Hawai’i At The Energy Crossroads — Part 2: How Much Renewable Energy?

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

---

Originally published on ilsr.org.

How Much Renewable Energy?

Below is part two of Hawai’i at the Energy Crossroads, a report released in October 2015 about the tough choices facing the islanders as they stand on the cusp of an electric grid transformation. Read part 1, published earlier this week and stayed tuned for part 3 next week.

There is much at stake for Hawai’i, including enormous rooftop solar potential that could push each island much closer 100% renewable electricity (below).‌ Most islands could get 20–30 percent more of their electricity from rooftop solar alone.

According to the state, each island also has renewable energy options beyond rooftop solar (below). 

It appears that each island has the renewable energy to meet its annual electricity needs and then some – except O’ahu, that is. But the chart above, drawn from numbers in an NREL report, overlooks a number of opportunities the island could tap.

According to utility documents, HECO’s yearly demand is likely to drop more than 1,000 gigawatt-hours by 2030, largely through energy efficiency. Based on findings from the Hawai’i Public Utilities Commission, O’ahu’s demand could drop further – to 5,000 GWh per year by 2030 – if deeper yet economically viable efficiency standards are implemented. (Similar additional savings could be realized on other islands.)

Reduced demand on O’ahu can be met by several overlooked resources not included in the above chart. ILSR has adjusted the island’s rooftop solar potential to 1,262 MW based on average installed system size. An additional 700 MW of utility-scale solar and 75 MW of onshore wind potential are added, based on HECO’s most recent resource plan. Other sources estimate hundreds of megawatts in potential for offshore wind and pumped hydro storage on the island. Biomass and biofuels, though predicted to have much more potential, were assumed to continue at their 2014 levels of production. Even thousands of megawatts in ocean thermal energy conversion and wave energy, not included here, could push O’ahu well past its supposed local renewable energy limits.

Reaching the 100% renewable energy future on every island isn’t without controversy. Although much of the potential can be met with on-site solar, O’ahu in particular will have to tap resources such as wind that raise questions about cost, cultural and environmental impacts, and variability. For example, bird migration patterns that have prohibited development of utility-scale wind on Kauai may also impact the potential to develop large-scale wind on O’ahu and other islands. Geothermal energy has also generated local opposition on the Big Island.

The Power of Rooftop Solar

Fortunately, the potential for on-site renewable energy (with minimal environmental impact) is enormous. Fully developed, rooftop solar would supply one-third of O’ahu’s electricity, and still more when deeper energy efficiency is taken on.

Even without subsidies, rooftop solar is also inexpensive. Shown with other renewable energy sources and energy efficiency below, it is economically competitive with electricity generated by burning fuel oil.

 

While other renewable energy technologies will tend to be developed by third parties, reaching full rooftop solar potential will require resolution of a major conflict between the HECO Companies and their customers over compensation. Compensation varies across the islands by more than a factor of two, but largely tracks the price of oil, either through the retail electricity price or another proxy such as “avoided cost.” HECO recently proposed more than halving the compensation rate for its solar-producing customers.

Current Compensation Rates for Customer-Sited Rooftop Solar

The issue is whether solar energy produced by rooftop solar arrays provides as much as value to the grid as it earns for its customers. This issue is not specific to Hawai`i. Environment America recently summarized the debate by illustrating that, in most mainland states, the value of solar energy exceeds the compensation solar producers receive by offsetting their energy’s use to the utility. However, as former Austin Energy executive Karl Rábago says, “utilities simply do not think things they do not own or control can be resources.”

Like many mainland utilities, the HECO Companies claim non-solar customers subsidize those who use solar to the tune of $53 million a year. However, the utility hasn’t conducted a study on the costs and benefits of solar energy, nor has it addressed the issue in its two most recent rate cases. In other words, net metering may not be the most accurate valuation for solar, but neither the utility nor the Public Utilities Commission has provided a more accurate alternative to date.

Beyond the battle over compensation, there are also potential technical limitations. Several years ago, the HECO Companies temporarily restricted solar by a “15% rule,” claiming that no more than 15% of the grid’s peak energy could come from rooftop solar. The rule was only loosely based on data, and subsequent investigation has suggested that solar could provide nearly twice that much power to the grid without significant hardware upgrades.

In recent months, the U.S. National Renewable Energy Laboratory and others determined that Hawai`i’s power lines could technically handle twice the amount of distributed energy previously advised by the utility, from 120% of the daytime minimum load to 250%. The leap was made by updating a firmware setting on Enphase smart inverters – which HECO estimated to be on 90% of all residential PV installations – on new and existing solar installations.

Although many perceived technical limitations to local solar, like the 15% rule, have been  ‌surpassed, utilities are nonetheless contending that the grid also faces global limits, as illustrated by the so-called “duck curve” (right, so called for its similarity to the waterfowl’s side profile). As more solar has been installed on Kauai island, it substantially reduces daytime demand for electricity (shown by the purple curve). The other Hawaiian islands face similar situations now or in the near future, where utilities assert “either generation assets will have to be curtailed [solar being the likely candidate since its low capacity factor is causing the situation], electrical demand will have to increase, or significant storage assets will be required to store excess generation and provide confidence that conventional units can be de-committed.”

All else being equal, massive growth in rooftop solar creates one certain financial problem: little remaining daytime demand for other power plants, such as the utility’s existing oil-fired (or proposed natural gas-fired) units. But the utilities may be exaggerating the technical challenge of quickly ramping up production their power plants. There are several solutions to the problem – from efficiency, to turning solar panels westward, to time-of-use pricing – that have yet to be deployed at any measurable scale in Hawai’i.

While the amount of customer-sited power generation is unprecedented, the technical limitations thus far have been relatively trivial to overcome. Given its minimal environmental harm and localization of economic benefits, distributed generation also has advantages for customers over larger scale power plants.

Despite these advantages, rooftop solar will not be enough to power most islands. But there are some promising opportunities for storing the sun and other sources of renewable electricity generation.

‌

Energy Storage

Inexpensive energy storage is seen as a panacea for powering a grid when the wind’s not blowing and the sun’s not shining. One form that has been widely adopted where possible, pumped hydro facilities, uses electricity in periods of low demand to pump water uphill into a reservoir, releasing it through generating turbines downhill when demand rises. Other forms of energy storage such as chemical batteries are becoming rapidly more economical, with some estimates that storage prices will drop by 60% over the next five years.

For Hawai’i, with its high electricity prices, the future is now for storage. Several Hawaiian companies already have plans to offer electric customers battery storage with a solar PV system. At least two, SolarCity and Blue Planet Energy, are offering to take customers off the grid entirely. Hawaiian utilities that have experimented with storage adjacent to wind and solar power plants to handle variability, are now starting to tackle storage as a means to deal with peak demand, following the lead from California utilities.

In the short term, energy storage such as batteries may help most with “fast-ramping” events, periods where electricity demand or supply moves rapidly up or down. With wind or solar power, this happens when the wind abruptly dies or the sun is obscured completely and briefly by passing clouds.

KIUC’s fuel oil- and diesel-fired power plants have traditionally filled the fast-ramping gaps. But a new battery on KIUC’s Anahola solar array, entering service in summer 2015, allows the utility to avoid using these dirty peaking power plants. The battery can store 4.62 megawatt-hours of electricity, while dispersing up to 12 megawatts instantaneously, for a total upfront cost of $7 million dollars. (In comparison, a 4.6 megawatt solar array would likely cost around $8 million.) This semi-trailer-sized storage enables the utility to smooth the supply of solar energy through any passing clouds.

While batteries typically supply or absorb power for short durations, time can be provided for other, slower-responding forms of storage (like pumped hydro) or conventional power generation to fill the larger gaps in electricity supply. But in the long run, battery storage may help variable wind and solar power mimic traditional power plants.

One recent example is the Kauai cooperative’s agreement with SolarCity to purchase energy from the nation’s first “dispatchable” utility-scale solar array, called such because the addition of a large battery allows it to deliver power on-demand. The 52 megawatt-hour battery and 13 megawatt solar array will be able to store noon-time solar power for over 2,000 homes for four evening hours. Including the 30% federal tax credit and $350,000 in state tax refunds, the dispatchable solar will cost 14.5 cents per kilowatt-hour, slightly higher than KIUC’s other utility-scale solar, but cheaper than existing fuel oil generation.

The cooperative is also considering pumped hydro storage, particularly a $65 million dollar, 25 MW project forecast for construction in 2019. It could provide up to 250,000 kilowatt-hours of energy per day, operating at a price comparable to oil, and falling to pennies per kilowatt-hour once the project is paid off. If approved, it could even supersede the cooperative’s consideration of LNG as a fuel for its power plants.

Although there are hundreds of megawatts of potential on every island in Hawai`i, HECO does not consider pumped storage in its plans because it’s “highly dependent on site availability, may face substantial permitting and public acceptance challenges, have high capital costs and require long lead times (more than seven years) to develop.” Yet siting a bulk shipping terminal for LNG has many of the same challenges, higher costs, and half the usable lifespan. Additionally, pumped storage hydro enjoys more community support than use of liquefied natural gas.

Pumped hydro has huge potential to aid Hawai`i’s 100% renewable energy standard by combining with locally-sourced energy. Using HECO’s own numbers (at the high end of the range), pumped hydro has a levelized cost hovering near 10 cents per kilowatt-hour. With nothing but rooftop solar energy fueling it, pumped hydro storage provides electricity at a levelized cost near 25 cents per kilowatt-hour, though KIUC’s reported lower capital costs and falling solar costs suggest an even lower levelized cost in the near future for all island utilities.

The seemingly high cost may be well worth it. In a recent filing, the California Energy Storage Alliance suggests that the grid value of solar plus storage is identical to the 25 cents per kilowatt-hour cost (to Californian utilities). El Hierro, an island in the Canary Islands with about half the electricity demand of Kauai, is now nearing 100% renewable energy through an installed pumped hydro system.

While the utilities debate the merits of storage technologies versus natural gas, distributed storage is not-so-quietly growing, allowing a home or business owner to shift energy use, or even to get off the grid entirely. Hawai’i utilities are uniquely vulnerable to customers using distributed storage to “defect” from the grid because their power costs are so high.

Earlier this year, Tesla Motors Inc. announced the release of its Powerwall battery, one of the first commercially viable residential storage technologies. A single 7 kilowatt-hour Powerwall battery can be installed for $500 per kilowatt-hour now, estimated to drop to $300 or below in a decade. ILSR estimates the unsubsidized cost of energy from a residential solar array paired with a Powerwall is between 19 and 30 cents per kilowatt-hour, often less than buying electricity from the incumbent utility. Employing a group of batteries on the distribution network, such as the 1 MW battery at the Maui Smart Grid Project, may have similar or greater economies-of-scale.

Smart Grids

The economics of storage and distributed power in Hawai`i are remarkable, and combining them with new, distributed smart grid technology is already allowing a rancher on the Big Island to plot a way to reach 100% renewable energy many years ahead of the new state law.

In 2014, when HELCO projected its rates to rise close to $1 per kilowatt-hour over the next few decades, Parker Ranch President and CEO Neil  ‌“Dutch” Kuyper thought he could do better. So he did what many utilities would do – he hired consultants to create a microgrid plan for his ranch and the surrounding community.

Currently run as a charitable trust, the ranch is spread over 130,000 acres on the northwest tip of Hawai`i Island. 26,000 cattle graze there on prime pasture, a land that also has rich renewable energy potential, including wind, geothermal, and pumped hydro storage. The 200 megawatts of available pumped hydro storage is more than enough for the entire island’s demand. Ultimately, the consultants suggested that Parker Ranch could be run more economically as a cleaner, smarter grid than by remaining a HELCO customer.

This kind of “smart” grid stands in contrast to the 20^th century “dumb” grid, the latter characterized by one-way power flows from utility to customer, minimal automation, and minimal real-time operation data for anyone but grid operators. A smart grid has advanced meters, electronic monitoring, and widely distributed large and small energy resources. It can coordinate distributed energy sources such as household batteries and solar with large-scale ones, can automatically avoid or reduce outages, and can provide real-time data and pricing. A microgrid, such as that proposed at Parker Ranch, is a localized smart grid that can operate on its own, separate from the larger grid.

For “Paniolo Power,” Parker Ranch’s nascent utility, creating a microgrid means reconstructing the transmission and distribution grid, down to the customers’ meters. Financed over 30 years, the microgrid supplied by renewable energy was found to cost less than buying power from the incumbent utility.

Thus far, the HECO Companies have confined their smart grid endeavors to a few government-supported microgrids and the deployment of smart meters, with a much smaller impact. HECO has smart meters on 5,200 houses within six clustered neighborhoods on O`ahu, a small fraction of its total customer base.

Meanwhile Kauai island cooperative installed smart meters on the majority of Kauai homes in 2013, more than 30,000 in total. The shift has helped the cooperative to more accurately forecast and manage energy demand and to redesign electricity rates, including a time-of-use pilot program for its member-owners.

NextEra has pledged to accelerate the installations of smart meters in HECO territory, but all utilities could do more. To fully expand rooftop solar in the state, batteries and demand-shifting appliances will be needed to make full use of power in-house when the sun is shining, and manage the flow of energy to distribution circuits during the daytime. Under smart management, rooftop solar penetration need not surpass technical limits on distribution networks. And excess daytime energy can then be shifted toward evening needs.

The Rocky Mountain Institute has explored what using a smart grid for flexible load management (as Kauai is testing) can do for utilities. They found, for HECO in particular, that electric vehicle charging coupled with controls on dryers, air conditioners, water heaters, and battery storage, can increase on-site usage of rooftop solar from 53% to 89%. For an investment of about $1,000 per home, customers would decrease bills by 33% while opening up a whole new market of non-exporting rooftop solar. With more customers using their own solar power, it would reduce demand on the distribution grid as well as the need for more distributed or centralized backup power or storage.

A distributed path for power is open for Hawai’i. But that’s not necessarily the future, according to HECO, NextEra, or even the Kauai cooperative.

For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.