This post was originally published on PV Solar Report.

What’s going on with solar in Hawaii? 

The Hawaii solar market has been strong enough to put it at #7 on the list of top 10 solar states. It was propelled there by very high power prices, plus a hefty state tax credit.

Last week, Hawaiian Electric Companies (HECO) issued a press release titled “Rooftop PV enjoys another strong year in Hawaii.” While the release started out sounding as celebratory as its title suggested, proclaiming the “unprecedented rapid growth in rooftop solar” in the state, it finished by warning of the dangers to the grid of so much solar.

Last year, Greentech Media reported on this issue. At the time, HECO claimed that the high grid penetration of solar was causing problems by producing 100% of daytime load on circuits. (A National Renewable Energy Laboratory report last year found that the Hawaii grid can handle solar penetration of 20%.) Because of these issues, HECO started charging $500 for solar permits, in addition to requiring approvals for each installation.

HECO acknowledged in their press release that this situation led to a slowdown of solar in Hawaii late last year.

So far in January, Oahu, where most of this solar has been concentrated, has experienced a 30% drop in residential PV permits, compared to the same period last year. Another report had Honolulu residential PV permits down 16% last week from the same week in 2013.

Solar advocates are not happy with HECO’s press release, and say the utility is not owning up to the true state of the industry, which has “hit a wall.”

That doesn’t mean solar has ground to a halt in the state. Just yesterday, SolarCity issued a press release announcing a partnership with a Hawaii homebuilder to provide solar on homes at little or no upfront cost to buyers. The solar installer has been forming a number of such partnerships lately, and says this one represents the first time a neighborhood in Hawaii will provide solar panels as an included feature on some new homes. So they must see some potential remaining in the market.

But for most homeowners, going solar in Hawaii has doubtless become more difficult.

The situation in the state is being watched closely. I’ve heard it used on more than one occasion as a prime example of the problems caused when too much distributed solar comes into the grid.

GTM quoted their own Cory Honeyman as saying, "Hawaii's market represents the looming (but far out) challenge to come for all established state markets: increasingly unmanageable PV grid saturation levels."  

While it's tempting to say that utilities are acting simply out of concern that their profits might shrink, the technical issue is real. GreenBiz quoted another GTM analyst, MJ Shiao, who said, "You can see where there is an incentive for the utility to hide behind technical issues, but in theory, what they are saying is sound and there are technical issues that need to be dealt with."

In the face of these issues, some are asking: Is it solar that’s the problem? Or is it our old, unreliable grid system?

Whichever side you find yourself on in answering that question, the fact remains that something’s gotta give. Hawaii’s amazing solar success is the very thing that’s now causing its solar slowdown. To keep solar vital and growing, we’ll need to find solutions to the grid penetration issue.