While there is certainly a market incentives problem, accomodating large quantities of rooftop solar does require infrastructure upgrades and an associated mass

While there is certainly a market incentives problem, accomodating large quantities of rooftop solar does require infrastructure upgrades and an associated massive capital investment. It may not be practical for a relatively small island utility to do this on their own, even if it had a more clear ROI. Ultimately, some government support may be required here, since a fee on solar installations wouldn't be popular.