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Hawaii hates its relationship with oil.
We sometimes gripe about international oil dealers, but we’re the ones consuming their product.
We know we have to change — just look at the cost of oil, the way it limits our future and affects the world around us.
But then we burn a little more to get us through the day.
The islands are hooked on petroleum in its many forms. Hawaii is arguably more dependent on the use of oil than any other state. Oil doesn’t just get refined into gasoline for our vehicles; it generates most of our electricity.
And it comes at a great price. In 2011 the price tag of all forms of energy used in Hawaii was $8.7 billion, according to the state. Thanks largely to the cascading price of oil, Hawaii consumers are expected to spend about half that much this year, but $4 billion remains a huge weight on the state’s economy. Most of that money leaves the islands, never to return.
Breaking an addiction is tough. But in this case, substitutes exist for the gasoline used in our cars, trucks and public transportation. The main one is electricity — not the electricity the utility creates by burning fuel oil, but the growing supply of electricity Hawaii is generating from renewable sources, particularly solar.
Call it the pathway to our electric recovery. An array of advocates say this restorative cleanse involves the electrification of ground transportation — cars, buses and rail. Doing so, they say, will spur a sharp increase in demand for electricity even as Hawaii ramps up its renewable energy production. And by aligning new supply to additional demand, we might actually bring down electricity prices and help to resolve some of the main challenges in satisfying the state’s ambitious 30-year shift toward renewable energy.
To Jeff Mikulina, the executive director of the Blue Planet Foundation, the electrification of transportation “could be the future.” Given that Mikulina’s organization is working to end fossil-fuel consumption, some people might try to dismiss him as an environmental dreamer.
The same is unlikely to be said about another advocate of the electrification of transportation, Hawaiian Electric Co. President and CEO Alan Oshima.
The HECO executive argued in a recent interview that the state’s commitment to renewable energy goals shouldn’t be an end point, it should be a stepping-stone to a more ambitious long-term assault on our oil dependency.
“We really want to get off imported fossil fuel,” said Oshima, “but I think the bigger message is: Two-thirds of our imported fossil fuel is not used for electric generation; it is in the cars you and I drive.”
He is right that approximately two-thirds of that fuel is not used for electric generation, but incorrect about where it is burned. Cars and trucks generally consume a little more petroleum-based fuel than air travel does, but only collectively do they consume twice as much oil as the utility uses for electricity, according to a May analysis by the Hawaii State Energy Office. (A smaller amount of oil is also used for marine transportation, the military and other uses.)
Oshima’s deeper point, though, is that we consume a whole lot of oil in our gas tanks. And if Hawaii is open to a true energy transformation, he argued, it should involve a revolution in the way we power ground transportation.
Rather than store huge amounts of the new renewable electricity — which leads to a host of technical and cost quandaries for the utility and for individual customers — many experts say it is better to use as much of it as possible when it is produced.
The electrification of vehicles is “good business for our customers … I want you to understand that. I really want you to understand.” — HECO President and CEO Alan Oshima
Interestingly, while renewable energy generation, especially solar, has surged in the islands in recent years, residential electricity use has fallen steadily, according to the state Department of Business, Economic Development and Tourism.
DBEDT’s recently released report, Hawaii’s Electricity Industry: 2014 Analysis and Recent Trends, found that residential consumption of the utility’s electricity fell an average of 2.4 percent per year from 2005 to 2014 as customers simply used less power.
Given that drop, and the increasing production of new energy, it is hardly surprising that electricity executives are considering how some of the incoming energy might be expended.
That’s where replacing oil with renewably generated energy makes sense, Oshima said
One area of fresh demand for electricity is slated for completion in four years. Rail is being built, and — barring a dramatic change of plans — it is expected to turn the City and County of Honolulu into the state’s largest consumer of power in the coming years.
“The rail will help that incredibly,” said Oshima. “As they use rail — with electricity — to get cars off the road, they are largely using it during daytime hours, right when we have a lot of solar.”
Electric cars are still, in many ways, in their infancy, but sales of those silent vehicles are increasing rapidly. After about five years on the market, 3,750 people in the islands drive them, according to DBEDT’s Monthly Energy Trend Highlights for September. That’s a 28 percent increase from the previous year.
Oshima said Hawaiian Electric is talking with electric car producers about bringing more cars — and more choices of models — into the islands.
There are even nascent efforts underway to begin electrifying the bus system. Honolulu’s Office of Transportation Services and TheBus, in partnership with Hawaiian Electric, is seeking a $25 million federal grant for transportation infrastructure for a pilot project for hybrid and electric buses that would run short, circular routes in central Honolulu and Waikiki.
The buses would transport an estimated 35,000 people each day on electric and hybrid buses between the last three rail stations in Honolulu to places like the University of Hawaii and Waikiki, and recharge during off-peak hours when the sun is shining. The project, according to Michael Formby, the director of Honolulu’s Department of Transportation Services, is awaiting a decision from the U.S. Secretary of Transportation, likely in the next month.
“We would like to find a way to get electric buses on the streets and HECO was looking for the ability to handle the off-peak hour challenges of electricity storage,” said Formby.
“I think (the electrification of transportation) can be a life boat for the utility.” — Blue Planet Foundation Executive Director Jeff Mikulina
The idea is to have the buses running during rush hours, then quick-charging at a transfer station that Hawaiian Electric would help set up.
In a May 29 letter to Formby pledging Hawaiian Electric’s support, Oshima wrote that HECO would, if regulators allow it, offer financial and in-kind support, including recharging engineering and infrastructure, as well as “an advantageous rate” to help the new system become “more economically viable.”
Beyond that proposal, Oshima said Hawaiian Electric is looking for other ways to generate more demand for electricity.
“The military is so wanting to move off of gasoline for their utility vehicles,” he said. “We just met with the Department of Army, we’re talking to the Navy. We’re looking for (vehicle) models we can use, on base and off, to help them.”
If this electrification process reaches critical mass, according to the head of Hawaiian Electric, it could help overcome some great obstacles.
In terms of prices, Oshima noted that given the way Hawaiian Electric is currently regulated, a sharp increase in electricity sales would directly benefit customers, rather than the electric utility.
Throughout the 20th century, Hawaiian Electric, like most other utilities around the nation, had a clear incentive to sell as much electricity as possible because it meant more revenue for the company.
More recently, amid the decline in energy use and as electricity regulators have emphasized the utility’s role in conservation and efficiency, regulators disconnected Hawaiian Electric’s sales from its revenue.
For the utility, this change has been challenging, says the former head of the Public Utilities Commission, Mina Morita. It goes against the historic business model: The more you sell, the more you earn. Getting customers to use more electricity has long been the road map to more profits.
Morita confirmed that with more renewable energy pumping into the system, a sharp increase in demand would — under the current regulatory framework — create a logic for cheaper prices. Basically, the utility’s operating costs would be spread out over more sales, meaning rates should go down.
This is why Oshima said he is so passionate about the idea. The electrification of vehicles is “good business for our customers,” said Oshima. “I want you to understand that.” His voices rose as he repeated for emphasis, “I really want you to understand.”
Oshima sees the electrification of transportation as an appealing, environmentally conscious series of decisions that, beyond bringing down prices and keeping more money in Hawaii, could act as a unifying project in the islands.
It could also give his company a clear path forward in a time of industry disruption, regardless of whether or not the Hawaiian Electric-NextEra Energy merger is approved by regulators. And it might even help to restore the reputation — tarnished with some current and former customers — of Hawaiian Electric.
These days, regulators allow the electric company to recover its expenses, plus a percentage, when it invests in the electrical system. Electrifying transportation would likely require a substantial investment on the part of the utility, so taking on an ambitious project might also result in increased profits.
“I think,” Mikulina of Blue Planet said, “it can be a life boat for the utility.”
But, he noted, there are other ways to shift toward the electrification of transportation via renewable sources without the utility playing such a crucial role. “The assumption,” he said, “is that the system remains as it is, and that the utility remains the dominant provider of electricity.”
Beyond issues of the utility’s role, finances and reputation, Mikulina noted that the electrification of transportation could also help HECO resolve key technical problems in trying to absorb uncertain solar and wind energy production into the grid and then distribute it.
“I think the electric vehicles can help them to do exactly what they need to do — use more of the renewable energy when it is generated,” Mikulina said, noting that this could even smooth out the electricity load, helping to avoid the peaks and valleys in demand that can disrupt the power grid.
Such a change could also start to lessen our energetic vulnerability to far-off geopolitical tensions, natural disasters — like the tsunami that damaged the Fukushima nuclear plant in Japan — and other demand surges in oil markets that have cost us dearly.
Marco Mangelsdorf, the president of ProVision Solar Inc., said, “cracking the transportation nut in our Aloha State will not be easy,” adding that it will consume a lot of time, energy and money.
Mangelsdorf said that hopes of aligning growing photovoltaic capacity with a burgeoning fleet of electric vehicles in the islands can only be fulfilled once the range of electric cars breaks the 100 miles-per-charge ceiling, which the successful mid-priced vehicles have been below for several years, and the economies of scale bring prices down substantially.
The best-selling electric vehicle in the islands is the Nissan Leaf. A new Leaf, minus a federal tax rebate, usually costs $26,000 to $30,000 to drive off the lot, although many are leased. It has been in the 85 miles-per-charge range, but the 2016 model is, according to independent testers, 107 miles. That is enough for someone in Honolulu to drive to the North Shore and back without the nail-biting that Leaf drivers sometimes describe.
“If people were rational actors, I think they would choose electric,” says Mikulina. But, he noted, there are other factors that affect decisions, including aesthetics and branding.
“I’d argue the largest barrier is access to the charging infrastructure,” he said.
People who live in apartments or condominiums often have no place to plug them in. The state will also need to expand the number of charging stations in parking lots exponentially and workplace parking will need to follow suit.
A greater logistical challenge than extending wires to allow people to plug in more widely would involve syncing the charge of a huge number of new electric vehicles to the times when renewable energy is coursing in.
“If you have a quarter-million cars — if they are plugged in at different times, how do you aggregate that most efficiently?” asked Mikulina.
That’s the sort of problem Alan Oshima hopes Hawaiian Electric gets to address.
Read our ongoing report on Hawaii’s high cost of living and the search for what can be done about it here.
And you can continue the broader conversation and discuss practical and political solutions by joining Civil Beat’s Facebook group on the cost of living in Hawaii.