Hawaii's Unique Situation Could Predict the Future for Renewable Energy

Spotlight Companies |

Hawaii is a unique situation. It’s a geographically remote island without its own source of fossil fuels, meaning that everything there has to be shipped large distances at great cost. The cost of filling up your gas tank in Hawaii, for instance, is much higher than anywhere on the mainland.

One place where this is particularly notable is in the cost of electricity. Unlike the mainland United States, where ample coal, natural gas, and oil resources are just a train ride away, any fuel-reliant power plants have to ship the energy sources. That means power bills are much higher.

It also means that Hawaii’s geography has arguably created a blueprint for the mainland, an energy economy with a cost structure that is a few years ahead of the rest of us. The relative grid parity that exists in Hawaii today for renewable energy could very well be a snapshot of how things will look for the rest of the country in the near future as the cost of solar power continues to drop.

It’s because of this that it’s easy to make the argument that Hawaii, through its higher costs for fossil fuels, is anticipating many of the trends in renewable energy market by several years. What is cost-efficient for Hawaiians right now is likely what’s going to be adopted by homeowners throughout the country in a few years’ time.

It could also mean that the companies that are currently showing success in Hawaii’s home solar market are precisely the sort of companies that stand the best chance of exploding in value as their products begin reaching a larger consumer base. Any shrewd investor hoping to find the best renewable energy plays in today’s market would likely be well served by using Hawaii as an indicator of where the market is headed.

Issues with Residential Solar in Hawaii Could Predict Similar Issues Elsewhere

One of the major stories in Hawaii involves the battle between the local utility and the homeowners there looking to install solar panels. It’s a similar story to legal battles currently playing out in California, Arizona, and several other states.

The main issue comes in the way that solar energy is collected. Since peak hours for collection are during the day, when the sun is up, while peak usage hours tend to come in the evening, when residents are home, the economics of rooftop solar rely heavily on being able to sell excess energy back to the main grid and receive a credit from the utility company. Without this, the economics of a rooftop solar system are significantly less appealing.

However, maintaining a grid that now involves a myriad of feeder lines from people’s homes, with energy traveling in both directions from multiple sources at any given point in time, has started to become onerous. So much so that local utilities in Hawaii actually moved to suspend the installation of any new solar systems.

Exactly how homeowners can and should be compensated for energy sold back to the utility remains a thorny issue, and one that could take time to resolve. However, what the Hawaiian market has already started to prove is that home energy storage in the form of high-tech lithium-ion batteries may ultimately provide the ideal solution.

The ability to connect home solar systems to a battery and store energy while the sun is at is most intense, energy that can then be used later in the day when demand is highest, is a big idea. It has gotten a lot more play in recent weeks, especially, after Tesla (TSLA) CEO Elon Musk revealed his company’s entry into the segment with the Powerwall.

However, anyone thinking Tesla is the only player in home energy storage, or even the first, hasn’t been following the market in Hawaii.

Tesla Competitors Already Making Their Mark in Hawaii

Tesla may have gotten the lion’s share of the attention about home batteries of late, but they’re actually late to the party. There are already competitors that have been active in Hawaii and Germany, where years of government subsidies have helped boost the solar economy.

One example comes from the 3-year contract for Eguana Technologies (EGT:CA) (STGYF) to supply Hawaii-based energy tech company E-Gear with a turnkey power control and conversion systems named the “AC Battery.” E-Gear, named in Hawaii’s Electric’s Distributed Generation Interconnection Plan, is building a battery-based energy storage system that will boost the value of home solar systems for Hawaiians looking for relief on their massive power bills. E-Gear and Eguana would appear to be out in front of Tesla in this key market by a considerable margin.

Eguana and LG Chem (LGCEY) , meanwhile, have developed an “AC Battery” which is a 5kW AC 12.8kWh, indoor-outdoor wall mounted turn-key energy storage hardware system that expands on Eguana’s core power controls and conversion functionality of the companies “Bi-Direx” product and is pre-integrated and certified with the LG Chem battery modules.

The AC Battery can be used to store electricity from solar and use it during evening hours, or can be used by fleet aggregators to provide utility grid management services including voltage control, frequency regulation, demand response and load balancing. The platform also supports battery backup functionality (120/240V split phase) which is critical as a consumer value add in many of these applications.

 Eguana’s model for the AC Battery is to provide a complete, pre-integrated, pre-tested, factory-built certified solution supporting batteries from lithium battery suppliers for sale to integrators, fleet operators, and other channels.

This makes Eguana a particularly intriguing player. Combining a home battery with solar panels in a way that will actually function seamlessly with a building’s electrical system is no easy feat, so getting the right power control technology in place can be essential to reach max efficiency. In Eguana’s case, the company has already provided thousands of systems to German customers through its partnership with Bavarian battery maker Sonnenbatterie.

Now, Eguana appears poised to capitalize on a home battery boom in North America. Its partnerships with companies like E-Gear, Sonnenbatterie, and LG Chem not only appear to demonstrate recognition by market experts that Bi-Durex is one of the best available options for power control systems, it also means that Eguana’s product is going to be attached to the sales of batteries from most of the leading producers out there.

Hawaii Could be Leading the Way for the Rest of the Country

Frequently, life in Hawaii can be very different from the rest of the country in ways that are hard to translate. However, when it comes to renewable energy, the island state could be ahead of the curve for everyone else. Tracking the leading competitors in their home solar market is likely the best way at the moment to get a sense of where things are headed from here.

So, an investor looking for growth opportunities would likely be well served by looking to Hawaii for tips. The success there of companies like E-Gear and Eguana could be a sign of what’s to come in the home energy storage market.

Disclosure: In the purview of Section 17(B) of the Securities of 1933 and in the interest of full disclosure, we call the reader's attention to the fact that Equities.com, Inc. may be compensated by the companies profiled in the Spotlight Companies section. The purpose of these profiles is to provide awareness of these companies to investors in the micro, small-cap and growth equity community and should not in any way come across as a recommendation to buy, sell or hold these securities. Equities.com is not a registered broker, broker dealer, investment advisor, analyst, investment banker or underwriter. All profiles are based on information that is available to the public. The information contained herein should not be considered to be all-inclusive and is not guaranteed by Equities.com to be free from misstatement or errors. Readers are reminded to do their own due diligence when researching any companies mentioned on this website.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TSLA Tesla Motors Inc. 192.18 -0.11 -0.06 2,722,505

Comments

Emerging Growth

New Age Farm Inc.

New Age Farm Inc is engaged in the development of the agriculture based business in Langley, British Columbia.

Private Markets

MyForce, Inc.

As parents, we constantly worry about the safety of our loved ones. The media bombards us with incidents from across the nation school shootings, frequent assaults on campuses, and crimes…

Pinterest

Pinterest is a visual discovery and planning tool. Users ("Pinners") use the site and apps to get ideas for their future, such as recipes, places to travel, and products to…