The Big Island of Hawaii has the highest cost of electricity ($.32 per KWH) of any place in the US. It also has half the energy consumption per household of any place in the US at 2500KWHs per year per household as compared to the national average of 4300KWH per year. The Big Island of Hawaii also has one of the highest rates of energy generated from renewable energy sources (39% of the Big Island’s billed electricity).
Hawaii has vast riches in renewable energy resources. Any one of the three major renewable sources of electricity: wind, geothermal or solar voltaic could produce 10 times more than all the foreseeable energy growth for the Big Island. The sunlight is so strong and shines so much of the day that any house with solar panels on its roof can easily generate the average Hawaii Island household electricity usage of 200KWH/month. Although solar hot water heaters make a great deal of sense and are the largest source of electric usage on the East side of the Big Island, only 1 in 4 houses have them installed.
Though the capital costs of installing a solar system is high, particularly compared to the average household income on the Big Island, individual usage of solar power is of a much greater economic benefit to BI residents then power by other renewable energy sources and here’s why.
The Federal Public Utilities Regulatory Policies Act (PURPA) requires utilities to purchase power from qualifying independent power producers at a price set by each State’s Public Utility commission. In Hawaii, which is restricted to electricity generated on each island, this power purchase price has been set using a formula which is tied closely to the cost of oil. Hawaii Electric Light Company (HELCO), the power utility on the Big Island, buys alternative energy from geothermal and wind independent power producers on the Big Island at the same KWH price as it costs to produce electricity using oil. This motivates external investors to develop power plants from alternative sources and sell it to HELCO which is profitable for them and good for the environment. It also provides diversification of power sources, reduces reliance on shipping in oil, and creates a more distributed power grid.
But the Big Island residents aren’t benefiting economically from the use of alternative energy and are paying ever higher electric bills as the price of oil escalates. The growing profits made by the independent power producers are sent off Island rather than benefiting the economy of the Big Island. If residents invest in solar hot water heaters and solar electricity they are immediately insulated from rising oil costs which have gone up 40% in the past year and are predicted to go up another 40% in the next 12 months. Once the capital investment has been made back (over 2-8 years) the solar power system will free up income of the Big Island residents. These dollars will remain on the Big Island in the pockets of the local residents.