LIFE OF THE LAND - maui-tomorrow.orgBorneo wildfires and peat soil fires set to clear land for biofuel plantations (1997-98) Kuwaiti Oil Fires (January and February 1991) Persian Gulf

Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS * p. 1

LIFE OF THE LAND76 North King Street, Suite 203

Honolulu, Hawaiì 96817Phone: 533-3454 [email protected]

September 5, 2012

Jim SpaethU.S. Department of Energy300 Ala Moana Blvd.Honolulu, HI 96850–0247

[email protected]://www.hawaiicleanenergypeis.com

RE: Hawai‘i Clean Energy Programmatic Environmental ImpactStatement (PEIS)

In 2010, the United States Department of Energy (DOE) announced itsintent to prepare a PEIS for the Hawai‘i Interisland Renewable EnergyProgram (HIREP). The PEIS failed to look at alternatives. In responseto public scoping comments the DOE has issued this new PEIS. Thepurported intent is to look at the full range of alternatives.

Aloha Mr. Spaeth:

Enclosed is Life of the Land’s proposed Distributed Generation (DG)alternative to be evaluated in the Programmatic EIS as a viable andreasonable alternative, eliminating the need for an expensive inter-island cable.

Mahalo,

Henry CurtisExecutive DirectorLife of the Land


PART I: NEPA: A MANDATED ‘HARD’ LOOK AT ALTERNATIVES

The Council on Environmental Quality (CEQ) oversees the NationalEnvironmental Policy Act (NEPA) of 1969 which requires anEnvironmental Impact Statement (EIS) for projects involving federalinvolvement.

The CEQ requires that reasonable alternatives MUST BE evaluated ifthey are technically and economically possible and based on commonsense.

If an alternative proves reasonable, project directors must provideevidence that they have weighed its pros and cons before determiningthat it is clearly beyond the scope of the implementing agency, orbeyond the capacity of funding sources, or in conflict with one or morelaws.1

The U.S. Ninth Circuit Court of Appeals has ruled repeatedly that theremust be a “hard look” at reasonable alternatives.2

Dr. Jane Summerson, the DOE NEPA Document Manager for therecently released “Hawaiì Clean Energy” PEIS, acknowledged that a

1 “Reasonable alternatives include those that are practical or feasible from a technical,economic, or common sense viewpoint, rather than simply desirable in the applicant’s view.An alternative that is outside the legal jurisdiction of the lead agency must still be analyzed inthe EIS if it is reasonable. A potential conflict with local or federal law does not necessarilyrender an alternative unreasonable, although such conflicts must be considered. []Alternatives that are outside the scope of what Congress has approved or funded must still beevaluated in the EIS if they are reasonable, because the EIS may serve as the basis formodifying the Congressional approval or funding in light of NEPA's goals and policies.”http://ceq.hss.doe.gov/NEPA/regs/40/1-10.HTM#12 http://caselaw.findlaw.com/us-9th-circuit/1432977.html


thorough and objective analysis of alternatives must be included in thedocument:

“We're required to disclose conflicting views, and we get conflictingviews. But we can't just pick and choose. If it is a valid, supported,scientific view that doesn't happen to agree with us, it goes in our EISand we discuss it and we present it.”3

PART II: FOSSIL FUEL IMPACTS

Cleaning Up after the Exxon Valdez: The ecological death toll included 500,000 birds,

4,500 sea otters, and fourteen whales.4

Fukushima Nuclear Power Plant melt-down (March 10, 2011)

BP Deepwater Horizon Explosion (April 20, 2010)

Iraq Oil War (2003-11)

3Dr. Jane Summerson, a geologist with the U.S. Department of Energy (DOE), spoke at PittCommunity College on) Oct. 15, 2010 about governmental procedures for protecting theenvironment and developing clean energy sources. http://vimeo.com/16172374: 14:17-344 http://faculty.buffalostate.edu/smithrd/ExxonPix/cleanup.jpg


Borneo wildfires and peat soil fires set to clear land for biofuelplantations (1997-98)

Kuwaiti Oil Fires (January and February 1991)

Persian Gulf Oil War (1990-91)

Exxon Valdez (March 24, 1989)

Chernobyl Nuclear Accident (April 26, 1986)

Three Mile Island Nuclear Accident (March 28, 1979)

Santa Barbara oil spill (January and February 1969) which led tothe first Earth Day

Texaco’s deliberate dumping of eighteen billion gallons of toxicoil waste products from the Lago Agrio oil field into theEcuadorian Amazon Rainforest (1964-90)

Egregious as they were, the total emissions from “big name” disasterssuch as the BP oil spill pale when compared with the continuousdisposal of fossil fuel waste products into the air, the water, and onland.

For example, the planet has 90,000 oil tankers, container ships, andcruise ships that are mostly powered by bunker fuel, which has theconsistency of mud and contains sulfur levels 3,000 times those ofgasoline.

Hawaiì Fossil Fuel Impacts

Hawaiì’s Top 3 Dioxin Emitters are all power plants: (1) AES CoalPlant; (2) HECO’s Kahe Generation Station; and (3) HECO’s WaiauGenerating Station.

Hawaiì’s Top 10 chemical polluters are six electricity generationstations, two refineries and two military bases: (1) HECO’s KaheGeneration Station; (2) Joint Base Pearl Harbor-Hickam; (3) ChevronRefinery: Kapolei; (4) HECO’s Waiau Generating Station; (5) MECO’sKahului Generating Station; (6) HELCO’s Hill Generating Station: Hilo;(7) AES Hawaii: Kapolei; (8) Tesoro Refinery: Kapolei; (9) US Army


Pohakuloa Training Area-Range Facility; and (10) MECO’s MaalaeaGenerating Station.5

Coal delivery and storage, AES Coal Plant, Campbell Industrial Park

On February 23-24, 1977, the Hawaiian Patriot leaked 18,000 tons ofoil, then caught fire, exploded, and sank. The ship was transporting99,000 tons of light Indonesian crude oil from Indonesia to Honolulu. A50,000 ton oil slick formed 300 miles west of Hawaiì.6

On May 14, 1996, a Chevron pipeline ruptured, discharging No. 6bunker fuel oil adjacent to HECO’s Waiau Power Plant. Over 41,000gallons of oil gushed into Waiawa Stream. Being slightly heavier thanthe fresh water, the oil slowly sank through the water table,contaminating life forms along its spread and descent. Being slightlyheavier than salt water, when it reached Pearl Harbor, the oil slowlyrose through the water column.

5 EPA: Hawaii Toxics Inventory Data for 2010.http://yosemite.epa.gov/opa/admpress.nsf/0/2eb5c3949a12816e8525797c006a07d96 http://www.itopf.com/information-services/data-and-statistics/case-histories/CP2.html


The 10-acre Waiawa Marsh, a restricted wildlife area and home to thestate's four endangered species of water birds (Hawaiian stilt, coot,duck, and moor hen), was contaminated with pools of submerged oil.An oil sheen covered approximately 90,000,000 square feet of openwater in Pearl Harbor during the first six days after the spill.

Areas impacted included freshwater and saltwater wetlands, shorelinesand intertidal areas including mangroves, mudflats, rocky shorelines,sandy beaches, riprap, seawalls and piers. Regulators estimated that77,965 linear feet of intertidal habitat was oiled.

The clean-up resulted in the repeated, episodic high-pressure washingof the Pearl Harbor shoreline, which destabilized and eroded shorelinesoils. The shoreline continued to emit an oil sheen for more than amonth. This pollution had a devastating impact on egg, larval, juvenileand adult stages of recreationally and commercially valuable finfish,invertebrates, green turtles, and birds.

Initially federal and state regulators estimated that the habitat wouldtake ten years to recover, but later revised estimates upwards tofifteen to twenty years.

Kahe Generation Station, Waianae


Ending the use of fossil fuel in Hawaiì would ensure the safety of thestate’s fragile ecosystems and end Hawaiì’s role in contributing tolooming worldwide fossil-fuel-based energy disasters.

PART III: THE CURRENT ELECTRICITY QUAGMIRE

The Vortex

The Institute of Electrical and Electronics Engineers (IEEE) held aphotovoltaic conference at the Hawaii Convention Center in thesummer of 2010. One of the speakers was Kris Mayes, Chair of theArizona Corporation Commission, the equivalent of the Hawaiì PublicUtilities Commission.

Kris Mayes helped co-author the Arizona RenewableEnergy Standard while serving on the ArizonaCorporation Commission (2003-2010). Mayes nowserves as Arizona State University’s Director on Lawand Sustainability.7

Mayes has a Masters of Public Policy from ColumbiaUniversity and a J.D. from the ASU’s College of Law.

Mayes introduced the concept of “cascading natural deregulation.” Asthe cost of renewable systems trends downward and electric rates goup, those who can leave the grid, will leave the grid.

The fixed costs associated with energy production, transmission, anddistribution will then have to be absorbed by the remaining (smaller)rate base still on the grid.

Those who remain on the grid will then see their rates go up evenmore, which in turn provides ever stronger incentives for more peopleto opt out of a centralized grid, driving ever higher the rates for thediminishing number of ratepayers who remain.

7 https://asunews.asu.edu/20111110_solarseminar;http://apps.law.asu.edu/Apps/Faculty/Faculty.aspx?individual_id=350


This cascading natural deregulation will first occur in areas withabundant renewable energy resources and high electrical utility pricessuch as Hawaiì.

In this scenario, a utility such as Hawaiian Electric Company (HECO),and its subsidiaries Maui Electric (MECO) and Hawaii Electric Light(HELCO) predictably will be sucked down into a bottomless vortex andultimately fail as a viable investor-owned corporation.

Whirlpool8

HECO: VISIBLE SIGNS OF A HAWAII VORTEX

In the past few years the rate of solar installations in Hawaiì hasdoubled each year. The number of renewable energy developers whohave made proposals to the utility for large-scale grid-connectedrenewable energy projects has gone up ten-fold. Simultaneously, asfossil fuel-based kwh prices rise, rapid return on investment leads tothe increasing installation of various energy efficiency systems, furtherdriving down the demand for electricity. For example, Hawaiì’s stategovernment has recently invested 33.4 million dollars in energy andwater conservation measures (ecm) in ten capitol district buildings,and has plans to invest in further ecm’s in the state’s 256 schools aswell as state libraries.9

8 http://uvs-model.com/pictures/whirlpool.jpg9 Green Governance, by Paul Berry, Honolulu Weekly, August 8, 2012.


The HECO utilities experienced peak energy use in 2004. Since thenthe demand for electricity from the grid has been dropping.

In February 2012 Hawaiian Electric Industries Inc. (HEI), the parentcompany of HECO, included a warning in their annual 10-K report filedwith the U.S. Securities and Exchange Commission:

“Increasing competition and technological advances could cause HEI’sbusinesses to lose customers or render their operations obsolete. []HECO and its subsidiaries face competition from IPPs [IndependentPower Producers] and customer self−generation. [] The electric utilities cannot predict the future impact of competition from IPPs andcustomer self−generation, or the rate at which technological developments facilitating non−utility generation of electricity will occur. New technological developments, such as the commercialdevelopment of energy storage, may render the operations of HEI’selectric utility subsidiaries less competitive or outdated.”10

Renewable Energy Transformation

Hawaiì is unique in having a high penetration level for renewableenergy.11

For the Big Island, renewable energy represents 36.7% of the totalgeneration (kWh). Just over half of this was baseload: geothermal(19.6%). The rest was variable Distributed Generation (DG)(16.83%): wind (13.3%), run of river hydro (3.8%), and solar energy(.006%). The amount of variable DG has jumped from 0.07% (2001)to 16.83% (2011).12

Solar

Hawaiì’s four utilities are all in the top five utilities in the nation forthe amount of solar systems installed per 1,000 customers.13 On theBig Island, HELCO ranks fourth with almost twenty-one solar systemsper one-thousand customers.14

10 HEI, Inc., Annual 10−K Report filed with the U.S. Securities and Exchange Commission, on February 17, 2012 for the year ending December 31, 2011, at 2811 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony T-7. 26:22-27:112Ibid. HELCO 2013 Rate Case. Testimony of Jay M. Ignacio (HELCO T-2), p. 7213 Solar Electric Power Association (SEPA, 2011): MECO (#1), HECO (#2), HELCO (#4), KIUC(#5) HECO-734, p. 1614 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony T-7. 26:8-10


The 1,900 small solar DG systems on the Big Island account for 98%of all 1,933 generators located on island.15 While large in numbers ofsystems, DG is still small in total generation capacity. The solarsystems represent less than 1% of electricity generated.16 HELCOestimates that there will be an additional 2,000 small solar generatorsby 2013.17

All sorts of numbers are thrown about regarding how much power canbe or is supplied by the La Ola Solar Farm on Lanaì. The ratios can becalculated using various numerators and denominators.

The numerator could be the maximum MW output of the solar farm,the initial available MW generation of the solar farm before a batterystorage system became fully functional, or the expected MW output ofthe solar farm with a fully functioning battery.

The denominator could be the total generation available on the island,the total grid-based electricity sold, the average electricity sold, or themaximum electricity sold.

MECO 8 diesel generators 10.4 MW18

Manele 1 diesel cogenerator 1.0 MW19

La Ola Solar 1 facility 1.2 MW20 (1.5 MW21)

Total 12.6 MW

15 By number of systems (April 2012): The Island of Hawaiì has 1,900 small PV systems, 25HELCO large units, 6 Purchase Power Agreements (2 wind generators and one each ofnaphtha, geothermal, solar and hydro), and a couple of small HELCO hydro units. HELCO2013 Rate Case, PUC Docket No. 2012-0099: Testimony of Ross H. Sakuda ( HELCO T-5), p.2, Chart 1; Testimony of Norman Verbanic ( HELCO T-7), p. 18, lines 11-15 and p. 23 line 17thru p. 24, line 19 .16 Ibid. HELCO 2013 Rate Case. Testimony of Jay M. Ignacio ( HELCO T-2), p. 51, lines 19-25.17 HELCO 2013 Rate Case, PUC Docket 2012-0099, Exhibit HELCO-725 p. 10.18 Lanai Existing Generation. MECO System & Conditions. Mat McNeff, Renewable EnergyServices. IRP Advisory Group Meeting #2, August 7, 201219 Ibid. Mat McNeff20 http://the.honoluluadvertiser.com/article/2009/Jan/07/bz/hawaii901070361.html21 http://www.castlecooke.net/property/details.aspx?rtr=s&rid=96&cat


Peak Generation 4.825 MW22 2010

Total Generation 25,430 MWh23 2012

Average Generation 2.9 MWh24

Actual Solar Generation unknown?25

The issue of how much solar is on the Lanaì system is very political,with the result that different ratios are used at different times.

The solar penetration ratios can range widely, from 52% (1.5 MW solar/ 2.9 MW average load) to 9.5% (1.2 MW solar divided by 12.6 MWtotal available generation).

Wind

Most local, regional, national, and international grids have lowintermittent renewable energy penetration levels,26 or interconnect tolarger grids that can counteract intermittent loads located in oneregion,27 or are isolated rural systems where reliability for largenumbers of grid users is not a factor.

Wind provides 6% of the electricity on the European Grid. Windgeneration represents 3% of the electricity produced in the U.S.(Other renewable generators account for another 0.5% of generation).

The U.S. Mainland has three independent transmission grids, two ofwhich include large portions of Canada and two of which extend intoMexico. These large grids can easily absorb the variable output of thevarious intermittent energy sources.

The largest wind energy penetration level on any of the three NorthAmerican grids28 is 8.5%, which is generated on the ERCOT (Texas)grid.29

22 Wayfinding: Navigating Hawaiì's Energy Future (June 2012)23 MECO 2011 Rate Case, PUC Docket No. 2011-0092, MECO T-3.24 Conversion of year to average hour: 25,430 divided by (24 x 365).25 Actual output of non-utility grid-connected renewable energy resources is difficult to obtain.26 The renewable energy penetration level in the U.S. is 4%.27 The Denmark grid with high wind penetration levels is interconnected to the European grid.28 The Western Interconnection (US/Canada/part of Mexico), the Eastern Interconnection(US/Canada), and the ERCOT Interconnection (Texas/part of Mexico).29 HELCO-730, p. 11; HELCO-749, ERCOT Quick Facts.


At maximum output, Maui’s existing wind generator and two approvednew generators may produce 54% of Maui’s average electricity30.

There are experimental battery-based pilot projects being tested onMaui to attempt to better manage the volatile output of wind energygenerators.

Hawaiì Island’s two existing wind farm generators can produce 23%of Hawaiì’s average electricity produced, and in 2011 HELCO obtained13.3% of its electricity from wind.31

Volatility and Instability

Increasing the penetration of grid-based intermittent renewableenergy (solar, wind) adds uncertainty and volatility to an electricsystem.32

On the Big Island, the highest level of renewable energy penetrationfor any one hour was 69.5%, and for any one week was 51.6%.

Utilities argue renewable energy penetration must have fixed limits,and the HECO Companies impose three types of limits on acceptingavailable renewable energy: 15% of distribution circuits, curtailment ofall wind energy between 10 p.m. and 6 a.m., and some curtailment ofwind and solar during the day.

These limits are imposed regardless of whether there are batteries onsite that are intended to smooth out the generation.

The HECO Companies, wind companies and solar companies areexperimenting with energy storage solutions. However, there is anongoing vulnerability in using currently available battery storagemeasures for intermittent energy sources. This is evident by the threefires in eighteen months at the Kahuku windfarm’s battery facility. Thethird fire shut down the windfarm and it remains off-line.

30 This is somewhat of an apples and oranges comparison since the US and Europeanpercentages are based on actual sales as measured in MWh, while the Hawaiì numbers aremaximum wind output divided by average electricity produced. Nonetheless, it is clear Hawaiìhas much higher penetration levels.31 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony of Jay M. Ignacio (HELCO T-2),p. 51, line 24.32 HELCO 2013 Rate Case, Docket 2012-0099: Testimony HELCO T-2; Testimony HELCO T-7,HELCO-730, HELCO-748, p. 1 Tools Used for Handling Variable Generation in the HawaiiElectric Light Co. Control Center. Lisa Dangelmaier, Dora Nakafuji, Member, and RobertKaneshiro.


Some believe the utility restrictions are legitimate. Some believe thatengineering limits are needed but that the utility limits are too strict.Still others think technical engineering studies are needed todetermine safe renewable energy penetration levels.

Customers who leave the grid to generate their own electricity aredoing more than just decreasing the revenue stream of the utilities.They are forcing utilities to examine new load profiles. This ongoinginvestigation will quite likely create greater planning uncertainty.

As customers leave the grid, install energy efficiency devices to lowergrid demand, or install net metered systems, the historic load patternfor grid-based electricity is becoming distorted.

For example, daytime and evening peak demands are decreasing onthe Big Island as distributed solar penetration increases.33 Themaximum peak on the island occurred a few years ago and was about204 MW. In 2010 the day time peak was 174 MW, the evening peakwas 190.6 MW and the minimum night load was 85.1 MW.

Hawaii’s independent, separate grids, though small geographically,have a higher renewable energy penetration level than other U.S.grids. Increasing the location diversity of wind facilities results in lesstotal wind generation volatility. Both Maui and Hawaii have only twowind facility sites, and they tap the same wind flows. Therefore outputmoves in sync, resulting in greater volatility.

Ramping refers to the change in generation over a given period oftime.

If a cloud passes above solar panels, there is a sudden need foradditional utility power to ramp up to meet the demand. If there is asudden change in wind speed at a large wind power plant, the utilitymust immediately adjust its output to compensate. If a wind facilitygoes off-line due to mechanical problems, the utility must be able todetermine if the sudden loss of load is for 1/100 of a second, for anhour, or for longer.

High wind speeds result in high generation. When the wind speedexceeds the maximum that the wind system can handle, however, theturbines are turned off as a safety precaution. During such eventsthere is a rapid ramp down.

33 HELCO 2013 Rate Case, PUC Docket 2012-0099, Exhibit HELCO-710, 721, and 725, page10.


There are experimental battery-based pilot projects being tested onthe Big Island to attempt to better manage the volatile output andsudden ramping of wind energy generators.

If grid-scale batteries prove successful, it may backfire on the utility. Itwill likely increase the comfort level of ratepayers who are consideringinstalling battery systems on site, thus accelerating the number of on-site renewable energy systems. This will raise prices for remaininggrid ratepayers, adding to the risk of utility financial losses, impairingthe utility’s borrowing capacity, and increasing a utility’s inability orunwillingness to invest in upgraded “smart” grids. As risk and pricesrise, more people will leave the grid. Thus utility-scale grid-connectedbattery pilot projects may be detrimental to utility generation andSmart Grids, and may lay the foundation for true self-generation.

The majority of DG capacity is provided by small unmetered PV withno utility monitoring or control. There is presently no solar or windproduction forecast provided to the system operator.

To offset variability and volatility, the utilities keep some of theirgenerators at or below their maximum output, in order to provide acushion for changing wind and solar generation. Unfortunately, thesegenerators operate less efficiently at lower outputs.

Just as some quick start appliances use almost as much power in the“off” position as in the “on” position, fossil fuel generators need to beidling, waiting to rev up, to rapidly increase output to adjust forsudden decreases in wind and solar output, due to the drop in windspeed or the passing of clouds overhead.

According to HECO CEO Richard M. Rosenblum:

“One of the greatest challenges to the development ofrenewable energy in Hawaii, as well as in the nation, isthe lack of infrastructure to support renewable energyresources.

The current electric infrastructure was not designed orbuilt to interconnect a variety of mostly intermittent, as-available, renewable electrical generation resourcesdeveloped at remote locations away from the currenttransmission grid.


It was designed to consolidate dispatchable generationfacilities in a few places (as permitted by governmentregulations) and transmit power to the major loadcenters in a reliable and efficient manner.

In order for the Companies to use these renewableresources, new transmission lines (and supportinginfrastructure such as substations) will have to bedesigned and built to these remote locations.

Because of the intermittent nature of many of theserenewable resources, different generation regimes,expanded and more sophisticated control systems, andadditional infrastructure will be required to account forand handle the variability of electrical output from suchintermittent resources.

The Companies will also be required to perform andincur the costs for the studies necessary to help assurethat the necessary modifications to the Companies'systems can be achieved while maintaining systemreliability, safety, and power quality.”34

34 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony T-1 13:11-14:5.


HECO Building at the corner of King St. and Richards St., Honolulu

The utility uses “smart” to mean what they are proposing to do. Ifimplemented, for example, Smart Grids will transfer billions of dollarsfrom ratepayers to utilities to build an infrastructure that allegedly willallow for greater renewable energy penetration. Smart refers to theinstallation of computers and telecommunication systems to enablegrid operators to know what is going on in real time, minute byminute.

The utility uses “Dumb” to mean the current system where mostelectricity relays and flows cannot be read in real time by gridoperators.

Escalating Capital Expenditures

The HECO Companies are adding layers of redundancy to handle newlevels of uncertainty, and are in the process of spending $2.4 billion aspart of a multi-year effort to upgrade their generation and


transmission grids. This ratepayer money is being allocated in littlenoticed regulatory proceedings.35

The HECO Capital Expenditures Budget shown below excludes the so-called “Big Wind” proposal to take 200-400 MW each of intermittentwind power from the islands of Molokaì and Lanaì and send it oneway via a multi-billion-dollar undersea cable to the load center onOàhu.

HECO Capital Expenditures Budget36

($M) (2012-15) HECO HELCO MECO

Transmission & Distribution 536 133 145

Generation 841 25 52

Other

Total $1,800 $300 $300

35 HECO, MECO and HELCO Application, dated March 31, 2011, for Approval of Issuance ofUnsecured Obligations and Guarantee. Docket 2011-0068. Capital Expenditures Program,(2010-2015). HECO: pdf page 53, MECO: pdf page 73, HELCO: pdf page 93.36 Ibid. PUC Docket 2011-0068.


At the same time that the utility is requesting more ratepayer funds tofinance upgrading the grid and generators, HECO is also proposing(and the Public Utilities Commission is approving) new renewableenergy Power Purchase Agreements that have higher financial coststhan the average cost of existing generators.

These multiple massive investments will sharply escalate electricityprices in Hawai’i and drive more ratepayers from the grid.

The Smart Grid

“Smart Grids” are a catch-all term for a variety of systems involvingintegration of electrical grids, telecommunications, and sophisticatedcomputer programs. A Smart Grid usually means a 2-way flow ofinformation to measure, command, and control the transmission anddistribution grid in real-time, while safeguarding the system fromaccidental “acts of God” and intentional acts of terrorism.

To handle the volatility of new intermittent loads, HECO is proposingnew “Smart Grid” technologies based on new computerized controlsystems that do not yet exist, new layers of cyber protections that donot yet exist, and new computerized forecasting of short-term andlong-term solar and wind output analysis, based on wind and solardata that also does not yet exist.


Cyber security Threats to Smart Grids pose a real threat with grave consequences37

The Super Grid

The early electrical grids were based on Alternating Current (AC)rather than Direct Current (DC) because engineers at the time hadfigured out how to build high voltage AC transmission lines. AC,generated by rotating engines, provides power for incandescent lightbulbs, electric motors and transmitting electricity on electric grids.

It took almost a century to develop and commercialize high voltageDirect Current (DC) transmission lines, and DC is used for 20% of thetotal power consumed in the U.S. Industrial-scale wind power plantsand solar panels produce DC power, which is used for transistor-basedtechnology including flat-screen TVs, PCs, and iPhones; chargingelectric cars; powering data centers that run telecommunications andinternet networks; uninterruptible power for computer systems; andlong-distance power lines. DC microgrids are being developed for

37http://4.bp.blogspot.com/-bOrpkz0M008/Tnib5AIlUUI/AAAAAAAAq4U/XLGQDONRHbs/s1600/9-

2011h.png


buildings, campuses, and commercial and industrial facilities. In recentyears DC has been relied on for very high voltage long distancetransmission lines because line losses are less for DC than AC.

The Super Grid refers to a multi-nodal, multi-island high voltage DC(HVDC) system overlaid above the traditional high voltage AC (HVAC)transmission system. In essence, inter-island and land-based DCtransmission lines would intersect with island-based AC systems.

The 2008 HCEI proposal envisions island-based AC Systems that wouldbe interconnected to a Multi-Island DC Super Grid.

Billions of dollars would be needed to build such a Super Grid;interconnection points between AC and DC transmission lines alone willcost $100 million each.

Some AC proponents believe that the AC standard will continue intothe future, while some DC proponents believe that a fundamental shiftis underway whereby DC will account for 50% of the load in 2030.

There is a risk in guessing which view will prevail, that is, sinkingmoney into the wrong future.38

Telecom Master Plan

In 2011 the HECO Companies initiated a system-wide Telecom MasterPlan.39 The telecommunications infrastructure would be used tosupport business and utility operations.

The plan is designed to facilitate the effective integration of Smart Gridtechnologies and other programs implemented between 2013-22. Theprogram includes the acquisition of radio and fiber terminals, antennasand radio towers.

38 Edison's Revenge: The Rise of DC Power. In a world of more electronics and solar energy,there's less and less need for AC power. By Peter Fairley, Technology Review, April 24, 2012.http://www.technologyreview.com/news/427504/edisons-revenge-the-rise-of-dc-power/See also: War of Currents, http://en.wikipedia.org/wiki/War_of_Currents; GiiResearch.com:DC Building Power Market Set to Exceed $2 Billion http://www.pr.com/press-release/396791;Insight: How renewable energy may be Edison's revenge By Sara Ledwith. Reuters, Dec 20,2011http://www.reuters.com/article/2011/12/20/us-power-acdc-idUSTRE7BJ0PW2011122039 HELCO 2013 Rate Case, PUC Docket 2012-0099. HELCO T-16, pp. 30-31; HELCO-1617, pp.5-6


The Telecom Master Plan is focused on developing telecommunicationcapacity for, among other systems, the Energy Management System(EMS), Automation and Supervisory Control and Data Acquisition(SCADA), Smart Meters a.k.a. Advanced Metering Infrastructure(AMI), Battery Energy Storage Systems (BESS) and Demand Response(DR), and Distribution Automation (DA).

Integrated Resource Planning

During the week of August 20-24, 2012, the HECO Companies held aScenario Planning Workshop for the Integrated Resource Planning(IRP) Advisory Group established by the Public Utilities Commission(PUC) in Docket 2012-0036.

“Scenario Planning” involves developing alternative plausible stories ofthe future. For each story, alternative strategies will be developed.40

HECO and the PUC are utilizing Scenario Planning to develop a Hawaiìenergy roadmap. To avoid flirting needlessly with ratepayers’ fundsvia present blindness to the law of unexpected consequences, acomparative analysis of alternatives is needed.

HECO’s Consultant presented four future scenarios. All four included acontinued migration away from a centralized utility grid and towardsgreater self-generation.

On August 29, 2012 the County of Maui’s Kal Kobayashi presentedDraft Scenarios to the IRP Advisory Group. The horizontal axis wouldbe an expression of consumer choice. At one extreme, on the far left,is a future where the consumer totally relies on the grid for electricalenergy services, and the far right a future where consumers provide allof their own electrical energy services. The vertical axis wouldmeasure the relative cost of alternative energy to the cost of oil. Theupper quadrants reflect a future in which alternative energy is cheaperand the lower quadrants reflect one in which oil is cheaper. Life of theLand’s comments to this PEIS are based on what Kal Kobayashi callsthe “Homesteads” Scenario.

40

http://www.heco.com/portal/site/helco/menuitem.cdc7db98e0a4d28884276c10c510b1ca/?vgnextoid=9a343d4f0078b210VgnVCM1000005c011bacRCRD&vgnextfmt=default



Stranded Cost Impacts

Assume for a moment that the HEI utilities are able to obtain PUCapproval to build a costly Smart Grid / Super Grid Infrastructure with alot of generation and transmission redundancies, combined withtelecommunication, centralized computerized management, and layersof cyber security.

In that event, it will not matter how many customers leave the grid,because through cost-recovery mechanisms previously approved bythe PUC, the utility could automatically raise rates to offset the loss ofrevenue due to drop in demand.

Thus, even if all customers depart the grid, the utility may argue thatHEI’s shareholders are legally entitled to cost recovery because thePUC authorized the utility to build the system. They may also arguethat if the utilities fail, the State economy will suffer an enormous jolt.These arguments have been used to bail out the Wall Street financialmeltdown (“too big to fail”) and to reinvigorate industries (DetroitBailout).

It is not in the public interest to give a monopoly utility a blank check.

Therefore it is critical that the discussion on any NEED for this costlysystem is done BEFORE the PUC approves it.

PART IV: WHAT IF ...?

What if Options: Alternative Plans

The Council on Environmental Quality (CEQ) oversees the NationalEnvironmental Policy Act (NEPA). CEQ requires that reasonablealternatives MUST BE evaluated in Environmental Impact Statement(EIS) if they are technically and economically possible and based oncommon sense.

Life of the Land believes that this EIS offers the opportunities to layout alternating future scenarios for evaluation. There is an absoluteneed for the PEIS to present a balanced estimation of the positive andnegative consequences of different, reasonable alternatives.


There are a number of game changers that are being discussed inutility circles, including Ocean Thermal Energy Conversion (OTEC),Liquefied Natural Gas (LNG), Wave Energy Conversion Systems(WECs), Algal Biodiesel, Storage, DC Grids and Self-Generation.

We are presenting the DG scenario, and we hope others will presentalternative future scenarios.

Puueo Substation, Hilo

What if Options: Solar Energy

Solar energy is everywhere.

In fourteen and a half seconds, the sun provides as much energy toEarth as humanity uses in a single day.


In eighty-eight minutes, the sun provides as much energy as humanityconsumes in a year.

In 112 hours – less than five days – the sun provides as much energyas is contained in all proven reserves of oil, coal, and natural gas onthe planet.

Earth:41 “Each day more solar energy falls tothe Earth than the total amount of energy theplanet’s 6.1 billion inhabitants would consumein 27 years.”42

Solar Ledge: PV awnings at the Universityof Texas.43

If humanity could capture one tenth of one percent of the solar energystriking the earth each year – one part in one thousand – we wouldhave access to six times as much energy as we consume in all formsevery year.

The National Renewable Energy Laboratory of the U.S. Department ofEnergy (NREL) notes that solar photovoltaic prices have been trendingdownward since 1980. In just three decades there has been a seven-fold drop in prices. NREL also estimates that rooftop PV cells may soonrival coal and natural gas in total cost per kW.

41 http://rst.gsfc.nasa.gov/Sect16/full-20earth2.jpg42 National Renewable Energy Laboratories. www.nrel.gov/documents/solar_energy.html43 Completed in the fall of 2000, this 7-kilowatt photovoltaic awning is situated above the 8thfloor windows of the 26-story University Center Tower on the Texas Medical Center campus inHouston, Texas. The awning serves a dual purpose: the SunShine® AC modules supply about10,000 kilowatts of electricity annually, and the shading they provide offsets an air-conditioning load of an additional 2,600 kilowatts. By installing this system, the HoustonHealth Science Center is helping Texas to meet its aggressive mandate for 2,000 megawattsof new renewable power by 2009, which is part of the state's electric utility restructuring plan.The University of Texas Health Science Center partnered with Applied Power Corp. andConservation Services Group on this project.


The average person probably thinks about large utility generatorswhen they reflect on how electricity is generated and produced withinthis State. In terms of MW output, that is certainly the case. But it isno longer the case in terms of the actual number of generators. Today,the vast number of grid-connected electric generators in Hawaiì areactually small rooftop photovoltaic (solar electric) systems. Hawaiìhas more than 3,500 solar powered net-metered systems, and theseconstitutes over 90% of all of the power plants in the State.Combined, however, the output of these generators still representsonly a small percentage of the total electricity generated in the State.

Solar Shelf Solar Tube Solar LightBulb

Light shelves44 placed belowwindows can be used to reflectsunlight upward to illuminate theceiling, creating generalillumination.

Solar Tubes capture dispersedsunlight and through reflectivematerial within the tube, transfersthat light into rooms.45

Solar tubesgenerate diffuselight.46

What if Options: Concentrated Solar Power

Although usually considered an intermittent source of power,Concentrated Solar Power (CSP) systems can store heat and produceelectricity hours after the sun has set, making it a source of “firm”power. CSP systems are built using aluminum and glass, but notsilicon, which is sometimes scarce and costly. Unlike the moretraditional flat photovoltaic panels, CSP systems use a parabolic mirrorto capture the rays of the sun and focus it on a pipe, heating its liquidcontents into a gas to fire a gas turbine.

44

www.robotecture.com/endofmechanics/CONTENT/Student%20Apps/EZ/Zambrano%20EOM%20final/template-img/light_shelves.jpg45 http://www.inhabitat.com/2006/12/28/solar-tube/46 www.portlandonline.com/shared/cfm/image.cfm?id=114639


SOPOGY (SOlar POwer enerGY), a Honolulu-based company founded in2002, focuses on building small-scale concentrated solar powersystems. Sopogy offers rooftop CSP, with a trough that flips over toprotect itself from adverse weather conditions. The SopoHeliosmeasures twelve by seven feet and weighs 168 pounds.47 The systemcan be ground or roof-mounted.

The amount of electricity and thermal energy storage that can beproduced on each roof is highly dependent upon the available flat roofspace and the strength of the roof, and a potentially negative impactof using thermal storage is the amount of water needed for coolingpurposes.

SopoHelios48

What if Options: Wind Energy

Wind energy systems existed for millennium before electricity wasdiscovered.

The first reference linking windmills with Hawaiì occurred in 1824,when a windmill was spotted from the ship bringing Kamehameha II’sentourage to Europe.49

47 http://sopogy.com/pdf/contentmgmt/p-sh-111012.pdf48 http://sopogy.com/images/contentmgmt/SopoHelios480px.jpg49 “Kamehameha II’s Ill-starred Journey to England Aboard L’Aigle, 1823–1824,” by J. SusanCorley. The Hawaiian Journal of History, vol. 44 (2010). Source: Ellis, Letter No. 8, HMCS;“Sketches of Society: Greenwich Hospital,” The Literary Gazette, and Journal of Belles Lettres,Arts, Sciences, &c. (London), no. 389 (3 July 1824): 430.


By 1837 Honolulu had a number of windmills, and by 1900 there were30,000 windmills in Europe, used primarily for water pumping and themilling of grain.50 Between 1850 and 1970 over six million windmachines were installed in the U.S. (most were less than 1 kW). Since1970 windmills have multiplied in size and complexity. More recently,due to growing opposition to the enormous scale and footprint of so-called large wind “farms”, small wind systems have come back intovogue.

In 2008 the Maui Ocean Center installed sixsmall wind turbines on its roof; each 1 kWturbine is only 8.5 feet tall.51 The windturbines will produce an estimated 48,880kWh per year.52

Shanah Trevenna and the Saunders Hall (University ofHawaii, Manoa) Vertical Axis Wind System donated byEnergy Management Group.

http://evols.library.manoa.hawaii.edu/bitstream/handle/10524/12251/HJH44_1-36.pdf?sequence=150

http://practicalaction.org/docs/technical_information_service/wind_electricity_generation.pdf51 http://mauisea.com/media/news/local/energy/2008112718272906412_Wind-Turbines-Story.jpg52 Wind Energy by Blake Bridges, Chris Parnell, Jeremy Petrowski, Yuren Salazar, Loy Pearce.


Small wind turbines on theroof of an office in London. 53

A “Windsave” micro turbineinstalled on a rooftop inScotland.54

Rooftop wind turbines on a buildingin Bosnia1 (Veneko/ BergeyWindpower)55

What if Options: Biofuels

In 1996 Pacific Biodiesel started operating the first modern commercialbiodiesel plant in the United States. Pacific Biodiesel started byrecycling waste fats, oils and grease at the central Maui landfill.

53 Renewable Energy World. January / February 2007. http://www.thailand-energy.info/News/34001132.htm54 Ibid.55 Ibid.


Pacific Biodiesel engaged in the collection of waste cooking oil such asused French-fry grease to produce biodiesel. The company is currentlycollecting waste vegetable oil on Oahu, Maui and Hawaiì Island.56 Thecompany’s technology allows its sustainable biodiesel facilities to workhand-in-hand with local farmers and local investors. Pacific Biodiesel isthe leading biofuel producer in Hawaiì.

Pacific Biodiesel also supports smaller farmers by purchasing locallyproduced agricultural goods and converting them to biodiesel. Many ofthe crops grown should be able to survive without irrigation (a majorsource of energy use), grow without the use of fossil fuel-basedfertilizers and pesticides and without nitrogen fertilizers (potentgreenhouse gas sources), and be non-genetically modified.

In 2000, Pacific Biodiesel open a new biodiesel plant on Sand Island,Oàhu.

In 2012 Pacific Biodiesel’s third Hawaii facility was opened. Called BigIsland Biodiesel, it is located in the Shipman Business Park, Keaàu,on Hawaiì Island.

56 http://www.biodiesel.com/Press/Cleanway%20Renamed%20PBL-PressRelease.pdf


It has a capacity of 16,000 gallons per day and will utilize zero-waste,super-efficient processing technology. In addition to using waste oil,the plant will use crop oil from a jatropha farm in the Keaàu area.57

Pacific Biodiesel has recently been reorganized, and is nowconsolidated under the name of Pacific Biodiesel Technologies. Thecompany currently manages biodiesel plants in Hawaiì, Oregon andTexas.

Pacific Biodiesel believes that “a small environmental footprint is anessential aspect of a sustainable biodiesel facility.58 Pacific Biodieselfacilities “are designed to be the most flexible in the industry,accepting multiple feedstocks, and providing maximum scalability ...[using] advanced waterless technologies.”59

57 http://www.bigislandvideonews.com/2012/07/03/video-big-island-biodiesel-opens-vips-tour-keaau-plant/58 http://www.biodiesel.com/index.php/technologies/biodiesel_process_technology59 http://www.biodiesel.com/index.php/technologies


In 2006 Pacific Biodiesel’s co-founder Kelly King, along with activistAnnie Nelson and actress/film maker Daryl Hannah, founded theSustainable Biodiesel Alliance (SBA).60

In 2011 the Gas Company61 initiated efforts to develop a biofuel pilotplant in West Oàhu to produce one million gallons a year ofrenewable fuel from fish oil.62

What if Options: Biofuel Vehicles

While there are many different ways to generate electricity, there areonly two clean ways of powering vehicles (biofuels, electricity), andonly one clean way of powering air transport (biofuels). Thereforebiofuels should be reserved for transportation. Biofuel-poweredvehicles provide an alternative to electric vehicles, and allow people tomaintain a mode of transportation with which they are comfortable –a traditional car powered by a liquid – while decreasing the use offossil fuel.

What if Options: Geothermal Heat Pumps

Examples of heat pumps, which move thermal energy from one placeto another, include refrigerators and air conditioners.

The Geothermal Heat Pump concept was developed by Lord Kelvin in1852; the modern era dates from the 1940s. Renewed interestoccurred during the Arab Oil Embargoes.63

Geothermal Heat Pumps (ground-source heat pump; “geo-exchange”)move low temperature geothermal heat between buildings and theEarth.64 Geothermal resources are classified as low temperature (<194° F), moderate temperature (194 - 302° F), and high temperature(> 302° F).

The temperature of the Earth at a depth of twenty feet is a fairlyconstant 50-60 °F.

60 http://test.sustainablebiodieselalliance.com/~sustai18/dev/about.shtml61 http://www.hawaiigas.com/62 http://www.hawaiirenewable.com/wp-content/uploads/2011/12/Renewable-fuel-project-uses-fish-oil-to-make-natural-gas-Hawaii-News-Honolulu-Star-Advertiser.pdf63 Geothermal heat pumps: Four plus decades of experience By R. Gordon Bloomquist, Ph.D.,Washington State University Energy Program http://geoheat.oit.edu/bulletin/bull20-4/art3.pdf64 http://wiki.aia.org/wiki%20pages/geoexchange.aspx


In winter, the Earth is warmer than the surface temperature, and aircirculating between the Earth and buildings can heat buildings.65

In summer the Earth is cooler than the surface temperature, and aircirculating between the Earth and buildings can cool buildings.

There are more than 400,000 systems currently in operation in theU.S. Between 10,000 and 40,000 new systems are installed each year.

The number of Hawaiì installations is significantly less that otherparts of the country. There may be a number of reasons for this,including our milder climate, lack of government support, focus onutility-scale solutions, and lack of data analysis of existinginstallations. Areas of Florida with similar climate to Hawaiì havesuccessfully installed geo-exchange systems.66

In 2012 the California Legislature unanimously passed AB2339 whichdirects the California Public Utilities Commission (PUC) “to evaluatepolicies and develop sufficient infrastructure to overcome barriers tothe widespread deployment and use of geothermal and solar heatingand cooling technologies.”67

65 http://en.wikipedia.org/wiki/Geothermal_heating66 Hawaii Renewable Energy Development Venture Program Assessment of TechnologyReadiness and Applicability – Low Grade Geothermal Heathttp://www.hawaiirenewable.com/wp-content/uploads/2009/12/9.-Low-Grade-Heat-Geothermal.pdf67 http://feedreader.com/feed/Home-2162/96685050


Residential Geothermal Energy Options68

What if Options: Energy Storage

The many forms of energy storage include fossil fuel, hydrogen, water,air, and electrochemical.

For example, air can be compressed into a balloon structure and thenreleased as needed. This is known as Compressed Air EnergyStorage (CAES).

Hydropower is also an effective way to store energy: water can bepumped uphill, between reservoirs, and released when it is needed tocreate power. While both methods provide short-term “firming” powersolutions to handle small variations in demand, if the energy source isintermittent and of large size, the size of the storage systems wouldhave to be huge to handle fluctuations on days of hot, cloudy, orwindless weather.

68 http://www.louisvillehomesblog.com/pics/2009/11/geothermal_heat_pump.jpg


There are also several types of batteries. New electrochemicaltechnologies are now being commercialized that represent anunprecedented breakthrough in large-scale energy storage. Theseinclude lithium batteries and flow batteries.

Most Hawaiì households have at least one lithium battery. They arefound in pacemakers, cell phones, cordless tools, MP3 players, andportable computers and tablets. Lithium batteries are being tested inelectric vehicles, hybrid electric vehicles and in residential energystorage systems.

The University of Hawaii's Hawaii Natural Energy Institute ("HNEI") istesting a 1 MW/250 kWh fast-response lithium titanate battery at theHawi Wind Farm.

HELCO and DBEDT are using stimulus funds to install a 100 kW/248kWh lithium ion battery at each of two non-utility photovoltaic projectsin Kailua-Kona.69

Following the 2011 Japanese earthquake and tsunami, the Japanese-based multinational electronics and ceramics manufacturer KyoceraCorporation released a solar energy management system that includeslithium-ion batteries.

69 HELCO 2013 Rate Case, Docket 2012-0099, T-2, 74:3-19


The Sacramento Municipal Utility District in California is testingindividual and communal (multi-home) lithium-ion batteries.

In 2010 Underwriters Laboratories (UL) developed safety standards forstationary storage batteries that contain lithium-ion rechargeablebatteries, and in 2012 a Sony lithium-based energy storage systemreceived UL accreditation.

In 2012 Panasonic began mass producing and marketing home energystorage systems.

World-wide lithium reserves are 13,000,000 metric tons, which, at thecurrent level of demand, could supply the world for 300 years. Theleading producers are: Chile (37%), Australia (33%), China (15%),and Argentina (9%). Afghanistan and Bolivia may have large lithiumresources.

Flow Batteries (FB) utilize two electrolytes that are transformedelectrochemically inside each cell, without direct mixing. By contrast,the electrodes in traditional batteries are directly involved in theelectrochemical reactions, and thus degrade. Flow Batteries appear tobe able to handle the full range of storage needs. This contrasts withthe current regime where different battery technologies are used fordifferent applications which include, but are not limited to, sub-secondsmoothing of wind output (as was attempted by the Kahuku WindFarm Battery), uninterruptible power supply (UPS), peak shaving, andload-management.70

Battery research is being heavily funded by two sources, the militaryand various utilities. While neither focuses on Residential EnergyStorage (1-5 kWh) or Community Energy Storage (50-100 kWh)systems, any technological breakthroughs can be used to supportsmall scale systems.

The military has been a technology trailblazer, responsible fordeveloping the internet and GPS among other items. So it is notsurprising that it is heavily involved in researching microgrids andenergy storage. “The U.S. military is the world’s single-largestindustrial consumer of oil, using more oil than 85 percent of all other

70 Community Energy Storage Report (2011) Shawn Fitzpatrick, P.E. et al. Advanced Energy.http://www.advancedenergy.org/ci/services/testing/files/Community%20Energy%20Storage%20Report%20(Sealed).pdf; See also: Flow Batteries: Has Really Large Scale Battery StorageCome of Age? By Christopher Lotspeich, Second Hill Group; and David Van Holde, E SOURCEhttp://www.eceee.org/conference_proceedings/ACEEE_buildings/2002/Panel_3/p3_17


countries combined. Every $10 increase in the price per barrel of oilcosts the Pentagon $1.3 billion. In the theater of war, oil is ourgreatest vulnerability. More than 3,000 service members have beenkilled or injured defending fuel and water supply lines in Iraq andAfghanistan.”71

HECO and other utilities, on the other hand, view batteries as a meansto integrate intermittent resources, such as large scale wind, into thegrid, and to improve load management.

What if Options: Electric Vehicles

Replacing the century-old gasoline-burning automobile with biofuel-powered and/or electric-powered vehicles makes a great deal ofsense.

Since the average vehicle is driven less than 100 miles per day,lithium ion batteries could be recharged easily during the night. Thecar batteries can be automatically plugged into a recharging stationabout the size of a parking meter, the voltage of which is similar to awall socket in a house.

As an experiment, a fleet of electric vehicles could be purchased enmasse to replace existing fossil fuel vehicles. Excess locally producedrenewable power, in the form of solar or wind, could then be used to“charge” the electric vehicles, acting as a de facto energy storagefacility at night, when the demand is the least.

71 Smart Grid Strategy: Why the military's smart grid battle plan could ignite a victory for allof us (2011) By Liz Enbysk, Smart Grid News (SGN) Managing Editorhttp://www.smartgridnews.com/artman/publish/Business_Strategy/Why-the-military-s-smart-grid-battle-plan-could-ignite-a-victory-for-all-of-us-3942.html; See also:http://www.smartgridnews.com/artman/publish/Delivery_Microgrids/Smart-grid-advances-Are-microgrids-coming-of-age-4335.html;http://www.smartgridnews.com/artman/publish/Technologies_Storage/Want-to-know-the-future-of-storage-ARPA-E-is-inventing-it-right-now-5019.html


Following the Fukushima nuclear disaster, Japanhas expressed interest in exploring Vehicle-To-Grid(V2G) Technology, whereby Battery ElectricVehicles (BEVs) and Plug-In Hybrid Electric Vehicles(PHEVs) can store excess night-time wind energyand power homes during the day.

Conversely, community energy production facilitiescan power vehicles, which can then dischargeexcess power into buildings using Vehicle-To-Grid(V2G) Technology.

Home Powered by Cars72

Growth of Hybrid and Electric Vehicles73

72 http://www.thechargingpoint.com/news/the-electric-car-that-washes-clothes-and-cooks-rice.html73 DBEDT: Status and Progress of Clean Energy Initiatives and Analysis of the EnvironmentalResponse, Energy and Food Security Tax Report, (January 3, 2012) Pursuant to Act 73,Session Laws of Hawaii 2010.


What If Options: The Demise of the Centralized Grid

Hawaiì has the highest utility rates in the nation, increasingpenetration levels of costly intermittent industrial-scale wind and solar,and the most aggressive energy efficiency goals in the world. HECO isproposing spending billions of dollars on Smart Grids, Super Grids,inter-island cables, and a vast computer-telecommunication system tooversee all of this change in sub-second real time.

But what if the cost of on-site renewables drops below the cost of grid-based electricity? This is not a far-fetched notion, but a real possibilityeven in the near-term.

The current energy paradigm under which the utility operates requiresthe spending of billions of dollars of ratepayer money in the next fewyears, further raising the rates of each grid user. The utility arguesthat higher but less volatile rates (as opposed to lower but morevolatile rates) makes it easier for businesses to plan budgets. Thisexorbitantly expensive, centralized energy system grid scenarioremains at best uncertain, but increasingly higher rates will certainlydrive more and more ratepayers away from centralized grid-basedsolutions.

The advent of effective, moderately priced intermittent energy storagedevices will further speed this flight from the grid.

Beyond driving up the cost of living substantially for householders,higher rates for businesses mean more major business customers willmove off the grid. Businesses that remain on the grid will become lesscompetitive as they will have to raise their prices.

Higher rates also impact the cost of governmental services.

HECO’s multi-billion dollar proposals point directly toward inflationarypressures on most goods and services in the islands. We must confrontthe hard fact that the cost of electricity is part of the cost of almosteverything we buy.

What if ... in the near future HECO’s current energy generation andtransmission model does in fact fail?


Cost Comparison

The utility considers most cost data to be Confidential BusinessInformation (CBI). Thus comparing the relative cost of fossil fuelgenerators with renewable energy facilities is difficult at best.

Compounding this is that a direct comparison distorts reality.

HECO claims that higher variable DG penetration levels require billionsof dollars to upgrade existing utility generators and transmission lines;and independently of this, also requires the implementation of SmartGrid technology, which also will cost billions of dollars. These costs arenot factored into fossil fuels versus renewables cost comparisons.

There are other costs not usually included in comparisons. Fossil fuelgenerators require much greater state1 and federal1 regulatoryoversight. The utility does not consider the relative environmentalimpacts of different facilities.

The increased use of renewable energy has raised utility rates. Thishas allowed the utility to rake in record profits.

Earlier this year, Hawaiian Electric Industries Inc. reported a profit of$138.2 million for 2011. This represented a 22 percent increase from

net income of $113.5 million in 2010. HECO’s net income was $100

million in 2011, compared to $76.6 million in 2010, an increase of 30.5percent.74

Hawaiian Electric Industries, Inc. reported a 2012 first-quarter profit of$38.3 million, an increase of 34 percent compared to the same quarter

in 2011.75

During HEI’s May 2012 Annual Meeting, the HEI CEO stated that for

each of the past 6 years, HEI has achieved profit margins exceeding

the national utility average return. She added that besides havinghigher profit margins, HEI has also achieved reduction in risk.76

74 Hawaiian Electric Industries earns $138.2M in 2011, up 22% Pacific Business News,February 8, 2012 http://www.bizjournals.com/pacific/news/2012/02/08/hawaiian-electric-industries-earns.html75 Hawaiian Electric Industries posts $38.3M Q1 profitPacific Business News, May 8, 2012http://www.bizjournals.com/pacific/news/2012/05/08/hawaiian-electric-industries-posts.html76 http://www.disappearednews.com/2012/05/what-could-possible-go-wrong-with.html


This goes against the traditional investor model where investors are

willing to accept lower rates of return for less risky ventures.

In August 2012 HELCO filed another rate hike request with the PUC.

Trade Impacts

Enterprise Honolulu77 opined that “a key characteristic of a healthyeconomy is that it exports more than it imports. This is especiallyimportant for an island community with no land-based contiguousmarkets. These goods arrive each day in containers at Sand Island andat the airport via cargo planes from global suppliers in other parts ofthe world.”78

Hawaiì does not appear to keep updated data on the importing andexporting of goods and services. DBEDT data from a decade agoreveals that imports ($15 billion) exceed exports ($3 billion) by awhopping $12 billion; a significant portion of Hawaiì’s trade deficit isdue to the importation of petroleum, coal, and food. To make up thisdeficit, Hawaiì needs military investments and tourist dollars. Thusgovernmental policy is focused on encouraging non-residents to spendmoney here. Correcting the imbalance in trade would mean that thegovernment could place greater emphasis on local Quality of Lifeissues.

Economic Impact

Ideally, moving expeditiously to replace imported fossil-fuel-basedelectric generation with domestic renewable energy resources makesgreat economic sense. Each year Hawaiì buys 40 million barrels of oilfrom abroad. At $100/barrel that is the equivalent of $4 billion dollarsleaving the State annually. If in fact that money stayed here, it wouldripple through the economy, much as a rock dropped in the middle ofa pond sends ripples in all directions. Using the classic economicmultiplier, the Department of Business, Economic Development and

77 www.enterprisehonolulu.com78 Enterprise Honolulu: Imports, Exports and Economic Development (August 28, 2003);Enterprise Honolulu: Export Enhancement and Import.http://www.lifeofthelandhawaii.org/doc2/Enterprise_Honolulu_Imports_Exports_2003.pdf; Seealso Substitution - Key Strategies for Hawaii’s Prosperity (September 4, 2003),http://www.lifeofthelandhawaii.org/doc2/Enterprise_Honolulu_Import_Substitution_2003.pdf


Tourism (DBEDT) estimates that each dollar circulated locally addsthree dollars to the economy.

Thus keeping $4 billion a year in Hawaiì would add $12 billion toState economy. To put this in easy-to-understand terms, theestimated state Gross Domestic Product in 2012 is $71 billion79 soadding $12 billion to the economy would result in 17% more economicactivity and could lead to a sharp rise in employment. This financialinjection would provide more jobs and added tax revenue that wouldallow greater funding of core governmental functions includingeducation, health, and safety net programs.

However, it must be noted any such future financial gain would beoffset by the continued reliance on “imported” renewable energysystems and the exportation of profits by out-of-state investors andrenewable energy product suppliers and developers.

Part V: CONCLUSION

What if ... in choosing between patching up the old and creating thenew ... Hawaiì led the way in creating a new efficient, and excitingenergy industry.

What if ... the utility of tomorrow focused on creating wireless forms ofelectricity transmission? What if the utility acted as a clearing house,bringing together technical assistance, monitoring energy trends,educating the public and serving as a bridge between energyconsumers and wind and solar companies, financial institutions, energyauditors and energy efficiency firms. What if the utility gave youchoices between owning, leasing and renting the equipment youneeded to become energy independent?

What if all of this was possible?

…then Hawaiì could demonstrate to the world that the future hasarrived here first.

Where We Were

Much of the electricity generation and distribution systems we havetoday were designed and built in the 1950-1975 era. The existing

79 http://hawaii.gov/dbedt/info/economic/data_reports/qser/outlook-economy


systems were designed to be radial, flowing outward from a few largecentral station generators. Generators were designed to have twopositions: on and off.

Fork in the Road

We are at a fork in the road and can go towards larger, more complex,centralized systems or towards more decentralized systems.

Super Grid & Smart Grid A DC interisland Super Grid wouldinterconnect existing AC islandgrids. Each island grid would beupgraded with Smart Gridtechnology based on newtelecommunication systems andcomputers.

Smart Grid Each island grid would beupgraded with Smart Gridtechnology based on newtelecommunication systems andcomputers.

Existing Grid

Smart Grid & Micro Grids The transmission grid would focuson providing power to smallregional grids.

Micro Grids The transmission grid would beremoved and all power would beprovided by micro grids and on-site generation

No Grid The transmission grid would beremoved and all power would beprovided only by on-sitegeneration

Thinking Outside of the Box

For the sake of stretching the thought process, consider the impacts ofa “No Grid” approach. Existing utility generators could be shut downand removed. Some on-site fossil fuel generators would still exist athospitals, fire stations, and commercial facilities for purposes ofredundancy. These could be gradually converted to run on biofuel.


The existing utility generation sites could be used for other purposes.Decades ago there was talk of a green lei extending from DiamondHead, through Waikiki, Ala Moana, Kakaako to Aloha Tower.

Honolulu Power Plant behind green roofs of Aloha Tower Marketplace

HECO’s Honolulu power plant, located between Kakaako, Downtown,and the Aloha Tower Marketplace, is located on choice harbor propertywhich could, if retired, support a variety of uses, including increasingpublic access to the coastal area.

Removing all transmission lines would increase aesthetic views,decrease unintended vehicle-pole interactions, and increase the use ofsidewalks. Transmission poles on hiking trails are pre-soaked in toxicherbicides and regularly sprayed with anti-termite fungicides;notification of this spraying by utility subcontractors is neverannounced. This contamination of hiking trails and remote ecosystemscould end.


Puna Transmission Lines

The Miniaturization Mega-Trend

There is a growing megatrend towards miniaturization. Usingmicrochips, new materials, micro and nanotechnology and computers,everything is becoming smaller and more efficient. All aspects oftechnology, with the exception of the monolithic electric grid, areshrinking in size. This “smaller is better” revolution includescomputers, cell phones, cameras, batteries, medical devices andsmall-scale home/neighborhood energy systems.

In 2007 a micro inverter (8.4 cubic inch) was developed whichconverts a vehicle’s 12 volt DC power into AC power for laptop, MP3,cell phone charger and other personal electronic devices. The devicewas one of ten winners in Popular Mechanics Breakthrough Awards(2007).80 In 2008 a Fuel Cell with a width of 3 millimeters wasdeveloped,81 and in 2010 a non-turbine ultra-micro wind generator

80 http://www.batterystuff.com/battery-restoration/12-volt/XR100.html81 Ai Kamitani et al. Journal of Microelectromechanical Systemshttp://iopscience.iop.org/0960-1317/18/12/125019/


was developed. It uses a small elastic membrane ribbon stretchedbetween two fasteners.82 In 2010 UCLA scientists usednanotechnology to develop lithium batteries the size of grains of salt.83

In 2012 Semprius Incorporated, with seed money from NREL (theNational Renewable Energy Laboratory), developed a solar cell the sizeof the dot over the letter “i.” The solar cell broke the world’s record inefficiency, converting 33.9% of the sun’s energy into electricity.84 Alsothis year, UCLA researchers created a 70% transparent solar cell forwindows. The polymer solar cell (PSC) converts non-visible infraredlight into an electrical current.85

Another megatrend is the transition to a wireless society. It hastransformed the digital telecommunications industry. It can and willeventually occur in the electrical transmission industry. Today,electricity can be transferred using various methods including light andmicrowaves. A “zero-grid” futurist, Justin Hall-Tipping, said, “I thinksometime in the next 10 to 15 years, kids are going to be saying, ‘Nowlet me understand this. You put up a pole, you strung a cable, youpassed electricity around, and you did this why?”86

Summary

We are on a knife’s edge: on one side we face a fossil fuel future and aclimate change melt-down, and on the other side we are at the cuttingedge of an exciting new distributed-generation future.

The Programmatic EIS gives us the opportunity to look carefully atfuture scenarios including the continuation of a highly centralized, top-down approach, a middle-of-the-road combination approach, or a fullydistributed generation approach, as advocated for in this paper.

There will always be a “lost” opportunity cost. Spending money for onesolution precludes having the funds available to spend on anothersolution.

Hawaiì’s centralized systems have high and increasing coststructures. Hawaiì has initiated a long-term trend towards energy

82 http://peswiki.com/index.php/Directory:Humdinger_Windbelt83 http://news.discovery.com/tech/miniature-batteries-salt-grains.html84 http://www.afcea.org/signal/signalscape/index.php/2012/04/06/16704/85 http://newsroom.ucla.edu/portal/ucla/ucla-researchers-create-highly-236698.aspx86 http://www.smartplanet.com/blog/pure-genius/q-a-justin-hall-tipping-nanotechnology-entrepreneur/7930


efficiency and self-generation leading to a downward trend demand forcentralized grid electricity. As rates rise further, more people will leavethe grid, leading to a collapse of the utility model as we know it.

There are grave consequences for not dealing with this quagmire. Theyrange from environmental justice issues (economically challengedcommunities may be forced to remain on the grid, unfairly shoulderingthe higher costs), to stranded costs (whereby taxpayers are forced tobail out shareholders).

Price-driven natural deregulation, via exodus from the grid, may leadHECO into a bottomless vortex, and the utility may ultimately fail as aviable investor-owned corporation. Building Smart Grid / Super Grids,without considering the risks, may lead to massive stranded costsleaving ratepayers and taxpayers holding the bag. It is not in thepublic interest to subsidize utility profits on the backs of Hawaiì’sratepayers.

These two trends – downward total demand for centralized gridelectricity and an increase in self-generation – are a hot topic in therecently opened HECO, MECO & HELCO Proceeding re: IntegratedResource Planning (PUC Docket 2012-0036), in which the utilities aretasked with developing five to twenty-year planning scenarios.

In June 2012 the PUC appointed sixty-eight individuals, representing avariety of industry groups, organizations and individual communities,to the Advisory Group for this docket. In August HECO held a threeday Scenario Planning workshop for AG members; all of HECO’sproposed scenarios that emerged acknowledged the trend towardsgreater self-generation. Several AG members from across variousspectrums advocated for consideration of future utility businessmodels based on these new trends.

Hawaiì has an opportunity to adopt a decentralized, participatory,democracy-style “community powered” paradigm.

Hawaiì can replace the large coastal generators, miles of uglyoverhead transmission lines, and intense energy facility sitingstruggles/litigation, with a PIMBY (“Please In My Back Yard”) approachwhereby all homes and businesses have on-site energy efficiency,energy storage, and energy production.


This trend is already occurring, as most homes have CFLs (efficiency),PCs and cell phones (energy storage) and some homes have solar(from gadgets to photovoltaic systems).

The trend towards miniaturization will lend itself towards expandingresidential opportunities.

We are on the cusp of an exciting new era. We should take everyadvantage in exploring this new paradigm.

The Programmatic EIS affords us of this opportunity to consider the100% DG alternative.

Documents

LIFE OF THE LAND - maui-tomorrow.orgBorneo wildfires and peat soil fires set to clear land for biofuel plantations (1997-98) Kuwaiti Oil Fires (January and February 1991) Persian Gulf