Kona Pacific, a case for solar

Kona Pacific is a long established condominium complex located within the Kailua-Kona downtown area. It is also an example of solar energy benefitting condominium owners and renters tapping into Hawaii’s abundant sunshine, both as a source of electricity generation and hot water. Each offers benefits which are not limited to Hawaii’s utility-scale solar installations or the rooftops of single family homes.

Hawaii’s home and condo residents are facing challenges of rising ownership costs. One such cost is linked to living in a state with increasing electricity fees already the highest in the nation.

Non-profit homeowners associations are particularly challenged in going solar in order to reduce their electricity expenses, yet they cannot leverage solar tax credits or taxable depreciation most homeowners adopting solar enjoy today.

For condo owners and residents there is a financing approach designed to serve their shared residential ownership needs.  Outside investors offer solar financing packages designed to off-set installation fees, with no upfront capital cost, and instead employ a power purchase agreement for condominium owners and residents. In this case, financing of solar installations and ownership of the solar system remains with the solar service provider, on average a 25 year contract period and which includes solar system operating maintenance.

One successful example has been Kona Pacific condominiums just off downtown on Walua Road, which took advantage of this opportunity 10 years ago and had installed a 100 kw solar array at a substantial savings over HELCO (HECO) commercial rates to meet their common area energy usage. The Condo association’s solar service agreement has worked well, but has also been also subject to a fee escalator clause adjusted to inflation.

The association’s cost per kilowatt hour went up over time and the overall projected savings were less than expected 10 years ago. Off-setting some, but not all of the inflation factors responsible for rising costs in the association’s original solar service fee agreement, Hawaiian Electric did not raise their rates over time as fast as originally estimated.  Still the original agreement operating savings was less than expected by the association.

The solution was a solar repowering project by the original developer which extended out the contract period another 25 years, and which included new and more powerful solar panels, new micro-inverters, and new wiring. The new agreement for the association had no fee escalator clause, and guaranteed a rate 30% lower than the utility rate for the life of the agreement, a win-win for the condo association and residents. Again, no upfront cost and generous tax incentives leveraged by investors drove the retrofit.

Calculating solar savings over a future time period is always speculative as rates are impacted by external forces like world market prices on oil. Hawaii is moving to 100% renewables energy, so this goes away as we meet our statewide renewable energy electricity goals, but other costs like replacing aging utility infrastructure, fire prevention measures, and insurance costs will continue to have an impact.

Homeowners associations often can’t budget for solar as reserve funds aren’t structured to tackle large new and unanticipated costs. They struggle just to address maintenance items like pipe repairs and painting. Raising monthly fees is never popular, so a no upfront cost solar financing option that lowers energy costs, and in some cases offer energy security with the addition of battery storage at scale is perfect solution for condominium owners and residents. .

Overall, in the case of Kona Pacific, updating the original solar and equipment offered a 30% savings from utility electricity costs, guaranteed for the life of  the contract. This option also provides quality assurance as the developer won’t put in cheap equipment that will fail 5 years down the road. They own the system for the 25 year contract and will make sure that they install reliable equipment. The other benefit over other solar financing is that you only pay for energy actually produced and used. Typically energy usage sees some minor seasonal changes in electricity demand with the addition of extended periods of hallway lighting that increases in winter months, even in Hawaii.

Kona Pacific, in addition to the solar power purchase agreement (PV array), has installed a solar hot water array, also under its own power purchase agreement, offering savings to the association over the original central hot water using gas.

Financing is the key.