Monday, May 30, 2011

The cost of renewable power in Hawaii

The Island of Hawaii produces over 40% of its electricity from renewable sources, yet electric power charges are up to 30% higher for users on the Big Island as compared to charges on Oahu.

Hawaii County has attracted investors in alternate energy sources like the geothermal plant in Puna, wind turbines in South Point and North Kohala, solar panels on homes and businesses around the island, and experimental projects at the National Energy Lab. In comparison, the island of Oahu burns cheaper coal, and old tires, in addition to oil, to produce its electricity.

Though wind farms and geothermal sources of energy are cheaper than feeding a coal fired plant, the costs to consumers remain high due to an agreement with the State that allows renewable energy producers, like Puna Geothermal in Hawaii to be compensated by Hawaiian Electric at the same rate per kilowatt hour (KWH) as electric power producers using oil, diesel, and naphtha. The surges in the price of oil products over the last few years means that Big Island electric users must pay more and more for their low-cost alternative energy sources while investors reap the windfall.

According to Hawaiian Electric Company (HELCO on the Big Island and HECO on Oahu) here are their average charges per Kilowatt hour for 2010:

Service Type Oahu Big IslandDifference
Residential users "P" 25.47 cents   35.31 cents     28%
Large power users "P" 20.09 cents   29.26 cents     31%
Medium power users "J" 22.72 cents   32.27 cents     30%
Small power users "G" 26.87 cents   40.29 cents     33%
Comm. refrig, AC users "H" 22.55 cents   35.59 cents     37%
Street lamps "F" 23.49 cents   33.95 cents     31%

The dramatically higher costs of electric on the Big Island is one the barriers businesses have when considering whether to locate on an outer island versus on Oahu. Here is a comparison of two residential electric bills last month from a condo in Kona on the Big Island and a condo in Honolulu on Oahu:

355 kilowatt hours = $112.35
non-fuel energy 27.14
base fuel energy 32.20
pbf surcharge 2.11
overall $.316 per KWH

413 kilowatt hours = $175.98
non-fuel energy 53.33
base fuel energy 69.17
pbf surcharge 2.45
overall $.426 per KWH

The difference is 11 cents per KWH or 26% more for electricity on the Big Island versus Oahu. And this difference may  increase if oil prices continue to escalate.

In 2008, the State signed an energy agreement which sought to decouple energy costs from fossil fuel prices for renewable energy contracts, but the existing contracts guarantee high returns for many years to come. Here are contract expiration dates for some of the major renewable power providers on the Big Island:

  • Puna Geothermal - 2027
  • Hawi wind farm - 2021
  • Tawhirl Power LLC’s South Point wind turbines – 2027
  • Wailuku River Hydroelectric power plant in Hilo - 2023

Only by decoupling these contracts from their energy payment rates based on oil costs will ratepayers on the outer islands have stable, long-term and predictable prices. For electric users in Hawaii, an option to stabilize your energy costs is to install your own alternative energy systems such as solar water heaters and solar panels. The cost of solar systems has dropped considerably, already down almost 50% in the last five years, making it faster to gain a return on the investment for a home based system.


RE Rex said...

Hawaii's energy is exorbitant overall. Hawaii is actually a leader in the generation of renewable energy: Hawaii is a renewable energy leader

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