Local utility caves in to pressure, finally
Having been slapped by the regulators for being slow and unimaginative – that is putting it politely – Hawaiian Electric Company was forced to make an about face. HECO now says it will get 67% of its electricity from renewables by 2030%, a third of that from “market-based, distributed solar,” while reducing average electric bills by 20%.
As reported in the July 2014 issue of this newsletter, in April 2014, Hawaiian Electric, Maui Electric and Hawaii Electric Light, collectively known as HECO, were reprimanded by Hawaii’s energy regulator for dragging their feet to address customer frustrations, namely high and rising retail tariffs and a virtual moratorium to connect new solar PV systems to the grid. In 2013, the number of solar permits issued in 2013 had plummeted by 44%.
At the end of 2012, Hawaii was importing more than 90% of its energy, making its electricity prices among the highest in the US. Not surprisingly, this makes solar PVs extremely popular in the Aloha state. According to a recent poll, an astonishing 96% of Hawaiians support more rooftop solar PVs (graph on right). The corresponding number in the mainland is 76%. More to the point, 90% said they believed HECO was slowing rooftop solar to protect its monopoly profits. HECO, one may safely conclude, had a serious image problem.
The Hawaii Public Utility Commission gave HECO 120 days to clean up its act, so to speak. “It is now incumbent upon HECO to use this road map (produced by the staff) diligently and promptly to move forward,” said commissioner Lorraine Akiba. Governor Neil Abercrombie agreed: “Today we are going to turn the corner on the energy transformation,” adding, “There’s no turning back. This is the most significant day for Hawaii and its energy future that we have ever had. The time for talk has ended; the time for action is upon us. The energy Rubicon has been crossed.”
The message obviously got to HECO management to utilize more renewable energy, especially distributed solar, and use less fossil fuels. Hawaii currently uses 18% renewable energy. In releasing the company’s new blueprint in late August 2014, Dick Rosenblum, Hawaiian Electric president and CEO said, “This plan sets us on a path to a future with more affordable, clean, renewable energy.”
With retail residential rates hovering around 40 cents/kWh – nearly all from inefficient, polluting and expensive diesel generators – the ambitious plan to embrace renewables, especially the distributed variety, makes perfect sense. The real question is why has it taken the Governor, the regulators and HECO so long to do the right thing?
The state is blessed with mild climate year round, no industry to speak of and ample renewable resources: sun, wind, biomass, geothermal, you name it. With no connections to the mainland and only minimal interconnections among the 5 major islands, each island is an ideal laboratory for a micro-grid case study.
Despite HECO’s late start, Hawaii is already blessed – a term disputed by those who are against distributed solar – with the highest concentration of solar PVs in the US, roughly 20% in some Islands. The only other places with a similar high residential solar PV penetration are South Australia and Queensland in Australia, where 1 in 5 homes now have solar PVs.
The resurrected HECO, in its latest submission to the Hawaii Public Utilities Commission (HPUC), called Power Supply Improvement Plan (PSIP) says, the key to successful implementation of the scheme will be a smart transmission and distribution system that, along with “exponential growth of energy efficiency,” will be able to integrate virtually all renewable generation between 2015 and 2028.
This, it expects to deliver by investing in energy storage for regulation and contingency reserves, increased demand response to manage peak load and by transitioning to liquefied natural gas (LNG) and combined cycle generation for backup and flexibility.
HECO’s current rates are high because it relies on expensive imported oil for over 75% of its generation. Switching to renewables and LNG will eventually pay off – once the company gets over the needed investments to implement the transition to LNG and upgrades its distribution network to handle more distributed solar generation.
For these reasons, HECO customers should not expect falling tariffs any time soon as HECO and HPUC decide how to treat solar vs. non-solar customers during the transition period – the same thorny issues afflicting California described in this month’s lead article.
A HECO representative told Utility Dive that customer bills will “fluctuate through about 2023” due to the investments need to implement the plan adding that, “After that, we envision bills in a steady decline, to reach 20% below current rates by or before 2030.”
Hawaii, of course, is not typical. Yet its decision to embrace – rather than repel or resist – solar PVs and renewables in general while investing in a more resilient distribution network with storage, demand response, energy efficiency and flexible back-up generation, won’t be atypical.
With over 20% of customers already owning solar PVs, a percentage expected to grow over time, does it really make sense to talk about solar vs. non-solar customers any more than it make sense to talk about customers with or without air conditioners, or pools, or EVs, or three-car garages, or kids who go to private schools? Hopefully you get the gist of the argument.
Published Originally in EEnergy Informer: The International Energy Newsletter October 2014 Issue.
