by Julia Pyper
April 20, 2018

Hawaii is currently the only state in the nation with a target to hit 100 percent renewable electricity, with a deadline set for 2045. The state is already well on its way to meeting that goal, but a new report by the Rhodium Group finds that speeding up the process could save billions of dollars.

Based on updated numbers for technology costs, Rhodium calculated that Hawaii can get to 84 percent renewable electricity by 2030 for less money than it will take to reach the state's current target of 40 percent renewables by 2030.

In this week's column, we dig further into the Hawaii report. 

Accelerating to 100%

As an island state, Hawaii historically has been dependent on oil. As a result, Hawaii’s electricity prices have been among the highest and most volatile in the nation.

But things are changing. According to the Hawaiian Electric Companies' latest sustainability report released this week, the utility reached a 27 percent renewable portfolio standard across its five-island service territory, up from 26 percent the year before.

Across Hawaiian Electric, Maui Electric and Hawaii Electric Light, the utilities used 8.55 million barrels of oil last year compared to 10.7 million seven years ago. They also cut power plant greenhouse gas emissions nearly 20 percent by replacing fossil fuels with energy efficiency.

HECO is also in the midst of a major renewable energy procurement effort, according to the sustainability report, with 220 megawatts planned for  for Oahu, 100 megawatts for Maui, and 70 megawatts for Hawaii Island set to come online by 2022.

The nonprofit startup accelerator Elemental Excelerator recently commissioned Rhodium Group, in partnership with Smart Growth America, to conduct an independent analysis of the different ways Hawaii can speed up its transition off of oil. The study leveraged state-of-the-art economic modeling tools, state and federal data sets, existing literature and nearly 200 hours of interviews with Hawaii stakeholders to assess the future potential of clean energy deployment in the state's electric power sector and transportation system. 

One of the primary findings is that Hawaii’s most cost-effective pathway would source from 58 percent to 84 percent of electricity from renewable energy by 2030. That could be up to double Hawaii's current RPS mandate, which calls for 40 percent renewable energy by 2030. The state currently gets around 25 percent of its electricity from solar, wind and other renewable resources.

"We've learned in this report that time matters, and the current trajectory that we have in law is actually not the least-cost path," said Dawn Lippert, CEO of Elemental Excelerator, on a Thursday call with reporters.

Going all the way to meeting 100 percent of the state’s electricity needs from renewable energy by 2030 would be more expensive than the 58 to 84 percent scenario, the report found. But it would be cheaper than the current energy mix and the current RPS target, under most oil price and renewable energy cost forecasts.

In the business-as-usual scenario, Rhodium estimates that operating Hawaii’s four electric power systems from 2020 through 2045 will cost $12.3 billion to $23.4 billion in net present value terms. The range represents differences in fuel prices and renewable energy costs. Generating more power from renewables in Hawaii would reduce system costs dramatically, Rhodium found — to between $9.5 billion and $16.4 billion on a net present value basis over roughly the next 25 years.

That represents a savings of $3 billion to $7 billion over the time period examined. The savings stem primarily from avoided oil use.

Accelerating Hawaii's clean energy transition comes with several other benefits, according to Rhodium. 

For one thing, it's expected to increase investments in clean energy in the state by up to an additional $2.9 billion. It will also create new employment opportunities. Clean energy investments are expected to produce a net increase in average annual statewide employment of around 1,500 jobs, and energy cost savings could increase yearly average employment by an additional 500 to 2,000 jobs.

Other benefits include attracting top talent and meeting Hawaii's commitments under the Paris climate agreement. 

While the report findings are based on rapidly declining costs for renewable energy technologies, getting to 84 percent renewable electricity by 2030 won't happen based on economics alone. 

"New policy frameworks and innovative approaches are going to be needed to get to this kind of outcome," said Rhodium Group's John Larsen, the lead author of the report. "Hawaii's going to have to capture all its potential to renew policy action, including changing the old model of utility regulation into something more open and more interactive and more competitive across all aspects of the electric grid."

Specifically, households and businesses need to be able to freely deploy low-cost distributed energy generation and get compensated, not just for the energy they put on to the grid, but for all of the grid services that those technologies can provide, he added.

"Meanwhile, the utilities need to have their incentives realigned so that they don't just profit from maintaining the status quo, but from actually pushing for reductions in oil consumption and pushing for accelerated clean energy deployment," Larsen said.

That's a big undertaking. But it's a conversation Hawaii is starting to have. The Hawaii State Energy Office is currently sponsoring a study to explore possible alternative business models, which could yield some meaningful results. 

Distributed solar and energy storage

Under today's policies, Hawaii's distributed solar market has seen a significant slowdown.

“The solar industry has undergone a number of significant changes over the past couple of years, including the elimination of [Hawaii's] popular net energy metering program and the recent imposition of tariffs on solar cells and modules made outside of the United States,” said Will Giese, executive director of the Hawaii Solar Energy Association, discussing the March solar deployment numbers for the state.

“The overall number of solar companies and ultimately, local solar workers, has fallen, slowing progress toward Hawaii’s clean economy and smart energy goals," he said.

Distributed energy generation and energy storage play key roles in Rhodium's analysis, which underscored the need for policy change if Hawaii is to speed up its renewable energy transition.

"A least-cost electricity future for Hawaii includes a continuation of recent rooftop solar trends," the report states. "By 2030, we find distributed PV is Oahu’s largest generating technology on a capacity basis across our scenarios, ranging from 936 megawatts to 1,379 megawatts."

Speaking at an Energy Excelerator event on Friday, Hawaii's Governor Ige noted that his state has the natural resources to generate renewable electricity as fast as it can attract capital. "We all know the challenge is about storage," he said.

Ige said there's a concern that some companies are underpricing their products to be "loss leaders" on energy storage.

Hawaii has indeed seen some highly competitive energy storage pricing as of late. The Kauai Island Utility Cooperative (KIUC) secured its 2015 solar-plus-storage PPA with Tesla Energy at the cost of 14.5 cents per kilowatt-hour. And in 2017, KIUC secured a contract with AES Corporation for 11 cents per kilowatt-hour. At the time these deals were signed, the cost of electricity from each project was cheaper than the cost of diesel fuel used in oil-fired power plants on the island of Kauai. 

This trend will need to continue for Hawaii to reach an 84 percent renewable energy scenario by 2030.

As if reforming the electricity sector wasn't complicated enough, the report recommends several other policy actions to help boost clean energy deployments. That list includes creating an open data environment; engaging in a multi-sector, long-term integrated energy plan; and putting a price on carbon. 

While there's a lot to be done, and a lot that's still unknown, Governor Ige noted that, by in large, Hawaiians support the clean energy transition. 

"Hawaii leads the country and the world in our quest for clean renewable energy," he said. "It's really important, I think, for all the people of Hawaii because it really is about transforming our economy."

"It's very clear to me our entire community embraces the challenge and looks forward to the opportunity," Ige said. 

This momentum just might enable the state to meet its 100 percent renewable energy target several years early.