Hawaiian Electric Company, Inc. INTEGRATED RESOURCE PLAN 2009–2028 Docket No. 2007-0084 September 30, 2008 Hawaiian Electric Company, Inc. HECO IRP-4 Table of Contents TABLE OF CONTENTS Page EXECUTIVE SUMMARY…………………………………………………………. ES-1 1 INTRODUCTION.........................................................................................1-1 1.1 Purpose of IRP.............................................................................................................................. 1-1 1.2 Commission Ruling on HECO IRP-3 ......................................................................................... 1-1 1.3 May 2007 Evaluation Report....................................................................................................... 1-1 1.4 Major Changes since HECO IRP-3 ............................................................................................ 1-4 1.4.1 Hawaii Global Warming Solutions - Act 234 ............................................................................ 1-4 1.4.2 Hawaii Renewable Portfolio Standard ....................................................................................... 1-4 1.4.3 Hawaii Clean Energy Initiative..................................................................................................1-5 1.4.4 Biofuels Legislation ................................................................................................................... 1-5 1.4.5 Renewable Energy Infrastructure Program Docket.................................................................... 1-6 1.4.6 Intragovernmental Wheeling Docket ......................................................................................... 1-6 1.4.7 Public Benefit Fund Docket....................................................................................................... 1-6 1.4.8 Net Energy Metering.................................................................................................................. 1-7 1.4.9 Competitive Bidding for New Generation Docket..................................................................... 1-8 1.4.10 Solicitation for 100 MW of As-available Renewable Energy ............................................. 1-10 1.4.11 Campbell Industrial Park Generating Station ...................................................................... 1-13 1.4.12 Relating to Renewable Energy Act 207............................................................................... 1-13 2 IRP-4 PROCESS OVERVIEW ....................................................................2-1 2.1 Description of Overall Process .................................................................................................... 2-1 2.2 Advisory Group Meetings............................................................................................................ 2-2 2.3 Public Information Meetings....................................................................................................... 2-4 2.4 IRP-3 Stipulated Agreement ....................................................................................................... 2-5 3 INITIAL IRP OBJECTIVES AND GOALS...................................................3-1 3.1 Renewable Portfolio Standard Percentage................................................................................. 3-2 3.2 Greenhouse Gas Emission Reduction......................................................................................... 3-3 Docket No. 2007-0084 i September 2008 HECO IRP-4 Table of Contents 3.3 Potable Water Consumption Reduction..................................................................................... 3-3 3.4 Demand-Side Management..........................................................................................................3-4 3.5 Distributed Generation ................................................................................................................ 3-5 3.6 Generation System Reliability..................................................................................................... 3-6 3.7 Electricity Rates and Bills Impact............................................................................................... 3-7 4 GLOBAL WARMING ..................................................................................4-1 4.1 Introduction .................................................................................................................................. 4-1 4.2 Background on Greenhouse Gas (GHG) and Global Warming............................................... 4-1 4.2.1 What are GHGs?........................................................................................................................ 4-1 4.2.2 How GHG Causes Global Warming .......................................................................................... 4-2 4.2.3 Sources of GHG in Hawaii ........................................................................................................4-2 4.2.4 General Policy Options .............................................................................................................. 4-4 4.3 HECO Policy on Global Warming.............................................................................................. 4-5 4.4 Summary of Potential Federal Legislation................................................................................. 4-6 4.4.1 Lieberman-McCain: Climate Stewardship and Innovation Act of 2007 (S.280) ...................... 4-6 4.4.2 Needs and Usefulness of a Federal Policy Model...................................................................... 4-7 4.4.3 Lieberman-McCain Results Used in IRP-4................................................................................ 4-7 4.5 Federal Activities Related to Global Warming/Climate Change ............................................. 4-8 4.5.1 Climate Change Science Program.............................................................................................. 4-8 4.5.2 Department of Energy................................................................................................................ 4-8 4.5.3 Environmental Protection Agency ............................................................................................. 4-8 4.6 Global Warming Actions in other Jurisdictions........................................................................ 4-9 4.6.1 Carbon Trading Markets ............................................................................................................ 4-9 4.6.2 State and Regional Initiatives..................................................................................................... 4-9 4.7 Hawaii Global Warming Solutions Act (Act 234).................................................................... 4-10 4.8 Global Warming Issues for Hawaii........................................................................................... 4-11 4.8.1 Establishing a 1990 Carbon Emission Standard....................................................................... 4-11 4.8.2 Establishing CO2 Emissions standards - Conceptual Issues..................................................... 4-11 4.8.3 Accounting for Air and Marine Transport ............................................................................... 4-12 4.8.4 Waste-to-Energy Projects ........................................................................................................4-12 4.8.5 Prior & External Sequestration Programs ................................................................................ 4-13 Docket No. 2007-0084 ii September 2008 HECO IRP-4 Table of Contents 4.8.6 Emissions from Independent Power Producers........................................................................ 4-13 4.8.7 Accounting for Energy Conservation / Efficiency Programs in IRP........................................ 4-14 4.8.8 Economic Justice and Freedom of Choice ............................................................................... 4-14 4.8.9 Transportation Technology and Electrical GHG Emissions .................................................... 4-15 4.9 Summary of GHG Assumptions Used in HECO IRP-4 Modeling......................................... 4-16 4.10 How HECO’s Action Plan Proposals Reflect Future GHG Uncertainties ............................ 4-18 5 OTHER PLANNING CONSIDERATIONS...................................................5-1 5.1 Capacity Planning Criteria.......................................................................................................... 5-1 5.2 Operational Requirements of Generation System for Today and Tomorrow ........................ 5-1 5.2.1 System Operation Issues ............................................................................................................ 5-2 5.2.1.1 Need to Match Generation and Demand................................................................................ 5-2 5.2.1.2 Offsetting Wind Farm Variations .......................................................................................... 5-4 5.2.1.3 Fault Ride-Through ............................................................................................................... 5-7 5.2.1.4 Resource Planning Implications ............................................................................................ 5-8 5.3 Minimum Load Constraints and As-available Load Curtailment Issues................................ 5-8 5.4 Spinning and Regulating Reserve ..............................................................................................