Hawaiian Electric Co. customers will be on the hook for hundreds of millions of dollars if the utility doesn’t switch to liquefied natural gas to power its generators, the executive vice president of the company says.
HECO, which serves Oahu, Maui and the Big Island, must invest up to $1 billion to meet new regulations imposed by the Environmental Protection Agency that govern oil-fired generators, Robbie Alm told a gathering of a couple hundred energy developers, experts and policymakers Thursday at the Hawaii Energy Policy Forum. Alm said the option is to switch HECO’s generators to run on LNG, which burns cleaner than oil.
“To totally meet EPA standards by modifying our units is an investment between half a billion and a billion dollars upfront money,” he said. “So you don’t want us to do that. You really don’t. From our point of view it’s capital and we make money off of it. But that’s not what (you want).”
Alm’s warning comes on the heels of a recently released University of Hawaii study that says LNG could be obtained at a cost of up to half that of oil if it is brought in from the U.S. West Coast.
While Alm was skeptical that LNG could mean savings as high as 50 percent, he said that in addition to avoiding expensive upgrades, ratepayers would likely save on electricity prices as well.
“All of the studies to date show that LNG, assuming that we can get it off the American continent and is priced at American pricing, will be cheaper,” he said.
Imports from locations such as Australia, Alaska and Canada are expected to be priced on the international market with costs much higher, according to the study.
Alm’s comments are likely to add momentum to the push for LNG. Debate over importing the fossil fuel has intensified in recent months.
Last year, Gov. Neil Abercrombie signaled that his administration was looking seriously into importing the fuel. But the plan has been criticized by Blue Planet Foundation and the Hawaii Sierra Club that worry the move will derail the state’s push for renewable energy. The Sierra Club is currently trying to stop mainland exports of LNG, including to Hawaii, because of concern over environmental impacts of new hydraulic fracturing technology, known as fracking.
Alm said that HECO is still moving aggressively ahead on renewable energy. The utility faces a 2015 deadline of deriving 15 percent of electricity sales from renewables, which Alm said the utility is on track to meeting.
“We will pass the 15 percent goal by the end of this year and probably exceed it by a couple percentage points,” he said. “That’s the good news.”
But the 2020 goal of 25 percent renewable energy is more challenging and currently there are not enough projets in the works to meet that goal, said Alm.
“So what happens next is we have to go back out to bid again,” he said.
In addition to a request for proposals for 200 megawatts or more of renewable energy for Oahu, which is currently being reviewed by the Hawaii Public Utilities Commission, HECO is currently in the midst of drafting RFPs for “firm” energy, which could include sources such as geothermal or biofuels, for both Maui and Oahu. The utility is also working on getting bids for geothermal energy on the Big Island.
But while HECO is working to attract more large-scale renewable energy projects, Alm said that the state should be looking toward LNG, especially in light of the news this week that Tesoro is closing its oil refinery on Oahu. Experts say the loss will make Hawaii more vulnerable to major disruptions in the international oil market.
“LNG is virtually a certainty in Hawaii, or something like that, unless we want to modify our (generating units),” said Alm.
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