Hawaii has a plan to generate all of its energy from low-emission sources by 2045. It is a bold plan, as the state’s administration admits, and it is also a plan that will see Hawaii start importing liquefied natural gas.
Hawaiians pay the highest electricity rates in the United States. They pay even more than Californians, who also have an administration with significant ambitions in the net-zero transition. With Hawaii, however, the reasons for the high rates include its geographical isolation, which makes it necessary to ship fuel oil for its power supply, adding to the final cost of the electricity produced with this fuel oil.
Indeed, the final cost of baseload electricity in Hawaii is so high that locals pay the highest electricity bills even though they consume the least grid-delivered electricity in the United States, according to the Energy Information Administration. At the same time, also per the EIA, “Despite having the third-lowest total energy consumption among the states, Hawaii uses 16 times more energy than it produces.”
Hawaii, then, is not in the most enviable position with regard to energy supply, especially reliable, baseload supply. It gets close to a quarter of its electricity from solar panels, although the data sheets noting this information do not mention the fact that this is not a consistent, round-the-clock supply. It does have some battery storage, including a large-scale installation with a capacity of 185 MW. This is nowhere near enough to cover demand. The island state’s administration closed its last coal-powered plant three years ago.
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Hawaii’s previous administration was dead set against natural gas in view of the 100% low-carbon energy goal. The current administration is more flexible, so it recently signed a preliminary deal with Japan’s JERA for long-term delivery of liquefied natural gas. Switching to gas-powered generation is expected to lower costs, especially over the long term, once Hawaii builds LNG import infrastructure.
Advocates of zero-hydrocarbon generation are protesting the plans. Their arguments come down to that same 100% low-carbon generation goal, even though electricity costs have been climbing in tune with the phase-out of coal and the growth in solar. To net-zero advocates, any reliance on hydrocarbons is a step off the right track to net zero. More practical minds, however, note that energy affordability is a serious concern worth prioritizing.
What is happening in Hawaii is quite similar to what is happening in Germany, which could serve as a cautionary tale to anyone planning a net-zero transition from hydrocarbons to weather-based sources of electricity. Germany also has firm net-zero plans in place that focus on the buildout of massive wind and solar generation capacity. Because this capacity depends on the weather, the country needs substantial baseload backup; and for that, it needs gas.
Germany has been building LNG import capacity at breakneck speed to replace shunned Russian pipeline supply, in evidence that its massive wind and solar capacity cannot handle demand on its own, even with batteries. Like Hawaii, Germany plans to switch from gas to hydrogen at some distant point in the future, if green hydrogen ever starts making economic sense. In the meantime, however, it’s either gas or blackouts.
One might point out that this sort of dilemma is a no-brainer. Yet those dedicated to net zero argue that Hawaii—again like Germany—could get “hooked” on gas and be unable to wean itself off it by 2045. In the end, it comes down to priorities: deciding whether it is more important to have an uninterrupted, affordable electricity supply or have an intermittent, expensive supply and lower emissions. It seems Hawaii’s current administration prefers the former option.
By Irina Slav for Oilprice.com
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