From algae to eucalyptus, sugarcane to sweet sorghum, companies in Hawaii are striving to convert agricultural feedstocks into sources for electricity.

If local companies don’t pull through — and by many accounts it’s been a rocky start — then Hawaii could end up importing biofuels for electricity needs, something critics say goes against the state’s goals of energy self-sufficiency and price stability. The fuel could also be more costly than petroleum.

“In terms of imported biofuels, it’s hard to see the value of paying a premium for that because you’re not solving the energy security issue,” said Michael Champley, a retired executive of Detroit’s DTE Energy, in an interview with Civil Beat last month. Champley was appointed as one of three commissioners for the Hawaii Public Utilities Commission by Gov. Neil Abercrombie last week.

“If you are importing biofuels, there is the same physical risk of disruption as there is in the supply of oil,” said Champley.

Hawaiian Electric Co., which owns the utilities on Oahu, the Big Island, and in Maui County, has pledged to derive 40 percent of electricity from clean energy sources by 2030. If it doesn’t meet certain benchmarks along the way, then the company can be financially penalized.

Biofuels from local or imported sources both count toward meeting renewable energy requirements, though local sources are given preference.

Hoping to Jumpstart Local ‘Ag’

Hawaiian Electric has worked to cultivate the local market by issuing requests for proposals for Hawaii biofuels.

In February, it issued an RFP to supply biofuel to its Campbell Estate Industrial Park Generating Station.

In April of last year, the utility issued an RFP solely for local biofuels for use on Oahu, the Big Island, or in Maui County. The awarding of contracts has taken longer than expected. Though Hawaiian Electric announced a contract with biofuel start-up company, Aina Koa Pono, earlier this year, and last week announced a contract with Hawaii BioEnergy. The company has five years to begin delivering 10 million gallons of biofuel annually to Hawaiian Electric. Neither company is currently producing the biofuel, but such contracts can help attract needed investment.

To test its generators, Hawaiian Electric has imported biofuels from Malaysia and Iowa.

Rocky Start

Local companies acknowledge that they’ve faced difficulties.

Pacific West Energy has been working to produce ethanol from sugarcane for a decade.

“It’s been different issues at different points in time,” said Scott Matsuura, vice president of Pacific West Energy, with a laugh. “We’ve had land issues, we’ve had landowner issues, we’ve had utility issues. It’s just over the years we’ve kind of hit a snag as we’ve moved along in different places.”

The company has also had financing problems.

“At one point in time we were ready to go,” he said. “But when the financial market crashed, we lost equity investors and had to start over.”

On the Big Island, SunFuels Hawaii is taking a breather. Company executives were seeking land for a biofuels project announced in 2008 that would covert woody biomass into fuel through a biomass-to-liquid technology. The company hoped to produce 13 million gallons of fuel annually. The company has shelved the project, saying it just couldn’t make the numbers work, but is interested in embarking on other biofuels trials. The company also said that it’s waiting for the technology to be further proven as commercially viable.

The problems the company has faced are not unique, according to Robert Rapier, the chief technology officer and executive vice president of Merica International, the parent company of SunFuels Hawaii.

“Most of these firms underestimate the costs, the price at which they can produce fuel, and underestimate the time it will cost them,” said Rapier. “When these guys throw these numbers around, it always costs more.”

Locally and nationally, the biofuels industry has had its share of hype, from algae biofuel companies promising prices for their fuel far below that of petroleum, to companies promising the commercialization of technologies that years later remain in the pipeline.

Algae, which can produce oil yields that are exponentially higher than crops such as jatropha and soybeans, has attracted a lot of excitement for its potential. But despite investments of more than $100 million for projects in Hawaii, it remains pre-commercial.

Cellana has an algae biofuels demonstration plant on the Big Island, and hopes to build a commercial-scale operation on Maui to supply energy to the utility. The company was founded in 2004, as HR Biopetroleum.

This year the company parted ways with its partner and investor, Royal Dutch Shell. One of its founders and top scientists departed, as did its CEO, and the company’s executive management team was restructured.

The company has said it’s now focused on producing other products from the algae oil, such as fish feed, which could provide alternate revenue streams that would support its biofuel efforts.

Other companies investing in research and demonstration projects in Hawaii, include Phycal and General Atomics. Commercialization is still considered a number of years off.

Some companies have abandoned projects or become very quiet.

Hamakua Biomass Energy formed in 2008 with the hopes of converting eucalyptus into energy. But the state energy office says it hasn’t heard from the company recently.

“As far as we know, they’re not doing anything,” said Cameron Black, a permitting specialist.

Company Founder Kent Smith could not be reached for comment.

Long-time farmer Richard Ha, owner of Hamakua Springs Country Farms on the Big Island and chairman of Kuokoa, which wants to buy Hawaiian Electric, said that making biofuels pencil out financially for farmers was a tough sell.

“It’s hard to be optimistic knowing what I know,” said Ha. “I don’t want to be skeptical just to be skeptical.”

He noted that the Environmental Protection Agency had drastically downgraded its standards for cellulosic biofuels, which are derived from wood, grasses and non-edible plants. The EPA is required to set cellulosic biofuel standards annually based on projected volumes. The goal is to increase the amount of biofuels used in ground transportation.

For 2011, the EPA decreased standards for the fuel from 100 million gallons to 6.5 million gallons. For 2012, it reduced yields from 500 million gallons to a range of 3.45 gallons to 12.9 gallons.

Hawaii Going Backwards

Up through the first half of the 20th century, the majority of Hawaii’s electricity needs came from renewable energy, according to Mae Nakahata, director of crop control and agricultural research for Hawaiian Commercial & Sugar Co.

The old sugarcane plantations produced a byproduct called bagasse that was burned to heat water and produce steam to turn a turbine, which generates electricity.

Because of the sugar plantations, Hawaii had electricity before the mainland, said Nakahata.

In 1881, Spreckelsville’s sugarcane factory on Maui was the first to generate electricity from bagasse.

Queen Liliuokalani came to see what this magical technology was,” said Nakahata, noting that was is 1881. “Five years later was when Iolani Palace was electrified.”

Since then, except for HC&S, all of Hawaii’s sugarcane plantations have disappeared. HC&S still supplies about 7 percent of Maui Electric Co.’s electricity.

“It’s kind of sad,” said Nakahata. “And this is the frustration that I have, is the whole country is looking to expand renewable energy. With the closure of the sugarcane factories we went backwards, and now we are trying to build it back up.”

Through the years, HC&S had tried different methods for producing electricity beyond bagasse, which can’t meet the needs of a larger population. They’ve tried ethanol from sugarcane, which produced an odorous byproduct called vinasse. The company has since shelved the idea. They also tried a gasification technology.

“Everyone said how great it was, and it just wouldn’t work,” said Nakahata.

Other than the bagasse, Nakahata said “all of the others haven’t proven to be economically feasible.”

With the longest and most extensive history in trying to produce biofuels in Hawaii, HC&S has recently renewed research into using its farmlands to produce the fuel. With $12 million in federal funding, the company is working in conjunction with the U.S. Department of Agriculture and the University of Hawaii College of Tropical Agriculture.

HC&S is looking at a variety of feedstocks and technologies, but it’s being cautious.

“It’s not just about money,” said Nakahata. “It’s also about what it’s going to do to the community and the environment – and if we can’t answer those questions positively, it will not move forward.”

Nakahata said that she believes the potential for generating biofuels is great, but that the second generation technology was still very young.

“I think the potential of the technology is real, but it will take longer than people think,” said Nakahata. “It’s not something that will happen in two years.”

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