02/22/2014 12:04 am ET Updated Apr 23, 2014

Hawaii's Test Case for Solar Grid Penetration

Two years ago, the state of Hawaii made history in the U.S. by becoming the first place where solar reached, and then exceeded grid parity with dirtier sources of energy. The Institute for Local Self Reliance published a study showing that even without any incentives, the simple payback for residential and commercial solar applications reached below 10 years, and with incentives, could be as quick as less than a year.

As CleanTechnica noted, however, the party just doesn't start when grid parity is reached. Technical, logistical and potentially political obstacles all became even more pervasive after the revelation of solar's clear financial competitive advantage. Just one example cited by CleanTechnica: Upwards of 70 percent of the permit applications filed in the state in 2012 were for solar. The bureaucracy involved in the approval of such a popular item has clearly gummed the machinery and slowed solar's incredible ascension.

How will the utilities, regulatory agencies and solar industry handle the conflict? The answer is unclear. Solar companies continue to hire and put panels on rooftops here, but many homeowners have been denied solar, or have been charged by HECO for inspections, safety maintenance and regulatory processes, when in the past they would never have. It's left a sour taste in many solar customers' mouths, not for the solar system, of course, but for the perceived enemy -- HECO.

Hawaii will likely serve as a test case for the rest of the nation. HEI (HECO's parent company) CEO, Richard Rosenblum, in a panel discussion this month, said:

What we've achieved is nothing short of incredible. We have the highest grid penetration in the nation, and the technical challenges we've overcome are unprecedented in this country.

At 10 percent the grid penetration in Hawaii falls far short of other countries like Italy, Spain and Germany, but remains the highest in the U.S.

Whether regulators and utilities will find ways to incorporate more solar or whether it'll happen more slowly on its own is not clear. One thing is clear, though. As the cost of solar power, panels and energy continues to decline, the demand for clean solar energy will continue to rise. Eventually grid parity in every state will be achieved, and the slow but unstoppable shift from fossil fuels to cleaner energy will eventually hit some tipping points. Until then, the system may well be a mess.