A ‘Perfect Storm’ Will Make This Utility 40% Renewable

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“We have a perfect storm for renewables,” says Jan TenBruggencate, second-term board member of the Kauai Island Utility Cooperative. The Hawaiian utility, made into a local cooperative when the investor-owned utility left the business a decade ago, is surging toward 40% renewable energy in the next year, with a third of that total from customer-generated solar. Half its daytime energy will come from solar arrays by the end of 2015.

Learn more about how a cooperative utility has blown past purported technical barriers to renewable energy and pioneered energy storage to make solar a prominent part of their energy mix in this interview with Jan, recorded via Skype on Feb 25, 2014.

Half Their Power from the Sun

Solar energy made sense even before it became so cheap for the island utility, which has long been reliant on oil to fuel its power plants. The price spikes in 2008 and persistently high oil prices made fuel-free renewable energy an imperative for gaining control over electricity costs.

By 2014, the 65 MW utility’s combination of large-scale projects at their substations plus a substantial amount of customer-sited solar energy (nearly 14 MW) mean that half of daytime energy demand is met with sunshine-fueled electricity. The achievement is notable since the solar resource, while good, isn’t extraordinary. In fact, it’s only about 5% better than Minneapolis, MN.

Customers an Unexpected Source of Power

Although shifting to renewable energy was a conscious move, “it wasn’t deliberate at all. It’s not clear to me that we anticipated that,” remarked Jan. The improving economics of solar, and generous state and federal tax credits sufficient to cut the cost by 65%, created an avalanche of interest in solar. Jan estimates that as many as 10% of their customers now have a solar array: “it’s a slam dunk for folks who have the cash to do the projects.”

Not Net Metering

Offering net metering to its customers (with retail electricity prices in excess of 30¢ per kilowatt-hour), was not the utility’s idea, confesses Jan. Rather, it was a pilot program imposed by the state’s Public Utilities Commission. KIUC shared the concern of many utilities about the balance of costs and benefits of net metering, an issue still being hotly debated (see this state-by-state map of battles over distributed renewable energy and a compilation of studies on net metering from RMI).

When the net metering pilot expired, the utility switched to an avoided cost payment for projects 100 kilowatts and smaller. Customers with solar arrays still buy all their power from the utility, and sell all their generated electricity back to the utility for 20-25¢ per kilowatt-hour (the utility’s avoided cost of getting energy from traditional sources, nearly 10 times what mainland utilities quote for the price of acquiring energy).

That avoided cost figure may change soon, says Jan, since soon renewable energy will be the “traditional source,” rather than fossil fuels.

Why a Cooperative?

Most cooperative utilities were formed in the 1930s to electrify rural areas where investor-owned utilities didn’t see a profit, but KIUC was formed about 10 years ago. The investor-owned utility serving the island left the business, and local leaders helped establish a cooperative. They’ve found many advantages to this structure:

We’re operating under the cooperative model…The cooperative tool is a remarkable tool for small communities … a combination of being able to make our own decisions as a community, as opposed to having those decisions made far away…Our access to low-cost capital helps our membership…the fact that we don’t need to make a profit…helps keep our costs under control.

The Role of Energy Storage

Storage is the great, fascinating story of the next 10 years in energy,” says Jan. KIUC is already using battery storage to overcome limitations of existing fossil fuel generation to handle “ramp rates,” or the speed with which intermittent cloud cover can cause solar arrays to go from low to maximum production in a matter of seconds. So far, that’s the economical limit of using batteries. The utility may try to develop some pumped hydro storage facilities, the most common energy storage technology deployed in the U.S. “What we’re looking forward to in the future,” Jan notes, “is the ability to move that solar power into other parts of the day.” But so far the technology and the costs haven’t matched up with the utility’s needs.

What’s Next?

The utility will continue to invest in renewable energy, and is looking to balance wind and solar with less variable options. A biomass plant will supply about 15% of the utility’s power by burning invasive tree species. The utility is also looking at a few hydro power opportunities.

Jan notes that “It’s hard to see a future that has no fossil fuels in it,” but that they will continue to invest in renewable energy. “The one that seems to make the most economic sense…is solar…We’re now actively looking at storage opportunities…to take that daytime solar and move it into the evening hours….if that becomes a reality, I can foresee us retiring a bunch of our fossil fuel power generation plants.”

They may keep them around for backup.

This is the 18th edition of Local Energy Rules, an ILSR podcast with Director of Democratic Energy John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies. It is published twice monthly, on 1st and 3rd Thursday.

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Thanks to ILSR intern Jake Rounds for his audio editing of this podcast.

Photo credit: KIUC

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John Farrell

John directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.

John Farrell has 518 posts and counting. See all posts by John Farrell