Papers Take Note of Consequences in Oil Price Fall

The steep drop in oil’s price produced contrasting stories today in the Honolulu Advertiser and the San Francisco Chronicle. The local paper focuses on the relief Hawaii consumers are feeling now that electricity charges, shipping costs and gas prices have fallen along with the price of crude.

The sidebar chart that's displayed next to the story (at right) shows Hawaiian Electric Company’s monthly cost of electricity this year, and although those prices look way high compared to the mainland, consider that the price of electrons on the neighbor islands is much higher – e.g., more than 50 cents/kwh on Lanai. Residents can look forward to additional cuts in their bills as long as oil’s price continues to slide.

The Chronicle’s take is through the lens of what the decline has done to renewable energy projects’ prospects, something we speculated about earlier this month. Oil’s spike to more than $145/barrel produced remarkable opportunities for green energy developers, but as the Chronicle notes, there’s less excitement now. "When oil comes down, there's still interest, but it's not as passionate. That's a potential risk,” says one observer.

No one knows how long this slide in oil’s price will last, but nearly everyone expects it to climb with a vengeance again someday. The market eventually is sure to reward those with enough vision and temerity to invest in renewables. We’re breathing easier now, but breathlessness is something we can anticipate again one day.

HECO To Hire Renewable Energy PP Negotiator

Hawaiian Electric has openings listed in today’s Classified Ads in the Advertiser, including Director, Renewable Energy Power Purchase Negotiation:

Manages the activities of the Renewable Energy Power Purchase Negotiation Division. Manages the negotiation of all renewable power purchase agreements for the Company and its’ (sic) subsidiaries. Makes recommendations on sophisticated technical issues which require the integration of knowledge and expertise in power system planning, design and operations.

Energy providers undoubtedly hope for a speedy filling of that position. (And since we’re duty-bound to protect and defend our beloved English language's grammar rules – and give our former employer a friendly tweak now and then – we’ll assume those future contracts won’t require a “sic” in them.)

Briefing Outlines Background of New Agreement To Hasten Renewable Energy Development in Hawaii

Ted Liu briefs Hawaii Energy Policy Forum today.

Monday’s press conference by Governor Lingle on agreements between the State, Hawaiian Electric and the consumer advocate covered the highlights on the proposed regulatory changes intended to create a new business model for the utility and integrate more clean energy onto the islands’ grids. Today, the Hawaii Energy Policy Forum meeting in the State Capitol was briefed on what led up to the agreement, which has been described as “historic” and “transformational.”

Ted Liu, director of the Department of Business Economic Development & Tourism, spent the better part of an hour describing a dialogue that began last year. Here are the highlights:

There was a gradual recognition that business as usual wasn’t acceptable, wasn’t tolerable and put our economy and quality of life for all of us at risk. The question became what do we do about it? What are the major drivers? There was a recognition that we needed to take a close look at our regulatory system – one, not just in Hawaii but elsewhere that was erected based on a series of assumptions that are no longer valid, cheap abundant never-ending fossil fuels, central power generation stations and electrons that flowed one way. 

But as much as we kept talking about changing, we needed to make sure that we put in place the regulatory environment that allowed, incentivized, rewarded that type of change, so there was a big focus on looking at what we could do in terms of the regulatory environment, and looking at it collaboratively and cooperatively with the other players.

And so the idea actually came up, I would say -- as a matter of fact, in my recollection it preceded the Hawaii Clean Energy Initiative (HCEI). There were a couple discussions at the end of last year about what could we do on a voluntary basis, what could we do together? There was a situation there – you all know this – in which people were publicly talking about each other, some in tougher terms than others, but was that really what was going to drive change? I think that helped drive change, but we really needed to focus on the specifics of what needed to get done.

A Seminal Event

So over the course of the last six or seven months, helped by the HCEI process, helped by the regulatory discussions that we had with the DOE’s regulatory assistance project and helped by some pretty intense interactions, the framework of this agreement started to emerge. It really took off toward summer. To my mind, a seminal event was this big group that we took to NREL. The National Renewable Energy Lab had never hosted a state delegation like this before, and what was striking to them was in the room we had all three PUC commissioners, Mina was there (Rep. Hermina Morita, chair of the House Energy & Environmental Protection Committee), Senator (Ron) Menor (chair of the Energy & Environment Committee) was there, the consumer advocate and her staff were there, the senior staff of the PUC was there, the Governor was there and the CEOs of every major utility – we only have two – were there with their senior staff. And NREL never had seen that type of gathering representing one state in one room wondering what the options were, reaching out for technical assistance. But the fact that we were there also meant we were interacting and that was extremely positive. 

So events like that helped spur the process along, and we started getting serious the last couple of months. Every one of us had to negotiate our own processes. There’s been some grumbling about this being sort of not inclusive. Well, this was a relatively sensitive negotiation for a publicly traded utility whose premature release of information could have had negative consequences, not only on them but also on our process. There was no assurance that any one of these things would ever reach conclusion. It’s not the type of thing we could talk about what we hoped to do. We could only talk about it after it had been essentially agreed to. So we all had to work with our own processes. I had to work with mine, believe me, because there’s a lot here that we all needed to understand. My staff understood it, but I needed to convince various people within the Administration from a policy perspective that they were the right policies to try to pursue. I give a lot of credit to Cat Awakuni, the consumer advocate who was very much involved in this. She has stated, and we’ve all stated, that this moves us all a little bit outside the zone of comfort. This is clearly not how we have always done things, and we need to have to adapt to this new environment that we’re in.

Is it as broad as it could be? I’m sure we probably could have included many things that others in different circumstances would have included or included things that many think are not as important, but it was in our best judgment all the factors that we needed to look at from a more comprehensive integrated perspective. It does change a lot of things. There are some things the utility can do voluntarily, moving out on some of these renewable energy commitments. I’m looking forward to being one of the first to complement my PV on my roof with an advanced meter on my home. 

In the PUC’s Court

Things that they can do voluntarily, but a lot also is going to be in the court of the PUC. In our discussion with the PUC – who were not involved in the process because they can’t be – to the extent that strong signals were given that they recognize it and hopefully will be – and I can’t speak for the PUC – processes that they will adopt that will get us to our objectives in a more efficient, timely manner.

I won’t get into the details because you all know this better than I do. You all can see what’s in it, and we’d be happy to answer any questions and engage you in conversations. This won’t be the last time I’m sure that we’ll have a chance to talk about it. And it’s going to be a living document. I will tell you that, even now, we’re already talking to the utility about improvements. Even now we’re talking about further agreements, so it’s going to be a living document. Not only will there be opportunities for input and conference about it but we can improve it and make it better. 

Liu’s presentation followed one by the U.S. Environmental Protection Agency’s Ed Chu, a Hawaii native now living in the Washington, D.C. area.  Chu’s presentation – “Closing the Loop on Climate Change” – included some fascinating facts we’ll include in future posts; for now, here are a couple concerning sustainability:

• 426,000 cell phones are retired each day, totaling (in 2005) 50,000 tons of discarded material in those phones.
• 2 million plastic bottles are used/consumed every 5 minutes in the United States.

That last one made us push the bottle under the chair a little further out of sight.

The Long View: New Hawaii Energy Pact Could Mean Our Grandchildren Will Be Fossil Fuel Free

Governor Linda Lingle, U.S. Senator Daniel Inouye and HECO's Robbie Alm await start of yesterday's signing ceremony.

As Marshall McLuhan observed nearly five decades ago, the medium is the message. Yesterday’s message-medium was a standing-room-only press conference with remarks by a governor, a U.S. senator, utility executives, a state consumer advocate, a business development director and a U.S. DOE representative, with several other notables mentioned and thanked by name.

The message was unmistakable: “This is important stuff we’re announcing today, and we don’t want you media types to miss it.” The Lingle Administration’s legacy is all about energy; also unveiled this year was the Hawaii Clean Energy Initiative.

Judging from the coverage, the media got the message. The Honolulu Star-Bulletin’s main story highlighted in the third paragraph what we also found significant and noted in yesterday’s post – the ban on adding net fossil-fuel-based capacity to the Hawaiian Electric companies’ grids.

That amounts to a cap on fossil fuels – but not carbon fuels – for electrical generation. If existing power plants are converted to biofuels or biofuel plants are built, a like amount of capacity powered by fossil fuels will have to be retired, according to yesterday’s announcement. And the prohibition of new coal-fired generation in the state means the existing AES generation station on Oahu won’t get any bigger and new coal facilities won’t be built.

Big Changes at HECO, HEI

Long-time employees of Hawaiian Electric Company might well be shell shocked by the rapid metamorphosis of their employer. HECO finds itself in a “change or die” syndrome, and it has chosen to change. The new agreement decouples HECO from a kilowatthour sales model. The company’s press release states:

“This decoupling of revenues from sales will remove barriers for the utilities to pursue aggressive demand-response, load management and customer-owned or third-party owned renewable energy systems while giving the utilities an opportunity to achieve fair rates of return.”

Connie Lau, CEO of parent Hawaiian Electric Industries, said HECO will evolve into an “energy services” company. She left for New York last night to speak with HEI investors and will be joined later in the week by HECO executive vice president Robbie Alm to explain the companies’ new direction.

At the urging of this “online journalist" for Alm to amplify on his comments two months ago about encouraging ocean energy developers to prove their technologies in Hawaii, he essentially repeated those sentiments. The mainstream media have yet to carry those comments, so we hope they heard enough to tweak some curiosity. HECO’s press release (not yet posted on its website) lists “renewable energy commitments” and potential projects, including Sea Solar ocean thermal energy conversion (25 to 100 MW) and Lockheed Martin OTEC (10 MW), both tied in with the Kahe power plant.

With Grandchildren in Mind

Those potential OTEC projects – if successful in proving the technology’s viability – probably have more potential to get Hawaii off oil because of their baseload configuration. But “Big Wind,” Governor Lingle’s name for the future wind projects on Lanai and Molokai, dominated the media coverage (Honolulu Advertiser’s page 1 story, KITV, KHNL, KGMB; KHON has no post).

The renewable technologies are projected to receive a big boost thanks to this agreement, which we hope will play out with cost estimates in the months ahead. Cost was a key point missing in yesterday’s announcement that the media picked up on immediately. Hawaii’s goal to eliminate fossil fuel for much of its energy needs seems within reach in the next two decades, but achieving complete fossil fuel freedom is something our grandchildren will enjoy.

The Clean Energy Initiative picked 2030 as a comprehendible target date – just two decades away and a year most of us are likely to experience. But our own grandchildren won’t have reached their 30th birthdays by then. Their generation will look to this century’s midpoint as a target for complete independence from fossil fuels for electrical generation and all transportation, including air travel.

Our generation’s legacy can be their generation’s green bonanza if we manage the transition to renewable energy wisely in these early years of the 21st Century. The new agreement seems like a good start.

‘Sweeping Agreement’ in Regulatory Changes Announced Between State, Utility, Others; Goal Is To Develop Renewable Energy, Get Hawaii Off Oil

L-to-R: Bill Parks, U.S. Department of Energy; Robbie Alm, Hawaiian Electric Co.; Catherine Awakuni, State Consumer Advocate; Connie Lau, Hawaiian Electric Indusries; Governor Linda Lingle; Maurice Kaya, former State Chief Technology Officer; Ted Liu, Department of Business Economic Development & Tourism.

Despite our intention to beat the mainstream media with details of today’s press conference attended by Governor Linda Lingle, numerous State energy officials, Hawaiian Electric Company executives, the U.S. DOE, the State Consumer Advocate, renewable energy developers and even U.S. Senator Daniel Inouye, the length of the conference pushed us right up against the start of a granddaughter’s birthday party. (The Phillies and the Rays might well play half a World Series game this week in the time it took to conduct this one.) We "online journalists" can bust a deadline if we want to.

For now, we’ll simply direct you to the Governor’s website for most of the details. However, the statement that jumped out to us was the agreement among the parties to prevent the growth of fossil fuel generation on the five islands served by Hawaiian Electric -- Oahu, Maui, Lanai, Molokai and the Big Island. (Negotiations are underway with independently owned Kauai Electric to bring that utility into general agreement.)

There will be no future net gain in megawatts generated by burning fossil fuel, according to the Governor and HECO representatives. That alone seems like a major advancement in the effort to reduce the state’s dependence on fossil fuel. If for whatever reason a new fossil fuel plant must be built, a like amount of carbon-based generation in an old plant will have to be taken down. That's how it sounded, at any rate; we'll have to review the video to get the exact quote. In addition, the overall agreement includes a prohibition on the construction of new coal plants in the state.

But there’s plenty more:

• A commitment to integrate as much as 1100 megawatts of additional renewable energy on the HECO companies’ grids, with 700 MW to be implemented within five years.
• Construction of an undersea cable connecting Maui, Molokai and Lanai into one electrical grid to allow integration of 400 MW of wind power generated in Maui County for transmission to Oahu.
• Changes in how HECO is compensated by moving away from a business model that places reliance on increased electric rates.

And the list goes on, but we'll have to leave it there until tomorrow.

Energy Shoe Seems Ready To Fall, but What Is It?

Oct. 20 Update:  Governor Lingle's website has this blurb about the intent of today's press conference:

"Today, Governor Lingle and officials from Hawaiian Electric Company will announce another milestone in the state's collaborative efforts to increase Hawaii's energy independence by having 70 percent of Hawaii's energy come from clean, renewable sources by 2030."

You'll be able to watch the conference "live" at the Governor's website at 2 p.m. HST (8 p.m. EDT, 12 Midnight UTC/GMT).

Weekends generally are news-less around here, but this weekend is full of anticipation about an energy-related announcement that’s rumored ready for delivery Monday in the Hawaii State Capitol.

We’ve been predicting major renewable energy developments here based on key individuals’ travel schedules and comments, such as this one, in recent months, but we don’t know what Monday’s announcement will be – just that it’s significant.

We’ll attend Monday afternoon's event and post to this site as quickly as possible – presumably before 4 p.m. HST. Come back to see what the fuss is all about.

Crude Dips Below $70/Barrel; Could it Be ‘Big Oil’ Hears Renewable Energy’s Following Footsteps?

We’re so whipsawed by wild swings in the markets and predictions of economic doom we don’t know what to believe anymore. What IS the truth about oil price’s fall to less than half the July price? Tell us; we really want to know!

"Supply & demand" is the accepted explanation, as proclaimed in a page one headline (10/17) in the Wall Street Journal: Oil's Slide Deepens as Downturn Triggers Sharp Drop in Demand.

Maybe that's it, or maybe not. Every dollar increase in oil’s price made the renewable energy alternatives more attractive to energy buyers, especially when the price soared above $145/barrel in July. “This isn’t good," we can imagine Big Oil saying. “We’ll be out on our ear inside a generation if this keeps up. Let’s put the brakes on and take the longer view. We can get it up to $200 soon enough.”

Some might think out-on-our-ear is as plausible as supply-and-demand. Whatever the true and complete explanation, alternative energy technologies don't look as attractive as they did three months ago only if we let the last three months predict the future. That wouldn't be smart.

2nd International Conference on Ocean Energy Meets In France; OTEC in Technology Review

Many leading marine renewable energy experts have gathered this week for three days of presentations and discussion on just about all the potential energy sources from the sea. The ocean energy conference opened today in Brest, France.

The ICOE has attracted “the ocean energy stakeholders: producers, engineers and scientists, sea users, energy politicians and planners….” Among them is Dr. Gerard Nihous of the Hawaii Natural Energy Institute at the University of Hawaii, and we hope he’ll share his reactions to the conference with the media and possibly a University presentation of some kind. Also attending is Ted Johnson of Lockheed Martin. He’s a frequent visitor to Hawaii as he pursues his company’s ocean thermal energy conversion (OTEC) interests here.

Since we’re writing an OTEC-centric blog, we were drawn to the conference sessions on that technology – “Ocean Thermal Energy Conversion (OTEC): Principle, Problems and Prospects”; “Impacts Study of OTEC Seawater Effluent Discharge”, and “Are there enough skilled personnel within ocean energy?”

That last topic touches a nerve in a positive way. Hawaii for decades struggled to find an economic engine beyond tourism. OTEC and the other renewable energy technologies could well be that new industry, offering not just jobs but careers for Hawaii’s young people.

What an exciting vocation that would be -- participating in cutting-edge work to harness energy from Hawaii’s natural resources. As we’ve written at our sister blog, Honolulu’s grade separated transit system one day will run on ocean power, solar power, sea power and all the other renewables.

If you’re a young person in search of a tech-oriented career, that’s a pretty good vision to keep in front of you.

Xenesys Eyes French Polynesia in OTEC Quest; the Emerging Ocean-Based Tahiti-Hawaii Connection

We have OTEC News to thank for the heads-up on a deal signed in August that could be a significant step in the long march to develop ocean thermal energy conversion (OTEC). Xenesys Inc. of Japan and the Pacific Petroleum Company (PPC) group of Tahiti have joined in an effort “to conduct commercial and technical studies to realize Ocean Thermal Energy Conversion (OTEC) in French Polynesia, New Caledonia and Vanuatu,” according to the Xenesys press release. (Photo: Kiminao Satomi of Xenesys and Albert Moux of PPC.)

Evidence of their alliance eluded us until the recent OTEC News item, but some web surfing found this Xenesys release from February 2008 on a Memorandum of Understanding between the two firms. The August event appears to have been a good photo op involving the president of French Polynesia, Mr. Gaston Tong Sang.

The Hawaii Connection

This may be a bit of a stretch, but there’s an emerging story line linking PPC's president, Albert Moux, with Hawaii. Additional surfing turned up his presidency of Shell Va`a, the Tahitian outrigger canoe club sponsored by the oil company. Shell Va`a won its third consecutive Molokai Hoe canoe race from Molokai to Oahu two days ago, smashing the old record by nearly two minutes.

Judging from the success of his canoe club, Mr. Moux knows how to get results in ways local enthusiasts can’t match. Perhaps we might anticipate a similar impact with OTEC – first in French Polynesia and just maybe later in these northern climes, as well. 

We wish him and his colleagues as much success plumbing the ocean’s depths as they have had on its surface.

REPORT: Low Marks on Energy Integration

The Network for New Energy Choices has a dim view of Hawaii’s ability to encourage power integration from homeowners and small-business owners. Read the report here.  Hawaiian Electric Company disputes the findings.

OTEC Buzz Gets Louder with New DOE Contract; Lockheed Suggests ‘Energy Independence’ for Isles

Ocean thermal energy conversion has been steadily edging its way into the conversation this year on how to dramatically reduce oil's use to generate electricity. Today, OTEC is the conversation starter with Lockheed Martin’s announcement of a contract award by the U.S. Department of Energy “to demonstrate innovative technologies to enable ocean thermal energy power generation.”

Lockheed has a long history with OTEC and Hawaii, as detailed in its press release, and the company continues to suggest the islands will be where OTEC finally is demonstrated as a game-changing energy technology.  (The New York Times carries the story today with some background on ocean energy and links to other sources.)  According to the general manager of Lockheed’s Undersea Systems business unit:

“It’s conceivable, for example, that OTEC could enable Hawaii to achieve energy independence within a generation. Our independent research and development work to date has shown OTEC to be technically feasible. The next step is to demonstrate it on a commercial scale and this DOE contract will help accelerate our progress towards that goal."

 The Times concludes today's story about ocean energy:

“If scaled, it could provide consistent base-load energy and help tropical islands, like Hawaii, attain energy independence, a serious issue in a world of petropolitics.”

Coupled with Hawaiian Electric Company's recent assertion that it will give set-asides to ocean energy developers to demonstrate their technologies, today's announcement is further evidence that OTEC offers the best chance for Hawaii to dramatically reduce its dependence on oil for electricity generation.

Signs Abound that Renewable Energy Tide Is Rising

Fall is in the air in Hawaii if you strain hard enough to notice the signs. A more obvious indicator of change is the steady drumbeat for renewable energy development in the Aloha State, including today’s editorial in the Honolulu Advertiser, which mentions the green energy proposals being reviewed by Hawaiian Electric Company.

Energy and climate conferences seem to be everywhere. The latest blurb to land in our inbox is for “Hawaii Energy Challenge 2008” on the Big Island just before Thanksgiving. This one offers a mix of familiar names on the Hawaii scene with prominent energy and climate figures from the mainland.

The Advertiser says there's "progress on the renewable energy front," but sometimes it seems progress is being measured in proposals and conferences. A better measure will be the number of contracts actually awarded for large-scale, base load pollution-free energy that will offset oil-generated electricity here.

Let's hope that news breaks before the Winter chill.

10/7 Update: Here's something to warm the heart of Hawaii's "anti-oil activists" (shall we call ourselves that?): Oil imports were down 14.7 percent here January through July compared to last year.

Lanai Solar Project Is Priced Below Avoided Cost; HECO Mulling Energy Proposals, Including OTEC

Here’s a tip for readers who want in-depth reporting on just about any business-related issue in Maui County: Harry Eager of The Maui News will give you more and better coverage, as he did this week in his story on Maui Electric’s deal to purchase solar photovoltaic power on the island of Lanai. Eager, who does the paper’s business reporting, almost “over covers” his subjects, if that’s possible, but his coverage of the MECO deal compared to what’s in the Honolulu papers shows it’s no contest.

For example, the not-insignificant detail about how much MECO will pay for the power isn’t even in the Honolulu Advertiser’s story – which as it turns out was supplied by Castle & Cooke Hawaii under a Reader-Submitted banner. (This isn’t a media criticism blog, but we can’t help but wonder about the practice of reprinting press releases supplied by one of the parties involved in a significant renewable energy deal.)

As Eager reports, MECO will pay Lanai Sustainability Research, LLC, a Castle & Cooke company, 27 cents per kilowatthour for the power, which is below MECO’s avoided cost to run its diesel generators on the island. Mainland readers probably will wince at that price, since the national average for all retail sectors in May 2008 was about one-third that level – 9.49 cents/kwh, according to the U.S. Energy Information Administration.

Eager’s story is recommended to catch up on the goal of achieving 100 percent of Lanai’s energy needs from renewable energy, including for transportation needs.

Searching for 100+ MW of Clean Power

Elsewhere, the Advertiser does a better job of reporting (by a staff writer) on Hawaiian Electric’s request for proposals for 100 megawatts of renewable energy. This blog naturally is pleased that ocean thermal energy conversion is under consideration.

OTEC supporters were enthused over the recent comments by HECO on the importance ocean energy technologies have for Hawaii, so we continue our optimism that the country’s first commercial OTEC plant will be included in HECO’s final selection of renewable suppliers. The company hasn’t set a deadline for that selection, according to the Advertiser story.