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Friday, July 10, 2020

Start Stop Start Stop Start Stop Method of Killing Businesses

I ran a design /build solar contractor in Hawaii, and I will briefly describe how the State of Hawaii government, and the utility Hawaiian Electric worked to destroy the solar industry.

Solar PV was going gang busters, a field of 8 companies blew up into a field of over 220 companies in a matter of years.    Companies that used to do hot water solar started migrating into PV solar, since the projects were bigger and the margins were higher.    Many stopped even servicing the hot water solar segment (which incidentally takes more skill), and put all their eggs in one basket.  

The utility, HECO, in a very short span of time finally saw the light that they should have seen a decade ago, that they were losing profits.   So rather than figuring out a plan to make themselves valuable, they decided  to, with full support from the government, via the Public Utilities Commission, to destroy the solar industry.

Solar companies are kind of like retail.   The first 10 months covers salary and overhead, with little profit.    The last 2 months are always big, and like black Friday, create the lion's share of the profit.
So changes that come at the year end, are particularly onerous to solar contractors!

I am not going to be able to adequately flesh out each start stop scenario.   But in 2011 they were already putting on the brakes, by requiring certain grids to be restricted for installation because of too much "penetration".

The moral of the story?    Governments right now are trying to destroy the economy, and in particular, small businesses.   Small businesses are independent type of people, those are the most hated by the Liberal overlords, they want dependency.

In the scenario where you know a business will be interupted for a known amount of time, the business owner can make a strategy, alternate plan, damage mitigation.   But when businesses are shut down, then started up, and then shut down again, there is no mitigation, the damage is amplified, and the permanent extinction of the business is much more likely.

That is exactly what we saw in Hawaii, with the Gov and HECO Utility working together to destroy as many companies as they could, they wiped out a thriving segment of 220 companies and a few years later it was down to 18, and even those were doing other work just to pay the overheads.

Sept 20, 2012 HECO Lifts Requirement for Pre-Approval

Jan 29, 2013
HECO Lifts Limits on Solar Installations

Sept 20, 2013 HECO requires pre-approval prior to even signing a PV contract.

Nov 20, 2015 There are 5000 "applications" waiting on approval and HECO is slow walking them.   Companies are already leaving.

The difficulties in ensuring grid stability led HECO to cut back on solar interconnections, sparking dicontent with Hawaiian installers as the interconnection queue backed up to more than 5,000. Eventually, a 50% drop in interconnection permits led some installers to flee Hawaii, taking up to 3,000 jobs with them, according to some estimates.

So this was perfect timing to destroy the profits of 220 already struggling companies.

Of course they spun it as "The Regulators Made us Do IT"

October 14, 2015, right before the end of the year rush.    Tax credits are big motivation for people, and many projects are in the 30k range, with 20k in tax credits, so the end of the year gets people motivated. 

Hawaii Regulators Shut Down HECO’s Net Metering Program


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