Hawaii surges toward clean energy: A special series
Canary Media’s Julian Spector reports on the Aloha State’s rapid shift away from coal and toward renewables. Hawaii is moving faster than the rest of the country, which makes it a fascinating case study. Check out our feature reporting, video and newsletters with behind-the-scenes insights.
Russia invaded Ukraine, global oil prices spiked, and one U.S. state in particular will feel the crunch.
Hawaii imports all of its oil, much of it from Russia itself. As the U.S. Energy Information Administration succinctly notes, “Isolated by the Pacific Ocean, Hawaii is the most petroleum-dependent U.S. state.” And while gasoline prices are rising everywhere, Hawaii is unique among the states in how much it depends on oil for electricity.
The geopolitical strife in Eastern Europe catches Hawaii at an awkward moment of transition from fossil-fueled electricity to clean energy.
The biggest power plant on the most populous island, the coal-powered AES plant in West Oahu, will shut down in September 2022. The fleet of large-scale renewable projects developed to replace the coal plant is facing delays and cancellations. Until new clean capacity comes online, oil plants are part of the fallback plan to keep the lights on for Oahu’s 1 million residents when coal power goes away.
“We have warned about leaving the cost of this transition up to world oil markets, and this week’s events are another reminder of the price we pay for oil dependence,” said Jay Griffin, chair of the Hawaii Public Utilities Commission, in a Friday email.
In recent years, roughly one-third of Hawaii’s oil came from Russia, according to information from the state’s Energy Office. After Russian forces began their invasion of Ukraine, the U.S. ordered sweeping new sanctions on Russia and Russian businesses, including the company building the Nord Stream 2 gas pipeline between Russia and Germany.
As of Friday, it remained unclear whether tensions between the U.S. and Russia would interrupt the flow of oil to Hawaii. Russian gas continued flowing to Europe despite the invasion, the Associated Press reported, and U.S. officials have insisted that sanctions were tailored to avoid disruption to Russian energy exports.
Utility Hawaiian Electric, which supplies almost all of the state’s electricity, buys fuel oil from local refiner Par Hawaii. The refiner has assured the utility that it will be able to pivot to other crude oil sources if current supplies get interrupted. Hawaiian Electric also stocks 1 to 1.5 months’ supply of fuel oil, according to a spokesperson, so there’s no immediate risk of running out.
HONOLULU, Hawaii — The telephone rang. First electrons were imminent. Twenty-five-year-old Julie Blunden grabbed her binoculars and stepped onto the lanai, a covered porch tucked into the emerald hillside rising above Honolulu.
Looking past the turquoise coastline of Waikiki, across some 20 miles of bay to the west side of Oahu, she saw the evidence: a plume of smoke rising from Barbers Point.
On that day in September 1991, Blunden’s first reaction was relief: AES, the upstart independent power company she and her new husband had moved to Hawaii to work for, had fulfilled its promise. It had constructed a state-of-the-art coal plant, which would lessen Oahu’s overwhelming dependence on imported oil for electricity and deliver cheaper power for the island.
“If we could figure out how to take old technologies, like coal boilers, and make them way, way better, certainly we’d eventually figure out how to start building wind plants and, maybe, someday, what I really wanted to be building: solar plants,” she recalled recently.
Thirty years later, that AES coal plant remains the largest source of power managed by Hawaiian Electric, the investor-owned utility that supplies most of the state. But not for long.
Something unusual is happening in Hawaii: An electric utility and rooftop solar installers have agreed on a proposal to reward households for sharing clean energy with the grid at useful times.
In many places around the U.S., utilities treat rooftop solar as an obstacle. They say it shifts grid-maintenance costs from customers who have solar to those who don’t, or causes headaches for their system planning and operations. Utilities in California are currently urging regulators to levy a monthly fee on anyone who adds rooftop solar, regardless of how it operates.
But things are playing out differently on Oahu. Hawaii’s most populous island, with a million residents, is struggling to ramp up enough clean energy ahead of shutting down its largest fossil-fueled power plant in September. To that end, the monopoly utility, Hawaiian Electric, teamed up with advocates of customer-owned energy to say households should earn money for using solar and batteries to keep power flowing to the grid.
“The two groups that are usually the most opposed to each other, the utility and the [distributed-energy] community, did come together,” said Anne Hoskins, chief policy officer at Sunrun, the nation’s largest rooftop solar installer.
Specifically, these groups asked the state’s regulators earlier this month to approve a program to pay households an upfront cash bonus plus a monthly credit on their bills for adding a battery to their rooftop solar.
To earn the money, customers must agree to export power to the grid during the two hours in the evening when the island needs more electricity. Essentially, they would use their battery to store up solar power during the day and then export it after the sun sets to help meet peak demand.
Participants would be paid at the relatively high retail rate for whatever electricity they feed into the grid during those two hours. The utility and the rooftop-solar advocates disagree about how many years that retail rate should be available, but that’s a small point of friction in an otherwise broad swath of agreement.
Chances are high that regulators will approve the proposal because the utility and solar companies want the same thing, and the regulators specifically asked for the proposal in a January decision. The stated goal is to implement the policy update by March 1.
“A common goal” for rooftop solar policy
Across the United States, rooftop solar policy tends to converge around one of two extremes. On the rooftop-friendly side, net-metering policies pay solar owners the retail price for exports at any time, regardless of how valuable the power may be to the overall system. This allows solar owners to use the grid as a sort of battery: When they produce more power than they can use, they in essence earn money by “storing” it on the grid, leaving the utility to figure out what to do with it. These types of policies are in place in most of the country.
On the less-rooftop-friendly side, policies target customers with rooftop solar by imposing flat fees or by making it uneconomic to export excess power at any time of day. Compensation for rooftop solar in California would head this way under a proposal released by regulators in December. Bills working through the legislature in Florida would similarly lower compensation for solar exports and add fixed fees for owners of solar systems.
Hawaii has bounced between those extremes, and now it’s landing on a middle path: It wants to reward customers for using batteries to deliver clean electricity when the grid actually needs it.
The proposal updates net metering by incentivizing households to behave in a way that’s more valuable to the overall network. “It’s not going to be using the grid as a battery; it’s using the battery as a battery,” said Earthjustice attorney Isaac Moriwake, who represented Hawaii’s distributed energy industry in the discussions.
In its early days, Hawaii’s rooftop solar industry thrived under net-metering policies. But rooftop solar adoption moved so quickly that the utility and regulators pumped the brakes in 2015, ending net metering and disincentivizing grid exports. That move pushed households to only produce as much solar power as they consumed, or to buy a battery and use it to store electricity for their own use during non-sunny times. Hawaii’s rooftop installation market slumped as a result.
But circumstances changed in the last year or so, as Oahu’s AES coal plant, the largest source of power on the island, edged closer to its retirement date, which is now less than seven months away. The large-scale solar and battery projects meant to replace it fell behind schedule, and any source of clean electricity suddenly looks much more attractive.
Hawaii’s regulators, led by Public Utilities Commission Chair James Griffin, approved a more limited Battery Bonus program last summer as an emergency effort to access more electricity in those high-demand hours. This initial version caters to customers who installed solar before the 2015 rule change and are grandfathered in under the old, generous net-metering policy. It allows them to add up to 5 kilowatts of new solar, provided they install a battery and set it to export at the right times.
Net metering offered a ready framework to compensate Battery Bonus participants for the power they sent to the grid — they already earned the retail rate for electricity they exported. But that meant only a narrow subset of the population could participate.
Hawaiian Electric approved 4 megawatts of Battery Bonus applications last year, said Yoh Kawanami, the utility’s director of customer energy resources overseeing operations. But the program was intended to supply 50 megawatts of capacity. The utility and solar industry had been talking about ways to improve it since the launch in July.
“We had a common goal to accelerate the pace and increase enrollment, allowing us to agree on the majority of the proposed amendment,” Kawanami said. “We do expect this proposed amendment will further increase participation in Battery Bonus.”
The new proposal greatly expands the pool of eligible participants by stipulating how to reward households and businesses for helping supply the grid at peak hours. Anyone who doesn’t have solar but wants to get it, and anyone else who got solar after net metering ended, would get paid the retail rate for exports in the two-hour evening peak, even though they wouldn’t get paid that much at other times.
Participants in Battery Bonus already earn an $850-per-kilowatt upfront bonus for committing a battery to 10 years of program participation. The new proposal would add a $5-per-kilowatt monthly bill credit for 10 years. A 5-kilowatt battery thus would get $4,250 immediately, plus $3,000 distributed over a decade’s time in $25 monthly credits. That’s not enough to fully cover a typical battery purchase, but it would greatly reduce the cost.
The retail-rate export payments aren’t an incentive so much as an effort to remove a penalty for participation, Moriwake said. Otherwise, households would be exporting electricity for less than it costs them to buy it from the utility, so the economics would reward using a battery to hold on to that electricity and avoid purchasing more later in the night.
“A substantial majority of customers don’t have any [distributed energy resource] participation yet,” said Moriwake. “Let’s take away the disadvantage for new customers. Let’s throw this wide open to the market.”
Lessons for other states
Hawaii is already in the thick of its transition to clean energy. It was the first state to pass a law requiring it to move to 100 percent renewable electricity, in its case by 2045. Hawaiian Electric just announced that it produced 38.4 percent of its electricity from renewables in 2021, up from 34.5 percent in 2020.
As an early mover, Hawaii has a lot to teach the rest of the country. Even states that aren’t as far along in their energy evolution are encountering a loss of traditional coal-burning power plants, a surge in intermittent renewables and constraints on the land available for more large-scale clean energy development. And a number of states are considering reducing compensation for rooftop solar, much like Hawaii did years ago.
The rooftop solar industry fights hard to maintain policies that boost its profitability. In Hawaii, it had already lost them, but a looming electricity supply crunch meant small-scale solar had something to offer that the utility needed.
The collaboration proves that compromise is possible between utilities and solar installers (something similar is afoot in South Carolina, though it hasn’t yet come to fruition).
“Here you have Hawaii that sees a challenge and says…‘Get together and tell us what you need to make this happen,’” said Sunrun’s Hoskins. “The utility really did come to the table to work with the industry. That’s the lightbulb that we need to get turned on with utilities and also with some regulators [elsewhere].”
If other states learn from Hawaii’s bumpy ride, they could fine-tune solar policies to help with peak demand without undergoing years of policy whiplash.
The obvious audience for this history lesson is California, which has more rooftop solar and more customer-owned batteries than any other state. The economic powerhouse has already suffered rolling blackouts due to a well-documented shortfall in evening grid capacity, which will only get worse as gas plants and the last nuclear plant in the state shut down in the next few years.
But California’s utility regulator, which is currently reevaluating rooftop solar policies, in December proposed slashing compensation for exported solar and imposing a flat monthly fee of $8 per kilowatt of solar capacity for new rooftop solar owners. This would penalize solar-plus-battery households for signing up to share power with the grid, whether or not they help California meet its evening peak demand.
“It’s a cautionary tale for California,” Moriwake said of Hawaii’s recent history.
Penalizing solar for connecting to the grid could push people to “load-defect,” meeting their own needs without participating in the broader energy system, he said. Under this scenario, the broader grid would still need to socialize the cost of large, utility-scale batteries to store clean energy, but it wouldn’t benefit from the fleet of batteries already installed in homes.
The alternative path that Hawaii is now poised to take would avoid redundant battery investment by paying customers to share their power at valuable times.
“Are we going to leverage and optimize the full benefits of [distributed energy] serving the grid?” Moriwake asked.
To complete the lesson, Hawaii regulators first need to finalize the program and see if Hawaiian Electric and solar installers can enroll a full 50 megawatts. Then the batteries actually need to perform as expected — thousands of devices delivering power reliably when the two-hour evening peak rolls around.
At the very least, trying to tap customer-owned batteries for the public good is more likely to succeed than not trying at all.
HONOLULU, Hawaii — When coal plants on the mainland U.S. began to shut down in droves, natural-gas plants were ready to take their place, ramping up as needed to keep the lights on. In Hawaii, that’s not an option — both because of the state’s commitment to having a carbon-free grid by 2045 and because delivering natural gas to the islands is prohibitively expensive.
When Hawaii’s last remaining coal plant ceases operations on the island of Oahu in September 2022, the state will turn instead to a giant battery to ensure the grid keeps functioning smoothly. The Kapolei Energy Storage facility (KES) will rank among the largest stand-alone batteries in the world, at 185 megawatts/565 megawatt-hours. It is contracted with utility Hawaiian Electric to keep the grid running for the next 20 years, a crucial interval leading up to the 2045 deadline.
“Here, today, on Oahu, Plus Power and Hawaiian Electric are sending a postcard from the future,” said Plus Power’s lead developer Bob Rudd at a ground blessing ceremony last week. “I’m certain that someday we’ll all look back, when there are dozens of projects just like KES on the mainland and all across the world, and we’ll think, ‘We were there. Hawaii showed the world how to do it first.’ ”
Soon, 158 Tesla Megapacks will arrive on the 7-acre patch of dusty, previously disturbed land in the James Campbell Industrial Park, a cluster of heavy industry on the west side of Oahu.
Large batteries are becoming an increasingly common source of power for evening hours in the desert Southwest on the mainland. But KES will shoulder duties that batteries have never had to perform at this scale in order to keep the grid running reliably for Oahu’s 1 million residents and the U.S. military’s Indo-Pacific Command facility.
KES still needs to get built, and then to operate as advertised. But as other states and the U.S. Congress contemplate 100 percent clean energy goals, KES will become an early test case for whether high-tech clean alternatives can take over from fossil fuel plants and keep the grid running.
“Ultimate pacemaker for the grid”
Large batteries of recent vintage typically serve a bulk capacity role: Their primary job is to deliver a bunch of electrons in the hours when the grid needs it. KES will do that, but it will also carry out several rarely performed but highly valuable tasks.
First, the battery will be able to jump-start the grid if some calamity knocks it out — grid wonks call this “black-start capability.” Islandwide blackouts hit Oahu in 2006 and 2008 after an earthquake and a lightning storm, respectively. Tsunamis and cyclones threaten to wreak similar havoc in the future.
Second, Plus Power specifically designed the battery to prevent the grid from shutting down in the first place. KES will reserve 50 megawatts of capacity to push out in a fraction of a second if grid frequency falls out of safe range, an event that can precede a cascading grid failure. Texas infamously came within 4 minutes and 37 seconds of a frequency-related collapse in its February winter storm, which could have knocked out power to many in the state for weeks.
If the problem continues, the full battery will respond with what is called “grid-forming services.”The state’s last remaining coal plant, owned by AES and located just down the road from the KES site, maintains grid frequency with the physical inertia of its spinning metal turbine. KES will replicate that effect with digital controls and a field of Tesla batteries, becoming what Plus Power’s policy leader Polly Shaw called “the ultimate pacemaker for the grid.”
On a daily basis, KES will act as a communal battery for the island as a whole, using the bulk of its capacity to absorb excess midday solar power and feed it back to the grid toserve evening demand. That creates space for more rooftop solar and larger solar fields as Oahu pushes toward 100 percent renewable power.
Claiming a first is always risky in the fast-moving storage industry. Plus Power’s leaders acknowledge that KES’ functionality is not entirely unique; some small-scale batteries in remote or off-grid settings perform similar roles. But KES will have considerably greater impact, as it adds up to roughly 17 percent of the 1,100-megawatt peak demand on Oahu.
“As far as I understand, this would be the first project that provides a combination of load-shifting, fast frequency response, virtual inertia and black-start [capabilities] at 100-plus-megawatt scale,” said Rudd, who previously led large-scale storage sales for Tesla.
Last week I visited Oahu, Hawaii’s most populous island, which is currently girding itself for the closure of the state’s last coal plant. My mission: to figure out how the island’s grid is shifting from fossil power to clean power, without the help of any neighboring grids to ease the transition.
I’ve got a ton to catch you up on, so stay tuned over the next few days. For now, I wanted to give you a quick overview of why Hawaii has become known as a “postcard from the future” of clean energy, and how that moniker has only grown more meaningful in recent months.
Clean energy moves faster on island time
Hawaii was the first state to pass a law to decarbonize its electricity system. The 2015 law set a 100 percent renewable target for 2045. Subsequent legislation specified that coal must shut down before 2023.
Policy certainly pushes things along. But Hawaii’s geography also accelerated clean energy adoption relative to the slower pace on the mainland.
The islands don’t have coal or natural gas deposits. The grid relies on burning imported oil and diesel, which is expensive.
That meant solar became cost-effective there early on, both on rooftops and in larger plants.
The early proliferation of solar installations forced the adoption of batteries to manage the influx and shift it to more valuable evening hours.
Scarce land makes large-scale development tricky, however. Hawaii very much pursues parallel tracks of building large-scale renewables and tapping its prodigious small-scale installations to help the grid.
As of 2020, Kauai was hitting around 60 percent renewable electricity. Oahu, Hawaii Island and Maui averaged 34.5 percent renewable. Compare that to about 20 percent for the U.S. as a whole.
In a moment that felt like it had to be scripted, my cab driver from the airport in Honolulu heard what I was up to and revealed that he had put some 40 solar panels on his roof. He said that dropped his household’s electric bill from $600 a month to almost nothing. (I did not have time to verify his electric bills, so take this as broadly illustrative of the market dynamics.)
Lest you think I’m the type of reporter who just jots down whatever the taxi driver says and calls it a day, here are some hard statistics:
78 percent of new home solar installations in 2020 included batteries. Sunrun, the nation’s largest solar installer, says basically all of its new customers in Hawaii get batteries.
Those numbers are way ahead of the mainland.
Over the last several years, Hawaii adopted policies to discourage more solar production exporting to the grid at midday, because it already had so much. But that’s now starting to change as the coal closure looms.
The last remaining coal plant in the state, owned by independent power producer AES, will shut down in 2022 after running since the early ’90s.
It’s an unusual plant in that it still provides some of the cheapest on-demand power in Hawaii. On the mainland, the story is usually that coal plants are already losing money compared to newer, cleaner options. But cheap or not, Hawaii’s last coal plant emits local pollution and carbon emissions.
“We strongly supported shutting down the coal plant,” said Kylie Wager Cruz, senior attorney with Earthjustice in Hawaii. “That facility needed to go. What we do with that loss of capacity is the key question.”
Making that question all the more interesting is the fact that Oahu can’t do what mainland grids do: simply shift to flexible gas power when coal goes away. For policy and economic reasons, gas is not an option for Hawaii. It can only build new renewables and energy storage to fill the gap — or temporarily burn more oil and diesel while those plants are still kicking.
Hawaiian Electric chose a portfolio of solar and storage projects to collectively replace the AES plant, as well as one really big battery. San Francisco developer Plus Power is building the 185-megawatt/565-megawatt-hour Kapolei Energy Storage (KES) system just down the road from the coal plant.
It will be among the largest stand-alone batteries in the world. Being able to charge from the grid, rather than onsite solar, gives it additional flexibility.
Beyond its size, KES going to do a bunch of things that no batteries have done at anywhere close to this scale.
This project is sufficiently groundbreaking to deserve a closer look, which I’ll deliver to your inbox tomorrow. But I wanted to tease one aspect of it: KES will act like a battery at large for the whole Oahu grid, which means the system will be able to handle way more solar power than it otherwise could.
Hawaii’s energy planners are already freeing up residential and community-scale solar projects to inject more power into the grid. After years when that was discouraged, it’s now looking like a vital tool for keeping the lights on without coal power.
And now that’s happening. Developer Plus Power held a ground blessing last week for Kapolei Energy Storage (KES), which will be the biggest battery in Hawaii. It will take over duties from the AES coal plant that we haven’t seen large-scale batteries do before. (See my full story here.)
Put simply, KES is a test case for how to switch from fossil fuels to clean energy without relying on gas power in a pinch.
Big fossil-fueled plants don’t just pump out electricity. They also maintain the frequency of the grid with the sheer inertia of their spinning turbines.
If the grid drops out of the safe band of frequency, bad things happen.
Texas came disturbingly close to a systemwide collapse due to that very reason during its February 2021 winter storm.
Plus Power designed a battery that can respond to a dangerous shift in grid frequency faster than you can blink. It also has the ability to jump-start the grid network if it does go down due to a massive storm, tsunami, earthquake or what have you.
Technically, a battery in your house plays a similar role if the grid goes down: It forms its own islanded grid, maintains proper frequency and manages the flow of rooftop solar generation. But I’ve never heard of a battery performing these tasks in such a high-stakes situation:
Oahu is home to 1 million people and critical facilities like the U.S. military’s Indo-Pacific Command.
KES’ capacity equates to about 17 percent of the island’s peak demand, immediately making it a central component of ensuring the smooth operations of the grid.
By serving as a communal battery for the whole island, KES unlocks a bunch more solar development elsewhere, including on rooftops and community-scale projects.
Here’s how Plus Power’s lead developer Bob Rudd (formerly director of utility sales at Tesla) described the precedent at a ground-blessing ceremony last week:
Here, today, on Oahu, Plus Power and Hawaiian Electric are sending a postcard from the future. I’m certain that someday we’ll all look back, when there are dozens of projects just like KES on the mainland and all across the world, and we’ll think, “We were there. Hawaii showed the world how to do it first.”
Welcome to the third and final installment of our newsletter series on the Aloha State. So far we’ve covered Hawaii’s bellwether push for clean energy and how a massive new battery is paving the way for a complete end to coal power. Now I’m going to tell you how residents on Oahu are getting asked to play a bigger role in the grid transition.
Hawaii’s rooftop solar industry boomed early and was so successful that the island grids ended up with more power than they needed in the sunniest hours.
The major utility, Hawaiian Electric, then pushed for policies that disincentivized sending excess rooftop solar production to the grid. Customers had to minimize exports by consuming what they produced or getting a battery to store it.
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A quick programming note for you: In the weeks to come, I’m going to shift more of my time to reporting and writing stories. I’ll focus my newsletter energies on the Monday edition, weaving together threads of knowledge from the previous week’s news and prepping you for the week ahead.
On other days, the newsletter will feature the freshest writing from myself, my colleagues and our soon-to-arrive new reporters. And you’ll enjoy special columns like Mike Munsell’s consistently fascinating Friday Social, which has already taught me a ton about how people grapple with the climate crisis in the far-flung corners of the internet.
I’m having a blast writing this missive to you and sharing what I’m seeing at the cutting edge of real action to build a society powered by clean energy. And it’s been heartening to see all the feedback from you when you enjoy an edition, chuckle at a pun, or argue a point you think I got wrong.
Please keep that conversation going. And if you enjoyed my writing here, I hope that you’ll also check out my reporting, starting with something very special this very day…
A special report on Hawaii’s energy transition crunchtime
This summer I went to Oahu for work, and that raised some eyebrows. Is he really working? How much time did he spend on the beach?
Hawaii was the first state to commit to 100 percent renewable electricity.
It faces its first major hurdle in that journey when the state’s lone coal plant shuts down in September 2022.
Now we’re in the crunchtime when Oahu must build enough clean power to ensure a smooth exit from coal.
The original purpose of my trip was to report on the massive stand-alone battery that will replace the coal plant’s capacity on a one-to-one basis.
What I learned on the ground is that construction of the large solar plants expected to fill up the big battery has fallen behind schedule. That created risk that the island grid will have to burn more oil to replace coal power, which would be both dirty and costly.
Rather than cruise into that mess, Hawaii’s regulators jumped in and rapidly approved a bunch of programs that clean and distributed energy advocates had long hoped for.
While the big projects work their way through permitting and construction delays, Oahu is asking for more residential and community-scale solar to rush onto the grid. Individual homes are being asked to help, and they’ll get paid for their services.
Hawaii is unlike anywhere else on earth (I verified this when I went there for my work trip). But this story is vitally important for any other place contemplating a wholesale shift to clean power (which is pretty much anywhere, at this point).
Hawaii is learning, in real time, what it takes to actually deliver on lofty decarbonization promises. There’s a lot of moving pieces, and not everything goes as planned. Success depends on timely and thoughtful intervention when things veer off track.
Hawaii is turning to small, localized clean energy out of necessity when the big power plants fall behind schedule. Anyone arguing for distributed versus centralized energy has a crucial case study to look at here.
The challenges in locating large renewables plants on Oahu are a warning for elsewhere. Renewables development doesn’t happen in a vacuum. It must contend with the historical forces that shape a place, while finding ways to help the community thrive in the future.
There are all sorts of other fascinating tidbits to discover and characters to meet, so please give the full article a read. If you like your news short and sweet, watch the video.
Andif you have any suggestions for sunny, gorgeous places where one may investigate the cutting edge of clean energy adoption, by all means, let us know at [email protected]canarymedia.com.