In Hawai`i, per capita consumption of petroleum is among the lowest in the United States. Hawai`i residents use half of what Texas residents use, and a quarter of what Alaskans use, says petroleum engineer Jack Zagar, the first of several speakers at the Energy Efficiency Policy Symposium held in Honolulu last month under the sponsorship of the state Department of Business, Economic Development, and Tourism.
At the same time, Zagar notes, Hawai`i’s total energy consumption since 1994 has increased annually at a faster rate — 2.8 percent – than that by which the world’s energy use has grown (1.8 percent a year).
What will it take to wean Hawai`i from its petroleum addiction? Not everyone at the Energy Efficiency Policy Symposium or at the Energy for the Millennium II Conference, also held in Honolulu last month, agreed.
But on one point there was little disagreement: Hawai`i must take steps now to curb its fossil fuel dependency, which, as of 1997, cost the state $2.76 billion, or about 8 percent of the gross state product.
A Lesson
One of the most dramatic illustrations of this need was provided by Albert Bartlett, professor emeritus of physics at the University of Colorado and a speaker at the Energy Efficiency symposium:
“Suppose we had bacteria that doubled in numberÉ every minute. Suppose we put one of those bacteria in an empty bottle at 11 in the morning and then observed that the bottle’s full at 12 noon. Now there’s our case of just ordinary, steady growth: It has a doubling time of one minute. It’s in the finite environment of one bottleÉ
“At what time was the bottle half full? Well, how about 11:59, one minute before twelve, because they double in number every minute. This is the characteristic of steady growth that is the centerpiece of the entire global economy…
“Suppose at two minutes before 12, some of the bacteria realize they’re running out of space, so they launch a great search for new bottles. They search offshore, on the outer continental shelf, Éand in the Arctic, and they find three, new bottles. Now that’s a colossal discovery! The discovery is three times the resource they ever knew about beforeÉ.
“How long can the growth continue as a result of this magnificent discovery? Well, look at the score: 12 noon, one bottle is filled… 12:01, two bottles are filled,.. and then 12:02, all four are filled, and that’s the end of the line.
“You don’t need any more arithmetic than this to evaluate the absolutely contradictory statement we’ve all heard from experts who tell us in one breath we can go on increasing our rates of consumption of fossil fuels. In the next breath they say, ‘But don’t worry. We will always be able to make the discoveries of new resources that we need to meet the requirements of that growth.'”
Bartlett applied this lesson in exponential growth to the world’s consumption of oil. At an average growth rate of 7 percent per year – the rate seen in the United States before the OPEC price hikes in the mid-1980s — the world’s known oil resources would be nearly exhausted by now.
World oil reserves in 1981 were 1,500 billion barrels, three times the total amount used to that time, Bartlett said. “That is an enormous remaining reserve. But what time is it when the remaining reserve is three times the total you used in all of history? And the answer is, it’s two minutes before 12.”
Given that the doubling time for seven percent growth is ten years, by 1991, the total usage in all of history would have totaled 1,000 billion barrels, Bartlett continued, leaving 1,000 billion more.
“You still say that’s an enormous remaining reserve. But what time is it when the remaining reserve is equal to all you’ve used in all of history?” Barlett asked. “And the answer is it’s one minute before 12.”
Zagar observed that the world will not fully run out of oil for some time. Still, he echoed Bartlett’s conclusions that oil production has peaked and said that from now on, production will decline and oil prices will continue to rise.
“A giant field on the world stage is any field with 500 million barrels or more of reserves. It sounds big – and it is – but the current appetite of the world is such that it consumes the equivalent of one of these giants every week,” Zagar said.
“It is a fact – not a forecast – that oil discovery peaked in the mid-1960s, in spite of new technology and an ongoing worldwide search, and that peak production will follow at some reasonable length of time thereafter,” Zagar added. Zagar has helped oil companies discover oil for more a quarter of a century, spending most of that time working for Exxon.
Peak production has already happened for Hawai`i’s four main crude oil suppliers – Alaska, Indonesia, Australia, and China, which have been producing less and less oil since the mid-1990s and “are projected to continue to do so,” Zagar continued.
Hawai`i is over-dependent on oil, Zagar says. That, coupled with its over-dependence on one industry, tourism, multiplies the states vulnerability to economic chaos “when, not if,” diminishing supplies force a rise in oil prices, Zagar says. He adds that while more oil will be found in the future, “these additional reserves will be discovered so far out in time that they will have no influence on world peak oil.
Bartlett’s analysis says many things about consumption and population growth in general. But the chief lesson is that Hawai`i, which depends on oil for 88 percent of its energy, needs to change its energy profile. And with the islands’ abundance of sun, wind and biomass, many in Hawai`i feel that renewable energy sources are where the state should be looking.
Snapshots From The Good Old Days
In the 1960s, renewable energy accounted for about 18 percent of Hawai`i’s total energy supply, most of it coming from bagasse generated by the sugar industry. Kaua`i was “almost totally self-sufficient,” said Keith Avery of Enron Wind (a developer of wind energy in Hawai`i). Avery, also a consultant to the state and counties on self-sufficiency and energy audits, briefly described Hawai`i’s energy past at the Energy for the Millennium conference, sponsored by DBEDT, Life of the Land, state Representative Mina Morita, and The Outdoor Circle.
In 1978, the Legislature enacted the Hawai`i State Plan, which set as primary objectives the promotion of dependable, efficient and economic energy systems and increased energy self-sufficiency.
The Hawai`i Integrated Energy Assessment (HIEA), a 1978-1981 project by the former state Department of Planning and Economic Development and the U.S. Department of Energy, predicted that by the year 2005, Hawai`i could produce as much as 90 percent of its electricity with indigenous, renewable resources.
“The largest renewable contribution would be made by geothermal, 20-21 percent; followed by wind, 14 percent; OTEC (Ocean Thermal Energy Conversion), 10-13 percent; and solar, 5-10 percent,” states a 1984 summary of HIEA’s conclusions.
The summary continues that a significant reduction of liquid fuels is not likely, “because there is as yet no indigenous substitute for the jet fuel, which represents 32 percent of Hawai`i’s energy use and which is central to Hawai`i’s economy.”
Two decades later, those forecasts seem wildly optimistic. By 1997, Kaua`i had become dependent on oil for 88 percent of its energy, with biomass making up just 10 percent of the utility’s energy supply. As 2000 draws to a close, the statistics for that island will be even worse, as Amfac’s closure of the Kekaha Plantation means that its power plant will start to use oil as fuel instead of bagasse.
Statewide, in 1997, 92.5 percent of the state’s energy generation came from fossil fuels.
“We’ve gone backwards with the demise of sugar,” Avery said.
Aside from the loss of bagasse as a source of renewable energy, other events also steered the state off the energy path projected by the HIEA: The undersea transmission cable meant to deliver the Big Island’s geothermal energy throughout the islands was never laid, and OTEC projects were never able to produce significant net power.
Renewable Appeal
Whatever the makeup of Hawai`i’s renewable portfolio, the Hawai`i Energy Strategy 2000, produced by DBEDT’s Energy, Resources and Technology Division, states that increased use of renewable energy would further diversify the state’s energy supply, would keep money spent on energy in the state, would provide more local jobs, and would reduce environmental damage when compared to other sources of energy. And there have been several notable renewable energy projects in the last couple of years.
Last September, Hawaiian Electric Light Company (HELCO, the Big Island’s electric utility) signed a multi-year contract with Zond Pacific to buy power from wind turbines at Kohala’s Kahua Ranch. And earlier this year, Zond (a subsidiary of Enron Wind) received a Conservation District Use Permit from the state Board of Land and Natural Resources to put a 20-megawatt (MW) wind farm on Maui.
Solar energy also seems to be doing well: The magazine Solar Today has pictured on its glossy cover the Mauna Lani Bay Hotel on the Big Island’s west side, its roof tiled with solar panels. The hotel, along with a 110-kilowatt system for its golf facility, is the world’s largest photovoltaic grid-tie system for resort operations. PowerLight Corporation, which built and installed the system, is currently fitting the Big Island’s Parker Ranch with two acres of swiveling photovoltaic panels that will track the sun to produce 175 kilowatts of power. The solar panel system, together with some 50 kw worth of windmills, will allow Parker Ranch to pump water for its livestock using renewable energy, and has been touted as the largest solar/wind hybrid system in the world.
Hawai`i also leads the nation in solar panel system installations in working toward the federal Million Solar Roofs initiative begun in 1996. Since then, “more than 7,500 systems (mostly solar water heaters) have been installed under utility rebate and state tax incentive programs,” states the Energy Resources Coordinator’s Annual Report 1999, published by DBEDT.
One of the reasons for solar’s success, according to Millennium II conference speaker and PowerLight Corporation’s Pacific region director John Crouch, is that large businesses on the neighbor islands simply can’t afford the increases in the cost of oil-generated electricity. Some of their bills have increased, “thousands of dollars a month,” Crouch said.
Oil costs $32-$33 a barrel and it’s not going to go down, Crouch said. The increase “is good for us in the islands because it forces us into alternatives,” he continued. And these “benefits” are not just for neighbor island businesses, he noted. Already, a large building in Honolulu has plans to have PowerLight install a 50-kilowatt solar system on its roof, he said.
“Business folks out there, they’re ready. [Electricity costs here are higher than anywhere in the nation]: It’s 12-15 cents [a kilowatt hour] on O`ahu. We [on the Big Island] pay 22 cents; Kaua`i pays 25 cents.”
The Flip Side
The examples cited by Crouch and others are promising, but they depict only half the story of Hawai`i’s energy situation.
Despite what could be perceived as triumphs for his company, Zond Pacific’s Avery confessed to being “a bit frustrated” about the effort required to create a successful wind project. It’s taken him more than 15 years to get the Kahua Ranch and Maui projects to the point where they are today. And his battles are still not over. Although Zond received its state permit for the Maui project several months ago, the company’s easement onto the state-owned is still awaiting approval and land and its interconnection status with Maui Electric is still in limbo.
On the Big Island, while there are ideal places for generating wind, HELCO has placed a cap on the amount of energy it will buy from renewable sources, in effect stifling renewable energy growth. Last year, alternative, indigenous energy sources, including geothermal, biomass, solar, wind, and hydro, accounted for 30 percent of the Big Island’s energy supply, more than any other island.
So what is Hawai`i’s wind energy potential?
“Initially, you would think that [there are] all the opportunities to use wind energy to make electricity, but the fact today is that the opportunities are very, very limited,” Avery said. “The reason for that is there are really only two places to sell the power: one is to the utility and the other is to a private individual or entity that has a load requirement but also has the land and the resource within the tax key where that power is going to be used. If you transport it out of that tax key, you are susceptible to becoming a utility, and the utility franchise is monopolistic in Hawai`i.”
These restrictions limit the scale on which renewable energy can be developed, Avery says. “The utility limits renewable penetration to a small percentage — five or ten percent of what the load is.” The daytime load is about 170 MW on the Big Island, with the nighttime load about 70 MW.
“And when you come down to 70 MW and you have a lot of [renewable energy sources] – besides this wind farm, our 10 MW, there’s 10 MW of hydro, another 12 MW of wind – and you combine those at night, it doesn’t leave a lot of room. So the Big Island is actually seeing curtailment of renewable energy, which seems kind of ludicrous,” Avery says.
According to the October 2000 Consumer Lines, an insert that accompanies the bills of Hawaiian Electric Company, Maui Electric Company, and Hawai`i Electric Light Company, “At HELCO, we’re committed to helping customers use more renewable energy that’s reliable and reasonable priced. Not all renewable sources meet this test.”
It continues that the inconsistency of wind power is a “challenge” to accommodate: “An electrical grid is only able to accept so much inconsistent power before the overall quality of power may be affected.”
Wind power generators are not the only renewable companies facing problems. Hawai`i’s solar energy industry also faces a challenge with the state Legislature.
“If the simple and obvious doesn’t work, we won’t get to the high tech,” says Cully Judd, a solar energy system business owner and member of the Hawai`i Solar Energy Association. He’s talking about the potential downfall of the solar energy industry in Hawai`i, which could happen if the state Legislature decides to yank its support away.
The Energy Conservation Income Tax Credit (ECTIC), which has been in place since 1977, will expire in the next two and a half years. So far, the state has dished out millions of dollars subsidizing the sale of 65,000 solar water-heating systems since 1977. In addition, O`ahu’s Hawaiian Electric Company, through its mandated rebate program, has paid more than $11 million in rebates.
These millions of dollars and years of support, however, have not pushed Hawai`i’s solar industry to its feet. Since the tax credit’s inception, the growth of the solar industry has fluctuated with changes in the size of the tax credit, which has ranged between 10 and 50 percent. When tax incentives were low, as they were in 1977 and 1986, fewer than 1,000 systems were bought in those years, according to research by Hawai`i economist Thomas Loudat. When the tax credit was 50 percent, annual system purchases averaged 4,000.
When 2003 rolls around, Judd fears that the tax credit will expire and not be renewed, effectively killing the solar industry and ending any chance that a solid renewable energy industry, strong enough to compete with cheap oil, will be established.
“The solar industry is completely reliant on a levelized playing field. If the tax credit is threatened, the industry will collapse,” Judd says.
Changing Policies
About 15 years ago, the breakdown of Hawai`i’s energy consumption differed little from today’s ratio of roughly 90 percent petroleum and 10 percent “alternate fuels.”
“If that pie chart (describing Hawai`i’s energy consumption in 1997) in ten years continues to look that way, Hawai`i has a problem,” said Peter Dreyfuss, deputy chief of staff for the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy and a speaker at the Energy Efficiency symposium.
Across the nation, states are adopting policies that are reconfiguring the energy industry. Twenty-two states have developed what’s called a system benefit charge (SBC). An SBC fee is tacked onto a ratepayer’s electric bill and goes into a system benefit fund. The money in that fund is allocated for whatever the law specifies – for example, renewable energy, energy efficiency, displaced utility worker training, etc. A small state like Delaware has a current system benefit fund of $2.6 million; California’s is more than $496 million.
More than a dozen other states have adopted a renewable portfolio standard (RPS), which requires utilities to include a specified amount or percentage of renewable energy in its supply. Most states have standards of between 2 and 10 percent, according to a report on State Renewable Energy Policy Initiatives by Matthew Brown, Energy Program Director of the National Conference of State Legislatures.
Speaking at the Energy Efficiency symposium, Brown noted, “Many types of incentives can be helpful. But the two that appear most helpful at the moment are the system benefit fund and the renewable portfolio standard. The portfolio standards is probably the more difficult to get through the legislature, and as a result, the system benefit fund tends to be the most popular new kind of renewable energy incentive.”
Hawai`i has neither.
Dreyfuss, Brown and several other energy experts from Hawai`i and elsewhere in the United States testified at the Energy Efficiency symposium that Hawai`i should continue its energy tax credits and explore other policy options (such as the SBC, renewable portfolio standards, net metering, etc.) to promote a more diverse energy profile.
Extending the life of tax credits, changing building policies to encourage solar installations, establishing renewable portfolio standards and net metering are some of the renewable energy policies proposed in the last Legislature. Few of those policies fared well.
The Legislature and governor approved a study of net metering, but, according to Life of the Land’s Henry Curtis, the utilities have fought net metering “tooth and nail.” (Net metering is a policy that allows small energy producers to sell excess power back to utilities.)
One of the top priorities should be extending the solar tax credit, said economist Loudat. “The number of solar systems purchased would decrease by 90 percent if the ECITC is eliminated,” Loudat said at the Energy Efficiency symposium.
If the Legislature’s reaction in 2000 to a proposed extension to the solar tax credit is the same in 2003, when the credit is set to expire, solar system purchases will plummet. In an effort to make an extension of the tax credit more palatable to utilities, a bill in the 2000 Legislature that would have made it permanent was amended in the House Committee on Energy and Environmental Protection to an extension to the year 2010. That way, the tax credit would at least be available throughout the president’s Million Solar Roofs Initiative, which runs through 2010. The committee also inserted into the bill language requiring all new single-family homes built after June 30, 2010, to be equipped with solar water heaters or heat pumps.
Despite the amendments, the bill failed, as did bills to promote renewable portfolio standards.
Although the bills face an uphill battle in the next session, Avery feels they should be stronger.
“We looked at RPS last year, we compromised at 7 percent [renewables] within 10 years and 14 percent within 20 years. That doesn’t even get us back to 1960 [where renewable energy accounted for almost 20 percent]. So I think the RPS needs to be aggressive, equal to a state like Texas, promoting 2000 MW of renewables,” he says.
DBEDT’s Energy, Resources and Technology Administrator Maurice Kaya said at the Energy for the Millennium II Conference that his department would not be offering any new legislation supporting renewable energy next year. Instead, he said, DBEDT will focus on private partnerships and other ventures. Still, he offered several suggestions to policy makers: look into distributed generation, develop policies that encourage entrepreneurial innovation, and link energy policies to the prevention of environmental degradation.
Enlarging the Choir
At both of the November energy conferences, much of the discussion focused on state policies and how they could improve the state’s economic position by supporting renewable energy.
“Economic factors are important, but we should do it because it’s the right thing to do,” Bartlett said. At the Millennium II conference, Rep. Morita expanded on that idea, explaining that her support of renewable energy is rooted in ethical and moral grounds.
At last year’s Energy for the Millennium Conference, Morita noted, keynote speaker Dr. Don Aitken had introduced himself as “Don Aitken, R.E.”. When Morita asked him what “R.E.” stood for, he replied, “renewable evangelist.”
“Now when I talk about energy issues, I feel like I’m preachingÉ But energy issues do have religious overtones. You have to acknowledge the moral and ethical problems for fossil fuels,” she said.
“We talk a lot about the economics, about costÉ We have to do what’s right for the planet, for our island, for our people, for our natural resources, our cultural heritage, to survive. We’re facing real critical challenges, like climate change,” she continued, adding that the massive die-offs of coral reefs in Indonesia and the South Pacific, which are being caused by warming of ocean temperature, could “happen to us any time here.”
Hawai`i needs more R.E. converts, Morita said — or “more politicians, at least,” should be among the converted.
A Hydrogen Future
During this year’s Legislature, Morita championed many of the ill-fated bills that supported renewable energy. Next year, she wants to introduce hydrogen technology to the energy discussion. She dreams that Hawai`i will one day have a hydrogen-based economy that produces enough energy to export.
She brought with her to the Millennium II conference a demonstration of what many tout as the future of energy: a small, triangular fuel cell, roughly the size of a hand-held tape recorder or a perfume bottle. With a little water and some power provided by photovoltaics, the cell separates hydrogen atoms from the water and, pushing them through a membrane, is able to produce clean, emission-free energy and water.
Fuel cell technology is not a new. In 1984, the Ilikai Hotel in Waikiki finalized plans to install a test fuel cell that was to provide the hotel’s hot water and electricity. Also in the 1980s, Pacific Resources, Inc. (PRI), participated in a long-term, $39 million cooperative fuel cell test program sponsored by the U.S. Department of Energy and the Gas Research Institute. In May 1984, an International Symposium on Hydrogen Produced from Renewable Energy Resources was held in Honolulu and was attended by more than 80 scientists, government officials and industry representatives from the U.S. and around the world.
While fuel cells have been around for decades, their widespread application is only now nearing economic feasibility.
“Until very recently, [fuel cell] costs were far too high. Each fuel cell had to be hand-built by highly trained Ph.D.s. Many fuel cells also required gobs of pricey catalysts such as platinum,” writes Rob Wilder in a paper he submitted to the Millennium II conference. Wilder, known as “the fuel cell guy,” is also conservation director of the Pacific Whale Foundation on Maui.
This year, FuelCell Energy Inc. built a small 250 kw power plant (able to power about 200 homes) in Danbury, Connecticut. It is able to produce electricity at 9-10 cents per kilowatt hour, according to the article, “Fuel Cells for Power Plants Under Development,” by Office.com’s Terry Perkins.
In September, Ballard Power Systems, Inc. announced that its subsidiary, Ballard Generation Systems, had delivered its third 250-kilowatt fuel cell generator to Swiss company Elektra Birseck for field testing. Ballard, known for its zero-emission proton exchange membrane (PEM) fuel cells, has partnered with DaimlerChysler, Ford, GPU International, and ALSTROM and EBARA, to commercialize its fuel cells. It has also supplied fuel cells to Honda, Nissan, Volkswagen, Yamaha, Cinergy, Coleman Powermate, and Matsushita Electric Works.
The strides made this year by Ballard and FuelCell, Inc., are only a hint of what’s to come from the fuel cell industry and Morita has more than taken notice. If someone had asked her one year ago about the role of hydrogen in energy production, she told the Millennium II conference, she would have said, “Well, maybe a decade or so down the path. Today, obviously, I feel differentÉ
“The fuel cell is the microchip of the energy industry, and we saw the transformation in telecommunication industry with wireless communication,” she said. The same technology boom experienced in the telecommunications and personal computers industries will happen in the energy industry with fuel cells, she predicted.
“The big challenge as a policy maker is how to condition ourselves to take advantage of innovation in technology, how to restructure our PUC (Public Utilities Commission) and update an old economy model to a new economy model,” she said. But, she added, the political will to support renewable energy is practically nonexistent. Indeed, only one legislator besides Morita attended the Millennium II conference: Rep. Mindy Jaffe of District 19 (Waikiki, Kaimuki, Diamond Head, Kapahulu).
Stressing, again, that changing the face of Hawai`i’s energy use is a moral and ethical mission Morita concluded, “We need the converts, we need the masses to move the political will in this direction,” she said. “I cannot do it alone.”
Note: Rep. Morita spoke at the October 2000 meeting of the California Hydrogen Business Council in Sacramento, California. Her comments have been posted on the Environment Hawai`i website. See them at http:// [url=http://www.environment-hawaii.org/x900mina.htm]www.environment-hawaii.org/x900mina.htm[/url]
For statistics on energy production and resources in Hawai`i, consult DBEDT’s energy website: [url=http://www.state.hi.us/dbedt/ert/endata.html]http://www.state.hi.us/dbedt/ert/endata.html[/url]
For information on fuel cells, visit [url=http://www.fuelcells.org/]http://www.fuelcells.org/[/url]
— Teresa Dawson
Volume 11, Number 6 December 2000