Hawaii's energy market is open for business — almost
You won't hear these conversations anywhere else.
Hawaii’s ambitious clean energy policy initiatives are well underway. Now the Hawaii Public Utilities Commission (HPUC) and Hawaiian Electric Company are finally laying the foundational backbone through a series of plans and projects.
This week’s VERGE Hawaii event profiled some of these activities along with the need for improved grid resilience across the energy and transportation sectors, inclusion across a diverse set of customers and a transparent stakeholder engagement process.
The majority of states across the U.S. are not having the conversations that are happening in Hawaii. Rich Sedano, president and CEO of the Regulatory Assistance Project said, “If they don’t have these conversations they’ll be at a competitive disadvantage.” A former regulator from Vermont, Sedano told me that many of these states are hindered by the perceived high cost and excessive future-proofing. The key lies in the ability for leaders to come to the table, engage stakeholders and embrace innovation.
He referenced the Hawaiian Electric’s Grid Modernization Strategy which was approved by the Hawaii PUC last February. The plan is a high-level roadmap for how Hawaii builds a more resilient and renewable-ready set of island grids. Resilience is a critical part of the plan, especially relevant in light of the severe flooding in Kauai, continued eruptions from Kilauea Volcano on the Big Island and more recent floods in East Honolulu.
One critical element of the plan, especially considering that Hawaii has the highest electric rates in the country, is how to ensure that programs and technologies are accessible for customers across a diverse set of needs. Yet another aspect is focused on the integration of a variety of distributed energy resources and transportation systems as they move towards electrification.
Given the complexity of these challenges, the HPUC initiated a new planning process that integrates many of these challenges. The Integrated Grid Planning process launched with a report in March that offers set of stakeholder engagement initiatives to begin the process. While the planning process is ongoing, Sedano told me that the planning process in Hawaii is moving along fairly quickly, at least as far as utility regulation goes.
While it may be years before customers begin seeing the benefits of the Grid Modernization and Integrated Grid Planning efforts, HPUC has been busy moving various orders and initiating proceedings, directing Hawaiian Electric to accelerate programs and technologies for customers. Furthermore, Governor Ige signed into law a bill in April directing the HPUC to initiate Performance-Based Regulation, which creates a new business model for utility compensation that prioritizes the public interest.
Shelee Kimura, senior VP of Business Development & Strategic Planning at Hawaiian Electric Company, provided an overview of several active plans and Requests For Proposal (RFPs) that tie to various HPUC dockets and planning efforts. Kimura described a “symbiotic relationship between energy and transportation systems” and a need for broad participation in the process.
At VERGE Hawaii, onstage Kimura described Hawaiian Electric's March Electrification of Transportation Roadmap across electric vehicles and the transportation sector. One important outcome of the plan will be an overall decrease in the price of electricity for all customers as fixed costs for infrastructure will be spread over increased electric sales.
I sat with Kimura for a deeper discussion about various energy projects initiated this year by Hawaiian Electric. She highlighted the largest renewable energy RFP in the company’s history that closed earlier this year. The utility-scale RFP incorporated a new Power Purchase Agreement (PPA) structure and called for 300MW of “Variable Renewable Dispatchable Generation” across the islands of Oahu, Maui and Hawaii.
The term “dispatchable” is unique for a PPA yet critical to provide Hawaii’s power grid with flexibility in addressing renewable intermittency that poses an increasing set of challenges as Hawaii approaches its 100-percent renewable energy requirement. The project will provide Hawaiian Electric’s system operators with the capability to turn on or off generating resources, such as solar or wind farms, and it includes an optional energy storage component. This is the first stage of a two-stage process that will add significant renewable-energy resources through 2022.
In May, Hawaiian Electric and the U.S. Army announced the completion of Schofield Generating Station, a 50-megawatt facility in the center of the island of Oahu. The facility will help customers across Oahu and will provide resilience at the only airport on the island in a non-tsunami zone.
Hawaiian Electric is closing a long-awaited grid-services RFP with a set of awardees expected to be announced later this month. The project will enable customer-sited demand response resources across a range of customer classes that will ultimately address a variety of grid challenges.
Sedano reminded me that energy policy is initiated by state legislators, and regulators and utilities are the instrument of public policy. This week at the GreenBiz VERGE Hawaii event, we heard from policymakers and regulators across the state that continue to push the needle with aggressive goal-setting and new business-model creation. Now, it’s time for Hawaiian Electric to move from planning mode to project execution. We’ve already seen the first few RFPs hit the street — a first indicator of clean energy projects getting underway — and we’ll likely see many more in the months and years to come.
