Wednesday, February 4, 2015

Is A 100% RPS Sound Policy?

Kathryn Mykleseth’s article in today’s Star-Advertiser starts off as follows:

“Several bills have been introduced to the Legislature as some lawmakers say now is the time for Hawaii to commit to increased renewable energy generation, tax credits for renewable energy batteries, and community solar projects before the sale of Hawaiian Electric Co. is finalized.”

House Bill 623 and its companion bill, Senate Bill 715, surely feel and sound good.  Who can argue against a 100% renewable energy target – yes, we all aspire to that goal.  But, how real is it?  Is it affordable?  Who pays?  Will it create inadvertent consequences, forcing risky investments and undetermined costs in a time of rapidly advancing technologies and uncertainty?  Finally, is the NextEra-HECO pending acquisition enough of a justification to act in frenzy pace to pass out a bill that reaches beyond a reasonable planning horizon? 

In the public hearings for House Bill 623, no one seem to recall the mandated Report to the 2014 Legislature on the Public Utilities CommissionReview of Hawaii’s Renewable Portfolio Standards, issued pursuant to Section 269-95(5), Hawaii Revised Statutes.

The report’s summary, findings and recommendations (pages 51-53), list several factors that should be considered carefully prior to revising RPS targets.  None of these factors were raised and discussed at yesterday’s hearing.

At the end of a two phase study being conducted for the PUC by the Hawaii Natural Energy Institute (HNEI), over $1 million of state and federal money will be spent to closely scrutinize and model the Hawaiian Electric Companies and Kauai Island Utilities Cooperative electrical systems to not only review and propose RPS targets based on credible research and a methodical review of various scenarios and assumptions and acknowledging risks and challenges in meeting future RPS targets but also to help the PUC in other on-going investigations confronting technical and cost issues.  This analysis, the subsequent report and the on-going work of HNEI, the PUC and their consultants were disregarded at yesterday’s public hearing.

Hawaii’s RPS law is and should be pragmatic and practical, not one based in aspiration.  The RPS’ initial purpose was to set a market floor for renewable energy development at a time when renewable resources could not compete cost-wise with fossil fuels.  However, recently, as renewable technologies mature and have become more cost-competitive and established, the challenge has been how to develop a diverse portfolio of resources and technologies by encouraging prudent investments and optimization of all assets (whether utility or customer owned) that will result in a more affordable, cleaner, efficient, and reliable electrical system that will benefit all electricity customers.

All of Hawaii’s utilities have exceeded near term RPS targets by mainly taking on all the “low hanging fruit” renewable projects.  However, as larger amounts of variable renewable resources come on to the grid the technical and economic challenges will be more pronounced on the entire electric system, thus, the need to take a more cautious approach when setting the future RPS targets.

Hawaii’s clean energy transformation should be about the total energy system performance where all electricity customers benefit from clean energy policies.  Measuring renewable energy generation through an RPS is an important tool and driver in Hawaii’s energy transformation but it is just one part of a highly complex and interdependent energy ecosystem.

Striving for 100% renewables is an easy sound bite, its implementation is not.

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