Cue warm tropical breezes, the sound of waves lapping the shore, the scent of exotic flowers tickling your nose. You're in Hawaii and you're high on the Aloha spirit.

Now open up your utility bill and cue Alfred Hitchcock Psycho shower noises. Hawaii has the nation's highest electricity prices. (The statewide average is in the $0.36 per kilowatt-hour range according to Ted Peck, Hawaii's former State Energy Administrator.)

Worse yet, realize that 75 percent of the island's electrical power comes from oil that's imported from non-U.S. sources and poses a oil spill risk that would destroy the island's ecosystem and economy in one not-so-unimaginable disaster. The island is 90 percent dependent on fossil fuels and 7.5 percent of the islands' $63 billion GDP is spent on fuel and 10 percent is spent on food.  

I met with a team that wants to do something about that. Not only that -- they want to transform Hawaii from the most fossil fuel-dependent state in the nation into a model of renewable generation, and eventually, a net exporter of renewable fuels.

Islands are model laboratories for biologists, and they can also serve as testbeds for new policies, new technologies and new ways of thinking. Moving, say, the California utility behemoth with its 47,350 megawatts of peak load and overlapping regulatory bodies is like moving a mountain. But the entire island chain of Hawaii has just 2,400 megawatts of generating capacity with 95 percent of the population served by a single utility. It's feasible that a team of entrepreneurs and innovators could actually make some real changes.
And the team at Kū‘oko‘a is even more ambitious than that. They want to take the current public utility private and reinvent the island's economy while creating a renewable energy model for the world. The utility portion of HEI, Hawaiian Electric Industries, had revenue of $2.4 billion in 2011, of which $900 million was spent on fuel oil, according to the most recent 10-K document.

The leaders of Kū‘oko‘a see "Hawaii as a canary in an oil barrel" and "one week away from starvation" in its current energy incarnation. According to Roald Marth, the CEO of this effort, "There's pain at the plug, the pump and the plate." The team wants to make a "transformative" change. 

You would think that a region blessed with solar, wind, ocean, and geothermal energy would be making that transformation today. But a certain amount of institutional inertia afflicts Hawaii's utility, HEI. Decades of dependence on oil have formed a power structure that is less than motivated to make sweeping changes.

And a certain amount of cultural inertia is in place as well -- in the previous decades, local Hawaiians took a dim view of using the island's geothermal resources at the risk of angering Pele, the volcano goddess. Just 30 megawatts of energy currently comes from geothermal. Kū‘oko‘a looks to decrease and stabilize the cost of electricity statewide by using geothermal energy as its core baseload on the road to 100 percent renewables -- Pele willing. 

The CEO, as well as the president of this venture, Ted Peck, want to change the business of the utility. They want to "sell electrons at cost and use excess energy to generate hydrogen and NH3 -- while the existing utilities want to keep selling high-priced electricity."

There are other efforts in the plan that we'll cover in a follow-up piece that address EVs, charging stations, tailored algae strains, aquaculture with sustainably farmed fish feed, a smarter grid, and connecting the islands with improved broadband capabilities (Hawaii ranks 50th in broadband penetration according to the team).

Peck said, "The utility in its current form has to take care of their shareholders. What we want to do is structurally change that -- to bless and release its shareholders."

It's an audacious plan that will require an enormous amount of capital, a utility management willing to move aside and change, and the cooperation of the island gods.

Tags: geothermal, hawaii, hawaiian electric, hei, islands, renewables, solar power, sopogy, wind, xtreme energy