HECO Starts TV Ads Explaining Increasing Electricity Rates

December 24, 2011 Richard Ha

In an article in yesterday’s Honolulu Star-Advertiser, Hawaiian Electric Company (HECO) Vice President Robbie Alms talks about how current increases in electricity rates are due to forces beyond our control, and says that customers should “brace for an extended period of high electricity prices.”

The article mentions that HECO is starting to run educational spots on TV to explain what is going on.

HECO sees electric prices staying high

The utility will begin airing TV ads tonight explaining reasons behind the rate hikes

By Alan Yonan Jr.

POSTED: 01:30 a.m. HST, Dec 23, 2011

Hawaiian Electric Co. is launching its first-ever public awareness campaign telling customers to brace for an extended period of high electricity prices.

Electric rates on Oahu have hit record levels in four out of the past five months largely due to an unprecedented hike in the cost of petroleum-based fuel, which the utility burns for more than 75 percent of its electricity production. Read the rest

I’ve been to four Peak Oil conferences now. During the first, in 2007, I learned that the world had been using twice as much oil as it had been finding for the past 20 years (and that trend continues). Ever since, I have been trying to educate folks so we can transition to more sustainable energy sources in an orderly manner.

At the time, one could not tell if the leveling off of oil production since 2005 was the beginning of a trend or not.

By 2009 though, at the time of the Peak Oil conference in Denver, we could see that the leveling off of oil production continued. At that time, I started paying attention to an idea that Professor Charles A.S. Hall called Energy Return on Energy Invested (EROI).

The idea: It is the net energy, resulting from the effort to get that energy, that is what society can use. The more difficult it is to get oil in its final usable form, the less net energy that’s available for society to use.

By 2010, Lloyds of London had issued a white paper alerting its business clients to be prepared for $200/barrel oil by 2013. By then, it was generally agreed that oil fields begin, peak and decline in a bell-shaped curve. And the decline rate of all the world’s oil fields could be estimated to within reasonable limits, say between 3 and 6 percent.

So the natural decline rate would be between 2.5 and 5 million barrels/day each year. Since Saudi Arabia produces 10 million barrels per day, we would need to find the equivalent of a Saudi Arabia every four years. Or, in the worse case scenario, every two years.

Renewables would have to fill that amount just for us to stay even.

Somewhere along the way, I picked up that our world economy is about manufacturing – building or making things – and that takes energy. But if the primary source of energy is not increasing, could it mean that the world economy cannot grow? It sounds plausible.

By this most recent Peak Oil conference, in October – and as recent events are starting to show – it looks like there is a fundamental change occurring in the oil market. Normally, one would expect to see the price of oil declining in a recession. But something different is happening: Oil costs close to $100 per barrel.

In China, the per capita usage of oil is around 2, while in the U.S. the per capita usage is around 26. At $100/barrel oil, China’s economy is still growing. The upside of this is that we have a cushion.

If oil supply is not able to keep up with demand, it seems reasonable that the price of oil will be rising. If this results in higher gas and electricity costs, it will put a drag on consumer spending, two-thirds of which affects economic growth.

The EPA is requiring upgrades to oil-fired plants, which will cost ratepayers even more.

It feels like we will be starting down the backside of the oil supply curve soon. And as it becomes more difficult to get oil, the net oil available to society will be less and less.

We in Hawai‘i are so lucky to have geothermal as an option for base power electricity, which is 80 percent of our electricity use. Geothermal is proven technology, environmentally benign and it’s affordable: Geothermal-generated electricity costs less than half that of oil at today’s price, and the cost will stay stable for 500,000 to a million years.

As the price of oil rises, and if we rely on affordable geothermal for a large portion of our electricity base power, our economy will become more competitive compared to the rest of the world, and our standard of living will rise. Our farmers and food manufacturers will become more competitive and Hawai‘i will become more food secure. Our young people will be able to find jobs at home.

I saw the first of the new HECO television spots a short time ago. Congratulations to HECO for starting them. There is a huge amount of catching up to do. It will be a challenge.

If we move urgently toward affordable energy, we will strengthen our Aloha way of life – where people aloha and take care of each other. Together we can make a better tomorrow for all.

Happy Holidays!

Geothermal, Iceland

About the “Broken Economy that got out of Jail”

December 19, 2011 Richard Ha 1 Comment

This article about Iceland and its ongoing recovery from the financial crash of 2008 was written a month after Roald Marth and I visited Iceland in August 2011.

The Independent

Iceland: The broken economy that got out of jail

The small nation went bust spectacularly. But its recovery has been remarkable, too – and holds lessons for other countries. Ben Chu reports

Iceland experienced one of the most severe recessions in the world when the markets crashed in 2008. Economic output fell by about 12 per cent over two years. But the latest report on Iceland by the International Monetary Fund shows that growth is resuming. GDP is expected to increase by a relatively healthy 2.5 per cent in 2011. The Icelandic public finances are on a sustainable path too with government debt projected to fall to 80 per cent of GDP in 2016.

The turnaround should not be exaggerated. Iceland is still more than 10 per cent below pre-crisis output levels. Unemployment remains at about 6.7 per cent, considerably higher than before 2007. The standard of living of most Icelanders is well down. Access to foreign currency is tightly controlled. And risks to recovery remain. Central bank interest rates are going up in order to curb inflation. This could stifle growth. Yet the fact remains that the outlook for the Icelandic economy is looking rather healthier than other distressed economies in Europe such as Greece, Portugal and Ireland… Read the rest

Iceland experienced the biggest financial crash in modern history – yet they are now recovering. They are recovering because they inoculated themselves from high oil prices by using low cost hydro and geothermal for 100 percent of their electricity and house heating. And by utilizing low cost electricity, they made an electricity intensive aluminum export industry.

It is clear to me that had they used expensive biofuel to generate electricity, they would not be competitive in making aluminum for export. And instead of coming out of this disastrous financial situation, they would be facing years of depression. This is exactly why Hawai‘i should not be using expensive biofuels to make electricity when we have low-cost geothermal.

Here are my observations from that trip we took took to Iceland.

I want to conclude my “Iceland Series” by pointing out something very simple and straightforward that they have learned in Iceland and put into practice, but that we in Hawai‘i have not:

Cheap and proven technology, and clean energy projects, protect an economy from oil crises. Read the rest

Peak Oil

It Fails The Common Sense Test

December 15, 2011 Richard Ha

But it sounds too good to be true!

Energy Expert Robert Rapier writes that:

On December 6th, the Institute for Energy Research released a groundbreaking report claiming that the amount of oil that is technically recoverable in the U.S. is more than 1.4 trillion barrels, with the largest deposits located offshore, in portions of Alaska, and in shale deposits throughout the country. The report estimates that when combined with resources from Canada and Mexico, total recoverable oil in North America exceeds nearly 1.7 trillion barrels.

To put this into perspective, the largest producer in the world, Saudi Arabia, has about 260 billion barrels of oil in proved reserves. It’s suggested that the technically recoverable oil in North America could fuel the U.S. with seven billion barrels per year for almost 250 years.

So, what does this mean for our energy future? For starters, it could mean the end of our reliance on imported oil from unfriendly nations.

I find these sorts of reports highly misleading, for the following reason. It is true that the U.S. has tremendous oil resources. But it is also true that most of those resources are not economically recoverable. An analogy I have used in the past is the amount of gold in the oceans. There are trillions of dollars of gold in the oceans that is technically recoverable. But that gold is not — and in my opinion will never be — economically recoverable. So it would be misleading for me to argue that we can have all the gold we want if we just get serious about it.

In fact, I tracked down the report referenced above from the Institute for Energy Research: North American Energy Inventory. Then I tracked one of the references they used to come up with their estimate of more than a trillion barrels of “technically recoverable” oil in the United States. The source is a U.S. Department of Energy report: “Undeveloped Domestic Oil Resources.” What that report says is quite different than the implications that are being drawn. The following chart tells the tale:

So of the 1.3 trillion barrels of oil from this DOE report, most is not technically recoverable, and the only category that is known to be presently economically recoverable is that tiny sliver of 22 billion barrels that says “Proved Reserves.” This accounts for less than 2% of the 1.1 trillion barrels categorized as “Undeveloped Oil In-Place.” Read the rest here.

The U.S. imports roughly 12 million barrels of oil per day. Prudhoe Bay, on Alaska’s north slope, produced, at its high point, two million barrels per day.

To be self-sufficient in oil, we would need to have six Prudhoe Bays sitting in North Dakota. This does not pass the “common sense” test.

Community, Shorts

Kamaaina Christmas at the Honolulu Academy of Arts

December 12, 2011 Richard Ha

June and I attended the Kama‘aina Christmas event at the Honolulu Academy of Arts this weekend. It was very nice and a lot of fun.

The last time I was at a black tie event was when I was an Army officer a long, long time ago. Governor Abercrombie told me he knows my twin brother – the one who only wears shorts.

At our table were Mina Brinkopf, Alan and Carole Tang, Pat and Jan Sullivan, and Henk, Akemi and Michael Rodgers.

Here’s June with Alan and Carole Tang. Alan is Chief Strategy Officer for Ku‘oko‘a.

One of the dancers from Iona Contemporary Dance Theatre performing in real snow!

With one of the Iona dancers.

Geothermal, Peak Oil, Renewable Energy Sources

Momentum Toward Geothermal Has Shifted

December 9, 2011 Richard Ha

It is clear that the momentum toward geothermal has shifted.

There have been numerous community meetings on the Big Island, where the overwhelming number of Hawaiians are in favor of geothermal if it is done in a pono way: It needs to be culturally sensitive and benefit the community, and before we implement geothermal, it must be shown that its use is environmentally benign.

People on the Big Island are very aware that geothermal electricity is much cheaper to produce than oil- or biofuel-generated electricity. They expect to see a difference on their electric bills.

This major change will be very challenging for the electric utility as it tries to translate geothermal production into lower electric bills. But they have the best people working for them; they are our friends and neighbors. Actually, they are us.

Not, no can. CAN!

Geothermal, Peak Oil, Renewable Energy Sources, Sustainability

We are at a Pivotal Moment & We Need to Make a Commitment

December 7, 2011 Richard Ha 4 Comments

I spoke at a plenary meeting for federal, state and private enterprise energy experts yesterday at the Honolulu Convention Center. It was put on by the Department of Business, Economic Development and Tourism. I want to share my speech here, too:

Aloha Everyone,

We farm 600 fee simple acres on the Big Island. I am the only person from Hawai‘i to have attended what is now four Peak Oil conferences. I went to the first conference so I could learn about oil, and figure out how to position our farm for the future.

I have an accounting degree. But, as a farmer, I would say our biggest strength is that we are good at adapting to change.

Here are some key observations:

1. The world has been using twice as much oil as it has been finding for more than 20 years. And that trend continues.

2. Economies run on energy. If you take a chainsaw and a gallon of gas, you will cut so many trees. If you take that chainsaw and a half gallon of gas, you will cut less. It’s the same for the world economy. Energy growth is tied to economic growth. If energy is not available in sufficient amounts, the economy cannot keep on growing.

3. “Energy Return on Energy Invested.” It is the net energy that is available for society to use that is important.

In 1930, to get 100 barrels of oil it took the energy of one barrel.

In 1970, to get 30 barrels took one barrel.

Now, it’s 10 or 15-1 and decreasing.

Oil shale and tar sands are in the 5-1 range.

Biofuels is less than 2-1.

But geothermal is at least 10-1, and will last for 500,000 years.

It is estimated that we need 4-1 just to maintain our present society.

The net energy that is available for the use of society is getting gets less and less. In order to stay even, we will need more and more of the low EROI stuff just to stay even. Using geothermal to make electricity costs only half as much as oil.

With the world in recession, the oil price is at $100 per barrel. It seems like we are at the edge of starting down the backside of the oil supply curve. As oil supply starts to decrease, the net energy available decreases too but at an increasing rate.

One may reasonably assume that we are facing permanent recession or worse.

Another way of looking at it is: Net energy minus the energy it takes to get our food equals our lifestyle.

What can we do? The Big Island will be over the hot spot for 500,000 to a million years. The EROI for geothermal is stable and will stay the same for 500,000 years.

Consumer spending is two-thirds of our economy. Affordable energy is key. Let’s all work together to find the solution that works for the community, the environment and the economy.

Iceland is energy- and food-secure. They became that way by using low-cost hydroelectric and geothermal energy. They use their cheap electricity to make aluminum, and with the hard currency from that, they buy the food that they cannot grow. It can be done, but we must force the change!

At the early ASPO conferences, EROI used to be “fringe” thought, and now it is mainstream. We need to consider this in our planning!

We are at a pivotal moment in Hawai‘i’s history. Business as usual is no longer safe. Like the ancient leaders who made the decision to send the canoes up from the south, we are about to make decisions that will decide the future for coming generations.

We here in this room will make the commitment. If not now, when? If not here, where? If not us, who?

We can do this. Not, no can. CAN!

Maku‘u Stories, Peak Oil, Renewable Energy Sources

Hawaii Needs to Show the Way, Not Serve as a Warning

December 5, 2011 Richard Ha

Robert Rapier and I have an article in Civil Beat today. Read the article here.

Hawaii Should Show Way to Better Energy Future

Over the past decade, world oil prices have advanced from approximately $25 per barrel to more than $100 per barrel. Had the price of oil merely kept pace with inflation, the $25 barrel in 2000 would have been worth just over $30 in 2010. Thus, there was a fundamental shift in the oil markets.

By 2005, the idea that the price increase was being caused by oil depletion – commonly referred to as “peak oil” – was receiving widespread attention. While some dismissed the idea of peak oil, instead offering up speculation, OPEC, growth in developing countries, or other geopolitical factors as the primary factors behind the advance in prices – oil production remained flat despite record high oil prices. Read the rest

The world is changing, and our next 20 years will be completely unlike the past 20 years. We need to adapt to this change.

We can start by taking a triple bottom line approach to the problem. We need to put the needs of the people first and foremost, we need to consider the effect on the environment and we must make sure that the investment makes sense. It isn’t the strongest that survive; it’s the ones who can adapt that survive.

Chris Martenson’s YouTube video explains in a commonsense way how the world is changing. Economic growth requires energy growth. Energy growth has hit a plateau and so economic growth is slowing down. If net energy starts to decline, there will be serious, and unpredictable, consequences.

We have geothermal, the gift of Pele, to help us cope. We must change and adapt.

Also from the Civil Beat article:

Because of our heavy dependence on oil, it has been said that Hawaii is the canary in the coal mine for the rest of the U.S. But in warning others of impending danger, the canary dies. We do not want to serve as a warning to others; we want Hawaii to be the beacon for the world to see how we have achieved a better future.

Renewable Energy Sources, Sustainability, Water

Hydroelectric Project at Farm is Full Steam Ahead

November 29, 2011 Richard Ha

Somebody asked me the other day about Richard’s hydroelectric project at the farm. I hadn’t even gotten around to asking him about it yet when I saw this Pacific Business News article.

Hydroelectric energy will power Big Island farm

FRIDAY, NOVEMBER 25, 2011 AT 10:24AM

(Pacific Business News) Hamakua Springs Country Farms plans to use the streams along the Hamakua Coast to generate electricity as early as next year and has hired a system developer to move the process forward.

The idea has been in the works since last year, and Richard Ha, president of Hamakua Springs, said development of the hydropower system is likely to begin in 2012. The farm has received the proper permits, he said, but the cost and design analysis has not yet begun. He expects the evaluation and building process to take about seven months to a year. Read the rest

Richard told me, “We cannot wait to make our electric bill predictable and stable.”

Biofuel, Peak Oil, Renewable Energy Sources

Great Podcast About Renewable Energy

November 28, 2011 Richard Ha

Richard Ha writes:

This is a very interesting podcast by Robert Rapier, who spoke at the recent Association of the Study of Peak Oil (ASPO) conference.

He talks about a request for him to rank the top 50 renewable energy companies. By the time he reached the fifth one, it was looking iffy and by the time he reached the tenth company, he did not expect the rest to survive 10 more years.

It really is tough to do what Mother Nature did for free and to be competitive, cost-wise. Some have Mother Nature’s oil embedded in the process and so the break-even point of the renewable oil recedes into the horizon.

Some fail because of bad assumptions – like that the feedstock will be available for a cheap price. Only if the farmer makes money will the farmer grow feedstock.

Scale is a significant issue, too. The process is like cooking turkeys. It’s one thing when one is cooking just one turkey in a bench scale experiment. It is quite another when one is cooking 100 turkeys per hour in a large oven. How do you make sure the turkeys in the middle are not raw and the ones on the edge are not burnt to a crisp?

What can we make of the fact that oil is $100 per barrel and yet we are in a recession? One would expect oil prices to decline in a recession. Could we be in an endless recession?

And what about the difference in the oil consumption of different countries? Will they be in a permanent recession? China uses only two barrels of oil per person per year while the U.S. uses 26 barrels of oil per person per year.

They can grow their economy at $100 per barrel oil, and we are barely keeping our heads above water at the same price? Hmmm.

Let’s move to geothermal now!

Water

Water, Water, Everywhere…

November 21, 2011 Richard Ha

How is it that, after drilling through fresh water and then through 9000 feet of salt water, they hit cold fresh water under pressure? That wasn’t supposed to happen.

Last year, Don Thomas gave a talk to the Keaukaha Community Association about this project I wrote about last time.

This is what it looks like when water under 160 pounds of pressure shoots up out of the ground.