Hawaii is geographically the most isolated population center on Earth. This small archipelago containing 8 major islands, is 2,300 miles from the closest land mass. While at one point in time these remote islands could wholly sustain themselves; that is no longer the case. In fact, Hawaii imports 80% of its goods from the mainland and other countries. They import 70% of their energy in the form of foreign oil contributing to the 5 billion dollars a year they spend on energy. Not coincidentally, Hawaii also has the highest electricity prices in the nation, fully 3x higher than the national average. Being so dependent on foreign oil, with its volatile price fluctuations, Hawaii has been rapidly diversifying their energy portfolio and investing in energy efficiency. Hawaii has the highest rooftop solar installations per capita in the country, contributing an estimated 3% of electricity in the grid. In 2012 Hawaii’s energy portfolio consisted of 14% renewable energy, today it has exceeded 21% and it looks like that trend will continue into the future. Especially with Governor Ige committing go 100% renewable energy by 2045, effectively making Hawaii the first state to make such a commitment. This monumental goal will undoubtedly upset the current energy status quo on the islands while the regulatory, business and societal challenges that stem from this change will serve as a precursor for the rest of the country.
Last week the University of Hawaii’ Energy Policy Forum hosted its 7th Annual Clean Energy Policy day at the YWCA in Honolulu. This was the most highly attended conference yet and served essentially as a gathering of key stakeholders critical to Hawaii’s energy future. The conference was attended by a who’s who of local politicians, including Governor David Ige. Private industry was represented by Alan Oshima the CEO and President of the Hawaiian Electric Companies, along with other institutions and interested parties. Governor Ige, gave the opening plenary session which focused on his goal of 100% renewable energy production by 2045. He talked about how Hawaii is raising the bar for the rest of the nation and at the same time is creating a hot bed for innovation in energy technologies. He spoke of progressive institutions like the Hawaii’s Energy Excelorator and further discussed how this bold goal is attracting foreign investments. He said that as an engineer, this kind of innovation is exciting, and that if we could produce all of our energy domestically, this sector would become the third largest component of Hawaii’s GDP behind tourism and government spending.
The Governor’s opening speech was followed by a panel discussion on the role that the electrical utility or the public electricity company will assume in the future. This was the panel that most attendees of the conference came to hear and is a very important topic to discuss nationwide but especially in Hawaii. The electrical utility is whom you pay your electric bills to and the role that this public entity plays will rapidly change over the next 10 years as more renewable energy comes on the grid. For example: traditionally the utility covers supply and distribution of energy. That means they own the power plants, the poles, wires and substations that transmit energy from power plants to the end users. Since these are large companies and have monopoly control in their area they are heavily regulated by federal, state and local governments with the government setting price structure and terms of service among other areas of the electric company’s business. The electric company’s profits theoretically should go towards energy supply projects and upgrading and maintaining the grid. But, when disruptive technologies like distributed rooftop solar come online in large capacities they end up cutting into the utility’s profits and the whole system can fall apart.
This is what is happening in Hawaii, the Utility provides 95% of electricity to residents but is loosing profit share to the rapidly increasing renewable energy sector. Further, complicating matters, the grid is aging and cannot keep up with modern power suppliers. Generally, the grid can be thought of as a complex roadway system with one-way highways transmitting power from suppliers to end-users. Now as distributed renewable energy projects come online, these highways are becoming congested with two-way traffic and unlike traditional power sources, renewable energy is intermittent, meaning that electricity is not allows being produced, I.E the sun does not always shine. These complications are something the current grid is not designed for, so the Utility ends up being the one responsible for upgrading these systems but cannot because they claim they are loosing profits. Now obviously the issue is much more complex than that, but this serves as a good example for the basis of the problem. This is the situation facing Hawaii currently and will face the rest of the nation as more renewable energy comes onto the grid.
The big question on everyone’s mind is: If the utility is not wholly responsible for electrical production, what role will it serve? The panel had some suggestions, one of which was to keep the same model but have the utility compete more and seek other revenue sources to maintain their profits such as offering new technologies to the customer like solar or energy storage. The positive here is that the regulatory framework stays the same but now you are using ratepayer funds to help the utility compete which could be seen as risky and has the potential to stifle innovation from third parties. Another suggestion was to follow New York’s model called “Distributed Platform Provider” and have the utility serve as grid facilitator, charging third party energy generators and other grid tied mechanisms to use their grid. Another example one of the speakers dubbed the “Poles and Wires” model was talked about, where the utility owns the poles and wires but does not facilitate the grid. Since the utility is not facilitating and therefore not receiving ratepayer funds they become a third party company like any other company out there and can fairly compete by innovating new technologies. The last option talked about was the concept of a publicly owned model. This would have the utility directly answerable to the public or their owners not regulators. It also gives the utility the added benefit of easier access to capital which intern means lower rates for customers. Whatever model Hawaii decides to go with, there is a lot at stake; as the moderator put it “failure is not an option.” And just as Hawaii was seeking input from other states on how to set up their energy model, other states will be looking to Hawaii to learn what to do when so much renewable energy comes on the grid.
The next panel further discussed grid scenarios, debating whether it is more sensible to move off the grid all together, thereby relying on self generated sources of electricity. This was not such a hotly debated topic as the majority of the panel decided that in our current time the answer is to stay grid connected. There are just to many scenarios in which having back up power is necessary. The panel agreed that many customers are not fully aware of the limiting qualities of going completely off the grid. While going off grid is as safe as ever because of technology advances and providers who specialize in these specific types of installations, there is still the possibility that you will use more electricity than you can produce and risk a black out.
The last panel discussed whether, Hawaii, should invest in Liquid Natural Gas (LNG) as a bridge fuel source or focus solely on developing its renewable energy sources. Renewable energy sources are increasingly proving their validity as a replacement for fossil fuels but there is one caveat. Solar and wind are intermittent power sources. This fact, coupled with poor battery technology means that renewable energy sources may not always be able to supply the grid with reliable power. For a utility this cannot happen, their number one concern is maintaining reliable electrical power to those that need it. Natural gas however can provide this base load, reliable power.
Unlike the previous panel this discussion had some great points from both sides of the fence. Jeff Mikulina, Executive Director of the Hawaii based clean energy non-profit Blue Planet, made the point that focusing on LNG instead of renewable energy will hurt Hawaii’s progress to 100% renewable energy. He also went on to explain that LNG is in most cases is brought out of the ground by the controversial process known as hydraulic fracturing or “fracking.” Fracking, has a whole host of environmental issues that stem from groundwater contamination. Ron Cox, Vice President of Power Supply at HECO countered with the important point, that despite the environmental issues, LNG is less economically volatile and would help usher in a new age of renewable energy by helping Hawaii transition away from Oil.
If Hawaii wants to achieve their goal of 100% renewable energy by 2045, these kinds of conferences and meetings will need to continue to happen. The issue at hand is so complex and involves so many stakeholders that it is incredibly important to keep getting these parties together to discuss their plans moving forward. Governor Ige, said that he wants to help lay the groundwork for collaboration between the utility, third parties companies and organizations and the public so that Hawaii could continue to innovate and progress. Considering the scale of the change that would need to occur for Hawaii to meet Governor Ige’s goal, 30 years is not as long as it seems. Hawaii will continue to bring more renewables on the grid and many unforeseen challenges will arise. If leadership in Hawaii can remain vigilant attack these issues as they arise, Hawaii will continue to blaze a path forward as an energy model for the future.