Abstract
2014–2015 were years of uncertainty and surprises for the Hawaii Clean Energy Initiative (HCEI) planners. These years were marked by major conflicts between the PUC and the HECO companies regarding the best strategy for implementing HCEI. These conflicts led to repeated rejections of several company planning proposals and suggested that HECO and the PUC might be reading from different strategic blueprints. To compound these conflicts a mainland energy company, NextEra Energy NextEra Inc. (NextEra), proposed to acquire HECO and bring a different expertise to local utility planning. The acquisition awaited PUC approval for over a year. During this time significant public and political opposition emerged over several resource development assumptions. In 2014 world oil prices collapsed. The collapse brought many of the economic justifications for HCEI’s key renewable substitution and energy efficiency assumptions into question. This oil collapse had important consequences for the growing sentiment favoring Liquid Natural Gas (LNG) imports, and seriously undermined the projected economic benefits from LNG. It also highlighted the conflict between LNG import plans proposed by HECO and HawaiiGas, the local gas supplier.
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- 1.
The Tesoro refinery was important to HCEI as the sole source of synthetic gas distributed by HawaiiGas. HawaiiGas had been acutely aware of its supply vulnerability for some time and had prepared a response strategy based on importing LNG .
- 2.
By 2014 technical concerns with HECO’s distribution system had resulted in a substantial backlog of over 4500 rooftop PV applications.
- 3.
DBEDT does not routinely comment on HECO’s PUC submissions and in recent years has rarely submitted this sort of exhaustive critique of utility planning assumptions. Normally the state takes a more neutral tone toward PUC submissions.
- 4.
The role of its parent Macquarie Infrastructure Company as a major provider of energy infrastructure may have encouraged an aggressive LNG strategy.
- 5.
But volumes and transportation vessels were not the only difference between the HECO and HawaiiGas plans. The site of a potential LNG terminal was also at issue. HECO preferred a terminal on Navy property in Pearl Harbor while HawaiiGas proposed a floating terminal at Barbers Point in Leeward Oahu.
- 6.
In arguing that LNG would not result in savings vis a vis imported oil, the governor was probably referring to the oil price collapse that started in 2014. Ige was also concerned with the infrastructure costs a major provider of energy infrastructure appear to encourage an aggresive LNG strategy to support LNG imports for HECO’s thermal generation needs.
- 7.
As discussed previously in the Environmental chapter, evaluating LNG carbon impacts based on life cycle accounting often yields different conclusions than simply counting end-use carbon releases.
- 8.
NextEra Energy Resources together with its affiliated entities is North America’s largest producer of renewable energy from the wind and sun. NextEra owns and operates about 17 % of installed US wind capacity, and about 14 % of installed US utility-scale solar.
- 9.
Even though the proposed purchase price carried a hefty premium for HEI shareholders the merger did not initially receive the required shareholder votes and a second vote was necessary.
- 10.
Concerns over medium-term restructuring were fed by the recent experience with acquisition and subsequent resale of Hawaiian Telephone by Verizon. During its tenure in Hawaii, Verizon had moved a number of organizational units and many of its information systems from the state to the US mainland. When the company eventually divested its Hawaii subsidiary, these changes became a major management and personnel burden for the new management and for the state.
References
Coffman, M., Bernstein, P., Wee, S., & Schafer, C. (2014). Economic and GHG analysis of LNG in Hawaii. UHERO working paper. www.uhero.hawaii.edu/assets/WP_2014-10.pdf
Department of Business Economic Development and Tourism. (2015). Energy coordinators annual report for 2015, value of solar projects as percent of total building permit value. http://energy.hawaii.gov/wp-content/uploads/2014/12/DBEDT_2015ERC-Reports_Nov2015.pdf
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Pintz, W.S., Morita, H. (2017). Years of Uncertainty and Surprise. In: Clean Energy from the Earth, Wind and Sun. Springer, Cham. https://doi.org/10.1007/978-3-319-48677-2_8
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DOI: https://doi.org/10.1007/978-3-319-48677-2_8
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