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Hawaii sets its sights on increased renewable energy

By Mark Glick

Hawaii's geographic isolation—roughly 2,500 miles from the nearest land mass—has played a central role in the evolution of the state's energy system. Even with the recent rapid growth of renewable energy in our electricity sector, more than 80 percent of Hawaii's energy still comes from petroleum, making us the most oil-dependent state in the nation.

Today, Hawaii spends about $5 billion a year to buy foreign oil to support its energy needs. As a result, Hawaii has the highest energy costs among the 50 U.S. states, which imposes a significant burden on our residents and businesses.

An important best practice pursued by Hawaii was the establishment of its first renewable portfolio statute in 2001, requiring renewable energy as a certain percentage of utility sales. The first major milestone was achieved in 2009 when the Hawaii Legislature passed a 40 percent renewable portfolio standard (RPS) to be achieved by 2030 and an energy efficiency portfolio standard (EEPS) equivalent to a 30 percent reduction in electricity use through efficiency and conservation.

Energy consumers and other stakeholders have enabled a growing clean energy market that has expanded at such a rapid pace that Hawaii has greatly exceeded its interim RPS and EEPS statutory targets. The RPS topped 21 percent at the end of 2014, well ahead of the 2015 interim target of 15 percent.

When examining the costs of generation, producing electricity by tapping our world class trade winds, abundant sunshine, and other renewable resources compares favorably with producing electricity from oil. While clean energy goals in other jurisdictions may conflict with economic goals to lower the cost of electricity, in Hawaii it is clear that the transformation to a clean energy future is entirely consistent with the goal of lowering the cost of electricity. Recent utility-scale renewable energy contracts procured by Hawaii's electric utilities for wind, solar, and geothermal are below the avoided cost of oil-fired generation. Power purchase agreements negotiated by Hawaiian Electric Company over the past year for utility scale solar and wind range from 14 cents per kilowatt hour to 15 cents per kilowatt hour.

That compares with an average oil-fired price of 20.1 cents per kilowatt hour over the past five years.

The result of this unprecedented growth in solar is that one-third—or 136 of Hawaiian Electric Company's 416 circuits in Oahu—are said to exceed 120 percent of daytime minimum load, with 10 percent exceeding 250 percent, which means that at certain times on any given day, there is 2.5 times the amount of electrical generation capacity on a circuit than the minimum load requirements.

This is a particularly challenging problem given that one of the main jobs of an electric utility is to match load with demand.

When one considers that Hawaii also leads the nation in solar capacity per capita, the rates of renewable penetration are even more impressive because Hawaii's isolated grid cannot absorb the percentage of renewables that can be interconnected in states that are attached to a regional grid. Consequently, often at the prodding of the Hawaii Public Utilities Commission and other energy stakeholders, Hawaii's utilities have had to act in real time to propose, deploy, and confirm solutions for integrating such high levels of renewables.

The search for solutions is helping fuel the growth of innovation in Hawaii. In fact, the very existence of isolated, island grids, along with the high energy costs and connections to the Asia-Pacific region, has made Hawaii a uniquely attractive laboratory for clean energy solutions. Hawaii's strong commitment to clean energy, evidenced by progressive policies and high rates of deployment and integration, has attracted entrepreneurs from around the world, looking to develop, test, and prove emerging technologies and strategies—such as energy storage and smart inverters—before going to market.

Hawaii has been able to leverage its isolation and the challenges faced in the arena of clean energy to great advantage. Hawaii has been able to attract international investment from governments and corporations that see the state as a bellwether for renewable energy, and a place where the next generation of energy solutions will be born.

For the Record is an edited version of a presentation by Mark Glick, State Energy Administrator in Hawaii's Department of Business, Economic Development, and Tourism, to the U.S. Senate Committee on Energy and Natural Resources.