Life of the Land's Wayfinding: Sowing the Seeds for Transforming Energy
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Life of the Land’s Wayfinding: Sowing the Seeds for Transforming Energy Futures Henry Curtis (March 31, 2012) 1 Wayfinding Report The State of Hawai`i should generate 90% of its electricity from distributed renewable energy resources by 2025 Dedication This Report is dedicated to the nearly 20,000 Americans who die each year from fossil fuel air emissions & to the 100 millions of people worldwide who will be displaced due to climate change. Acknowledgments I wish to thank Peggy Lucas Bond and Bob King for their suggestions and to Sally Kaye for her thoughtful insight and superb editing of each draft of this Report. 2 Table of Contents 1. Introduction 2. Energy Efficiency 3. Continuous Energy Resources 4. Variable Energy Resources 5. Batteries 6. Moloka`i 7. Lana`i 8. Hawai`i 9. Maui 10. O`ahu 11. Kaua`i and Ni`ihau 12. The Future Utility and its Regulation 13. Summary Appendix I: Comparative Costs Acronyms Glossary References 3 CHAPTER I: INTRODUCTION This work is a follow-up to the chapter on Energy written by this author in "The Value of Hawaii: Knowing the Past, Shaping the Future" (July 2010),1 which laid out several competing scenarios or paths towards energy independence. The author subsequently elaborated on one of the options: “Ocean Thermal Energy Conversion (OTEC),” by discussing how each of the Hawaiian islands could be 100% energy self-reliant for both electrical generation and ground, marine, and air transportation by 2030 in: “Energy Independence for Hawai`i (2030) An Integrated Approach to Economic Revitalization in a Culturally and Environmentally Sensitive Way” (February 25, 2011).2 This Report now explores a second path forward: Distributed Generation, which focuses on a decentralized, community-based model of energy self-sufficiency utilizing local solutions. These are variously known as on-site generation, dispersed generation, embedded generation, decentralized generation, and decentralized energy. Moving expeditiously to replace fossil-fuel-based electric generation makes great economic sense. Each year Hawai`i buys 40 million barrels of oil from abroad. At $100/barrel that is $4 billion dollars leaving the State. If in fact that money stayed here, it would ripple through the economy, just as a rock dropped in the middle of a pond sends ripples in all directions. Using the classic economic multiplier, DBEDT estimates that each dollar invested locally adds three dollars to the economy. Thus keeping $4 billion a year in Hawai`i would add $12 billion to State coffers. To put this in easy-to-understand terms, the state Gross Domestic Product is $60 billion per year, so adding $12 billion to the economy would result in 20% more economic activity and a sharp rise in employment. This financial injection would provide added tax revenue that would allow greater funding of core governmental functions including education, health, and safety net programs. In the traditional utility model, distribution lines brought electricity to every home. In the modern, non-centralized utility model, homeowners, renters, businesses, and industry can all produce most of their own power via rooftop solar and other renewable technologies. It is the author’s belief that local communities will benefit the most by moving to distributed renewable energy generation, and that local communities should ultimately determine which resources are appropriate for their homes and islands and which resources should not be deployed. Unfortunately, Hawaiian Electric (HECO) and the State have elected to focus instead on a different scenario, one based on a “Smart Grid,” which serves to perpetuate the 19th century model of centralized energy system distribution. 1 Edited by Craig Howes and Jonathan Kay Kamakawiwo‘ole Osorio. Published for the Biographical Research Center, University of Hawai‘i 2 http://www.lifeofthelandhawaii.org/Energy_Independence_for_Hawaii_2030.pdf 4 The essence of Smart Grid technology is to solve the problem of balancing supply and demand by installing massive computers and telecommunication facilities in order to have increasing top-down control over all aspects of generation, transmission and use of energy. This will prove to be an extremely expensive proposition. Some Hawai`i energy “experts” believe in a Modified Smart Grid approach, where smart grid technologies would be "in addition to," rather than "instead of," all current primary resource options. These experts believe that smart grid technologies will, in general, be the most cost effective means for optimizing the integration of as-available and dispatchable renewable energy and energy storage systems, at high renewable energy grid penetration levels. The Smart Grid and the Modified Smart Grid both propose top-down centralized control of the grid. The Smart Grid is advocated by those who feel that utility control is paramount, and future renewable energy systems will only gradually be interconnected to the grid. The Modified Smart Grid is advocated by those who focus on developing and building renewable energy as quickly as possible, and view making grid improvements the best way to achieve this. The essence of Distributed Generation, on the other hand, is to balance supply and demand by relying on small-scale, dispersed power generation systems located adjacent to where the power is needed. The Vortex In the summer of 2010, Kris Mayes, Chair of the Arizona Corporation Commission3 (2009-10) spoke about “cascading natural deregulation” at an Institute of Electrical and Electronics Engineers (IEEE) solar convention held at the Hawaiian Convention Center. She explained that “cascading natural deregulation” means that as the cost of renewable systems trend downward and electric rates go up, those who can leave the grid, will leave the grid, by building or installing on-site generation. The fixed costs associated with energy production, transmission and distribution will then have to be absorbed by the remaining smaller rate base. Thus, those who remain will see their rates go up even more, causing more people to opt out of a centralized grid, driving the rates for those who remain even higher. Under this scenario, companies such as HECO would be sucked down into a bottomless vortex and ultimately fail as a viable investor-owned corporation. This could occur in Hawai`i first since the state not only has the highest utility rates in the nation, and has held that record for decades, but also has some of the 3 The equivalent of the Hawaii Public Utilities Commission. 5 nation’s best alternative renewable sources in solar, wind, wave and geothermal resources. HECO is acutely aware of this. In the past few years the rate of solar installations within Hawai`i has doubled each year. The number of renewable energy developers who have made proposals to the utility for large-scale grid-connected renewable energy projects has gone up ten-fold. The increasing use of various energy efficiency systems are also driving down the demand for electricity. HECO, and its subsidiaries Maui Electric (MECO) and Hawaii Electric Light (HELCO), experienced peak energy use in 2004. Since then the demand for electricity has been dropping. In anticipation of this dim future, the utility wrote the Hawai`i Clean Energy Initiative (HCEI) in 2008. The document calls for the Legislature and the Hawaii Public Utilities Commission to adopt policies to shield HECO from this impending doomsday scenario. One such policy or concept is called “Decoupling.” This mechanism states that the utility is entitled to a certain amount of profit, and as sales drop they can automatically increase rates to keep their profits on target. The PUC has already approved this mechanism. An additional centerpiece of the HCEI is the development of industrial scale renewable power plants that would require extensive cabling to send large amounts of power to the primary load center, O`ahu. Climate Change – one more reason to leave the grid Moving away from fossil fuel use is not simply a matter of economics, but a matter of slowing the rate of climate change. As Life of the Land’s Vice President for Social Justice, Kat Brady, testified to the PUC in 2009 in the matter of HECO’s proposed power plant at Campbell Industrial Park: “The planet is in crisis. Global warming can no longer be ignored. The science is in and the data is conclusive that global warming and climate change is primarily due to the burning of fossil fuels. We no longer have a choice. We must change or perish. The earth is in crisis and this proposed project does nothing to address the fact that global warming is real - the planet is heating up faster than predicted and the future is uncertain.”4 It is now a settled matter that ocean levels are rising due to the melting of land- based glaciers and other snow and ice formations. While melting ice bergs do not change the depth of the water, the oceans expand with rising temperatures. The oceans are also becoming more acidic. Low lying areas are facing coastal erosion and salt water intrusions into drinking water aquifers. Pacific Atolls and low-lying islands are particularly vulnerable. 4 Testimony of Kat Brady, Vice President for Social Justice, Life of the Land, Hawai`i Public Utilities Commission, Docket No. 2005-0145, O`ahu Power Plant (“Brady LOL T-1”). 6 “The government of Tuvalu is in a quandary as salt water intrusion threatens their aquifers and as they witness the loss of their shorelines and their food-producing gardens to a rising sea. Tuvaluan officials have made arrangements with Aotearoa (New Zealand) to relocate their people, but not all of the people want to leave. Some fear the loss of their culture and would rather sink with the island than face the cultural genocide of assimilation. The issue for Tuvalu is how to slow the heating of the planet so that their culture will thrive in its homeland.