LifeOfLandPEISComments

LIFE OF THE LAND 76 North King Street, Suite 203 Honolulu, Hawai`i 96817

Phone: 533-3454 henry.lifeoftheland@gmail.com September 5, 2012 Jim Spaeth U.S. Department of Energy 300 Ala Moana Blvd.

Honolulu, HI 96850–0247 hawaiicleanenergypeis@ee.doe.gov http://www.hawaiicleanenergypeis.com RE: Hawai‘i Clean Energy Programmatic Environmental Impact Statement (PEIS) In 2010, the United States Department of Energy (DOE) announced its intent to prepare a PEIS for the Hawai‘i Interisland Renewable Energy Program (HIREP). The PEIS failed to look at alternatives. In response to public scoping comments the DOE has issued this new PEIS. The purported intent is to look at the full range of alternatives.

Aloha Mr. Spaeth: Enclosed is Life of the Land’s proposed Distributed Generation (DG) alternative to be evaluated in the Programmatic EIS as a viable and reasonable alternative, eliminating the need for an expensive interisland cable.

Mahalo, Henry Curtis Executive Director Life of the Land Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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PART I: NEPA: A MANDATED ‘HARD’ LOOK AT ALTERNATIVES The Council on Environmental Quality (CEQ) oversees the National Environmental Policy Act (NEPA) of 1969 which requires an Environmental Impact Statement (EIS) for projects involving federal involvement.

The CEQ requires that reasonable alternatives MUST BE evaluated if they are technically and economically possible and based on common sense.

If an alternative proves reasonable, project directors must provide evidence that they have weighed its pros and cons before determining that it is clearly beyond the scope of the implementing agency, or beyond the capacity of funding sources, or in conflict with one or more laws.1 The U.S. Ninth Circuit Court of Appeals has ruled repeatedly that there must be a “hard look” at reasonable alternatives.2

Dr. Jane Summerson, the DOE NEPA Document Manager for the recently released “Hawai`i Clean Energy” PEIS, acknowledged that a 1

“Reasonable alternatives include those that are practical or feasible from a technical, economic, or common sense viewpoint, rather than simply desirable in the applicant’s view.

An alternative that is outside the legal jurisdiction of the lead agency must still be analyzed in the EIS if it is reasonable. A potential conflict with local or federal law does not necessarily render an alternative unreasonable, although such conflicts must be considered. [] Alternatives that are outside the scope of what Congress has approved or funded must still be evaluated in the EIS if they are reasonable, because the EIS may serve as the basis for modifying the Congressional approval or funding in light of NEPA's goals and policies.” http://ceq.hss.doe.gov/NEPA/regs/40/1-10.HTM#1 2 http://caselaw.findlaw.com/us-9th-circuit/1432977.html Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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thorough and objective analysis of alternatives must be included in the document: “We're required to disclose conflicting views, and we get conflicting views. But we can't just pick and choose. If it is a valid, supported, scientific view that doesn't happen to agree with us, it goes in our EIS and we discuss it and we present it.”3 PART II: FOSSIL FUEL IMPACTS

Cleaning Up after the Exxon Valdez: The ecological death toll included 500,000 birds, 4 4,500 sea otters, and fourteen whales.

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Fukushima Nuclear Power Plant melt-down (March 10, 2011)

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BP Deepwater Horizon Explosion (April 20, 2010)

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Iraq Oil War (2003-11)

3

Dr. Jane Summerson, a geologist with the U.S. Department of Energy (DOE), spoke at Pitt Community College on) Oct. 15, 2010 about governmental procedures for protecting the environment and developing clean energy sources. http://vimeo.com/16172374: 14:17-34 4 http://faculty.buffalostate.edu/smithrd/ExxonPix/cleanup.jpg Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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Borneo wildfires and peat soil fires set to clear land for biofuel plantations (1997-98)

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Kuwaiti Oil Fires (January and February 1991)

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Persian Gulf Oil War (1990-91)

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Exxon Valdez (March 24, 1989)

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Chernobyl Nuclear Accident (April 26, 1986)

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Three Mile Island Nuclear Accident (March 28, 1979)

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Santa Barbara oil spill (January and February 1969) which led to the first Earth Day

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Texaco’s deliberate dumping of eighteen billion gallons of toxic oil waste products from the Lago Agrio oil field into the Ecuadorian Amazon Rainforest (1964-90)

Egregious as they were, the total emissions from “big name” disasters such as the BP oil spill pale when compared with the continuous disposal of fossil fuel waste products into the air, the water, and on land.

For example, the planet has 90,000 oil tankers, container ships, and cruise ships that are mostly powered by bunker fuel, which has the consistency of mud and contains sulfur levels 3,000 times those of gasoline.

Hawai`i Fossil Fuel Impacts Hawai`i’s Top 3 Dioxin Emitters are all power plants: (1) AES Coal Plant; (2) HECO’s Kahe Generation Station; and (3) HECO’s Waiau Generating Station.

Hawai`i’s Top 10 chemical polluters are six electricity generation stations, two refineries and two military bases: (1) HECO’s Kahe Generation Station; (2) Joint Base Pearl Harbor-Hickam; (3) Chevron Refinery: Kapolei; (4) HECO’s Waiau Generating Station; (5) MECO’s Kahului Generating Station; (6) HELCO’s Hill Generating Station: Hilo; (7) AES Hawaii: Kapolei; (8) Tesoro Refinery: Kapolei; (9) US Army Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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Pohakuloa Training Area-Range Facility; and (10) MECO’s Maalaea Generating Station.5

Coal delivery and storage, AES Coal Plant, Campbell Industrial Park

On February 23-24, 1977, the Hawaiian Patriot leaked 18,000 tons of oil, then caught fire, exploded, and sank. The ship was transporting 99,000 tons of light Indonesian crude oil from Indonesia to Honolulu. A 50,000 ton oil slick formed 300 miles west of Hawai`i.6 On May 14, 1996, a Chevron pipeline ruptured, discharging No. 6 bunker fuel oil adjacent to HECO’s Waiau Power Plant. Over 41,000 gallons of oil gushed into Waiawa Stream. Being slightly heavier than the fresh water, the oil slowly sank through the water table, contaminating life forms along its spread and descent. Being slightly heavier than salt water, when it reached Pearl Harbor, the oil slowly rose through the water column.

5

EPA: Hawaii Toxics Inventory Data for 2010. http://yosemite.epa.gov/opa/admpress.nsf/0/2eb5c3949a12816e8525797c006a07d9 6 http://www.itopf.com/information-services/data-and-statistics/case-histories/CP2.html Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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The 10-acre Waiawa Marsh, a restricted wildlife area and home to the state's four endangered species of water birds (Hawaiian stilt, coot, duck, and moor hen), was contaminated with pools of submerged oil.

An oil sheen covered approximately 90,000,000 square feet of open water in Pearl Harbor during the first six days after the spill.

Areas impacted included freshwater and saltwater wetlands, shorelines and intertidal areas including mangroves, mudflats, rocky shorelines, sandy beaches, riprap, seawalls and piers. Regulators estimated that 77,965 linear feet of intertidal habitat was oiled.

The clean-up resulted in the repeated, episodic high-pressure washing of the Pearl Harbor shoreline, which destabilized and eroded shoreline soils. The shoreline continued to emit an oil sheen for more than a month. This pollution had a devastating impact on egg, larval, juvenile and adult stages of recreationally and commercially valuable finfish, invertebrates, green turtles, and birds.

Initially federal and state regulators estimated that the habitat would take ten years to recover, but later revised estimates upwards to fifteen to twenty years.

Kahe Generation Station, Waianae

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Ending the use of fossil fuel in Hawai`i would ensure the safety of the state’s fragile ecosystems and end Hawai`i’s role in contributing to looming worldwide fossil-fuel-based energy disasters.

PART III: THE CURRENT ELECTRICITY QUAGMIRE The Vortex The Institute of Electrical and Electronics Engineers (IEEE) held a photovoltaic conference at the Hawaii Convention Center in the summer of 2010. One of the speakers was Kris Mayes, Chair of the Arizona Corporation Commission, the equivalent of the Hawai`i Public Utilities Commission.

Kris Mayes helped co-author the Arizona Renewable Energy Standard while serving on the Arizona Corporation Commission (2003-2010). Mayes now serves as Arizona State University’s Director on Law and Sustainability.7 Mayes has a Masters of Public Policy from Columbia University and a J.D. from the ASU’s College of Law.

Mayes introduced the concept of “cascading natural deregulation.” As the cost of renewable systems trends downward and electric rates go up, those who can leave the grid, will leave the grid.

The fixed costs associated with energy production, transmission, and distribution will then have to be absorbed by the remaining (smaller) rate base still on the grid.

Those who remain on the grid will then see their rates go up even more, which in turn provides ever stronger incentives for more people to opt out of a centralized grid, driving ever higher the rates for the diminishing number of ratepayers who remain.

7

https://asunews.asu.edu/20111110_solarseminar; http://apps.law.asu.edu/Apps/Faculty/Faculty.aspx?individual_id=350 Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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This cascading natural deregulation will first occur in areas with abundant renewable energy resources and high electrical utility prices such as Hawai`i.

In this scenario, a utility such as Hawaiian Electric Company (HECO), and its subsidiaries Maui Electric (MECO) and Hawaii Electric Light (HELCO) predictably will be sucked down into a bottomless vortex and ultimately fail as a viable investor-owned corporation.

Whirlpool8 HECO: VISIBLE SIGNS OF A HAWAII VORTEX In the past few years the rate of solar installations in Hawai`i has doubled each year. The number of renewable energy developers who have made proposals to the utility for large-scale grid-connected renewable energy projects has gone up ten-fold. Simultaneously, as fossil fuel-based kwh prices rise, rapid return on investment leads to the increasing installation of various energy efficiency systems, further driving down the demand for electricity. For example, Hawai`i’s state government has recently invested 33.4 million dollars in energy and water conservation measures (ecm) in ten capitol district buildings, and has plans to invest in further ecm’s in the state’s 256 schools as well as state libraries.9 8 9

http://uvs-model.com/pictures/whirlpool.jpg Green Governance, by Paul Berry, Honolulu Weekly, August 8, 2012.

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The HECO utilities experienced peak energy use in 2004. Since then the demand for electricity from the grid has been dropping.

In February 2012 Hawaiian Electric Industries Inc. (HEI), the parent company of HECO, included a warning in their annual 10-K report filed with the U.S. Securities and Exchange Commission: “Increasing competition and technological advances could cause HEI’s businesses to lose customers or render their operations obsolete. [] HECO and its subsidiaries face competition from IPPs [Independent Power Producers] and customer self−generation. [] The electric utilities cannot predict the future impact of competition from IPPs and customer self−generation, or the rate at which technological developments facilitating non−utility generation of electricity will occur. New technological developments, such as the commercial development of energy storage, may render the operations of HEI’s electric utility subsidiaries less competitive or outdated.”10 Renewable Energy Transformation Hawai`i is unique in having a high penetration level for renewable energy.11 For the Big Island, renewable energy represents 36.7% of the total generation (kWh). Just over half of this was baseload: geothermal (19.6%). The rest was variable Distributed Generation (DG) (16.83%): wind (13.3%), run of river hydro (3.8%), and solar energy (.006%). The amount of variable DG has jumped from 0.07% (2001) to 16.83% (2011).12 Solar Hawai`i’s four utilities are all in the top five utilities in the nation for the amount of solar systems installed per 1,000 customers.13 On the Big Island, HELCO ranks fourth with almost twenty-one solar systems per one-thousand customers.14 10

HEI, Inc., Annual 10−K Report filed with the U.S. Securities and Exchange Commission, on February 17, 2012 for the year ending December 31, 2011, at 28 11 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony T-7. 26:22-27:1 12 Ibid. HELCO 2013 Rate Case. Testimony of Jay M. Ignacio (HELCO T-2), p. 72 13 Solar Electric Power Association (SEPA, 2011): MECO (#1), HECO (#2), HELCO (#4), KIUC (#5) HECO-734, p. 16 14 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony T-7. 26:8-10 Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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The 1,900 small solar DG systems on the Big Island account for 98% of all 1,933 generators located on island.15 While large in numbers of systems, DG is still small in total generation capacity. The solar systems represent less than 1% of electricity generated.16 HELCO estimates that there will be an additional 2,000 small solar generators by 2013.17 All sorts of numbers are thrown about regarding how much power can be or is supplied by the La Ola Solar Farm on Lana`i. The ratios can be calculated using various numerators and denominators.

The numerator could be the maximum MW output of the solar farm, the initial available MW generation of the solar farm before a battery storage system became fully functional, or the expected MW output of the solar farm with a fully functioning battery.

The denominator could be the total generation available on the island, the total grid-based electricity sold, the average electricity sold, or the maximum electricity sold.

MECO Manele La Ola Solar Total

8 diesel generators 1 diesel cogenerator 1 facility

10.4 MW18 1.0 MW19 1.2 MW20 (1.5 MW21) 12.6 MW

15

By number of systems (April 2012): The Island of Hawai`i has 1,900 small PV systems, 25 HELCO large units, 6 Purchase Power Agreements (2 wind generators and one each of naphtha, geothermal, solar and hydro), and a couple of small HELCO hydro units. HELCO 2013 Rate Case, PUC Docket No. 2012-0099: Testimony of Ross H. Sakuda ( HELCO T-5), p.

2, Chart 1; Testimony of Norman Verbanic ( HELCO T-7), p. 18, lines 11-15 and p. 23 line 17 thru p. 24, line 19 .

16 Ibid. HELCO 2013 Rate Case. Testimony of Jay M. Ignacio ( HELCO T-2), p. 51, lines 19-25.

17 HELCO 2013 Rate Case, PUC Docket 2012-0099, Exhibit HELCO-725 p. 10.

18 Lanai Existing Generation. MECO System & Conditions. Mat McNeff, Renewable Energy Services. IRP Advisory Group Meeting #2, August 7, 2012 19 Ibid. Mat McNeff 20 http://the.honoluluadvertiser.com/article/2009/Jan/07/bz/hawaii901070361.html 21 http://www.castlecooke.net/property/details.aspx?rtr=s&rid=96&cat Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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Peak Generation Total Generation Average Generation Actual Solar Generation

4.825 MW22 25,430 MWh23 2.9 MWh24 unknown?25

2010 2012

The issue of how much solar is on the Lana`i system is very political, with the result that different ratios are used at different times.

The solar penetration ratios can range widely, from 52% (1.5 MW solar / 2.9 MW average load) to 9.5% (1.2 MW solar divided by 12.6 MW total available generation).

Wind Most local, regional, national, and international grids have low intermittent renewable energy penetration levels,26 or interconnect to larger grids that can counteract intermittent loads located in one region,27 or are isolated rural systems where reliability for large numbers of grid users is not a factor.

Wind provides 6% of the electricity on the European Grid. Wind generation represents 3% of the electricity produced in the U.S. (Other renewable generators account for another 0.5% of generation).

The U.S. Mainland has three independent transmission grids, two of which include large portions of Canada and two of which extend into Mexico. These large grids can easily absorb the variable output of the various intermittent energy sources.

The largest wind energy penetration level on any of the three North American grids28 is 8.5%, which is generated on the ERCOT (Texas) grid.29

22

Wayfinding: Navigating Hawai`i's Energy Future (June 2012) MECO 2011 Rate Case, PUC Docket No. 2011-0092, MECO T-3.

24 Conversion of year to average hour: 25,430 divided by (24 x 365).

25 Actual output of non-utility grid-connected renewable energy resources is difficult to obtain.

26 The renewable energy penetration level in the U.S. is 4%.

27 The Denmark grid with high wind penetration levels is interconnected to the European grid.

28 The Western Interconnection (US/Canada/part of Mexico), the Eastern Interconnection (US/Canada), and the ERCOT Interconnection (Texas/part of Mexico).

29 HELCO-730, p. 11; HELCO-749, ERCOT Quick Facts.

23

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At maximum output, Maui’s existing wind generator and two approved new generators may produce 54% of Maui’s average electricity30.

There are experimental battery-based pilot projects being tested on Maui to attempt to better manage the volatile output of wind energy generators.

Hawai`i Island’s two existing wind farm generators can produce 23% of Hawai`i’s average electricity produced, and in 2011 HELCO obtained 13.3% of its electricity from wind.31 Volatility and Instability Increasing the penetration of grid-based intermittent renewable energy (solar, wind) adds uncertainty and volatility to an electric system.32 On the Big Island, the highest level of renewable energy penetration for any one hour was 69.5%, and for any one week was 51.6%.

Utilities argue renewable energy penetration must have fixed limits, and the HECO Companies impose three types of limits on accepting available renewable energy: 15% of distribution circuits, curtailment of all wind energy between 10 p.m. and 6 a.m., and some curtailment of wind and solar during the day.

These limits are imposed regardless of whether there are batteries on site that are intended to smooth out the generation.

The HECO Companies, wind companies and solar companies are experimenting with energy storage solutions. However, there is an ongoing vulnerability in using currently available battery storage measures for intermittent energy sources. This is evident by the three fires in eighteen months at the Kahuku windfarm’s battery facility. The third fire shut down the windfarm and it remains off-line.

30

This is somewhat of an apples and oranges comparison since the US and European percentages are based on actual sales as measured in MWh, while the Hawai`i numbers are maximum wind output divided by average electricity produced. Nonetheless, it is clear Hawai`i has much higher penetration levels.

31 HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony of Jay M. Ignacio (HELCO T-2), p. 51, line 24.

32 HELCO 2013 Rate Case, Docket 2012-0099: Testimony HELCO T-2; Testimony HELCO T-7, HELCO-730, HELCO-748, p. 1 Tools Used for Handling Variable Generation in the Hawaii Electric Light Co. Control Center. Lisa Dangelmaier, Dora Nakafuji, Member, and Robert Kaneshiro.

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Some believe the utility restrictions are legitimate. Some believe that engineering limits are needed but that the utility limits are too strict.

Still others think technical engineering studies are needed to determine safe renewable energy penetration levels.

Customers who leave the grid to generate their own electricity are doing more than just decreasing the revenue stream of the utilities.

They are forcing utilities to examine new load profiles. This ongoing investigation will quite likely create greater planning uncertainty.

As customers leave the grid, install energy efficiency devices to lower grid demand, or install net metered systems, the historic load pattern for grid-based electricity is becoming distorted.

For example, daytime and evening peak demands are decreasing on the Big Island as distributed solar penetration increases.33 The maximum peak on the island occurred a few years ago and was about 204 MW. In 2010 the day time peak was 174 MW, the evening peak was 190.6 MW and the minimum night load was 85.1 MW. Hawaii’s independent, separate grids, though small geographically, have a higher renewable energy penetration level than other U.S. grids. Increasing the location diversity of wind facilities results in less total wind generation volatility. Both Maui and Hawaii have only two wind facility sites, and they tap the same wind flows. Therefore output moves in sync, resulting in greater volatility.

Ramping refers to the change in generation over a given period of time.

If a cloud passes above solar panels, there is a sudden need for additional utility power to ramp up to meet the demand. If there is a sudden change in wind speed at a large wind power plant, the utility must immediately adjust its output to compensate. If a wind facility goes off-line due to mechanical problems, the utility must be able to determine if the sudden loss of load is for 1/100 of a second, for an hour, or for longer.

High wind speeds result in high generation. When the wind speed exceeds the maximum that the wind system can handle, however, the turbines are turned off as a safety precaution. During such events there is a rapid ramp down.

33

HELCO 2013 Rate Case, PUC Docket 2012-0099, Exhibit HELCO-710, 721, and 725, page 10.

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There are experimental battery-based pilot projects being tested on the Big Island to attempt to better manage the volatile output and sudden ramping of wind energy generators.

If grid-scale batteries prove successful, it may backfire on the utility. It will likely increase the comfort level of ratepayers who are considering installing battery systems on site, thus accelerating the number of onsite renewable energy systems. This will raise prices for remaining grid ratepayers, adding to the risk of utility financial losses, impairing the utility’s borrowing capacity, and increasing a utility’s inability or unwillingness to invest in upgraded “smart” grids. As risk and prices rise, more people will leave the grid. Thus utility-scale grid-connected battery pilot projects may be detrimental to utility generation and Smart Grids, and may lay the foundation for true self-generation.

The majority of DG capacity is provided by small unmetered PV with no utility monitoring or control. There is presently no solar or wind production forecast provided to the system operator.

To offset variability and volatility, the utilities keep some of their generators at or below their maximum output, in order to provide a cushion for changing wind and solar generation. Unfortunately, these generators operate less efficiently at lower outputs.

Just as some quick start appliances use almost as much power in the “off” position as in the “on” position, fossil fuel generators need to be idling, waiting to rev up, to rapidly increase output to adjust for sudden decreases in wind and solar output, due to the drop in wind speed or the passing of clouds overhead.

According to HECO CEO Richard M. Rosenblum: “One of the greatest challenges to the development of renewable energy in Hawaii, as well as in the nation, is the lack of infrastructure to support renewable energy resources.

The current electric infrastructure was not designed or built to interconnect a variety of mostly intermittent, asavailable, renewable electrical generation resources developed at remote locations away from the current transmission grid.

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It was designed to consolidate dispatchable generation facilities in a few places (as permitted by government regulations) and transmit power to the major load centers in a reliable and efficient manner.

In order for the Companies to use these renewable resources, new transmission lines (and supporting infrastructure such as substations) will have to be designed and built to these remote locations.

Because of the intermittent nature of many of these renewable resources, different generation regimes, expanded and more sophisticated control systems, and additional infrastructure will be required to account for and handle the variability of electrical output from such intermittent resources.

The Companies will also be required to perform and incur the costs for the studies necessary to help assure that the necessary modifications to the Companies' systems can be achieved while maintaining system reliability, safety, and power quality.�34

34

HELCO 2013 Rate Case, PUC Docket 2012-0099, Testimony T-1 13:11-14:5.

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HECO Building at the corner of King St. and Richards St., Honolulu

The utility uses “smart” to mean what they are proposing to do. If implemented, for example, Smart Grids will transfer billions of dollars from ratepayers to utilities to build an infrastructure that allegedly will allow for greater renewable energy penetration. Smart refers to the installation of computers and telecommunication systems to enable grid operators to know what is going on in real time, minute by minute.

The utility uses “Dumb” to mean the current system where most electricity relays and flows cannot be read in real time by grid operators.

Escalating Capital Expenditures The HECO Companies are adding layers of redundancy to handle new levels of uncertainty, and are in the process of spending $2.4 billion as part of a multi-year effort to upgrade their generation and

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transmission grids. This ratepayer money is being allocated in little noticed regulatory proceedings.35

The HECO Capital Expenditures Budget shown below excludes the socalled “Big Wind” proposal to take 200-400 MW each of intermittent wind power from the islands of Moloka`i and Lana`i and send it one way via a multi-billion-dollar undersea cable to the load center on O`ahu.

HECO Capital Expenditures Budget36 ($M) (2012-15) Transmission & Distribution Generation Other Total

HECO

HELCO

MECO

536 841

133 25

145 52

$1,800

$300

$300

35

HECO, MECO and HELCO Application, dated March 31, 2011, for Approval of Issuance of Unsecured Obligations and Guarantee. Docket 2011-0068. Capital Expenditures Program, (2010-2015). HECO: pdf page 53, MECO: pdf page 73, HELCO: pdf page 93.

36 Ibid. PUC Docket 2011-0068.

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At the same time that the utility is requesting more ratepayer funds to finance upgrading the grid and generators, HECO is also proposing (and the Public Utilities Commission is approving) new renewable energy Power Purchase Agreements that have higher financial costs than the average cost of existing generators.

These multiple massive investments will sharply escalate electricity prices in Hawai’i and drive more ratepayers from the grid.

The Smart Grid “Smart Grids” are a catch-all term for a variety of systems involving integration of electrical grids, telecommunications, and sophisticated computer programs. A Smart Grid usually means a 2-way flow of information to measure, command, and control the transmission and distribution grid in real-time, while safeguarding the system from accidental “acts of God” and intentional acts of terrorism.

To handle the volatility of new intermittent loads, HECO is proposing new “Smart Grid” technologies based on new computerized control systems that do not yet exist, new layers of cyber protections that do not yet exist, and new computerized forecasting of short-term and long-term solar and wind output analysis, based on wind and solar data that also does not yet exist.

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Cyber security Threats to Smart Grids pose a real threat with grave consequences 37

The Super Grid The early electrical grids were based on Alternating Current (AC) rather than Direct Current (DC) because engineers at the time had figured out how to build high voltage AC transmission lines. AC, generated by rotating engines, provides power for incandescent light bulbs, electric motors and transmitting electricity on electric grids.

It took almost a century to develop and commercialize high voltage Direct Current (DC) transmission lines, and DC is used for 20% of the total power consumed in the U.S. Industrial-scale wind power plants and solar panels produce DC power, which is used for transistor-based technology including flat-screen TVs, PCs, and iPhones; charging electric cars; powering data centers that run telecommunications and internet networks; uninterruptible power for computer systems; and long-distance power lines. DC microgrids are being developed for 37

http://4.bp.blogspot.com/-bOrpkz0M008/Tnib5AIlUUI/AAAAAAAAq4U/XLGQDONRHbs/s1600/92011h.png Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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buildings, campuses, and commercial and industrial facilities. In recent years DC has been relied on for very high voltage long distance transmission lines because line losses are less for DC than AC. The Super Grid refers to a multi-nodal, multi-island high voltage DC (HVDC) system overlaid above the traditional high voltage AC (HVAC) transmission system. In essence, inter-island and land-based DC transmission lines would intersect with island-based AC systems.

The 2008 HCEI proposal envisions island-based AC Systems that would be interconnected to a Multi-Island DC Super Grid.

Billions of dollars would be needed to build such a Super Grid; interconnection points between AC and DC transmission lines alone will cost $100 million each.

Some AC proponents believe that the AC standard will continue into the future, while some DC proponents believe that a fundamental shift is underway whereby DC will account for 50% of the load in 2030.

There is a risk in guessing which view will prevail, that is, sinking money into the wrong future.38 Telecom Master Plan In 2011 the HECO Companies initiated a system-wide Telecom Master Plan.39 The telecommunications infrastructure would be used to support business and utility operations.

The plan is designed to facilitate the effective integration of Smart Grid technologies and other programs implemented between 2013-22. The program includes the acquisition of radio and fiber terminals, antennas and radio towers.

38

Edison's Revenge: The Rise of DC Power. In a world of more electronics and solar energy, there's less and less need for AC power. By Peter Fairley, Technology Review, April 24, 2012. http://www.technologyreview.com/news/427504/edisons-revenge-the-rise-of-dc-power/ See also: War of Currents, http://en.wikipedia.org/wiki/War_of_Currents; GiiResearch.com: DC Building Power Market Set to Exceed $2 Billion http://www.pr.com/press-release/396791; Insight: How renewable energy may be Edison's revenge By Sara Ledwith. Reuters, Dec 20, 2011 http://www.reuters.com/article/2011/12/20/us-power-acdc-idUSTRE7BJ0PW20111220 39 HELCO 2013 Rate Case, PUC Docket 2012-0099. HELCO T-16, pp. 30-31; HELCO-1617, pp.

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The Telecom Master Plan is focused on developing telecommunication capacity for, among other systems, the Energy Management System (EMS), Automation and Supervisory Control and Data Acquisition (SCADA), Smart Meters a.k.a. Advanced Metering Infrastructure (AMI), Battery Energy Storage Systems (BESS) and Demand Response (DR), and Distribution Automation (DA).

Integrated Resource Planning During the week of August 20-24, 2012, the HECO Companies held a Scenario Planning Workshop for the Integrated Resource Planning (IRP) Advisory Group established by the Public Utilities Commission (PUC) in Docket 2012-0036.

“Scenario Planning” involves developing alternative plausible stories of the future. For each story, alternative strategies will be developed.40 HECO and the PUC are utilizing Scenario Planning to develop a Hawai`i energy roadmap. To avoid flirting needlessly with ratepayers’ funds via present blindness to the law of unexpected consequences, a comparative analysis of alternatives is needed.

HECO’s Consultant presented four future scenarios. All four included a continued migration away from a centralized utility grid and towards greater self-generation.

On August 29, 2012 the County of Maui’s Kal Kobayashi presented Draft Scenarios to the IRP Advisory Group. The horizontal axis would be an expression of consumer choice. At one extreme, on the far left, is a future where the consumer totally relies on the grid for electrical energy services, and the far right a future where consumers provide all of their own electrical energy services. The vertical axis would measure the relative cost of alternative energy to the cost of oil. The upper quadrants reflect a future in which alternative energy is cheaper and the lower quadrants reflect one in which oil is cheaper. Life of the Land’s comments to this PEIS are based on what Kal Kobayashi calls the “Homesteads” Scenario.

40

http://www.heco.com/portal/site/helco/menuitem.cdc7db98e0a4d28884276c10c510b1ca/?vg nextoid=9a343d4f0078b210VgnVCM1000005c011bacRCRD&vgnextfmt=default Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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Stranded Cost Impacts Assume for a moment that the HEI utilities are able to obtain PUC approval to build a costly Smart Grid / Super Grid Infrastructure with a lot of generation and transmission redundancies, combined with telecommunication, centralized computerized management, and layers of cyber security.

In that event, it will not matter how many customers leave the grid, because through cost-recovery mechanisms previously approved by the PUC, the utility could automatically raise rates to offset the loss of revenue due to drop in demand.

Thus, even if all customers depart the grid, the utility may argue that HEI’s shareholders are legally entitled to cost recovery because the PUC authorized the utility to build the system. They may also argue that if the utilities fail, the State economy will suffer an enormous jolt.

These arguments have been used to bail out the Wall Street financial meltdown (“too big to fail”) and to reinvigorate industries (Detroit Bailout).

It is not in the public interest to give a monopoly utility a blank check.

Therefore it is critical that the discussion on any NEED for this costly system is done BEFORE the PUC approves it.

PART IV: WHAT IF ...?

What if Options: Alternative Plans The Council on Environmental Quality (CEQ) oversees the National Environmental Policy Act (NEPA). CEQ requires that reasonable alternatives MUST BE evaluated in Environmental Impact Statement (EIS) if they are technically and economically possible and based on common sense.

Life of the Land believes that this EIS offers the opportunities to lay out alternating future scenarios for evaluation. There is an absolute need for the PEIS to present a balanced estimation of the positive and negative consequences of different, reasonable alternatives.

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There are a number of game changers that are being discussed in utility circles, including Ocean Thermal Energy Conversion (OTEC), Liquefied Natural Gas (LNG), Wave Energy Conversion Systems (WECs), Algal Biodiesel, Storage, DC Grids and Self-Generation.

We are presenting the DG scenario, and we hope others will present alternative future scenarios.

Puueo Substation, Hilo

What if Options: Solar Energy Solar energy is everywhere.

In fourteen and a half seconds, the sun provides as much energy to Earth as humanity uses in a single day.

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In eighty-eight minutes, the sun provides as much energy as humanity consumes in a year.

In 112 hours – less than five days – the sun provides as much energy as is contained in all proven reserves of oil, coal, and natural gas on the planet.

Earth:41 “Each day more solar energy falls to the Earth than the total amount of energy the planet’s 6.1 billion inhabitants would consume in 27 years.”42

Solar Ledge: PV awnings at the University of Texas.43

If humanity could capture one tenth of one percent of the solar energy striking the earth each year – one part in one thousand – we would have access to six times as much energy as we consume in all forms every year.

The National Renewable Energy Laboratory of the U.S. Department of Energy (NREL) notes that solar photovoltaic prices have been trending downward since 1980. In just three decades there has been a sevenfold drop in prices. NREL also estimates that rooftop PV cells may soon rival coal and natural gas in total cost per kW. 41

http://rst.gsfc.nasa.gov/Sect16/full-20earth2.jpg National Renewable Energy Laboratories. www.nrel.gov/documents/solar_energy.html 43 Completed in the fall of 2000, this 7-kilowatt photovoltaic awning is situated above the 8th floor windows of the 26-story University Center Tower on the Texas Medical Center campus in Houston, Texas. The awning serves a dual purpose: the SunShine® AC modules supply about 10,000 kilowatts of electricity annually, and the shading they provide offsets an airconditioning load of an additional 2,600 kilowatts. By installing this system, the Houston Health Science Center is helping Texas to meet its aggressive mandate for 2,000 megawatts of new renewable power by 2009, which is part of the state's electric utility restructuring plan.

The University of Texas Health Science Center partnered with Applied Power Corp. and Conservation Services Group on this project.

42

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The average person probably thinks about large utility generators when they reflect on how electricity is generated and produced within this State. In terms of MW output, that is certainly the case. But it is no longer the case in terms of the actual number of generators. Today, the vast number of grid-connected electric generators in Hawai`i are actually small rooftop photovoltaic (solar electric) systems. Hawai`i has more than 3,500 solar powered net-metered systems, and these constitutes over 90% of all of the power plants in the State.

Combined, however, the output of these generators still represents only a small percentage of the total electricity generated in the State.

Solar Shelf

Solar Tube

Solar Light Bulb

Light shelves44 placed below windows can be used to reflect sunlight upward to illuminate the ceiling, creating general illumination.

Solar Tubes capture dispersed sunlight and through reflective material within the tube, transfers that light into rooms.45

Solar tubes generate diffuse light.46

What if Options: Concentrated Solar Power Although usually considered an intermittent source of power, Concentrated Solar Power (CSP) systems can store heat and produce electricity hours after the sun has set, making it a source of “firm” power. CSP systems are built using aluminum and glass, but not silicon, which is sometimes scarce and costly. Unlike the more traditional flat photovoltaic panels, CSP systems use a parabolic mirror to capture the rays of the sun and focus it on a pipe, heating its liquid contents into a gas to fire a gas turbine.

44

www.robotecture.com/endofmechanics/CONTENT/Student%20Apps/EZ/Zambrano%20EOM%2 0final/template-img/light_shelves.jpg 45 http://www.inhabitat.com/2006/12/28/solar-tube/ 46 www.portlandonline.com/shared/cfm/image.cfm?id=114639 Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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SOPOGY (SOlar POwer enerGY), a Honolulu-based company founded in 2002, focuses on building small-scale concentrated solar power systems. Sopogy offers rooftop CSP, with a trough that flips over to protect itself from adverse weather conditions. The SopoHelios measures twelve by seven feet and weighs 168 pounds.47 The system can be ground or roof-mounted.

The amount of electricity and thermal energy storage that can be produced on each roof is highly dependent upon the available flat roof space and the strength of the roof, and a potentially negative impact of using thermal storage is the amount of water needed for cooling purposes.

SopoHelios48

What if Options: Wind Energy Wind energy systems existed for millennium before electricity was discovered.

The first reference linking windmills with Hawai`i occurred in 1824, when a windmill was spotted from the ship bringing Kamehameha II’s entourage to Europe.49 47

http://sopogy.com/pdf/contentmgmt/p-sh-111012.pdf http://sopogy.com/images/contentmgmt/SopoHelios480px.jpg 49 “Kamehameha II’s Ill-starred Journey to England Aboard L’Aigle, 1823–1824,” by J. Susan Corley. The Hawaiian Journal of History, vol. 44 (2010). Source: Ellis, Letter No. 8, HMCS; “Sketches of Society: Greenwich Hospital,” The Literary Gazette, and Journal of Belles Lettres, Arts, Sciences, &c. (London), no. 389 (3 July 1824): 430.

48

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By 1837 Honolulu had a number of windmills, and by 1900 there were 30,000 windmills in Europe, used primarily for water pumping and the milling of grain.50 Between 1850 and 1970 over six million wind machines were installed in the U.S. (most were less than 1 kW). Since 1970 windmills have multiplied in size and complexity. More recently, due to growing opposition to the enormous scale and footprint of socalled large wind “farms”, small wind systems have come back into vogue.

In 2008 the Maui Ocean Center installed six small wind turbines on its roof; each 1 kW turbine is only 8.5 feet tall.51 The wind turbines will produce an estimated 48,880 kWh per year. 52

Shanah Trevenna and the Saunders Hall (University of Hawaii, Manoa) Vertical Axis Wind System donated by Energy Management Group.

http://evols.library.manoa.hawaii.edu/bitstream/handle/10524/12251/HJH44_136.pdf?sequence=1 50

http://practicalaction.org/docs/technical_information_service/wind_electricity_generation.pdf 51 http://mauisea.com/media/news/local/energy/2008112718272906412_Wind-TurbinesStory.jpg 52 Wind Energy by Blake Bridges, Chris Parnell, Jeremy Petrowski, Yuren Salazar, Loy Pearce.

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Small wind turbines on the roof of an office in London.

53

A “Windsave” micro turbine installed on a rooftop in Scotland.54

Rooftop wind turbines on a building in Bosnia1 (Veneko/ Bergey Windpower)55

What if Options: Biofuels In 1996 Pacific Biodiesel started operating the first modern commercial biodiesel plant in the United States. Pacific Biodiesel started by recycling waste fats, oils and grease at the central Maui landfill.

53

Renewable Energy World. January / February 2007. http://www.thailandenergy.info/News/34001132.htm 54 Ibid.

55 Ibid.

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Pacific Biodiesel engaged in the collection of waste cooking oil such as used French-fry grease to produce biodiesel. The company is currently collecting waste vegetable oil on Oahu, Maui and Hawai`i Island.56 The company’s technology allows its sustainable biodiesel facilities to work hand-in-hand with local farmers and local investors. Pacific Biodiesel is the leading biofuel producer in Hawai`i.

Pacific Biodiesel also supports smaller farmers by purchasing locally produced agricultural goods and converting them to biodiesel. Many of the crops grown should be able to survive without irrigation (a major source of energy use), grow without the use of fossil fuel-based fertilizers and pesticides and without nitrogen fertilizers (potent greenhouse gas sources), and be non-genetically modified.

In 2000, Pacific Biodiesel open a new biodiesel plant on Sand Island, O`ahu.

In 2012 Pacific Biodiesel’s third Hawaii facility was opened. Called Big Island Biodiesel, it is located in the Shipman Business Park, Kea`au, on Hawai`i Island.

56

http://www.biodiesel.com/Press/Cleanway%20Renamed%20PBL-PressRelease.pdf

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It has a capacity of 16,000 gallons per day and will utilize zero-waste, super-efficient processing technology. In addition to using waste oil, the plant will use crop oil from a jatropha farm in the Kea`au area.57 Pacific Biodiesel has recently been reorganized, and is now consolidated under the name of Pacific Biodiesel Technologies. The company currently manages biodiesel plants in Hawai`i, Oregon and Texas.

Pacific Biodiesel believes that “a small environmental footprint is an essential aspect of a sustainable biodiesel facility.58 Pacific Biodiesel facilities “are designed to be the most flexible in the industry, accepting multiple feedstocks, and providing maximum scalability ... [using] advanced waterless technologies.”59

57

http://www.bigislandvideonews.com/2012/07/03/video-big-island-biodiesel-opens-vipstour-keaau-plant/ 58 http://www.biodiesel.com/index.php/technologies/biodiesel_process_technology 59 http://www.biodiesel.com/index.php/technologies Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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In 2006 Pacific Biodiesel’s co-founder Kelly King, along with activist Annie Nelson and actress/film maker Daryl Hannah, founded the Sustainable Biodiesel Alliance (SBA).60 In 2011 the Gas Company61 initiated efforts to develop a biofuel pilot plant in West O`ahu to produce one million gallons a year of renewable fuel from fish oil.62 What if Options: Biofuel Vehicles While there are many different ways to generate electricity, there are only two clean ways of powering vehicles (biofuels, electricity), and only one clean way of powering air transport (biofuels). Therefore biofuels should be reserved for transportation. Biofuel-powered vehicles provide an alternative to electric vehicles, and allow people to maintain a mode of transportation with which they are comfortable – a traditional car powered by a liquid – while decreasing the use of fossil fuel.

What if Options: Geothermal Heat Pumps Examples of heat pumps, which move thermal energy from one place to another, include refrigerators and air conditioners.

The Geothermal Heat Pump concept was developed by Lord Kelvin in 1852; the modern era dates from the 1940s. Renewed interest occurred during the Arab Oil Embargoes.63 Geothermal Heat Pumps (ground-source heat pump; “geo-exchange”) move low temperature geothermal heat between buildings and the Earth.64 Geothermal resources are classified as low temperature (< 194° F), moderate temperature (194 - 302° F), and high temperature (> 302° F).

The temperature of the Earth at a depth of twenty feet is a fairly constant 50-60 °F. 60

http://test.sustainablebiodieselalliance.com/~sustai18/dev/about.shtml http://www.hawaiigas.com/ 62 http://www.hawaiirenewable.com/wp-content/uploads/2011/12/Renewable-fuel-projectuses-fish-oil-to-make-natural-gas-Hawaii-News-Honolulu-Star-Advertiser.pdf 63 Geothermal heat pumps: Four plus decades of experience By R. Gordon Bloomquist, Ph.D., Washington State University Energy Program http://geoheat.oit.edu/bulletin/bull20-4/art3.pdf 64 http://wiki.aia.org/wiki%20pages/geoexchange.aspx 61

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In winter, the Earth is warmer than the surface temperature, and air circulating between the Earth and buildings can heat buildings.65 In summer the Earth is cooler than the surface temperature, and air circulating between the Earth and buildings can cool buildings.

There are more than 400,000 systems currently in operation in the U.S. Between 10,000 and 40,000 new systems are installed each year.

The number of Hawai`i installations is significantly less that other parts of the country. There may be a number of reasons for this, including our milder climate, lack of government support, focus on utility-scale solutions, and lack of data analysis of existing installations. Areas of Florida with similar climate to Hawai`i have successfully installed geo-exchange systems.66 In 2012 the California Legislature unanimously passed AB2339 which directs the California Public Utilities Commission (PUC) “to evaluate policies and develop sufficient infrastructure to overcome barriers to the widespread deployment and use of geothermal and solar heating and cooling technologies.”67

65

http://en.wikipedia.org/wiki/Geothermal_heating Hawaii Renewable Energy Development Venture Program Assessment of Technology Readiness and Applicability – Low Grade Geothermal Heat http://www.hawaiirenewable.com/wp-content/uploads/2009/12/9.-Low-Grade-HeatGeothermal.pdf 67 http://feedreader.com/feed/Home-2162/96685050 66

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Residential Geothermal Energy Options68

What if Options: Energy Storage The many forms of energy storage include fossil fuel, hydrogen, water, air, and electrochemical.

For example, air can be compressed into a balloon structure and then released as needed. This is known as Compressed Air Energy Storage (CAES).

Hydropower is also an effective way to store energy: water can be pumped uphill, between reservoirs, and released when it is needed to create power. While both methods provide short-term “firming” power solutions to handle small variations in demand, if the energy source is intermittent and of large size, the size of the storage systems would have to be huge to handle fluctuations on days of hot, cloudy, or windless weather.

68

http://www.louisvillehomesblog.com/pics/2009/11/geothermal_heat_pump.jpg

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There are also several types of batteries. New electrochemical technologies are now being commercialized that represent an unprecedented breakthrough in large-scale energy storage. These include lithium batteries and flow batteries.

Most Hawai`i households have at least one lithium battery. They are found in pacemakers, cell phones, cordless tools, MP3 players, and portable computers and tablets. Lithium batteries are being tested in electric vehicles, hybrid electric vehicles and in residential energy storage systems.

The University of Hawaii's Hawaii Natural Energy Institute ("HNEI") is testing a 1 MW/250 kWh fast-response lithium titanate battery at the Hawi Wind Farm.

HELCO and DBEDT are using stimulus funds to install a 100 kW/248 kWh lithium ion battery at each of two non-utility photovoltaic projects in Kailua-Kona.69 Following the 2011 Japanese earthquake and tsunami, the Japanesebased multinational electronics and ceramics manufacturer Kyocera Corporation released a solar energy management system that includes lithium-ion batteries.

69

HELCO 2013 Rate Case, Docket 2012-0099, T-2, 74:3-19

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The Sacramento Municipal Utility District in California is testing individual and communal (multi-home) lithium-ion batteries.

In 2010 Underwriters Laboratories (UL) developed safety standards for stationary storage batteries that contain lithium-ion rechargeable batteries, and in 2012 a Sony lithium-based energy storage system received UL accreditation.

In 2012 Panasonic began mass producing and marketing home energy storage systems.

World-wide lithium reserves are 13,000,000 metric tons, which, at the current level of demand, could supply the world for 300 years. The leading producers are: Chile (37%), Australia (33%), China (15%), and Argentina (9%). Afghanistan and Bolivia may have large lithium resources.

Flow Batteries (FB) utilize two electrolytes that are transformed electrochemically inside each cell, without direct mixing. By contrast, the electrodes in traditional batteries are directly involved in the electrochemical reactions, and thus degrade. Flow Batteries appear to be able to handle the full range of storage needs. This contrasts with the current regime where different battery technologies are used for different applications which include, but are not limited to, sub-second smoothing of wind output (as was attempted by the Kahuku Wind Farm Battery), uninterruptible power supply (UPS), peak shaving, and load-management.70 Battery research is being heavily funded by two sources, the military and various utilities. While neither focuses on Residential Energy Storage (1-5 kWh) or Community Energy Storage (50-100 kWh) systems, any technological breakthroughs can be used to support small scale systems.

The military has been a technology trailblazer, responsible for developing the internet and GPS among other items. So it is not surprising that it is heavily involved in researching microgrids and energy storage. “The U.S. military is the world’s single-largest industrial consumer of oil, using more oil than 85 percent of all other 70

Community Energy Storage Report (2011) Shawn Fitzpatrick, P.E. et al. Advanced Energy. http://www.advancedenergy.org/ci/services/testing/files/Community%20Energy%20Storage %20Report%20(Sealed).pdf; See also: Flow Batteries: Has Really Large Scale Battery Storage Come of Age? By Christopher Lotspeich, Second Hill Group; and David Van Holde, E SOURCE http://www.eceee.org/conference_proceedings/ACEEE_buildings/2002/Panel_3/p3_17 Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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countries combined. Every $10 increase in the price per barrel of oil costs the Pentagon $1.3 billion. In the theater of war, oil is our greatest vulnerability. More than 3,000 service members have been killed or injured defending fuel and water supply lines in Iraq and Afghanistan.”71 HECO and other utilities, on the other hand, view batteries as a means to integrate intermittent resources, such as large scale wind, into the grid, and to improve load management.

What if Options: Electric Vehicles Replacing the century-old gasoline-burning automobile with biofuelpowered and/or electric-powered vehicles makes a great deal of sense.

Since the average vehicle is driven less than 100 miles per day, lithium ion batteries could be recharged easily during the night. The car batteries can be automatically plugged into a recharging station about the size of a parking meter, the voltage of which is similar to a wall socket in a house.

As an experiment, a fleet of electric vehicles could be purchased en masse to replace existing fossil fuel vehicles. Excess locally produced renewable power, in the form of solar or wind, could then be used to “charge” the electric vehicles, acting as a de facto energy storage facility at night, when the demand is the least.

71

Smart Grid Strategy: Why the military's smart grid battle plan could ignite a victory for all of us (2011) By Liz Enbysk, Smart Grid News (SGN) Managing Editor http://www.smartgridnews.com/artman/publish/Business_Strategy/Why-the-military-s-smartgrid-battle-plan-could-ignite-a-victory-for-all-of-us-3942.html; See also: http://www.smartgridnews.com/artman/publish/Delivery_Microgrids/Smart-grid-advancesAre-microgrids-coming-of-age-4335.html; http://www.smartgridnews.com/artman/publish/Technologies_Storage/Want-to-know-thefuture-of-storage-ARPA-E-is-inventing-it-right-now-5019.html Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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Following the Fukushima nuclear disaster, Japan has expressed interest in exploring Vehicle-To-Grid (V2G) Technology, whereby Battery Electric Vehicles (BEVs) and Plug-In Hybrid Electric Vehicles (PHEVs) can store excess night-time wind energy and power homes during the day.

Conversely, community energy production facilities can power vehicles, which can then discharge excess power into buildings using Vehicle-To-Grid (V2G) Technology.

Home Powered by Cars72

Growth of Hybrid and Electric Vehicles73

72

http://www.thechargingpoint.com/news/the-electric-car-that-washes-clothes-and-cooksrice.html 73 DBEDT: Status and Progress of Clean Energy Initiatives and Analysis of the Environmental Response, Energy and Food Security Tax Report, (January 3, 2012) Pursuant to Act 73, Session Laws of Hawaii 2010.

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What If Options: The Demise of the Centralized Grid Hawai`i has the highest utility rates in the nation, increasing penetration levels of costly intermittent industrial-scale wind and solar, and the most aggressive energy efficiency goals in the world. HECO is proposing spending billions of dollars on Smart Grids, Super Grids, inter-island cables, and a vast computer-telecommunication system to oversee all of this change in sub-second real time.

But what if the cost of on-site renewables drops below the cost of gridbased electricity? This is not a far-fetched notion, but a real possibility even in the near-term.

The current energy paradigm under which the utility operates requires the spending of billions of dollars of ratepayer money in the next few years, further raising the rates of each grid user. The utility argues that higher but less volatile rates (as opposed to lower but more volatile rates) makes it easier for businesses to plan budgets. This exorbitantly expensive, centralized energy system grid scenario remains at best uncertain, but increasingly higher rates will certainly drive more and more ratepayers away from centralized grid-based solutions.

The advent of effective, moderately priced intermittent energy storage devices will further speed this flight from the grid.

Beyond driving up the cost of living substantially for householders, higher rates for businesses mean more major business customers will move off the grid. Businesses that remain on the grid will become less competitive as they will have to raise their prices.

Higher rates also impact the cost of governmental services.

HECO’s multi-billion dollar proposals point directly toward inflationary pressures on most goods and services in the islands. We must confront the hard fact that the cost of electricity is part of the cost of almost everything we buy.

What if ... in the near future HECO’s current energy generation and transmission model does in fact fail?

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Cost Comparison The utility considers most cost data to be Confidential Business Information (CBI). Thus comparing the relative cost of fossil fuel generators with renewable energy facilities is difficult at best.

Compounding this is that a direct comparison distorts reality.

HECO claims that higher variable DG penetration levels require billions of dollars to upgrade existing utility generators and transmission lines; and independently of this, also requires the implementation of Smart Grid technology, which also will cost billions of dollars. These costs are not factored into fossil fuels versus renewables cost comparisons.

There are other costs not usually included in comparisons. Fossil fuel generators require much greater state1 and federal1 regulatory oversight. The utility does not consider the relative environmental impacts of different facilities.

The increased use of renewable energy has raised utility rates. This has allowed the utility to rake in record profits.

Earlier this year, Hawaiian Electric Industries Inc. reported a profit of $138.2 million for 2011. This represented a 22 percent increase from net income of $113.5 million in 2010. HECO’s net income was $100 million in 2011, compared to $76.6 million in 2010, an increase of 30.5 percent.74 Hawaiian Electric Industries, Inc. reported a 2012 first-quarter profit of $38.3 million, an increase of 34 percent compared to the same quarter in 2011.75 During HEI’s May 2012 Annual Meeting, the HEI CEO stated that for each of the past 6 years, HEI has achieved profit margins exceeding the national utility average return. She added that besides having higher profit margins, HEI has also achieved reduction in risk.76 74

Hawaiian Electric Industries earns $138.2M in 2011, up 22% Pacific Business News, February 8, 2012 http://www.bizjournals.com/pacific/news/2012/02/08/hawaiian-electricindustries-earns.html 75 Hawaiian Electric Industries posts $38.3M Q1 profit Pacific Business News, May 8, 2012 http://www.bizjournals.com/pacific/news/2012/05/08/hawaiian-electric-industries-posts.html 76 http://www.disappearednews.com/2012/05/what-could-possible-go-wrong-with.html Life of the Land’s Comments re Hawai‘i Clean Energy Programmatic EIS *

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This goes against the traditional investor model where investors are willing to accept lower rates of return for less risky ventures.

In August 2012 HELCO filed another rate hike request with the PUC. Trade Impacts Enterprise Honolulu77 opined that “a key characteristic of a healthy economy is that it exports more than it imports. This is especially important for an island community with no land-based contiguous markets. These goods arrive each day in containers at Sand Island and at the airport via cargo planes from global suppliers in other parts of the world.”78 Hawai`i does not appear to keep updated data on the importing and exporting of goods and services. DBEDT data from a decade ago reveals that imports ($15 billion) exceed exports ($3 billion) by a whopping $12 billion; a significant portion of Hawai`i’s trade deficit is due to the importation of petroleum, coal, and food. To make up this deficit, Hawai`i needs military investments and tourist dollars. Thus governmental policy is focused on encouraging non-residents to spend money here. Correcting the imbalance in trade would mean that the government could place greater emphasis on local Quality of Life issues.

Economic Impact Ideally, moving expeditiously to replace imported fossil-fuel-based electric generation with domestic renewable energy resources makes great economic sense. Each year Hawai`i buys 40 million barrels of oil from abroad. At $100/barrel that is the equivalent of $4 billion dollars leaving the State annually. If in fact that money stayed here, it would ripple through the economy, much as a rock dropped in the middle of a pond sends ripples in all directions. Using the classic economic multiplier, the Department of Business, Economic Development and

77

www.enterprisehonolulu.com Enterprise Honolulu: Imports, Exports and Economic Development (August 28, 2003); Enterprise Honolulu: Export Enhancement and Import. http://www.lifeofthelandhawaii.org/doc2/Enterprise_Honolulu_Imports_Exports_2003.pdf; See also Substitution - Key Strategies for Hawaii’s Prosperity (September 4, 2003), http://www.lifeofthelandhawaii.org/doc2/Enterprise_Honolulu_Import_Substitution_2003.pdf 78

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Tourism (DBEDT) estimates that each dollar circulated locally adds three dollars to the economy.

Thus keeping $4 billion a year in Hawai`i would add $12 billion to State economy. To put this in easy-to-understand terms, the estimated state Gross Domestic Product in 2012 is $71 billion79 so adding $12 billion to the economy would result in 17% more economic activity and could lead to a sharp rise in employment. This financial injection would provide more jobs and added tax revenue that would allow greater funding of core governmental functions including education, health, and safety net programs.

However, it must be noted any such future financial gain would be offset by the continued reliance on “imported” renewable energy systems and the exportation of profits by out-of-state investors and renewable energy product suppliers and developers.

Part V: CONCLUSION What if ... in choosing between patching up the old and creating the new ... Hawai`i led the way in creating a new efficient, and exciting energy industry.

What if ... the utility of tomorrow focused on creating wireless forms of electricity transmission? What if the utility acted as a clearing house, bringing together technical assistance, monitoring energy trends, educating the public and serving as a bridge between energy consumers and wind and solar companies, financial institutions, energy auditors and energy efficiency firms. What if the utility gave you choices between owning, leasing and renting the equipment you needed to become energy independent?

What if all of this was possible? …then Hawai`i could demonstrate to the world that the future has arrived here first.

Where We Were Much of the electricity generation and distribution systems we have today were designed and built in the 1950-1975 era. The existing 79

http://hawaii.gov/dbedt/info/economic/data_reports/qser/outlook-economy

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systems were designed to be radial, flowing outward from a few large central station generators. Generators were designed to have two positions: on and off.

Fork in the Road We are at a fork in the road and can go towards larger, more complex, centralized systems or towards more decentralized systems.

Super Grid & Smart Grid

Smart Grid

Existing Grid Smart Grid & Micro Grids Micro Grids

No Grid

A DC interisland Super Grid would interconnect existing AC island grids. Each island grid would be upgraded with Smart Grid technology based on new telecommunication systems and computers.

Each island grid would be upgraded with Smart Grid technology based on new telecommunication systems and computers.

The transmission grid would focus on providing power to small regional grids.

The transmission grid would be removed and all power would be provided by micro grids and onsite generation The transmission grid would be removed and all power would be provided only by on-site generation

Thinking Outside of the Box For the sake of stretching the thought process, consider the impacts of a “No Grid” approach. Existing utility generators could be shut down and removed. Some on-site fossil fuel generators would still exist at hospitals, fire stations, and commercial facilities for purposes of redundancy. These could be gradually converted to run on biofuel.

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The existing utility generation sites could be used for other purposes.

Decades ago there was talk of a green lei extending from Diamond Head, through Waikiki, Ala Moana, Kakaako to Aloha Tower.

Honolulu Power Plant behind green roofs of Aloha Tower Marketplace

HECO’s Honolulu power plant, located between Kakaako, Downtown, and the Aloha Tower Marketplace, is located on choice harbor property which could, if retired, support a variety of uses, including increasing public access to the coastal area.

Removing all transmission lines would increase aesthetic views, decrease unintended vehicle-pole interactions, and increase the use of sidewalks. Transmission poles on hiking trails are pre-soaked in toxic herbicides and regularly sprayed with anti-termite fungicides; notification of this spraying by utility subcontractors is never announced. This contamination of hiking trails and remote ecosystems could end.

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Puna Transmission Lines

The Miniaturization Mega-Trend There is a growing megatrend towards miniaturization. Using microchips, new materials, micro and nanotechnology and computers, everything is becoming smaller and more efficient. All aspects of technology, with the exception of the monolithic electric grid, are shrinking in size. This “smaller is better” revolution includes computers, cell phones, cameras, batteries, medical devices and small-scale home/neighborhood energy systems.

In 2007 a micro inverter (8.4 cubic inch) was developed which converts a vehicle’s 12 volt DC power into AC power for laptop, MP3, cell phone charger and other personal electronic devices. The device was one of ten winners in Popular Mechanics Breakthrough Awards (2007).80 In 2008 a Fuel Cell with a width of 3 millimeters was developed,81 and in 2010 a non-turbine ultra-micro wind generator 80

http://www.batterystuff.com/battery-restoration/12-volt/XR100.html Ai Kamitani et al. Journal of Microelectromechanical Systems http://iopscience.iop.org/0960-1317/18/12/125019/ 81

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was developed. It uses a small elastic membrane ribbon stretched between two fasteners.82 In 2010 UCLA scientists used nanotechnology to develop lithium batteries the size of grains of salt.83 In 2012 Semprius Incorporated, with seed money from NREL (the National Renewable Energy Laboratory), developed a solar cell the size of the dot over the letter “i.” The solar cell broke the world’s record in efficiency, converting 33.9% of the sun’s energy into electricity.84 Also this year, UCLA researchers created a 70% transparent solar cell for windows. The polymer solar cell (PSC) converts non-visible infrared light into an electrical current.85 Another megatrend is the transition to a wireless society. It has transformed the digital telecommunications industry. It can and will eventually occur in the electrical transmission industry. Today, electricity can be transferred using various methods including light and microwaves. A “zero-grid” futurist, Justin Hall-Tipping, said, “I think sometime in the next 10 to 15 years, kids are going to be saying, ‘Now let me understand this. You put up a pole, you strung a cable, you passed electricity around, and you did this why?”86 Summary We are on a knife’s edge: on one side we face a fossil fuel future and a climate change melt-down, and on the other side we are at the cutting edge of an exciting new distributed-generation future.

The Programmatic EIS gives us the opportunity to look carefully at future scenarios including the continuation of a highly centralized, topdown approach, a middle-of-the-road combination approach, or a fully distributed generation approach, as advocated for in this paper.

There will always be a “lost” opportunity cost. Spending money for one solution precludes having the funds available to spend on another solution.

Hawai`i’s centralized systems have high and increasing cost structures. Hawai`i has initiated a long-term trend towards energy 82

http://peswiki.com/index.php/Directory:Humdinger_Windbelt http://news.discovery.com/tech/miniature-batteries-salt-grains.html 84 http://www.afcea.org/signal/signalscape/index.php/2012/04/06/16704/ 85 http://newsroom.ucla.edu/portal/ucla/ucla-researchers-create-highly-236698.aspx 86 http://www.smartplanet.com/blog/pure-genius/q-a-justin-hall-tipping-nanotechnologyentrepreneur/7930 83

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efficiency and self-generation leading to a downward trend demand for centralized grid electricity. As rates rise further, more people will leave the grid, leading to a collapse of the utility model as we know it.

There are grave consequences for not dealing with this quagmire. They range from environmental justice issues (economically challenged communities may be forced to remain on the grid, unfairly shouldering the higher costs), to stranded costs (whereby taxpayers are forced to bail out shareholders).

Price-driven natural deregulation, via exodus from the grid, may lead HECO into a bottomless vortex, and the utility may ultimately fail as a viable investor-owned corporation. Building Smart Grid / Super Grids, without considering the risks, may lead to massive stranded costs leaving ratepayers and taxpayers holding the bag. It is not in the public interest to subsidize utility profits on the backs of Hawai`i’s ratepayers.

These two trends – downward total demand for centralized grid electricity and an increase in self-generation – are a hot topic in the recently opened HECO, MECO & HELCO Proceeding re: Integrated Resource Planning (PUC Docket 2012-0036), in which the utilities are tasked with developing five to twenty-year planning scenarios.

In June 2012 the PUC appointed sixty-eight individuals, representing a variety of industry groups, organizations and individual communities, to the Advisory Group for this docket. In August HECO held a three day Scenario Planning workshop for AG members; all of HECO’s proposed scenarios that emerged acknowledged the trend towards greater self-generation. Several AG members from across various spectrums advocated for consideration of future utility business models based on these new trends.

Hawai`i has an opportunity to adopt a decentralized, participatory, democracy-style “community powered” paradigm.

Hawai`i can replace the large coastal generators, miles of ugly overhead transmission lines, and intense energy facility siting struggles/litigation, with a PIMBY (“Please In My Back Yard”) approach whereby all homes and businesses have on-site energy efficiency, energy storage, and energy production.

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This trend is already occurring, as most homes have CFLs (efficiency), PCs and cell phones (energy storage) and some homes have solar (from gadgets to photovoltaic systems).

The trend towards miniaturization will lend itself towards expanding residential opportunities.

We are on the cusp of an exciting new era. We should take every advantage in exploring this new paradigm.

The Programmatic EIS affords us of this opportunity to consider the 100% DG alternative.

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