Hawai'i has failed in some parts of its renewable energy policy while being just average in others, according to a report issued yesterday by a New York-based environmental group.

The report by the Network for New Energy Choices gave the state a failing grade when it came to the technical rules governing how home and small renewable energy projects connect with electrical transmission grids.

It also said the state merits a "C" grade when it comes to net metering, or the billing arrangement customers use to realize savings when they feed energy into utility grids.

The two policies are not widely understood by the general public, but are seen as being crucial to the development of renewable energy such as photovoltaic systems in use by homeowners and businesses. Such policies can cap growth of renewable energy if they restrict how much electricity can be sent into utility grids, or the size of the systems attaching to the grids.

While the authors tried to objectively grade policies in each state, they appeared to not understand the nature of Hawai'i's energy market, said Peter Rosegg, a Hawaiian Electric Co. spokesman. He said Hawai'i shouldn't be held to the same standards used to judge states with large Mainland grids that can draw power from other states.

"They haven't looked at our situation very closely," Rosegg said. Standards are "going to be different for small island grids."

In the group's report, "Freeing the Grid," Hawai'i was recommended to increase the percentage of net energy metering electricity to at least 5 percent of a utility's peak demand. Currently, the state Public Utilities Commission has set a 1 percent cap, though Hawaiian Electric has filed with the PUC to increase that level to 3 percent on Maui and the Big Island.

Rosegg said the report authors didn't take into consideration that Hawai'i's systems are self-contained to each island and could be destabilized if a larger percentage of its energy is drawn from renewables. If renewable resources become unavailable during certain periods, it may result in problems for power users as the utility strains to meet capacity, Rosegg said.

On the Mainland, such problems could be resolved by bringing in more power from generating units in other states, he said. Hawaiian Electric thinks the capacity can be increased but wants to do it in increments to see its effect on the system.

The group also cited Hawai'i in its "worst practices" section for not having interconnection standards above 100 kilowatts. Rosegg said the PUC and Hawaiian Electric are also moving in this direction with a test project looking at interconnection for systems up to 500 kilowatts. The report recommended increasing the interconnection limit to systems up to 2 megawatts.