In the world’s largest economy, the United States, the State of Hawaii has ambitiously pioneered the quests towards carbon neutrality and 100% renewable energy electricity, both to be achieved by 2045. Historically heavily dependent on oil imports, embracing carbon neutrality and RE are Hawaii’s solutions to keep growing its economy while protecting its environment and strengthening its energy security. Until now, expanding solar photovoltaic and pursuing energy efficiency savings have been the State’s main actions to meet its climate and energy goals. To address the challenge of integrating increasing shares of electricity generated from solar photovoltaic, Hawaii now advances solar photovoltaic + battery energy storage projects, and starts implementing a “grid modernization strategy.” Challenges, however, remain to be solved, among which renewable energy electricity diversification and transport decarbonization, notably.
StoryIn 2015 and 2018, the State of Hawaii was the first among 50 States to successively adopt two pioneering ambitious energy and climate objectives in the United States: (1) A 100% renewable portfolio standard (RPS), and (2) aiming for carbon neutrality. Both are targeted to be achieved by 2045. These decisions were made to end the State’s historical unsustainable heavy reliance on polluting fossil fuel imports, and especially oil, by advancing cost competitive, environmentally friendly, and domestic alternatives.
Hawaii is an archipelago in the Pacific Ocean, north of the equator. For many decades, the entire energy system of the State has been developed to accommodate the consumption of imported oil. This is mainly because oil is relatively easy to transport and store, and practical for multiple purposes (transport, electricity, and heating) at different scales (from small to large). Also, despite its associated risks (energy insecurity and price volatility) it was recognized as the most economic option to meet the islands of Hawaii’s energy needs.
Though renewable energy (RE) has been significantly deployed in past years, the State’s reliance on oil is still extreme: 84% of its total energy consumption in 2018 (the latest year for which data is available), and about 60% of its net electricity generation in 2020 (from January to November). 1The latter compares with less than 1% in the rest of the country.2 Burning oil is often, if not the most expensive way, one of the most expensive ways to generate electricity. As a result, average prices of electricity to ultimate customers in Hawaii are quite high: Between $0.25 per kilowatt-hour (/kWh) and $0.30/kWh in 2020 (up to November), around 2 to 4 times more expensive than in the rest of the country for all categories of customers (residential, commercial, and industrial).3
The paradigm shift envisioned in Hawaii has so far been based on two portfolio standards, one for RE electricity (RPS) and one for energy efficiency (EEPS).
Hawaii’s RPSa mandates the percentage of electricity sales that is represented by RE to reach 100% by 2045, and paves the way towards this objective by setting intermediate goals: 30% by 2020, 40% by 2030, and 70% by 2040. An electric utility failing to meet the RPS shall be subject to penalties (to be established by the State’s Public Utilities Commission (PUC)). In 2019, 29.8% was achieved, up from 9.5% in 2010 – a remarkable +20 percentage points increase over the decade, making the 2020 intermediate goal within reach.4
In Hawaii in recent years, the growth in RE has essentially been the result of solar photovoltaic (PV) expansion (Chart 1). The share of solar PV in the State’s total net electricity generation has increased from 5% in 2014 to 17% in 2020 (up to November). This expansion has first been supported by small-scale systems (mainly residential and to a lesser extent commercial), and more recently by utility-scale ones. In comparison, onshore wind and geothermal have been less developed, with shares of 5% and 2% in 2020 (up to November), but could be expanded further owing to good resource availability.
Hawaii’s EEPS requires to reduce electricity consumption by 4,300 gigawatt-hours (GWh) by 2030, compared to projected consumption. As for the RPS, a failure in meeting the EEPS may result in penalties for an electric utility (also to be established by the State’s PUC). As of 2017 (the latest year for which data is available), electricity savings of almost 2,600 GWh were achieved, mainly thanks to savings in lighting in the residential and commercial sectors.6In the future, additional savings are expected in lighting (again) and air conditioning.7
Renewable Energy IntegrationTwo main solutions are advanced in Hawaii to massively deploy RE electricity and successfully integrate this new electricity into the State’s isolated power grids (i.e., each island with a power system has its own independent electrical grid): (1) Pairing solar PV with battery energy storage, and (2) implementing a “grid modernization strategy.”
- Solar PV + battery energy storage is the first of Hawaii’s two main key innovative approaches to greatly increase the penetration of RE and ensure stable power. The combination of cost reductions in these two technologies and high electricity prices for ultimate customers make this change happen fast in Hawaii. This is true for both utility- and small- scale systems. To date the most impressive development in this area has resulted from a request for proposals (RFP) issued by Hawaiian Electric in August 2019 seeking 900 megawatts (MW) of new RE or new RE paired with storage – the largest clean energy procurement in the utility’s history – to end coal power (the State’s only coal-fired power plant will as a result be closed by 2022) and replace oil power.8In May 2020, the result of this competitive process was announced; thirteen solar + storage and three standalone storage projects were selected for total of 460 MW of solar energy and nearly 3 GWh of energy storage, including projects by independent power producers ENGIE and SB Energy for examples.9These 460 MW represent “only” a little more than half of the 900 MW sought, which may be explained by the fact that the intent of this RFPs was to go big to see what the market would support and to ensure lots of competition. In September 2020, the prices of seven solar + battery winning projects were disclosed and made headlines thanks to their competitiveness; between $0.09/kWh and $0.13/kWh (Table 1). The prices of six other winning projects were not disclosed, three of which because they were still being negotiated and three of which because as standalone storage projects, they do not produce energy so have no per unit price (instead they will receive a fixed monthly payment for energy stored), and the last three winning projects withdrew.10
Regarding small-scale systems, the end of the net energy metering program and the introduction in 2015 of new programs incentivizing self-consumption (Table 2 illustrates these programs referring to the situation in the island of Oahu, the main power demand center of the State) resulted in a significant penetration of solar PV + battery energy storage, especially in the residential sector. Among these new programs are the “customer grid-supply” program, and its successors the “customer grid-supply plus” and “smart export.” Also, the “customer self-supply” program. Under the “customer grid-supply” program, solar electricity exported to the grid was compensated at $0.15-0.28/kWh (depending on islands) instead of the retail rate.11Following this program, the “customer grid-supply plus” and “smart export” programs were introduced in 2017. The former, is similar to the “customer self-supply” program with lower compensations: $0.10-0.21/kWh (depending on islands), and allows curtailment to maintain grid stability.12And the latter directly focuses on rooftop solar PV paired with battery energy storage, offering compensations of $0.11-0.21/kWh (depending on islands) for electricity sent to the grid during non-daytime hours (before 9 AM and after 4 PM).13Under the “customer self-supply,” solar electricity cannot be exported to the grid, but qualify for an expedited interconnection study even in grid constrained areas.14As a result, among new solar PV systems, the share of systems paired with battery energy storage in Hawaii’s residential sector skyrocketed between 2016 and 2019; from only 1% to 75%(!).15
Table 2: The Evolution of Small-scale Solar PV System Support Programs in Hawaii, the Example of Oahu
The “grid modernization strategy” is Hawaii’s second main key innovative methods to greatly increase the penetration of RE and ensure stable power. This strategy relies on two complementary pillars: (1) Grid modernization technologies (Chart 2) and (2) advanced rate design. Information and communication technologies enable to collect real-time data across the electrical grid and make adjustments using remote capabilities (e.g., remote intelligent switches, remote fault indicators, substation automation). As energy management tools (i.e., advanced meters), these technologies also offer the possibility to advance pricing options such as time-of-use (TOU) rates to incentivize the optimization of electricity uses.
With less than two years of implementation, this strategy is a work in progress.16 For the grid modernization technologies, one of the important goals to be reached is the deployment of about 175 thousand advanced meters (38% of existing meters) by 2024.17 In the case of advanced rate design, a TOU pilot program for residential customers, in which almost three thousand customers are enrolled (as of January 24, 2021), incentivizes electricity consumption during daytime to match the output profile of solar PV.18 For instance, in the island of Oahu in January 2021, electricity consumption during the daytime (from 9 AM to 5 PM) is charged only $0.10/kWh, but $0.39/kWh during the evening peak (from 5 PM to 10 PM), and then $0.31/kWh during the nighttime and morning (from 10 PM to 9 AM). These rates compare to a non-TOU baseline rate of $0.25/kWh throughout the entire day (Chart 3).
In this regard, TOU rates incentivizing daytime electricity consumption are available at electric vehicle (EV) charging stations as well, at Hawaiian Electric’s public fast chargers for examples.19 These tariff structures provide additional flexibility to existing demand response programs such as those for commercial and industrial customers.20
Achieving Future Goals
The first key challenge Hawaii will have to address is RE electricity diversification. In recent years, RE electricity progress has essentially been the result from solar PV expansion, with very limited developments for all other RE technologies: Wind, biomass, geothermal, and hydro. Though solar PV output seasonality is a relatively good match with the State’s electricity consumption seasonality (both only peaking in the summer), other RE could contribute in providing power during the hours when the sun does not shine, batteries have been emptied, or flexible consumption has reached its maximum. In this regard, wind and geothermal contributions could be increased if current obstacles are overcome.
Thanks to a robust and consistent wind regime, delivering very fast mean annual average wind speeds exceeding 9 meters per second in the most favorable locations, wind power capacity factors in Hawaii can be exceptionally high: from 35% to 65% (against about 25% globally).21 The top of this range was actually realized at the Pakini Nui wind farm (20.5 MW) in 2011.22 These quite favorable conditions may spur the installations of more wind turbines in the State, both on- and off- shore. Though wind developments have so far taken place essentially onshore, offshore wind might be more promising.
At the federal level, the Department of Interior’s Bureau of Ocean Energy Management is now in the planning stages for identifying and leasing areas off Hawaii.23This is a time-consuming effort with uncertainty around any timetable, notably because of conflicts with military seabed stakeholders.24 Since 2015, there are three active unsolicited lease requests for floating offshore wind projects from two developers: Two from AW Hawaii Wind (AWH); the AWH Oahu Northwest Project and the AWH Oahu South Project, and one from Progression Hawaii Offshore Wind; the Progression South Coast of Oahu Project (Table 3).25 Each project proposes an offshore floating wind energy facility with a capacity of 400 MW. The number of turbines required per project, assuming turbine capacity of 6-8 MW for the first two projects and of 8-10 MW for the last one, ranges between 40 and almost 70. The closest distance from the coast among these projects will be at least 14 kilometers, and the furthest at least 27 kilometers. The depth of these projects will be between 500 and 1,000 meters approximately. The electricity generated by the projects would be transmitted to the island of Oahu by undersea cables.
The latest Hawaiian Electric Companies’ Power Supply Improvement Plan (PSIP) (2016) proposes for 200 to 800 MW of offshore wind of Oahu, equivalent to about 15-65% of the island’s 2019 peak load, by 2045.26 This plan does, however, not guarantee any of the proposed MW will be installed, but it does provide options for planning consideration.
Regarding onshore wind, though it is already an established technology in Hawaii, its further expansion faces a number of various challenges, among which: Environmental impacts (especially on protected species such as the Hawaiian hoary bat or seabirds), suitable land and infrastructure availability, conflicts with other economic activities (e.g., tourism), social acceptance, and economic competition from solar PV + battery energy storage.27 The environmental impacts issue can be particularly problematic. For instance, no wind farm exists on Kauai which is largely due to the island’s protected seabird populations.
This situation results in somewhat lower ambitions for onshore wind compared to offshore wind. For examples in Oahu in the PSIP, only up to an additional 64 MW of onshore wind are planned to be added by 2045.28
As for geothermal, a good potential also exists in Hawaii – unevenly distributed though; the islands of Maui and Hawaii being the most favorable locations with a combined potential estimated to at least 525 MW and likely 1,535 MW – roughly sufficient to meet 40% to more than all of the State’s current electricity needs.29 In comparison, Kauai and Oahu are less favorable locations. Moreover, geothermal may provide both baseload and dispatchable power as demonstrated by Puna Geothermal Venture (PGV) (38 MW), the State’s only geothermal power plant located in the island of Hawaii.30
Apart from natural disasters, as the Kilauea eruption in 2018 – which disrupted operations at the PGV power plant until 2020 (including a temporary closure), geothermal expansion also faces barriers. These notably include: concerns about human health and the environment, as well as cultural considerations.31 Regarding the former, one of the primary concerns in Hawaii is the release of hydrogen sulfide, a poisonous gas that can cause acute and chronic respiratory conditions in humans and acidic environmental conditions. Hydrogen sulfide is present in the fluids contained in a geothermal reservoir. It is released both during well drilling and electricity generation (usually at low levels). In the case of the PGV power plant, the concentration of hydrogen sulfide in the geothermal fluids is relatively high, and in 1991 a blowout at one of the wells resulted in an uncontrolled release of hydrogen sulfide and caused the evacuation of nearby homes.32 Regarding the latter, the native religion of the Hawaiian people has many deities connected to Hawaii’s natural resources, including Pele, widely known as the goddess of fire and volcanoes. Some native Hawaiian religion practitioners have opposed geothermal for religious reasons.
In this context, the outlook for geothermal in the State is limited. Forecasts indicate new 40 MW both in Maui and Hawaii islands, by 2040 and 2030, respectively.33
The second key challenge Hawaii will have to address is the decarbonization of its transport sector, the State’s main source of greenhouse gas emissions 44% in 2016 (the latest year for which data is available) (Chart 4). The fact that most of the transport sector emissions are from the air and marine means of transportation – which are particularly hard to decarbonize – makes this challenge even more difficult (this is true in- and out- side Hawaii), and concrete solutions remain to be adopted.
Other than those two main challenges, another challenge for Hawaii will be to reach carbon neutrality and 100% RE electricity while remaining an archipelago of rather small isolated power systems. This situation is indeed unlikely to change in the near future as the last project to build an undersea power cable, 200 MW with a capital cost of approximately at least $600 million, between the islands of Oahu and Maui was abandoned in 2017 after years of debate and concerns raised about its economic and environmental impact.35 More specifically, benefits from the project were estimated to be less than its estimated costs by the Hawaiian Electric Companies. And there was resentment from local people to develop RE on their island for power exports to Oahu.
It is often recognized that it is more challenging to integrate high shares of RE in small areas than in large ones, because over large areas the generation profiles of solar and wind are more complementary and less volatile. Also, it is often recognized that it is more challenging to integrate high shares of RE in isolated power systems than in interconnected ones, because in interconnected power systems it is possible to keep supply and demand in balance by making adjustments thanks to exchanges. This understanding is also shared in Hawaii, and future actions to develop a power system of interconnected islands are not to be excluded in the medium to long-term. At this stage, however, the possible realization of such project and its timing are quite uncertain.
Finally, a potential improvement to the State’s action plan could be the introduction of a roadmap to phase out electricity generation from oil, supported by a planification of power plant closures, which has not been established yet.
Background InformationIn Hawaii, the Government of the State is in charge of establishing energy policies. The Public Utilities Commission regulates electric utilities to ensure that they provide reliable service at just and reasonable rates, and in line with the State’s energy policy goals.
In Hawaii, there are two main electric utilities: Hawaiian Electric Industries (HEI) and Kauai Island Utility Cooperative (KIUC). Under HEI, there are three electric utilities Hawaiian Electric Company (HECO) serving Oahu, Maui Electric Company (MECO) serving Maui, Molokai, and Lanai, and Hawaii Electric Light Company (HELCO) serving Hawaii island. The two small islands of Niihau and Kahoolawe do not have electric utilities and electricity is generated off-grid from solar PV and diesel generators. Each island with a utility presence has its own independent electrical grid.
Some competition exists in the generation segment with independent power producers (IPPs). There is no competition in the supply segment.
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