Tuesday, October 25, 2011

Biofuel Contact’a Rejection Stirs Columnist’s Ire, but Questions Still Need Asking about Renewables’ Costs

It wouldn’t be accurate to say nothing’s been happening re energy issues in Hawaii since our most recent post. Just the opposite has been true, but our involvement with the Honolulu rail project hasn’t exactly been on hiatus since then either.

We were jogged back into action here at Hawaii Energy Options by the ThinkTech column in today’s Star-Advertiser (subscription required). Author Jay Fidell argues that the Public Utilities Commission’s rejection of the Aina Koa Pono biofuels contract – subject of our post immediately below – was a huge setback for the cause of renewable energy in Hawaii.

Fidel writes: ”It was a dream deal: local company, local investment,local labor, local feedstock, sending less money overseas, increasing energy security, reducing vulnerability to oil volatility, producing utility-scale renewables that can be shipped anywhere in the state without waiting for an undersea cable, building the economy and making us look good. So good, uyou’d think we’d snap it up.”

Sounds like the deal had everything Hawaii citizens could want – except a price the PUC could accept. According to the PUC’s decision, the price premium residents and businesses would have paid over the anticipated cost of oil during the 20-year contract would have been somewhere between $100,000,000 and $999,999,999.

The deal would have added only $2 a month to the average consumer’s electric bill, according to Aina Koa Pono. With its line-in-the-sand ruling, the PUC says two bucks a month over 240 months is too much.

Best Use of Biofuel?

Some in Hawaii question whether burning biofuel in power plants in place of residual fuel oil or diesel is its highest and best use. With the state’s tourism industry 100-percent dependent on petroleum to bring visitors here in planes and ships, the argument is made that biofuels should be reserved for transportation. Another sharp spike or even a gradual rise (see chart at right) to 2008 oil prices would put the entire industry and everything dependent on it in the tank.

Clearly, the PUC’s decision sent a signal – or fired a shot across the bow – to those who believe renewable energy’s costs have no limit. Reasonable limits must be imposed on how much local residents and businesses are expected to pay to get off oil, and that includes the physical impacts these projects would impose.

If you also think Big Wind when you hear "impacts," we’re on the proverbial same sheet of music.

Saturday, October 1, 2011

PUC Draws a Line, Says Biofuel Plan Is Too Expensive

The Hawaii Public Utilities Commission’s ruling this week that a proposed biofuel supply contract was too expensive could be a tip-off on how the commission will rule on other high-impact renewable energy projects.

It’s worth considering as the Big Wind project attempts to overcome the obstacles that are certain to confound it in the months and years ahead.

Molokai and Lanai residents say they’re determined to fight the planned 200-MW wind farms on each island because of impacts on the aina. There’s little point in denying 400-foot-plus wind turbines will have significant impacts; proponents don’t even try and instead work to offset them with localized benefits.

The PUC has signaled a “too much is too much” attitude. Ratepayers would have paid a premium for the Aina Koa Pono-supplied biofuel of at least $100,000,000 over the course of the proposed 20-year contract. Price details are still confidential, and the PUC refers only to a “nine-figure” premium – which under those guidelines could push the premium to the billion-dollar mark.

Tail Wagging?

It’s also worth asking whether the Hawaii Clean Energy Initiative tail is wagging the dog. Just because targets call for significant slashes in the use of fossil fuels in the islands by 2030 is no reason to throw caution to the wind when renewable projects are up for consideration.

The PUC seems to be following a cautious approach to meeting those goals, and we’ll have to see if it applies to the Big Wind project.

Proven base-load geothermal technology is being heavily promoted by those who believe it's a better option than intermittent wind power. And as always, we're promoting the still-nascent ocean thermal energy conversion technology for its potential to play a major role in achieving energy security for the islands.

Geothermal and OTEC development will be expensive – no doubt about it – but some premiums may be worth it.

BY THE WAY: Don't let those charts in the right-hand column column fool you about the direction energy costs are headed in Hawaii. The price of gasoline has been rising here since June even as it declines across the country. We pay the highest electricity rates in the nation (32 cents/kwh on Oahu, much more on the neighbor islands), and the same's true for gasoline. And Subway's "$5 Foot-long" special during October? Forget it: "Prices higher in Alaska and Hawaii." Welcome to Paradise.