Defining the affordable path to Hawaii's renewable future
This article is sponsored by the Ulupono Initiative.
Hawaii’s utility regulators recently offered a boost to slow-footed efforts to achieve the clean energy goals of the most oil-dependent state in the country.
It took two years, nine months, three days — and three tries — for the Hawaiian Electric Companies to submit a Power Supply Improvement Plan (PSIP) that the Hawaii Public Utilities Commission (PUC) could accept, although not entirely approve.
The PUC held firm until the utility submitted plans that clearly defined near-term actions that would accelerate Hawaii’s path to 100 percent renewable energy, be affordable and invite fair competition between utility-scale and distributed resources. The PUC’s decision was groundbreaking for what it agreed was an acceptable path forward and for what it found to be unconvincing.
The PUC found that advancing the integration of renewable sources faster than the current Renewable Portfolio Standard (RPS) is in the public interest. This would save ratepayers money compared to the fossil alternatives. As an impact investment firm focused on helping to make Hawaii more self-sufficient, Ulupono Initiative agrees, especially when any measure of fossil fuel risk is taken into consideration.
The Hawaiian Electric Companies provide electricity to Oahu, Maui, Lanai, Molokai and Hawaii Island. Kauai’s independent utility, Kauai Island Utility Cooperative (KIUC), is showing the rest of the state the power of renewable acceleration. KIUC’s latest photovoltaic plant with battery storage costs just 11.9 cents per kilowatt-hour for firm renewable power and is increasing system-wide reliability.
By comparison, Hawaiian Electric’s 2017 costs for fuel alone — not including any additional capacity from storage — is 11-12.5 cents per kilowatt-hour. That’s why the PUC approved 400 MW of new grid-scale renewables by 2021, the largest such competitive procurement in our state’s history — because it’s less expensive than fossil fuel over time.
The PUC also made it clear that customer-centric resources — demand response, distributed energy resources and community-based renewables — should move forward and must be considered as alternatives to making our grid more reliable. All of these approaches are part of ongoing dockets, which should be brought to successful conclusions as soon as it is practical, in order to move the solar and storage industries out of limbo and forward into the future.
What the PUC did not agree with was a series of proposed actions by Hawaiian Electric because there was no justification that they were affordable. It denied the proposed 154 MW of new fossil generation resources on Oahu, at Pearl Harbor and Kaneohe. In fact, objective analysis found that rates actually would drop if these fossil plants were not built.
These plants, along with the plan for excessive investment in the grid, would have led to the widely reported 44 percent rate increase by 2026. This is why the PUC expressly did not approve the entire plan, only the elements that were in the public interest.
The PUC stood strong in denying earlier versions of the PSIP. It forced the utility to go back to the drawing board and come up with a plan that reduced the grid modernization cost by hundreds of millions of dollars.
Earlier versions included plans for intensive capital improvements to the grids. These plans were linked to massive LNG imports submitted during the proposed merger of HECO and NextEra Energy, which the PUC wisely decided not to approve. One year after that decision, we can see that the NextEra plan would have cost all ratepayers dearly, $1.3 billion in present value, which dwarfs the $60 million in benefits that the merger had touted.
In both the merger and the PSIP proceedings, public participation played key roles to ensure transparent and objective analysis. It demonstrates the power that a broad coalition of stakeholders, and the stalwart efforts of the Hawaii state Department of Business, Economic Development and Tourism, the counties and the Consumer Advocate, can have on protecting the public’s interest.
Hawaii must move forward expeditiously, so that the state can still take advantage of the federal solar tax credits before they expire in 2019, and work toward achieving our state’s clean energy goals.