Why Islands make for good solar markets

The Solar Electric Power Association issued its annual report Wednesday that shows what many solar companies have talked about for a while: islands make good solar markets.

Hawaii may not be as large in size or population as, say, California, but its utilities have been aggressively buying solar energy or building their own solar power plants. Hawaii Electric Co. added 65.2 MW of solar electricity to its energy mix in 2012, putting it at the No. 10 spot on a list of U.S. utilities that added the most solar power to their supplies last year, the report said. The utility ranked No. 14 in 2011.

If you divide up a utility’s overall solar energy supply by the number of customers it has, Kauai Island Utility Cooperative ranks No. 3, with 430 MW per customer by the end of 2012. Maui Electric Co. places fourth with 412 MW while Hawaii Electric takes the No. 5 spot with 375 MW.

Electricity is expensive in Hawaii historically for several reasons. The islands are small and lack conventional natural resources, such as oil, coal or natural gas, for producing electricity. The state relies on imported oil and is subject to the price fluctuation of this pricy commodity. It doesn’t have a large population, so the costs of operating power plants and the grids are shouldered by fewer people.

Hawaii has made a commitment to increasing its use of renewable energy. Thought solar electricity is expensive when compared with power from coal fire power plants, it can be comparable or cheaper when it’s up against power produced from burning oil. Hawaii’s plan to increase its clean power use has benefited solar companies, such as SolarCity, which snagged its first utility-scale project with the Kauai Island Utility Cooperative last year.

Many other island states face the same resource limitation as Hawaii and have attracted solar power developers and equipment makers. Puerto Rico and other Caribbean islands are among them.