U.S. energy project gets state $7 million

The public-private venture aims to cut peak electricity use by at least 15 percent

Hawaii will receive $7 million in federal money over the next three years as part of a national demonstration project aimed at increasing energy efficiency by modernizing the country's electrical grid system, Gov. Linda Lingle announced Monday.

A total of $50 million is being set aside by the Department of Energy for nine projects nationwide.

Hawaii's project is led by the Hawaii Natural Energy Institute at the University of Hawaii and is being demonstrated at Maui Lani Substation on Maui. Partners in the public-private venture, including Hawaiian Electric Co., Maui Electric Co. and General Electric, are contributing $8 million.

The goal is to reduce peak electricity demand by at least 15 percent.

Projects put out to competitive bids last year aim to look at ways to better manage the generation, distribution and storage of energy. For example, the Hawaii project would operate in conjunction with other energy resources on Maui, such as the Kaheawa wind farm, to maximize the use of renewable energy sources in providing power to consumers.

Whether it leads to lower electric bills for residents of the Valley Isle remains to be seen.

"It's far too early to make predictions," said Kevin Kolevar, Department of Energy assistant secretary for electricity delivery and energy reliability, who announced the project with Lingle at a news conference in her office.

Ultimately, rates will be determined by other factors, such as the reliability of the new systems as well as regulatory changes that will have to be implemented by policymakers and the Public Utilities Commission, Kolevar said.

Federal funding will be used not only for research, but for equipment as well.

"In some solicitations (for projects) in the past, the Department of Energy has chosen not to actually fund the equipment. We would ask the private sector," Kolevar said. "We just felt that the upside potential here -- not just for the state of Hawaii, but for all the projects -- were such that we wanted to demonstrate a strong level of departmental support for these new systems across the country."

Lingle said the project will improve the efficiency of the electrical grid on Maui and also promote the development of renewable energy resources.

Successful projects likely will be applied elsewhere.

"These benefits could be replicable in other areas of the country interested in establishing microgrids and increasing the penetration of distributed and renewable generation," Kolevar said. "I can tell you that's most states right about now."

The Maui Lani project also supports the Hawaii Clean Energy Initiative, a partnership between the state and Department of Energy that aims to have at least 70 percent of Hawaii's energy needs met by renewable resources by 2030.