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Editor’s Note: Over the next several weeks Living Hawaii will be examining the high price of electricity in the islands and efforts to bring down those costs as part of the state’s broader shift toward renewable resources.
When it comes to Hawaii’s ambitious renewable energy generation plans, we have a lot of big-picture vision and ambition. But it isn’t clear exactly how we are supposed to get there.
There is no precise road map to tell us what is necessary to transform our 20th century power grid into a smooth, efficient and affordable 21st century distributed generation system that deftly receives and redistributes renewable power.
Beyond the huge amount of technical expertise, integrative savvy and judicious decision-making that we’ll need to chart the state’s path, Hawaii will almost certainly need something else to meet its ambitious renewable energy goals: the support of the people.
This just isn’t the kind of transition policymakers are going to manufacture over the objections of the state’s 1.42 million residents. Power is too integral to people’s lives.
This venture is going to require a transformational commitment of energy, know-how, time and money. As NextEra Energy Hawaii President Eric Gleason said during a recent visit to Civil Beat’s offices, creating the electric system of the future will likely require a wide array of companies to spend “tens of billions” of dollars.
So how can policymakers and the energy industry convince residents to enthusiastically take part?
Reducing our reliance on fossil-fueled energy generation is certainly a huge motivator for some environmentally conscious political leaders, foundations and activists, but this project will demand a much broader coalition of residents than the die-hards who show up at Public Utilities Commission hearings.
The answer, in the nation’s most expensive state where we pay two-to-four times the electricity rates of others, is staring us right in the pocket book. The shift toward less expensive energy sources and the shift toward renewables should be one and the same.
The reason is simple. There are a limited number of people in the islands who can afford to say: OK, let’s pay extra for renewable energy.
With that in mind, it is worth asking the people who have started to drive Hawaii’s renewable energy transformation a few of the tough questions asked of Florida-based NextEra Energy as it tries to purchase Hawaiian Electric: How much can you bring down rates, what can you guarantee and when can you do it by?
“The challenge of policy making generally, but specifically in the energy space (is) you have imperfect information. And every choice has risks associated with it.” — U.S. Sen. Brian Schatz
As is the case for NextEra, these questions aren’t easy to answer. There are many intertwined and uncertain factors and the numbers are inherently speculative, given shifting market forces. But while those companies aren’t seeking the dominant status in Hawaii’s energy market that Hawaiian Electric possesses, and that NextEra seeks, the state undoubtedly needs greater clarity to find its way.
“The challenge of policy making generally, but specifically in the energy space (is) you have imperfect information. And every choice has risks associated with it,” U.S. Sen. Brian Schatz explained during a recent editorial board with Civil Beat.
As a policy maker, he said, Hawaii and its regulators should be focused on tying the two issues together.
“We have a 100 percent clean energy goal and then we have the cost of living and the cost of operating businesses and institutions,” said Schatz. “And those are the two things that we should singularly focus on.”
Schatz, who as lieutenant governor under then-Gov. Neil Abercrombie was dubbed Hawaii’s “energy czar,” said that discussions about which forms of renewable energy should be used and whether the state should focus on “distributed generation” or utility-scale renewable electricity are not policy issues and should remain secondary.
The main questions, he said, should be: “What reduces the cost for ratepayers and what adds to the penetration of clean energy into our portfolio of renewable energy.”
It is a key part of what the Public Utilities Commission is supposed to focus on.
Schatz recalled a time when the commission was only permitted to look at cost and reliability when making decisions on the energy front. “So we changed it because, if you’re going to do clean energy, among other things, you can’t just think about lowest initial costs. You have to think about long-term impact on ratepayers, but we also have this long-term policy to get to ‘100 percent clean energy.'”
There is a precedent for lower prices driving the shift toward renewable energy generation here in Hawaii — and it is all around us.
“You see all these people with solar on their roof?” asked former regulator-turned-renewable energy consultant Ron Binz during a recent visit to Oahu organized by the Blue Planet Foundation. “When they do that, they lower their bill.”
A small number of people began installing rooftop solar on their homes generations ago, but since the 1990s two things have changed. Hawaiian Electric rates surged compared to electric utilities on the mainland (see chart for details), and the cost of solar panels dropped sharply.
State and federal subsidies for solar systems have given the industry an extra boost — that may well expire at some point — but the maturation of the industry and lower costs mean that solar energy’s best days are likely ahead of it, according to various experts.
Today nearly one in six homes in the islands already have rooftop photovoltaic panels on them. That’s more than 70,000 out of 450,00 homes, and Hawaiian Electric President and CEO Alan Oshima has said he expected rooftop solar penetration to triple over time. If he is correct, 45 percent of all residences in the islands will have rooftop solar in the foreseeable future.
Even now Hawaii produces more solar power per person than any state, according to the Frontier Group’s just-released report, Lighting the Way. The islands even beat out solar-happy California, which generates 20 times more solar energy than Hawaii, but has 27 times our population. But the greatest indicator of the islands’ place at the forefront of the solar industry is that it has seven times the average national per capita solar electricity capacity.
“The faster that Hawaiian Electric can move to solar, the quicker they will lower prices. … Substitute solar for oil; nothing else can reduce costs for energy more than that.” — Former regulator Ron Binz
A desire to move away from fossil fuels plays a role in this. But beyond idealism, personal and industry finances are really propelling the shift. Hawaii’s high electricity rates make the monetary benefits of switching from HECO to solar panels kick in much faster.
In much of the country, it takes seven to nine years of a customer paying the equivalent of their electric bills to cover the cost of a solar system on their house. In Hawaii, it takes three to five years. (The University of Hawaii Research Organization created an online calculator aimed at helping residents to figure out how much they might save by switching to solar.)
That is part of why NextEra Energy Hawaii’s president noted at the recent innovative energy summit in Honolulu that solar power “meets the market test.”
And what is true for rooftops is equally true for large-scale utility solar projects. “If the utility would do the same strategy, it would lower their bill,” said Binz, the consultant for the Blue Planet Foundation. “The faster that Hawaiian Electric can move to solar, the quicker they will lower prices. … Substitute solar for oil; nothing else can reduce costs for energy more than that.”
So, as Hawaii works toward its 30-year renewable electricity generation goals, it is worth remembering that this state, with its buffet of established and experimental alternative energy options — wind, geothermal, wave, biofuels, biomass and others — should learn from the development, spread and growth of solar and, to a lesser extent, wind and geothermal energy.
“Why are we shifting now? Because the numbers work,” said Kyle Datta, a general partner at the social change investment firm Ulupono Initiative.
And Hawaii may complete the much bigger shift later — but only if the numbers continue to work.
Disclaimer: The Ulupono Initiative was founded by Pierre and Pam Omidyar. Pierre Omidyar is the CEO and publisher of Civil Beat.
You can also find Civil Beat’s entire ongoing Living Hawaii series here. And you can also continue the broader conversation and discuss practical and political solutions by joining Civil Beat’s Facebook group on the cost of living in Hawaii.