United States

United States

Hawaii governor takes the lead -- Commitment by utility and lawmakers

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Hawaii governor Linda Lingle has won a commitment from the Hawaii Electric Company (HECO) to add 1100 MW of renewables to the American state's generation mix, with 700 MW coming online in the next five years. At the same time, lawmakers have agreed to raise the bar for the proportion of green power that Hawaii's electric utilities must include in their supplies from 20% in 2020 to 40% by 2030 as part of an overall goal for 70% of energy, including for transportation, to come from renewable sources in the same year.

HECO, which provides about 95% of the electricity on the island chain, will meet the goals through an accelerated process for approving power purchase agreements (PPA). Hawaii's Public Utilities Commission (PUC) will be tasked with fast tracking the contracts with wind and other green power providers. First, however, the law to raise the green power mandate must be enacted.

The commitments from HECO and lawmakers result from Lingle's Hawaii Clean Energy Initiative plan, announced a year ago. "As we worked through those first couple of months and through the legislative session, it became crystal clear to me that we could not achieve our goal of 70% clean energy without a transformational change in our regulatory process, in our relationship with the utility and the collaboration with legislators in integrating the county and the federal government with whatever our efforts happened to be," says Lingle.

"This could not be something that was a governor's initiative, a legislator's initiative. This had to be something that the entire state came together on," she adds. "The way we were doing things is not going to get us where we need to get to."

Sky high oil

Lingle's targets are described as a "huge increase" by HECO's Lynne Unemori. "Wind power will play a big role in getting us to that," she adds. The state has good wind resources and high retail power prices that make wind projects especially competitive. Last month, retail prices were in the $0.30/kWh range, says Noi Calipi, of wind developer First Wind, which already operates a 30 MW project on Maui. The state imports over 90% of its energy, largely through shipments of oil. Sky-high oil prices over past months caused the retail price for power to hit the mid $0.40/kWh range.

Of the 700 MW Hawaii hopes to bring online in the next five years, about 400 MW is expected to come from large commercial wind projects. First Wind and real estate developer Castle & Cooke, which has yet to develop a wind project, hope to be the first with a big slug of megawatts hitting the grid.

But Calipi cautions that wind projects well over a 100 MW in size are not likely to become a reality unless another part of Lingle's agreement with HECO reaches fruition: construction of an undersea cable linking the islands of Maui County with the island of O'ahu, where about 900,000 of Hawaii's 1.2 million population is based. There are relatively few good wind sites on the crowded island, but nearby Maui County, which includes the islands of Maui, Moloka'i and Lana'i, have some of the most promising wind sites if they could be linked to O'ahu.

More wires capacity

First Wind is proposing a wind project on Moloka'i, while Castle & Cooke is proposing one on Lana'i. Linking the islands into one electrical grid not only allows export of wind to the power-hungry O'ahu, but it also strengthens the reliability and flexibility of the network to accommodate variable resources such as wind. When First Wind's 30 MW project on Maui is operating near full capacity, it is generating about 9% of the island's power. Maui does not have enough of a market or an electric grid to sustain hundreds of megawatt more, according to HECO.

Also in the agreement with Lingle is a major reform of HECO's business model, dubbed "de-coupling," to move it away from relying on increasing electricity sales for profit. California's major utilities have been operating under such a model for years. The establishment of government mandated power purchase prices may be introduced to provide incentive for private industry to deploy more renewables of varying sizes and generation. The current timeline calls for Hawaii's PUC to come to a decision on fixed purchase prices and decoupling by March 2009.

But with no hard specifics finalised, the devil is in the details, says Calipi. Like many other stakeholders, First Wind was not involved in the negotiations leading up to the agreement with HECO. "I think we're all still going through the agreement and still trying to ascertain how it will be implemented," says Calipi. "Basically, it's an extremely positive step forward for Hawaii and I think all the parties, the developers, the policy makers and the utility, are all working together to try and reach that 70% clean energy goal. The implementation of how this agreement gets done is important and it's something we're all going to watch and see how it plays out," Calipi adds.

The voluntary agreement also includes the state's Department of Business, Economic Development & Tourism and the Consumer Advocate.

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