A major liquefied natural gas company has submitted a proposal to build a gas-fired generator facility to replace aging oil-fired generators now used to power much of Oʻahu, marking a new stage in Gov. Josh Green’s campaign to bring LNG to Hawaiʻi.

The announcement by Tokyo-based JERA Co., Inc.’s U.S. unit follows a strategic partnership entered into between Green and JERA in October. A summary of the proposal attached to Green’s announcement provides the first details of a venture the governor has promoted as a way to reduce the cost of electricity and lower carbon emissions as Hawaiʻi transitions toward relying exclusively on renewable resources for electricity in 2045. 

“This proposal represents a transformative overhaul of our electrical grid and a tangible step to move Hawaiʻi off its historic dependence on oil,” Green said in a statement. “Through this partnership with JERA and its partners, we are bringing billions of dollars in new energy investments to Hawaiʻi — securing more affordable, reliable energy for the people of our state.”

The announcement comes days after opponents of the liquefied natural gas initiative announced it dead. 

On Thursday, at a hearing of the Hawaiʻi House Committee on Energy and the Environment, former University of Hawaiʻi professor Matthias Fripp said he had found a $1.2 billion error in a study in which the Hawaiʻi State Energy Office concluded that liquefied natural gas was “the most cost-effective transitional fuel to be used until carbon-emitting fossil fuels can be permanently eliminated by 2045.”

Fripp said the study had failed to include the cost of the gas, an assertion Hawaiʻi’s Chief Energy Officer Mark Glick disputed. Earthjustice, meanwhile, responded with a press release with the headline “Billion-Dollar Math Error Blows Up Green Administration’s Fossil Gas Import Plan.”

JERA’s announcement suggests the plan hasn’t quite blown up yet.

Erik Montague, vice president of development for JERA Americas, said the company had included the cost of gas in its plan, which the company said could reduce the cost of generating electricity on Oʻahu by 20% compared to the oil now used. 

“I can say unequivocally that the full cost of the fuel is included,” Montague told Civil Beat. “It’s a fundamental part of our analysis.”

The war in Iran has underscored the volatility of fossil fuel prices, as Iran has closed a key shipping lane for oil and liquefied natural gas from the Middle East. Rising global oil prices will likely be passed to consumers on their electric bills.

In the case of LNG, Montague said, prices are generally determined through one of two methods. One pegs the price to the global oil price, but at a lower price than oil. This makes LNG sensitive to global oil price shocks, although he said it’s still cheaper than the oil now used in Hawaiʻi. 

The other method pegs the LNG price to U.S. natural gas prices, adding various costs for transportation and processing. This generally insulates the LNG price from global shocks, although it’s still sensitive to U.S. price increases caused by factors such as cold winters that drive up demand on the continent.

Hawaiʻi could choose either method or a combination, he said. 

“In all cases,” Montague said, “natural gas is delivered cheaper than oil.”

HECO Power Plant May Be Delayed

The proposal comes as the Hawaiʻi Public Utilities Commission is on the cusp of approving Hawaiian Electric Co. Inc.’s proposal to replace aging generators at its Waiau power plant with fuel flexible generators that could burn oil or bio-diesel fuel. The project would be the same size as JERA’s.

HECO’s new generators are expected to tack on $4.23 to the monthly electric bill of typical residential customers on Oʻahu when the power plant is finished in 2033. That would be on top of an $11 rate increase Hawaiian Electric has requested, plus an additional new fee to help cover wildfire mitigation work.

Glick has asked the PUC to delay approving the HECO project to give regulators more time to answer a series of criticisms Glick has lodged about the HECO power plant. In his request, Glick cited the JERA proposal and purported cost savings. HECO shot back accusing Glick of asking the PUC to short-circuit its approval process to benefit JERA. The company also said the two projects weren’t mutually exclusive.

The PUC was supposed to make a decision on HECO’s Waiau power plant upgrade last Friday. While state offices were closed due to bad weather that day, the agency still had not publicly posted an order by late Monday. PUC spokeswoman Deborah Kwan did not respond to a request for comment.

JERA’s proposal would still need to undergo vetting and approval by the PUC.

The company said it anticipates initiating required state and federal permitting processes in the coming months, including potential filings with the Federal Energy Regulatory Commission and the City and County of Honolulu.

Civil Beat’s coverage of climate change and the environment is supported by The Healy Foundation, the Marisla Fund of the Hawai‘i Community Foundation and the Frost Family Foundation.