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Learning from Aloha: Hawaii’s Energy Transformation

image credit: Photo 46080235 © Wei Chuan Liu - Dreamstime

Co-authored by Dan Cross-Call, Jason Prince & Peter Bronski

In March 2011, a massive 9.0 earthquake off the coast of Japan precipitated a cascading series of events that ultimately sparked Hawaii’s rooftop solar boom more than 4,000 miles away.

As Japan shuttered its nuclear fleet and ramped up production from its oil-fired generators, global demand for oil increased, and so did prices. Since petroleum fueled 80 percent of Hawaii’s electricity generation in 2011, when oil prices rose, so did the state’s retail electricity rates—up to more than three times the US national average.

Hawaii residents felt the pain through their utility bills. To alleviate the financial burden of electricity, customers increasingly installed cost-competitive solar systems, often financed through third parties for $0 upfront, with excess generation compensated at retail rates through utility net metering programs. Solar adoption exploded at an unprecedented speed and magnitude, rapidly vaulting Hawaii into the echelon of leading states for installed solar capacity per capita.

But apart from market forces propelling adoption of customer-sited renewable energy (as well as utility-scale), Hawaii is an important case study for the energy transition because deliberate leadership from legislative, regulatory, utility and grassroots levels is effectively steering the state forward on decarbonization.

In a new report from RMI, Powering Paradise, we tell the story of Hawaii’s unfolding energy transition—from individuals’ leadership and legislative accomplishments, to the details of utility and regulatory efforts to achieve a low-carbon energy system. With this report, we seek to consolidate and make sense of the countless headlines and events that have churned out of Hawaii in recent years, to translate those to a wider audience and help practitioners of the energy transition everywhere reflect on what lessons we can all take from the island state. In addition, this report is a celebration of the progress and accomplishments that Hawaii is making.

Net metering, declining solar costs, and third-party finance propel Hawaii’s rooftop solar revolution

From Broad Vision and Targets to Detailed System Design

Hawaii is the paragon for energy sector transformation precisely because its leaders are addressing the challenges of creating a 21st century electric system with a holistic and iterative approach. Over the last decade, Hawaii has passed a steady stream of legislative milestones. These include the monumental Act 97 in 2015, which made Hawaii the first state to proclaim a 100 percent renewable energy target. Today, over a hundred other state and local jurisdictions have either set renewable energy goals, or, in a few cases, mandates like Hawaii’s. They and others can draw from Hawaii’s experience to develop strategies to achieve their goals.

It is difficult to distill all the lessons of Hawaii’s embrace of clean energy over the last decade, but key themes can at least help characterize the state’s evolution across three main fronts:

  1. Procurement: For customer-sited technologies, Hawaii is refining solar and storage compensation structures, utility programs, and policies to ensure that the full spectrum of capabilities are harnessed to support grid operations. For utility-scale projects, Hawaii is focusing on competitive sourcing mechanisms and consultative processes to ensure the benefits of renewable energy are captured, equitably shared, and well understood.
  2. Planning: Hawaii is taking a systems approach to developing modern planning practices that account for generation, distribution and transmission in an integrated manner and reconsiders the roles of customers, service providers and the utility.
  3. Regulations: Hawaii is updating its utility regulations in a manner that encourages a viable utility business that fulfills customer and societal needs as well as the ambitions of the state’s energy policies.

RMI’s Powering Paradise report provides a comprehensive review of the Aloha State’s journey through these and other elements of the energy transition. It explores the technical details of customer solar innovation in a post-net metering world, the nuances of harmonizing traditionally discrete and opaque planning processes, and the details of implementing a performance-based regulatory framework to align the utility business with a 100 percent renewable energy future.

Collaboration, Innovation and Experimentation

In addition to the importance of leadership in establishing and justifying a North Star to orient the state’s efforts, Hawaii also demonstrates two further lessons with broad applicability for others pursuing energy reform.

First, Hawaii’s experience embodies a willingness to try. There is no blueprint for managing the evolution of the electricity ecosystem, but Hawaii is consistently pushing boundaries, without always having a clear script for where it will go. Others can learn from Hawaii’s missteps, but should also be emboldened to take their own risks, assured that rapid feedback loops will accelerate rather than impede progress toward solutions.

Second, as it has stepped into the unknown across so many fronts, Hawaii consistently engages stakeholders to crowdsource invaluable local wisdom, draw from national and international experience, and ensure support for actions that are collaboratively developed to achieve benefits for everyone.

Although goals for 100 percent renewable or clean energy may feel ambitious, they are becoming common. They are also an accelerant to move the power system onto a sustainable path consistent with global climate goals. To be successful, plans must be developed that take note of lessons learned elsewhere. As one US state leading on energy transformation, Hawaii’s story is relevant for energy stakeholders everywhere. We hope our Powering Paradise report helps inspire and inform your own thinking and important efforts.

© 2018 Rocky Mountain Institute. Published with permission. Originally posted on RMI Outlet.

Dan Cross-Call's picture

Thank Dan for the Post!

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Matt Chester's picture
Matt Chester on Feb 14, 2020 11:00 pm GMT

Although goals for 100 percent renewable or clean energy may feel ambitious, they are becoming common. They are also an accelerant to move the power system onto a sustainable path consistent with global climate goals. 

One aspect of the 100% goals that I often wonder about is if failure to meet that most ambitious of target will be used as some sort of political ammo against them or a deterrent generally. The first 90%, for example, is way more valuable and attainable than the last 10%-- so is there an inherent value of shoehorning the goal to be 100%?

Gary Hilberg's picture
Gary Hilberg on Feb 18, 2020 4:22 pm GMT

Dan - with the current low prices for fuel oil, has this impacted the economics for Hawaii?  Current electricity rates seem to be holding near to $0.3/KWH - are these expected to be reduced or is the overall investment such that rates are just more stable due to less fuel oil impacts?

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