In Hawaii, we’ve been talking about renewable energy for decades.

We launched the Hawaii Clean Energy Initiative (HCEI) six years ago. We now generate only about 18 percent of our energy from renewable sources. Progress is very, very slow.

Why? Progress is excruciatingly slow, at least in part, because we succumb to our tendencies.

Parker Ranch Big Island

Parker Ranch on the Big Island

Courtesy: Parker Ranch

We, as humans, tend to be risk averse. We tend to avoid conflict. We tend to avoid difficult people and situations. We also tend to assume someone else will do something. Our thinking is sometimes ripe with expectations based on past experience. We sometimes think that we can predict the future with a reasonably high degree of certainty. Take oil prices for example. Few, if any, reputable analysts were forecasting oil to rise above $100 per barrel prior to 2005.

The central issue is not the uncertainty exhibited in the market prices for oil. The key question is how the rise in energy prices is affecting all aspects of our society and how we can address it, together, as a social question of costs and benefits. Developing a comprehensive understanding of alternative energy strategies and the associated social costs and benefits will be necessary, but worth the time and effort.

As difficult and challenging as it may be, especially given the diverse set of interests with invested capital and new opportunities at stake, we need to move forward more swiftly and expeditiously. The economy is hurting, especially the average citizen.

The Beauty of Renewables

The beauty of renewables is that the only likely substitute to beat them in the future, in both economic and environmental terms, is another form of renewable energy. Renewables of all kinds in Hawaii are already among the most cost effective forms of generation available. The sooner we incorporate those renewables, especially utility scale projects, the lower rates will be, creating greater benefits and savings for society.

Our highest strategic priority should be how we maximize renewables in the generation mix in the next 10 years or less. The first major step should be to evaluate the maximum economic renewables penetration possible given the state of today’s technology on an island-by-island basis.

The second major step would be to accelerate the deployment of capital to maximize the near-term benefits from the high renewables generation portfolios.

HECO’s current PSIP plans appear to defer the transformation for 15 years or so. This action defers the benefits and, therefore, makes the changes appear less necessary compared to the status quo. It would also make the status quo appear not as bad as it actually is.

Accelerating the transformation would cause the benefits to society to materialize in a much shorter time frame. Realizing benefits sooner would highlight how unacceptable the status quo really is.

Let’s Make a Deal

The benefits of an accelerated transformation are likely to also highlight how much better off the ratepayer would be if the HECO Companies were to exit generation and retire its oil-based fleet faster.

The only remaining question at that point would be how much of the approximately $1 billion in generation assets owned by HECO should be absorbed by the ratepayer as opposed to covered by the shareholders of the investor-owned utility. Ratepayers
have a reason to cover some of the costs: lower rates. Shareholders, too, have a reason to cover some of the cost:
ensuring the HECO Companies relevance in the future by avoiding large scale customer “grid defection”.

Let’s resist our tendencies. Let’s do something together. Let’s make a deal. If we don’t, our society won’t reap the benefits of clean energy soon enough – benefits that are actually within reach.

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About the Author

  • Neil “Dutch” Kuyper
    Neil “Dutch” Kuyper is president and Chief Executive Officer of Parker Ranch Inc., a subsidiary of Parker Ranch Foundation Trust. A Punahou graduate, Kuyper was born and raised on Oahu and returned to Hawaii with his family after 20 years of increasingly senior executive positions on the mainland and in Asia. Kuyper served most recently as Chief Operating Officer with Capricorn Investment Group, previously holding the same position with Morgan Creek Capital Management, following extensive experience with Wellington Management, Boston Consulting Group and Coopers & Lybrand.