Advancing Diverse Technologies (continued) HCEI RENEWABLE ENERGY PROJECTS SUMMARY* or agricultural waste.˜The foundation˜will promote research Clean Energy Initiative and development, assessment and demonstration projects Projects Identiÿed In Energy Agreement for biofuels. It˜has sponsored workshops around the state Hawaiian Electric Companies’ to discuss biofuels in Hawaii’s future and establish strong Status No. of Total Size Projects (MW) sustainability standards. Energy Agreement Update - Year Two • Participated in development of State Biofuels Master Plan In-service 3 111.7 • Campbell Industrial Park and began development of a company biofuel working plan Combustion Turbine No. 1 to coordinate all fuel acquisition with goal of using as much (“CIP CT-1”) “green” liquid fuel as possible. • Lanai Sustainability Research (Lanai Solar) PICKING UP THE PACE • Keahole () Wind PUC approved 2 38 • Supported First Wind Hawaii in construction of the 30 MW • Airport Dispatchable Standby n October 2008, the Hawaiian Electric companies joined for Hawaii and reduced gas emissions that are Kahuku Wind Farm, the ÿrst such facility on Oahu in nearly Generation Project the Governor of Hawaii, Hawaii Department of Business, responsible for the climate change to which our islands are 30 years. Expected to be in service in early 2011. • Kahuku Wind Power Economic Development and Tourism (DBEDT), and the especially vulnerable. Making the needed investments now can • Working with First Wind Hawaii on potential 70 MW Kawailoa Under PUC review 2 27.6 I Division of Consumer Advocacy in an energy agreement as provide more stable and lower energy costs in the long-run. Wind Farm to be developed on lands above Haleiwa, one of • Honua Power part of the Hawaii Clean Energy Initiative. the projects that responded to the call for up to 100 MW of • Kaheawa Wind Power II As we ended the second year, the pace is picking up. This new renewable energy generation on Oahu. Active/Non-Utility Generator 11 658 • Completed and sent to the PUC for approval a purchase (“NUG”) Form received The agreement – the most aggressive and far-reaching effort list summarizes some key actions by the Hawaiian Electric (technologies include waste-to- in the nation – aims to move Hawaii decisively away from companies in cooperation with many others to reduce our fossil power agreement with First Wind for Kaheawa Wind Power II, energy, ocean thermal, wind a 21 MW addition to the Kaheawa Wind Farm above Ma‘alaea power, photovoltaic) imported oil for and ground transportation toward fuel use and move toward a clean energy future for Hawaii. in West Maui. Awaiting NUG Form 1 10 diverse, local renewable energy and energy efÿ ciency. • Continuing work with Sempra Wind Power on development of Unable to reach agreement on 2 29.5 a potential 21 MW wind farm at Ulupalakua in East Maui. termsheet The goal at Hawaiian Electric, Maui Electric and Hawaii Electric • Continuing technical, environmental, community outreach and Other projects – deferred or no 12 -- Light Company is greater energy and economic security information work on Interisland Wind project to import up to updates at this time 400 MW of wind power from Molokai and Lanai to Oahu. o Working with State of Hawaii on the undersea cable portion for which an environmental study has begun. Additional Projects Status No. of Total Size o Assisted in completing a Technical Review Committee report by national and international experts (including Projects (MW) from the National Renewable Energy Laboratory). Active/NUG Form received 14 46.4 Studying modiÿcations to generators, upgrades to (technologies include photovoltaic, o biomass) the transmission grid and new technology to reliably integrate ever increasing amounts of energy from Awaiting NUG Form or action 14 71.9 from developer (technologies Laying the Foundation variable renewable sources like and wind into the include waste-to-energy, ocean existing system. thermal, photovoltaic, concentrated uch beginning work on this initiative is to lay the Decoupling: In August 2010, the PUC approved a change to solar power, wind, biomass, hydro) the utilities’ ÿ nancial model to better support integration of o Upgrading interislandwind.com website to provide Mregulatory foundation needed to improve our ability to public information on all aspects of the project. Unable to reach agreement on 1 10.3 install new renewable energy and improve energy efÿ ciency more renewable energy and energy conservation by breaking termsheet in Hawaii. Our state made major progress in the second year the historic link between energy sales and utility revenues. Other renewable energy projects *As of 12/2010 of the energy agreement. Decoupling was implemented on Oahu in December 2010. • Participating in working group established by State Legislature Implementation on Hawaii Island and in Maui County to to discuss geothermal energy expansion on Hawaii Island and Feed-In Tariff (FIT): In October 2010, the Public Utilities follow with PUC decisions in pending rate cases. perhaps Maui, taking into account community and cultural Commission approved plans to create standard rates, contract concerns. terms and speciÿ cations for renewable energy developers to Clean Energy Scenario Planning (CESP): Would • Negotiating garbage-to-energy projects on Oahu and other add up to 60 megawatts to utility grids on Oahu, 10 MW in replace current framework for integrated resource planning islands. Maui County and 10 MW on Hawaii Island. A special working with a broader, more dynamic process to meet future energy • Continued discussions and supporting research on future group of stakeholders is developing reliability standards for needs. PUC adoption of the CESP framework is pending. renewable technologies including ocean thermal energy the utilities and renewable energy developers. conversion, wave energy, expanded concentrating solar power Clean Energy Infrastructure Surcharge: The PUC has and others. Tiers 1 and 2 of the Feed-in Tariff opened to online approved use, with case-by-case approval, of a surcharge to • Continued working with biomass developers, primarily on applications through an independent observer on behalf of help pay for projects to support adding renewable generation Hawaii Island. the PUC in November 2010. Tier 3 is under development. in a more timely way. • Supporting Honolulu Seawater Air Conditioning

January 2011 January 2011 Energy Efÿciency ° Rates as Incentives for Wise Energy Use and decreased trafÿ c congestion during project Economic Development & Tourism with 1) Better Place, • Supported Act 155 (2009) establishing an Energy • Soon to be rolled out: Replacing the present uniform construction. Obtained approval for $5.3 million in an EV control network provider; 2) AeroVironment, Efÿ ciency Portfolio Standard by 2030 and participating in residential rates (no matter how much electricity is used) federal stimulus funds to help reduce the project cost. a charge station provider; and 3) Plug-in America, a the Energy Efÿ ciency Portfolio Standards docket opened with inclining rates so the cost of electricity rises as use • Continued Smart Grid pilot projects and testing to grass-roots EV outreach and education organization. March 2010 by the PUC. increases. Exploring a single energy charge and single determine most effective blending of electricity delivery Partnered with Better Place and Sheraton Hawaii on EV • Supported increasing the PBF Surcharge to 1.5% to demand charge to eliminate declining block rates (lower technology with information and communication demonstration funded by the Department of Energy provide additional needed funding to help meet energy rates as use increases) for commercial customers. technology. Among the early efforts is a joint Hawaii through the Hawaii Renewable Energy Development efÿ ciency and energy conservation goals. project with Sacramento Municipal Utility District (using Venture. • Completed transfer of energy efÿ ciency rebate programs Smart Grid PUC funds). • Sponsored the 2010 First Hawaiian International Hawaii to Hawaii Energy, the public beneÿ ts fee administrator • Although the PUC turned down an initial request for Auto Show to promote EV awareness and provided EV reporting to the PUC. a pilot project to install more advanced meters, the Greening transportation information at the Asia Paciÿ c Clean Energy Summit and • Continued to help customers use energy wisely. Tools in commission stated its commitment to a “Smart Grid” Gained PUC approval for Electric Vehicle (“EV”) pilot Expo and other venues. print and online include Cool Tips reminders for summer and asked Hawaiian Electric to provide a roadmap of its charging rates with a reduced off-peak price to encourage • Participating in the Edison Electric Institute Transportation months, an easier-to-use “My Home Energy Check” Smart Grid plans. early EV adoption, make Hawaii EV-ready and incentivize Task Force with nearly two-dozen leading publicly owned tool at heco.com, Power to Save booklets for homes • Developed a working Smart Grid roadmap to identify off-peak charging. Established a robust EV section on heco. utilities across the country. and small businesses plus events such as the annual Live opportunities over time for new technologies to help com with general information and easy sign-up for charging Energy Lite!, Hawaii Farm Fair and many HECO in Your solve challenges such as renewable energy integration, rate pilot. Community booths at other events. improved reliability, customer engagement, cost of • Partnered on applications for federal stimulus funds • Invited Hawaii Energy to co-sponsor Energy Expo 2010 service and safety. awarded through the Hawaii Department of Business, and provided support and data for a planned pilot • Gained PUC approval for East Oahu Transmission Project program to encourage conservation through comparison Phase 2 which substitutes smart grid solutions for to one’s neighbors. traditional methods, resulting in savings for customers

Advancing Diverse Renewable Energy Technologies 4500 Cumulative PV Projects on HECO, HELCO, and MECO Systems 4000

Seeking new renewable sources of energy 3500 • Entered into a $2 million contract among DBEDT energy • Continued development of Honolulu International • Called for proposals to increase renewable energy and division and Maui Electric and Hawaii Electric Light Company Airport Emergency Facility, a partnership to serve the 3000 renewable fuels, including seeking ideas to use utility-owned using federal stimulus funds for projects to increase State Department of Transportation and Hawaiian Electric land adjacent to the Kahe Power Plant in Leeward Oahu for 2500 renewable energy integration (primarily PV) on island customers with four biodiesel-fueled generators able to clean energy projects. grids. Contract funds pay for equipment and installation; provide 8 MW to the grid; planned for service in mid-2012. 2000 • Continued negotiations on proposals resulting from request interconnection costs to be paid by the utilities. • Called for proposals for long-term contracts for biofuels Maui Electric will perform interconnection study grown and produced in Hawaii to supply generating units for proposals for up to 100 MW of renewable energy to 1500 o Oahu, including Kawailoa wind project discussed below. on one Molokai circuit that has reached 15% on all islands. By the June 2010 deadline, received ten 1000 proposals. Negotiations with selected bidders underway. Number of Projects Number of Projects penetration to identify upgrades that would allow • Called for proposals for locally grown biofuels. (See Biofuels) more distributed generation. • Finished preparation and received approvals to test biofuels • Continuing to develop battery energy storage demonstration 500 • Continued work with Castle & Cooke on a battery back-up at Maui Electric Company’s Ma`alaea Power Plant and projects˜to˜evaluate their use in integrating more clean 0 system for La Ola, the 1.2 MW photovoltaic facility supplying Hawaiian Electric’s Kahe Power Plant. energy, in partnership with the Hawaii Natural Energy 2006 2007 2008 2009 2010 electricity to Maui Electric Company on Lanai. • Continued funding research into Hawaii-grown biofuel Institute at the University of Hawaii, the DBEDT energy ofÿce, • Completing purchase power agreement with Puna feedstocks -- including algae among others – at Hawaii the U.S. Ofÿce of Naval Research and others. Customer-sited solar power had a banner year in 2010, with the number of Agriculture Research Center and sub-contractors University new, renewable systems nearly doubling over 2009. Geothermal Venture for an added 8 MW over the 30 MW already supplied. of Hawaii at Manoa and at UH-Hilo agricultural departments. Solar • Supported Sopogy, Inc. on Holaniku, a 500 kilowatt • Continued to honor the policy developed jointly with • Implementing the Feed-in Tariff approved by PUC for Oahu • Continued to seek approval for an amended Photovoltaic Host concentrating solar power farm with Natural Resources Defense Council on procuring sustainably (see Laying the Foundation section) providing renewable pilot program to allow the utility to rent roofs or open space, to buffer variability at Keahole Point at the Natural Energy produced biofuels with a preference for local biofuels energy developers (primarily PV developers) simpliÿed and contract with a PV developer to install, own and operate a Laboratory of Hawaii Authority on Hawaii Island. included in contracts. price-certain contracts to sell their power to the Hawaiian maximum-sized PV array and accept generated electricity to • Assisted in creation of the Hawaii Biofuels Foundation,˜a Electric companies. the grid. Biofuels not-for-proÿt dedicated to promoting a sustainable Hawaii- • Obtained PUC approval to proceed with negotiation of • Increased legally required caps for net energy metering in Maui • Completed, tested, signed fuel contracts and brought into based biofuels industry using locally-grown energy crops purchase power agreements for four ÿve-megawatt solar County and Hawaii Island from 3% to 4% of system peak and service the Campbell Industrial Park Generation Station, projects at a planned Castle & Cooke park in proposed increase for Oahu from 1% to 2%, in response to believed to be the largest commercial generator in the world Mililani. growing NEM participation. fueled entirely with renewable biodiesel. (continued on back page)