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Shift in power production will be expensive but necessary


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POSTED: Thursday, October 23, 2008
               

     

 

 

THE ISSUE

        The state and Hawaiian Electric have worked out a plan to increase renewable energy production.

STATE leaders hope an agreement between the government and Hawaiian Electric Co. will further accelerate the use of renewable resources for power production, a necessity for the environment and the economy of the islands.

Though the proposals in the agreement haven't been fully detailed, they appear to push forward the essential transition from oil- and coal-based electricity to alternative energy.

The change won't come cheap and it won't be without sacrifices.

A showcase project of the agreement is wind power generation on one or more of three islands — Lanai, Maui and Molokai — to be connected by undersea cables for transmission to Oahu. This will be an extremely expensive endeavor; estimates range in the hundreds of millions of dollars.

State and company officials will seek federal funds and private investment to bear some of the costs. However, the current worldwide financial crisis and the decreasing price of oil are not conducive to raising capital. Alternative energy companies have seen their shares drop abruptly and investment, which has tightened considerably in recent months, isn't expected to improve through the next few years.

Meanwhile, the federal government's severe money problems lessen the likelihood of financing even though John McCain and Barack Obama have promised programs for renewable energy.

HECO officials have acknowledged that electricity, whether generated by oil or alternative fuels, and the transitional infrastructure will be costly, and that customers shouldn't expect to see lower bills. But consumers and island businesses shouldn't be overburdened and state officials are obligated to make sure this doesn't happen.

HECO and its affiliates will be reorganizing their business model from principally power producers and distributors to service providers, buying electricity from other sources and selling it to consumers. This potentially opens Hawaii's market to competition since HECO will publicly state how much it will pay for renewable power, though it will remain the sole distributor.

Getting Maui County residents and leaders to sign on to the wind-power proposition will be a challenge. There is little vacant space on Oahu for wind farms and previous proposals to raise windmills on the most populated island have met strong opposition. The same resistance can be expected on Maui and Molokai, particularly because the power will flow to Oahu.

The agreement lays out some benefits. Among them, HECO will phase out oil-based fuel plants as renewable generation increases and is barred from building new coal-fired plants, although it had no plans to do so. Caps on net-energy metering will be removed to allow consumers to produce and sell back to the utility alternative power they generate on their own and customers who use power during off-peak hours will see lower rates.