Can’t Help Falling In Love – Hawaii Finds The Move Away From Fossil Fuels Is Easier Said Than Done


It has become abundantly clear over the past couple of years that energy transition isn’t going to be a straight line leading directly to abundant carbon-free power and a net-zero world. All sorts of obstacles have popped up, indicating that the energy industry’s trilemma of availability, reliability and affordability not only clash with each other, they can also conflict with environmental priorities. The challenge is being felt now in Hawaii, where a commitment to expanding energy production from renewable sources and tamping down the use of fossil fuels while also keeping prices under control and reducing pollution is turning out to be no easy feat. In today’s RBN blog, we look at Hawaii’s recent efforts to phase out coal- and oil-fired power generation, why that’s turned out to be easier said than done, and what it all means for environmental performance and energy prices.

In many ways, Hawaii exemplifies both the ambitions and pitfalls in today’s energy landscape. The sharp contrast between the state’s environmental bounty and its energy needs is vividly exemplified at a spot called Kahe Point on the west side of Oahu, the most populous of the Hawaiian islands. Nicknamed “Electric Beach,” (yellow star in Figure 1) the area’s abundant sea life — including reef fish, sea turtles, eagle rays and even pods of spinner dolphins — attracts scores of divers and snorkelers, but much of that underwater beauty is a result of the warm water that flows from the cooling pipes that extend from a nearby power plant, which runs on fuel oil. So why does a state with such a strong environmental drive perpetuate the plant on the otherwise pristine coastline?

Let’s start with a look at where things currently stand in the Aloha State, where a transition from fossil fuels for power generation has long been a priority for environmental and economic reasons. In many ways, the energy landscape there remains a state of extremes. Even though Hawaii has the third-lowest energy consumption per capita of any state, according to Energy Information Administration (EIA) data, it uses almost seven times more energy than it produces, a result of its small size and lack of resources. (It has no oil, gas or coal reserves. Renewables are responsible for about 15% of utility-scale power generation, with imported oil responsible for nearly all the rest.) Solar power (including rooftop panels) meets about 17% of the state’s overall electricity needs, which puts it 10th overall in that category, but petroleum-based products account for about 80% of the state’s total energy consumption (including transportation), which is the highest in the U.S. And then there’s the bottom-line number that resonates with residential consumers, businesses and politicians alike: the highest electricity prices among the 50 states.

Key Energy Infrastructure Points on Oahu

Figure 1. Key Energy Infrastructure Points on Oahu. Source: RBN

When it comes to energy transition, the state’s boldest move so far may be the September 2022 retirement of its last remaining coal-fired power plant, the 180-MW Barbers Point facility (orange smokestacks icon in Figure 1) on Oahu. The plant had long been the biggest source of power for the island, meeting about 16% of peak electric demand. (A state law passed in 2020, Act 23, effectively banned the use of coal for power generation beginning September 1, 2022, when the coal plant’s power purchase agreement with Oahu’s electric utility expired.) While coal plants have been closing across the U.S. over the past decade, largely due to low natural gas prices but also due to environmental concerns, the situation in Hawaii is unique. According to the State Energy Office, the closure of Barbers Point represented the first time a state has retired a large coal unit without transitioning first to a “bridge” fuel such as natural gas. Instead of replacing the plant’s output, the state is banking on a number of initiatives to meet its power needs going forward and reach its goal of 100% renewable energy by 2045, including:

  • Utility-scale renewable energy projects.
  • Community-based renewable energy projects.
  • Distributed energy resources, such as rooftop solar and residential batteries.
  • Demand-response programs for peak demand periods.
  • Enhanced and targeted energy-efficiency measures.

Rendering of the Kapolei Energy Storage Facility on Oahu

Rendering of the Kapolei Energy Storage Facility on Oahu. Source: Kapolei Energy Storage

We’ve written a lot about how the energy transition isn’t likely to be a smooth process anywhere (see Sledgehammer) and it’s no different in Hawaii, even with several big projects scheduled to come online on Oahu in the next couple of years. The one considered the biggest step toward meeting the state’s 2045 clean-energy target is the Kapolei Energy Storage (KES) facility, a 185-MW battery storage project (aqua battery icon in Figure 1 and rendering above) intended to help make up for the closure of the Barbers Point coal plant, enhance grid reliability and accelerate the integration of renewable energy. KES received approval from the Hawaii Public Utilities Commission in May 2021 and construction is underway, although its completion has been delayed. Originally expected to be online by Q1 2023, it’s now slated to begin commercial operations in the second half of this year. One big complicating issue with the KES facility is that while it has the capacity to harness large amounts of energy, there isn’t enough being generated by renewable sources to fully charge the system. The project is supposed to get at least 75% of its power from renewables during its second through fifth years of operation, but Hawaiian Electric has said it won’t meet that target for more than a decade and that renewables will be responsible for just 63% of charging over the facility’s 20-year lifetime. (KES estimates that the battery systems at the site will operate for at least 15 years. As they degrade, they will be augmented with supplemental battery units. At the end of the project’s operating life, KES is required to remove the battery system and restore the land to pre-existing conditions.)

Many renewable projects in Hawaii have been delayed in recent years due to a combination of factors common to the rest of the U.S., including supply-chain problems, difficulties in permitting (see Don’t Pass Me By), and contracting issues. In addition, the Department of Commerce’s anti-dumping investigation into solar cells from Southeast Asia has created complications for some projects, while COVID-related delays caused prices to spike for important components for solar panels and batteries.

Petroleum Liquids Used in Power Generation, 2001-22

Figure 2. Petroleum Liquids Used in Power Generation, 2001-22. Source: EIA

So, if there aren’t enough renewables, what is going to power the KES facility? Ironically, the answer is fuels produced from oil (either diesel or fuel oil), on which Hawaii still relies for power generation, contrary to the trend nationwide, even as it tries to accelerate its energy transition. As shown in Figure 2, the state used 11.3 million gallons of fuel to produce electricity in 2022, down slightly from 13.7 million gallons in 2001. (During that time, annual usage was between 10.4 million gallons and 15.7 million gallons every year.) The declines have been much sharper across the rest of the U.S., from 183.7 million gallons in 2001 to 17.8 million gallons in 2022 as cheap natural gas displaced other fuel sources. Put another way, Hawaii accounted for about 7% of all petroleum liquids used for power generation two decades ago, but that was up to 39% in 2022 and has been at least 33% of usage every year since 2010.

The state’s dependence on oil-fired power also comes with an environmental cost. While Hawaii ranked an unsurprising 47th in net power generation in 2021, it ranked 22nd in sulfur dioxide (SO2) emissions, 32nd in nitrogen oxide (NOx) emissions and 42nd for carbon dioxide (CO2) emissions. However, those rankings are for raw emissions — by total volume, that is. When emissions are measured on a per-megawatt-hour (MWh) of electricity produced basis, the rankings are considerably worse — using that approach, Hawaii is the #1 emitter of SO2 per MWh produced, #3 in NOx and #6 in CO2 — not exactly what you’d expect from paradise.

Average Cost of U.S. Power Generation by Fuel Type, 2005-21

Figure 3. Average Cost of U.S. Power Generation by Fuel Type, 2005-21. Source: Statista

The impact of Hawaii’s heavy petroleum-product reliance on power prices is significant as well, even without factoring in the long-term risk of market disruptions due to being an ocean away from the source of its generating fuel supply. Oil-fired generation (orange line in Figure 3 above) has been far-and-away the most expensive fossil fuel for power generation over most of the last two decades. Across the U.S., it’s been three-to-five times as expensive as coal (blue line) and almost always more expensive than natural gas (gray line) since 2005. Correspondingly, as is shown in Figure 4 below, Hawaii’s residential, commercial and industrial electricity prices (blue bars) already far exceed the U.S. averages (orange bars). What’s more, Hawaii’s move away from coal-fired power is going to be partly compensated for by expensive fuel oil. (On the positive side, fuel oil can be a cleaner-burning fuel than coal.) For its part, Hawaii Electric said it expected residential bills for customers on Oahu to rise by about 7% after closure of the Barbers Point coal plant, although it said that rates should go down as more clean-energy projects come online.

Average Hawaiian and U.S. Electricity Prices, January 2023

Figure 4. Average Hawaiian and U.S. Electricity Prices, January 2023. Source: EIA

The most recent development to improve the state’s environmental performance involves Hawaii Gas, the state’s only regulated gas utility, which serves residential and commercial customers. (The state has no utility-scale power generation that relies on gas.) It issued a request for proposals (RFP) in April to purchase renewable natural gas (RNG) and renewable hydrogen (more on that in a bit) to further diversify its fuel supply. As we explained in That Smell, RNG is just methane, with no material difference from natural gas produced and processed in areas such as the Permian in West Texas. The distinction is in how it’s produced. There are two main paths to RNG, one via the collection of methane generated by landfills and the other through anaerobic digesters. (The RFP notes that RNG can be sourced from wastewater treatment plants, landfills, construction and demolition waste, bio-crops, food waste and dairy farms.) The RFP solicits proposals from local and national suppliers who can provide up to 65,000 therms per day (~6.5 MMcf/d) of RNG, several times what the utility currently uses. Since 2018, Hawaii Gas has been utilizing RNG produced at Honolulu’s Honouliuli wastewater facility, which can produce up to 800,000 therms (~77 MMcf) of RNG each year, or a scant 0.21 MMcf/d.

RNG is just part of the mix (and one half of the latest RFP) for Hawaii Gas, which also relies on LNG imports, synthetic natural gas (SNG, which is produced from naphtha, a petroleum byproduct) and hydrogen in its fuel mix. The RFP also calls for up to 2,300 kilograms per day (kg/d) of renewable hydrogen. As we’ve noted previously (see You Can Make It If You Try), renewable hydrogen (often referred to as “green”) comes from water run through an electrolyzer powered by renewable energy. It’s worth noting that while many states and utilities are investigating the use of hydrogen in power generation, including co-firing with natural gas (see Something to Believe In?), Hawaii Gas has been blending up to 15% hydrogen (albeit the “gray” variety produced from natural gas via steam methane reformers or SMRs) into its gas mix since 1974. The RNG and hydrogen volumes sought in the RFP would replace nearly all of the SNG used by Hawaii Gas.

Hawaii’s hydrogen market is advanced in comparison to most other states, with a long history of programs and incentives. The Hawaii Natural Energy Institute was formed in 1974 — soon after OPEC’s first market-shocking oil embargo — to research and develop alternative energy technologies and reduce the state’s dependence on fossil fuels. As noted earlier, Hawaii has been using hydrogen as part of its gas mix for decades, but other efforts have expanded over the years, including the state’s creation of a renewable hydrogen program and a rebate program for hydrogen fueling stations. The most recent development has been the state’s pursuit of a regional hydrogen hub (see The Contenders). The Department of Energy (DOE) opened up $7 billion in funding in September 2022 for the development of six to 10 hubs. The Hawaii Pacific Hydrogen Hub — a consortium of energy businesses, including Hawaiian Electric Co. and Hawaii Gas — was one of the 33 concept papers to receive DOE encouragement in late 2022 and it turned in a final application in April. Details about the plan are scarce, but the overall goal is to make Hawaii a key location for hydrogen production and distribution in the Pacific. The DOE is expected to notify the winners around the fall of 2023 and complete award negotiations in the winter of 2023-24.

Hawaii, like Europe and other regions with lofty green energy ideals, has been fervent in its efforts to transition away from fossil fuels yet stymied by the practicalities of energy markets, the real-world limitations on renewable energy and concerns about pricing and reliability. The trajectory of Europe’s energy transition was altered (see Monkey Wrench) by Russia’s war in Ukraine, a race to secure energy supplies, and a spike in energy prices. Although the situation in Hawaii is far different, it’s also a prime example of the need to prudently consider the real-world impacts, secondary consequences, and long-term risks of various energy policies.

“Can’t Help Falling in Love” was written by Hugo Peretti, Luigi Creatore and George David Weiss. It appears as the fifth song on side one of Elvis Presley’s fourth soundtrack album, Blue Hawaii. The melody of the song originated in the French love song “Plaisir d’amour,” composed in 1784 by Jean-Paul-Egide Martini. “Can’t Help Falling in Love” was featured in Presley’s 1961 feature film, Blue Hawaii. Released as a single in November 1961, it went to #2 on the Billboard Hot 100 Singles chart and has been certified Platinum by the Recording Industry Association of America. The song was featured as the finale at Elvis’ concert appearances in the 1960s and ’70s. Elvis sang it in the live segment of his 1968 NBC television special and as the closing number for his 1973 live global telecast, Aloha from Hawaii. It was the last song he performed live at his final concert at Market Square Arena in Indianapolis in June 1977. Personnel on the record were: Elvis Presley (lead vocals), The Jordanaires (backing vocals), Scotty Moore, Hank Garland (electric guitar), Tiny Timbrell (acoustic guitar), Floyd Cramer (piano), Dudley Brooks (celeste), Bob Moore (acoustic bass), Hal Blaine (drums, percussion), and Alvino Rey (pedal steel guitar).

Blue Hawaii was recorded at Radio Recorders in Hollywood in March 1961 with Steve Sholes handling production duties. The soundtrack album was released in October 1961 and went to #1 on the Billboard 200 Albums chart. It has been certified 3x Platinum by the RIAA. Due to the success of this soundtrack album and its predecessor, G.I. Blues, Elvis and his manager Tom Parker would focus on Elvis’ film career and soundtrack albums for the next eight years. Two singles were released from the LP.

Elvis Presley was an American rock and roll singer and actor. Dubbed “The King,” he is regarded as an iconic cultural figure of the 20th century and one of the early pioneers that helped put rock and roll on the map. His professional career began in 1954 when he started making records for Sam Phillips’ Sun Records in Memphis. He released 23 studio albums, eight live albums, 13 compilation albums, 18 soundtrack albums, 19 EPs, and 117 singles. He has sold more than 500 million records worldwide. He starred in thirty-three motion pictures. Elvis won three Grammy Awards, a Grammy Lifetime Achievement Award, and is a member of the Rock and Roll Hall of Fame. He has a star on the Hollywood Walk of Fame, and was posthumously awarded the Presidential Medal of Freedom in 2018. Elvis Presley died at his Graceland home in Memphis in August 1977 at the age of 42.


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