Hawaiian Electric Co. says it is years ahead of schedule in meeting renewable energy goals. And it won’t have to rely on controversial interisland cables to bring power from the neighbor islands to Oahu, the company says.
A major component of the Hawaii Clean Energy Initiative has been to connect the electric grids of Oahu, Maui County and maybe even the Big Island via undersea cables. That plan was put in place in 2008 in an agreement between the state and HECO and requires the company to produce 40 percent of its power through renewable sources by 2030.
Utility executives and policymakers viewed Oahu, which contains 75 percent of the state’s population, as energy hungry and resource poor. Tapping neighbor island resources for Oahu was said to be critical to meeting clean energy goals.
But a new report that details the utility’s five-year energy plans for Oahu, the Big Island and Maui County says that Oahu can meet its renewable energy requirements on its own.
The plan also provides a timeline to take oil-fired generators offline, supports importing liquefied natural gas and installing smart grid technology throughout the islands. The report reflects an increasing focus on customer costs.
In 2012, with the help of Gov. Neil Abercrombie, lawmakers passed a bill that facilitates financing for an interisland cable system. The legislation had stalled amid criticism of Big Wind, a project that would bring wind energy from Lanai and Molokai to Oahu. The Molokai portion of the project has since fallen through.
The bill’s supporters argued that the cable system was central to the state’s energy plan. And as recently as last month, Robbie Alm, executive vice president of HECO, told Civil Beat that the utility couldn’t reach 40 percent renewable energy by 2030 “without wind and cable.”
But in the new report, HECO says each island, including Oahu, can meet renewable energy requirements on their own. And Alm, in a statement to Civil Beat, said this week the energy market is “constantly evolving” and that HECO is continuing to evaluate optons and costs.
HECO now estimates that it will meet the 40 percent renewable energy benchmark somewhere between 2018 and 2022, about a decade ahead of schedule, without cables. Currently, 14 percent of the islands’ electricity comes from renewables. That could approach 80 percent by about 2030, according to the report.
HECO spokesman Peter Rosegg attributes the change in outlook to the utility’s recent request for low-cost renewable energy projects on Oahu. Developers submitted 25 bids and HECO hopes to negotiate contracts with five of the companies if the state Public Utilities Commission allows it to circumvent the competitive bidding requirement. Part of HECO’s new plan is to fast-track energy projects.
The average combined prices of the projects, which include four solar projects and one wind farm, is about 16 cents per kilowatt hour, according to HECO. The price is lower than fuel costs — which are about 21 cents a kilowatt hour on Oahu — and less than past renewable energy contracts. Rosegg said that the lower price should pressure other developers to also reduce their bids.
Rosegg said this doesn’t mean that interisland renewable energy projects are off the table. HECO still intends to release a long-overdue request for renewable energy projects that can be sited on the neighbor islands and brought to Oahu via cables. The proposal has been awaiting final PUC approval for months.
HECO also has a legally binding agreement with Castle & Cooke for a Lanai wind farm. The wind project is dependent upon issuing the proposal request — currently the project lacks a way to get the energy to Oahu.
But HECO’s new energy plan raises questions about whether the Lanai wind farm — and its pricing — will pass PUC scrutiny now that HECO says there are significant low-cost energy sources on Oahu. And it injects further insecurity into energy and cable projects that energy developers have been hoping to develop on neighbor islands for Oahu.
“It looks like events might just pass the cable by,” said Doug McLeod, Maui County energy commissioner.
HECO says that it’s possible that interisland cable projects could come in at lower prices than projects sited on Oahu. But estimates show cables add significant costs to projects. The cable from Lanai could double the price of the Lanai wind farm, according to HECO’s report.
HECO’s findings are also likely to bolster the arguments of critics who say Oahu should rely on its own resources, not the neighbor islands.
“It’s a step in the right direction,” said Sally Kaye, a member of Friends of Lanai, who opposes the Lanai wind farm. She was part of a 68-member task force that advised the utility on its energy plans.
“We’ve always maintained that islands need to be energy independent,” Kaye said. “It’s one of the reasons we fought this so much.”
Harry Saunders, president of Castle & Cooke Hawaii, said that he hadn’t read HECO’s report yet. “I think we still need to go through the process of what actually happens,” he told Civil Beat.
Castle & Cooke sold Lanai to Oracle CEO Larry Ellison last year, but kept the rights to build the wind farm.
HECO has been criticized by state regulators in recent weeks for not doing enough to bring down electricity bills. A spike in oil prices has caused rates to soar to three times the national average. While the utility doesn’t control the price of oil, state regulators say that HECO needs to do more to rein in operational costs that also factor into consumer electric bills. The company needs to come up with long-term plans that will lower rates, the PUC said.
To that end, HECO’s five-year plan reflects an increased focus on easing the cost to customers.
HECO says it’s taking a more aggressive approach to negotiating lower prices for renewable energy projects. The utility is also looking to build its own solar systems. HECO can build solar farms faster and cheaper under certain circumstances — for instance, if the utility owns the land or uses its own rooftops, Rosegg said.
HECO has outlined a schedule for taking eight of its oil-fired generators offline, which comprise about 14 percent of the utility’s generation. It plans to use liquefied natural gas to diversify its fuel supply and bring down costs. And the company says it will continue to work on integrating more rooftop solar into its electric grids while trying to bring down costs for customers who don’t have solar systems.
HECO also plans to install smart grid technology on Oahu, the Big Island and in Maui County by 2018, which would give customers greater control over their electricity use and help the utilities better manage increasingly complex energy loads.
Homeowners can significantly reduce or eventually eliminate their electricity bill with solar panels. But as more people switch to solar, state regulators worry that those without solar will pay higher electric bills to cover the utility’s fixed costs. HECO says it is working to address this problem, but has no specifics.
HECO also plans to prorate the costs of technical studies required to make sure solar systems don’t disrupt grid stability. Early solar adopters avoid these costs. But as more residents switch to solar, they are at higher risk of paying for the studies. Under HECO’s prorating plan the costs will be spread across more customers.
HECO says it will seek bids for LNG in 2015 or 2016. The plan includes a floating storage and regasification facility, using a ship anchored off-shore.
So can Hawaii residents expect to be paying mainland electricity prices in the near future? It’s unlikely. But HECO expects electricity prices to stabilize under its plan and be significantly lower than the cost of sticking with oil.