As the Big Island deploys more geothermal, its electricity rates will come down relative to O‘ahu’s.
It won’t be too long before the Big Island’s electricity rates are lower than O‘ahu’s.
See HECO rates per island here.
Should O‘ahu try to levelize rates, in order to take advantage of some of this decrease in electricity cost? Or should it wait for a cable, which would lower electric costs more?
For various reasons, it is better to wait for a cable.
To be continued
Last night, I spoke at the Laupahoehoe Community Association meeting and shared the perspective I have gained from watching the world oil supply subject evolve over a short five years.
I related how I have attended four Peak Oil conferences, most recently as Hawai‘i County’s representative. The first thing I learned was that the world has been using twice as much oil as it has been finding for 20 to 30 years – a trend that continues.
Five years ago, oil prices were supply driven. When supply was restricted, oil prices rose, and when oil supply resumed, prices fell.
Last year, that correlation fundamentally changed. We now have a demand problem. And the demand is coming from the new economies: China, India and others.
That’s why, during this recession, we still have $100 per barrel oil. Unlike during the last 150 years, supply cannot seem to keep up with demand. If you are a subscriber to Nature magazine, or don’t mind becoming one, you can read a good article about that here.
The economic pain of a flattening supply will trump the environment as a reason to curb the use of fossil fuels, say James Murray and David King.
…There is less fossil-fuel production available to us than many people believe. From 2005 onwards, conventional crude-oil production has not risen to match increasing demand. We argue that the oil market has tipped into a new state, similar to a phase transition in physics: production is now ‘inelastic’, unable to respond to rising demand, and this is leading to wild price swings…. Read the rest here
World oil supply is naturally declining at approximately five percent, meaning we need to find the equivalent of a Saudi Arabia every two to three years. Clearly we have not been doing that, nor is it likely we will do that.
To make matters worse, oil-exporting countries are forced to use more of the oil resource in their own countries or the people will revolt. Sooner or later, oil-exporting countries will keep all its oil for its own people. All the signs indicate that we have much less time than we think.
I told the folks that most of us, except the native Hawaiians, were immigrants. We all dream of a better future for our children and grandchildren, and rising oil prices are a threat to that dream.
We are very lucky, though, to have an indigenous alternative – Geothermal. Generating electricity from geothermal costs approximately 10 cents per kilowatt hour, while generating electricity from oil (at $100 per barrel) costs more than 20 cents per kilowatt hour. Geothermal-generated electricity prices will be stable for generations, while oil prices will keep on rising.
I was preaching to the choir. They wanted to know what could be done. I told them to contact their legislators and that I would make sure to keep in contact with their organization.
Advantages of geothermal:
I want to share some highlights of the Geothermal Working Group’s final report.
Page 10, Revenues derives from geothermal:
Page 12:
IV. Recommended Steps for Hawaii State Legislators
– Make the allocation of geothermal royalties more transparent to show how benefits come back to the community. Designate the records of the allocations to be public domain.
– Establish a community advisory board to offer suggestions to the DLNR about how royalties generated by geothermal power plants are spent. The advisory board should be members of the communities that host existing or future geothermal power plants and/or those who are most impacted by the development of geothermal energy.
– Encourage the DLNR to use geothermal royalties to identify promising geothermal sites and to further develop the resource.
– In light of the probability that oil will reach $200 per barrel (Lloyds of London), the legislature is requested to commission a study to show the economic impact of various prices of oil.
– Facilitate development of geothermal with a critical review of the geothermal permitting process, regulatory capabilities, and possible investment incentives.
Page 5:
The Geothermal Working Group’s principal findings
– Geothermal is a renewable resource indigenous to the island of Hawaii that is dissociated from the price volatility of petroleum fuels.
– Geothermal can be a key component in a diversified energy portfolio for Hawaii County, both for the electrical grid and for transportation.
– In Hawaii, geothermal is a firm-energy resource at lower cost than fossil fuel. – Developing multiple geothermal plants is the most prudent approach.
– Geothermal has the potential to supply baseload electricity; long term reliability and the ability to supply grid management services (currently supplied by conventional fossil-fueled power plants) must be demonstrated in order to consider geothermal as the primary energy resource.
– With geothermal power plants, agricultural fertilizers, hydrogen, oxygen, and business-enterprise power can be produced for off-peak rates during the hours of curtailed electrical demand.
Page 9:
Overview
Geothermal energy can be developed to become the cheapest form of baseload power for Hawaii County. There are no importation or storage costs. Using geothermal as the primary source of baseload power will permit the county’s businesses to be more competitive with the rest of the world. Using geothermal as the primary source of baseload power will also help folks on the lowest rungs of the economic ladder—those who struggle with the cost of services.
In addition to stability and affordability, geothermal can leave less of an environmental impact than the commercially-available baseload power sources of electricity. There are no greenhouse gases, emissions and no oil spill risks.
The lower rates of off-peak geothermal electricity encourage the production of ammonia locally. Ammonia is an efficient hydrogen carrier that can be used to power internal combustion engines and as an aid to local agriculture as fertilizer. Light-industry business parks constructed near geothermal energy plants can use excess heat as a resource for heating vegetable and tropical flower hothouses, drying wood, and drying fish.
Benefits of geothermal energy to the community include sharing in geothermal royalties. In accordance with state law, the geothermal royalties are paid directly to the Department of Land and Natural Resources who allocate the royalties in three ways:
1. Department of Land and Natural Resources receives 50% 2. County of Hawaii receives 30% 3. Office of Hawaiian Affairs (OHA) receives 20%
Potential adverse impacts are listed below:
– Interference with worship of the Goddess Pele – Interference with certain Native Hawaiian practices – Rainforest destruction – Possible health and safety impacts – Disruption of the way of life for nearby residents – Hydrogen sulfide and other air quality issues – Noise – Increased strain on an inadequate infrastructure – Impact on native fauna and flora
At a local level, the rising cost of electricity, whatever the cause, will result in severe economic pressures.
What’s important to realize is that 70 percent of our economy is based on consumer spending. “If people no more money, they no can spend.”
It all relates to costs.
See these Honolulu Star-Advertiser articles on the subject:
Hawaiian Electric Light Co. wants to tap more of the Earth’s power for electricity
By Alan Yonan Jr.
POSTED: 01:30 a.m. HST, Jan 07, 2012
Officials from Hawaiian Electric Light Co. said Friday they will soon seek regulatory approval to more than double the amount of geothermal power produced on Hawaii island in a move that could provide some relief for residential utility customers, who pay the highest electric rates in the state…. Read more
and
POSTED: 01:30 a.m. HST, Jan 07, 2012
Hawaii has been touted as an ideal laboratory for the development of renewable energy that’s bound up in its wind, seas and sunshine. It’s the southernmost island in the chain, however, that may be the most richly endowed overall, and the most promising resource of all is the one that’s buried far beneath the surface…. Read more
Having attended four Peak Oil conferences now, I have seen that Jeff Rubin is one of the credible commentators on the world oil situation. His comments are especially relevant to the discussion about rising oil prices in Hawai‘i today.
Audio of Jeff Rubin’s talk at the most recent ASPO conference.
From his blog:
…The real story behind triple digit oil prices is not the threat of supply shocks, but the sheer, unrelenting rise in world oil demand. Already closing in on 90 million barrels a day, the quick rebound in world oil consumption to new record highs demonstrates the global economy can’t grow without burning greater amounts of oil.
No matter how many rabbits the oil industry can pull out of its hat, be it tar sands from Alberta or shale oil from the Bakkens, supply just can’t seem to keep pace – at least not at the prices most consumers can afford to pay. That is the message that triple digit prices keeps telling us.
If the global economic expansion, troubled as it may be, continues, we will see even higher oil prices in 2012. But what does that say about the sustainability of growth?
And even if there is growth, what is the pace? Read the whole post here.
Jeff Rubin explains why he quit his job as Chief Economist at CIBC World Markets. In Hawai‘i, we call it kuleana.
After twenty years as Chief Economist for a North American investment bank, it was time for me to seek a larger audience for the story I needed to tell.
My predictions of steadily rising oil prices over the last decade, including my call for $100-per-barrel oil by 2007, had flown in the face of conventional wisdom.
Among other things, my track record on predicting rising oil prices demonstrated that the traditional laws of supply and demand were no longer working for one of the economy’s most basic and essential commodities. And when they stopped working, the consequences for the economy would be severe.
It wasn’t subprime mortgages but triple-digit oil prices that brought down the world economy.
And unless that economy started to wean itself off an ever-depleting supply of affordable oil, there would be other recessions to follow as economic recoveries would simply push oil prices right back into triple-digit range. But weaning our economy off oil meant, at the same time, making fundamental changes in the way we live.
This is not the kind of message investment banks want their chief economists delivering these days, to either governments or investors. But the urgency of this message grows with every passing day.
On March 31, 2009, I resigned my position as Chief Economist and Managing Director of CIBC World Markets to deliver this message in my book, Why Your World Is About To Get A Whole Lot Smaller: Oil and the End of Globalization.
Jeff Rubin was the Chief Economist at CIBC World Markets for 20 years. He was one of the first economists to accurately predict soaring oil prices back in 2000 and is now one of the world’s most sought-after energy experts. He lives in Toronto.
At the press conference announcing the Geothermal Working Group’s final report, Mayor Billy Kenoi announced that Hawai‘i County will use 100 percent renewable energy by 2015. That was significant.
Mayor Kenoi emphasized geothermal’s primary role as that of base load and he said we are lucky to have an array of options available, such as wind, solar and biomass. He mentioned that the County would be converting some of its passenger vehicle fleet to electrical. He said that we will need the help of the Federal, State and County governments, as well as that of the community.
He has already touched bases with Lieutenant Governor Shatz, and will be speaking with our congressional delegation next week. Senator Kahele and Representative Nakashima both reiterated the importance of enabling geothermal for base power.
More about the Geothermal Working Group’s final report press conference:
Big Island Video News: Geothermal Working Group Report Unveiled in Hilo
Hawaii 24/7: Geothermal Working Group Presents Findings
Although the topic of the press conference was the Geothermal Working Group’s final report, Mayor Kenoi’s announcement about taking the Big Island to 100 percent renewable energy by 2015 was the big news.
He is retaining the Geothermal Working Group, which will continue its work under the County of Hawai‘i.
As I have been saying, we are running out of time. Mahalo, Mayor Kenoi, for leading the Big Island to a safe place for us and future generations.
Following the Mayor’s lead, we can get there. Not, no can. CAN!
We know the era of cheap oil is over, and that it is only a matter of when and how high oil prices will rise.
What we need now is to see what we can do to enable geothermal. Two-thirds of our economy is made up of consumer spending, and stabilizing electricity prices will help our people cope.
From Hawaii Reporter:
REPORT FROM HAWAII COUNTY – HILO, HAWAII – The Geothermal Working Group, with the support of Hawai`i County Mayor Billy Kenoi, will present the final draft of the Geothermal Working Group Report on Wednesday, January 4, 2011 at 2:30 p.m. The press conference will be held at the County building on the Mayor’s lanai at 25 Aupuni St., second floor.
The report was sponsored by the County of Hawai‘i to evaluate geothermal energy as the primary source of baseload power for electricity on the Island of Hawai‘i. The report includes an analysis of technical data and expert testimony providing convincing rationale to develop local renewable energy plants and transition away from the county’s dependence on petroleum-fueled generators for baseload electricity. The report, which is currently being circulated within Hawai`i’s State Legislation, was developed as research to help support Hawai`i’s Clean Energy Initiative goals…. Read the rest
As I’ve talked about here before, Iceland has made itself energy and food secure. We can too.
What a year it’s been! Here are some 2011 highlights:
There was a lot of conversation, of course, about geothermal. The Geothermal Working Group Interim Report – which provided lawmakers with an evaluation of using the hot water reservoir in certain locations of Big Island to provide local and renewable energy for electricity and transportation – was distributed to state legislators. I also wrote about it being a matter of leadership, about mopping the deck of the Titanic, and about how the momentum toward geothermal has shifted. Also about a Democratic Party Resolution supporting geothermal for baseload electrical power.
I attended a geothermal energy forum in Pahoa, with Hawaiian leaders speaking and every seat taken. There were more Hawaiian perspectives in supporting geothermal, this time in Hilo. And about even more Big Island support for geothermal.
I posted a link to the cloudcam, a time-lapse video taken by the Canada France Hawaii telescope’s cloud cam at night, which I thought was really neat. It’s time-lapse photography where you can watch the stars migrate across the night sky.
June and I enjoyed meeting and talking with visionary Earl Bakken at his Kiloho Bay home, and learning about his manifesto.
We participated in Alan Wong’s Farmers Series dinner for a second time, and really enjoyed it.
People seemed to enjoy the conclusion of my Maku‘u Series. I got a lot of great feedback on it. It was fun remembering the old days and the old ways of my Kamahele ‘ohana in Maku‘u.
I wrote about biofuels, and the very real problems with them. Also on biofuels and feedstock. I wrote a post about the National Research Council calling biofuels costly and their impacts questionable.
I spoke to the Kamehameha Schools First Nation Fellows about food sustainability, showed them the farm and gave them some of the best advice I could think of.
Of course I mentioned a few times about how “If the farmers make money, farmers will farm.” That link is to one of those times.
In June, seven Polynesian-style voyaging waka (canoes), representing different Pacific Islands, arrived in Hilo Bay after a two-month voyage from Aotearoa (New Zealand).
Leslie Lang, my blog editor, went for a spin around the bay on one, and we wrote about how the ancient ways are again showing us the way.
“It’s all about taking the knowledge and wisdom of the past and using it in the present to make a stronger future. It’s exactly what the old Polynesians did when they sailed out into the Pacific to find new land.”
It’s a strong metaphor. I wrote my impressions of the vaka here.
More vaka posts: The Canoes are Coming: Te Mana o Te Moana, They’re Here! and What’s the Big Deal about Voyaging Canoes?
In July, CEO of Ku‘oko‘a Ro Marth and I went to Iceland, in order to see for ourselves how Iceland went from being a developing country in the 1970s to one of the most productive countries in the world today. (Here’s a hint: GEOTHERMAL.)
Read about our very interesting trip (I wore shorts) at Heading to Iceland, Heading to Iceland 2, Power Plant Earth and Iceland, In Conclusion.
The online news organization Civil Beat published my three-part series on energy and food security in September.
And I attended my fourth Peak Oil conference, this one in Washington, D.C. I wrote about it here: Part 1: As the ASPO Conference Gears Up, Part 2: Impressions from the Conference, Part 3: Energy Return on Energy Invested and Part 4: The Answer is Geothermal.
It has been a busy, productive and interesting year, and I look forward to having another of the same. My best wishes to everybody out there reading for a happy, healthy and successful 2012!
The following is a resolution that the Hawaii County Democratic Party adopted at its 2011 County Convention. It recognizes the value of geothermal as an indigenous resource, and it recognizes that low cost is a relevant and important aspect that benefits society.
It also notes that the EPA has directed the HECO companies to retrofit its oil-fired plants to comply with emission standards. But that will cause oil-fired plants to stay in operation longer than desirable, and will result in higher cost to ratepayers.
Note especially this:
“NOW THEREFORE BE IT RESOLVED THAT the Hawai‘i County Committee of the Democratic Party of Hawai‘i hereby formally requests the 2012 Hawai‘i State Legislature to direct the Public Utilities Commission to require HELCO to develop a timely plan to retire its fully depreciated fossil fuel power generation facilities and accept geothermally generated electrical power as the primary baseload source. HELCO should continue to include other alternative energy sources – such as wind, solar and hydro – in its mix of sources, but geothermally generated electricity must become the primary baseload source for Hawai‘i Island within the next five years; and
FURTHER BE IT RESOLVED THAT the PUC should continue to implement contractual procedures between HELCO and geothermal power producers that represent an equitable return on investment but, as important, reduce the kilowatt hour cost to consumers whenever possible.”
The Resolution:
Requesting the 2012 Legislature to Mandate PUC to Require HELCO to Develop A Timely Action Plan To Retire All Depreciated Oil-Fired Power Plants on Hawai’i Island And Transition to Geothermally Generated Electricity As the Island’s Primary Baseload Power Source
WHEREAS, the Hawai‘i County Democratic Party adopted a resolution at its 2011 County Convention supporting the use of indigenous, renewable geothermal energy to generate baseload electrical power to (1) reduce dependency of imported fossil fuels, (2) reduce our carbon footprint and other environmental risks, and (3) hold the line or reduce electrical energy costs to consumers; and
WHEREAS, Puna Geothermal Venture has proven the safety and reliability of geothermally generated electrical power for Hawai‘i Island consumers for about 18 years; and
WHEREAS, this geothermal power has also generated royalty payments to the State and County of Hawai‘i and the Office of Hawaiian Affairs running in the millions of dollars over the past 18 years; and
WHEREAS, the Public Utilities Commission has in the past year initiated new contractual procedures between HELCO and PGV which are successfully reducing the kilowatt hour cost of geothermally generated power to consumers; and
WHEREAS, all but one of HELCO’s existing fossil fuel-dependent power generation facilities on Hawai‘i Island are fully depreciated but continue to be operated, which has destructive environmental and economic consequences, including forcing Hawai‘i Island consumers to pay the highest kilowatt hour charge in the state – a cost that will continue to increase as the global peak oil situation further drives up the cost of fossil fuel;
WHEREAS, the federal Environmental Protection Agency has recently directed all HEI companies including HELCO to retrofit existing oil fired plants to comply with EPA emission standards. This expensive undertaking will force continued usage of these plants and perpetuate a level of emissions and kilowatt hour costs that exceed that of geothermal. Also, this investment – which will inevitably be borne by consumers – should, instead, be dedicated to the transition to environmentally and economically preferred geothermal power production and/or distribution;
NOW THEREFORE BE IT RESOLVED THAT the Hawai‘i County Committee of the Democratic Party of Hawai‘i hereby formally requests the 2012 Hawai‘i State Legislature to direct the Public Utilities Commission to require HELCO to develop a timely plan to retire its fully depreciated fossil fuel power generation facilities and accept geothermally generated electrical power as the primary baseload source. HELCO should continue to include other alternative energy sources – such as wind, solar and hydro – in its mix of sources, but geothermally generated electricity must become the primary baseload source for Hawai‘i Island within the next five years; and
FURTHER BE IT RESOLVED THAT the PUC should continue to implement contractual procedures between HELCO and geothermal power producers that represent an equitable return on investment but, as important, reduce the kilowatt hour cost to consumers whenever possible.
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 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
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!
