15 MW, at which point the upfront incentive drops to $750/kW, and finally to $500/kW for the final 20 MW of capacity. Applications will be accepted through June 20, 2023, or until the 50MW cap is reached.

If you don’t yet have a solar contractor in mind, it’s important to get multiple quotes and compare the offerings based on equipment used, estimated solar production, and cost per watt of solar.