Policy - 09/May/2018

Hawaii bets on solar power

Battered by years of high energy prices due to heavy dependence on imported oil, Hawaii has been moving aggressively to take advantage of the declining cost of renewables.

Hawaii is the second island explored by FORESIGHT  to see how islands are taking up the challenge of the energy transition. Read the first story on Danish island Bornholm here.

 

The Hawaii legislature in 2015 set a goal of producing 100% of its electricity from renewable sources by 2045, up from the current 27%. The political will to achieve this is strong and while the transition is raising some tough questions, progress seems to be taking place. New research advocates a system with solar as its backbone as the best solution, while a breakthrough in utility planning suggests a détente in the long-running battle between policy makers and Hawaii’s main utility.

The 100% renewables goal was initially based more on desire than on analysis, but in July 2017 it was fleshed out by Hawaii Electric (HECO), the state’s largest supplier of electricity, in its power supply improvement plan (PSIP). The PSIP, a master plan for future development, was previously rejected twice by regulators for failing to lay out a vision for cutting costs and carbon. The new version proposes meeting the 100% goal five years earlier than required by state law, starting with the small island of Molokai going all renewable by 2020. HECO serves 95% of the Hawaiian population, on five of the state’s eight islands.

HECO’s plan signals a breakthrough in what has been a long running battle over Hawaii’s energy future. Earlier iterations of the PSIP featured a shift from burning oil to burning imported liquefied natural gas (LNG), despite clear direction from regulators to move towards renewables.

 

 

Solar system

The island state already has the highest concentration of distributed solar power in the US, with 20% of homes sporting panels on Oahu, the most populous of the islands, with about 970,000 residents, plus an average of 100,000 tourists per day.

Recent changes to net metering and interconnection policies have slowed the growth of stand-alone solar systems, but are increasing the number of solar systems that are combined with battery storage. Concerned by runaway solar growth, regulators on the islands ended the practice known as net metering, or allowing panel owners to run their meters backwards and sell excess generation into the grid, in 2017, limiting payments for power exports and requiring customers to use smart inverters that can be controlled by utilities. As a result, customers have an incentive to install batteries to keep their solar power rather than export it to the grid. In the capital city of Honolulu, 731 residential solar-plus-storage projects received permits last year, according to the state energy office, up from only 40 the previous year.

Research by Matthias Fripp from Hawaii university suggests that the key to making a 100% renewable Hawaii work is copious amounts of low-cost solar, supplemented by wind and biomass, and enabled by battery storage, electric vehicles (EVs) and demand response. According to his work, battery storage could provide short-term energy shifts, from afternoon to evening, while biomass energy could compete with hydrogen to fill in gaps, especially in the winter. His research has pushed HECO to increase its plans for solar, raising its proposals from 793 MW originally to 2756 MW. But with so much solar and only 1000 MW of peak demand currently, solar would be heavily curtailed in the summer months. “There’s too much during the day and too little at night,” says Fripp. But he claims that, “The day-night balancing problem is relatively easy to solve: just add batteries, charge EVs during the day and add some responsive load like water heating and pumping.” These measures could double daytime demand, soaking up much of the excess solar, while displacing imported oil for vehicles.

This all sounds very good in theory, but problems remain in practice.

The seasonal energy problem is bigger, admits Fripp, when the winter sun is not strong enough to recharge batteries and get a household through the day. “It’s difficult to store energy at one time of year and save it for another time of year,” he says. “The problem is getting through low-energy days.” For those days, biomass energy, such as biodiesel from Brazil and wood pellets imported from Canada, would have to compete with hydrogen generated with surplus wind and solar power. While hydrogen loses out currently, it could see lower costs in the future as technology costs fall with deployment. Bio-power technologies are fairly mature and are not expected to fall in price.

 

Cleaner and cheaper

This combination is not just cleaner, it is also cheaper than the fossil-fuelled status quo. The overall least-cost scenario is about 60% renewables, Fripp says, about double current levels. As the state renewables mandate pushes supply above that level, total costs would rise due to greater need for batteries, biomass and hydrogen, and rising prices for coal and oil as they lose their economies of scale. But even with high levels of renewables, the average cost of generation is 13.9 cents per kWh, lower than the 15.3 cents cost currently. Residential retail rates in Hawaii currently average 28 cents per kWh, down from 37 cents in 2014, due to lower oil prices.

Fripp also points to some technical challenges that would also have to be met, especially at the distribution grid level. “We could easily overload distribution circuits if everybody has rooftop PV in the day and charges their electric vehicles at night,” he says. But it is unlikely that electric vehicles will make a significant mark until the power system is transformed. With high electricity costs, charging an EV costs as much as filling a car with expensive imported gasoline, negating one of the main consumer benefits of EVs. Plus, with the electric fuel mix, the cars run on oil either way. “The case for EVs today is not very good, since we burn oil for power production,” Fripp points out. As a result, EVs make up only 0.5% of cars on the island. HECO forecasts that about 55% of cars will be electric by 2045.

The need to connect the main Hawaiian islands with sub-sea cables has long been discussed. Since most Hawaiians live on Oahu, getting access to the geothermal resources of the Big Island (also called Hawaii) and wind on Maui, Lanai and Molokai was seen as the best way to get the power where it was needed and to have an integrated system. But Fripp is increasingly sceptical about the need for this to happen given the low cost of solar.

Students blow the traditional conch shell at a groundbreaking ceremony for the new solar+storage system. Photo courtesy KIUC, used with permission.

 

Kauai leads the way

The island of Kauai is already showing that solar and batteries can be deployed quickly and at a saving. The island’s cooperative utility KIUC serves 33,000 customers and has pledged to hit 70% renewables by 2030. As of 2017, more than 40% of the island’s electricity comes from a mix of solar, hydropower and biomass, up from 5% in 2009. On the sunniest days, the island can be more than 90% solar powered, which KIUC claims to be, “The highest percentage of solar on an electrical grid of any utility in the US.”

On February 22, 2018 KIUC broke ground on one of the largest integrated solar plus storage systems in the world. The project by AES Distributed Energy consists of 28 MW of PV and a 100 MWh five-hour duration energy storage system, enough to provide 11% of Kauai’s electricity. “At 11 cents a kilowatt hour, the pricing is well below the cost of diesel,” says KIUC’s president and chief executive officer David Bissell. When completed it will boost Kauai’s renewable share to 60%.

Such progress is welcomed by David Ige, Hawaii’s governor. “As the most oil dependent state in the nation, Hawaii spends roughly $5 billion a year on foreign oil to meet its energy needs,” he says. “Making the transition to renewable, indigenous resources for power generation will allow us to keep more of that money at home, thereby improving our economy, environment and energy security.”

 

Writer: Bentham Paulos

This article is part of the Nordic Clean Energy Series, published by FORESIGHT Climate & Energy to support Nordic Clean Energy Week. A week where energy leaders from around the globe gather in Copenhagen and Malmö to discuss the policies, business and technological solutions and challenges involved in tackling climate change.

Learn more about the week – Nordic Clean Energy Week

Learn more about FORESIGHT’s Nordic Clean Energy Special Edition to be published in May. 

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