On Monday, July 20, Governor David Ige and the State of Hawaii rejected a proposed $3.4 billion buyout of Hawaiian Electric Industries (HEI) by Florida-based NextEra Energy. There had been intense worry from some—even hopelessness—when the corporate ship that is NextEra landed on our shores from Florida. Most Hawaii residents were unaware of their plans for our islands, while many of those who were aware felt that the deal would go through inevitably. After all, many recent state decisions have fallen on the side of big business.
HEI was incorporated 124 years ago, smack dab in the middle of the six year period between the signing of the Bayonet Constitution in 1887 (which took away the right of the Hawaiian monarch to veto laws) and the corporate takeover of Hawaii itself in 1893. We now find ourselves in a time and place in which the majority of our energy will soon have to come from something other than fossil fuels. That hasn’t been the case for well over 150 years, when our main source of energy was still whale oil.
Governor Ige’s rejection of the proposed merger between HEI and NextEra was indeed shocking. Upon making the announcement, Ige was bombarded with questions aimed at determining the state’s openness to an agreement moving forward and what, exactly, NextEra would have to do in order to change the governor’s opinion. Without speaking in absolutes, Ige remained firm that NextEra would not be taking over Hawaii’s electric utility service.
NextEra is not the right choice for Hawaii. Just last month, the company’s stance on our 2045 benchmark for 100 percent renewable energy was that such a goal is “very aggressive.” But we in Hawaii do not see this benchmark as something aggressive. Rather, we see it as something necessary. This benchmark will make us more sustainable, self-reliant and able to preserve our way of life in a future which will not afford us, or anyone else, the use of fossil fuels for our electricity. For us, this isn’t loftiness, over-ambitiousness or naivety—it is absolute necessity.
NextEra’s track record on renewables comes up short of meeting the necessity of our goal. The amount of energy NextEra produces from solar totals less than 1 percent, and only .01 percent of its 4.7 million customers, or 47,000, have rooftop solar. Hawaiian Electric Company (HECO), HEI’s main subsidiary, serves about 12 percent of its 450,000 customers, or around 29,000, residential solar. We need a solution that will do a better job of addressing the shortcomings we already experience with HEI subsidiaries.
NextEra is also eager to adopt another finite fuel—Liquefied Natural Gas (LNG). While there are multiple ways to incorporate LNG into our islands’ energy composition, all of them call for extremely high upfront infrastructure costs that force us to commit ourselves to their usage for years to come (at least 30) just for the investment to pencil out. Making the decision to adopt LNG means spending money that could otherwise be put toward improving our existing grid and storage capacity, as well as toward other investments in renewables that will be necessary if we are to hit our 2045 benchmark. It means short-term gains for long-term losses. In Hawaii, LNG represents continued dependency on others for energy, continued pollution and a continuation of a backwards way of thinking—of looking to a source of energy from the previous century’s fossil fuel energy revolution—when our islands are blessed with an unparalleled bounty of renewable energy resources. Our aina makes us world leaders in this century’s energy revolution, not slaves to the last’s.
While it’s clear that NextEra is not the akamai choice, what’s next in the process as we go through it then? If companies from outside of Hawaii cannot understand the unique reasons why we as a people set the goals we did, and they cannot perform well enough to achieve them, then who can? The answer is that we can.
A public buyout is a viable option that needs to be explored. It’s something that both established business leaders as well as some of our elected officials have called for. Under this umbrella, we would have government owned and operated municipalities as well as cooperative (co-op) models. There are over 1,000 energy co-op’s in America. We have an award winning co-op in Kauai—the Kauai Island Utility Cooperative (KIUC)—and there is already momentum in both Maui and Hawaii counties towards forming co-ops.
The structure of a co-op produces much more constant rates for customers (known as members in this case) than that of an investor-owned utility (IOU), along with individually driven determination in the values of the utility, from community to community. This potentially means things like cleaner and less-greenhouse gas producing fuels, a choice of one type of renewable over another for place-based reasons related to cultural practices (hunting/fishing access, etc.), and control over the type of relationship that each co-op has with its neighbors (whether they be other co-op’s, municipalities or even IOU’s).
One can easily imagine how the personal, and yet shared, community-driven ownership structure found in a co-op might be able to move us past what seemed like impassable projects such as Big Wind and its accompanying undersea cable (sending offshore wind energy from Molokai and Lanai to Oahu). A generation and transmission co-op model (G&T, a generation system which serves a distributer) could open other doors as well. When individual communities have shared ownership and a consensus on their utility’s values—serving them firstly, in ways they deem equitable—bridges can be built that otherwise couldn’t, to the benefit of us all.
While co-op models traditionally work in rural areas, mostly because of the fact that Federal funding is exclusively funneled towards their implementation in rural areas at $20 billion a year (until we pass the 112th Congress’s H.R. 3677, allocating federal funds towards urban co-op models), municipalities are another very attractive option. Our best example, out of many, comes from our extended ohana across the pond in Sacramento, proudly touting the achievements of the Sacramento Municipal Utility District (SMUD). SMUD has produced energy at the lowest rates in the entire State of California for 11 years running and boasts the highest customer satisfaction rating of any utility in the state—not bad, ya? Who says we can’t create a similar model for the heavily urban and suburban residential areas of Oahu? It’s something that should be studied by an exploratory task force, jointly funded by the City of Honolulu and the State of Hawaii.
The takeaway should be apparent: NextEra is quite likely out, and that’s OK because we have better local options anyhow. We already have a thriving residential solar industry that employs over 2,200 island residents (despite countless obstructions to the industry drummed up by HECO). This industry leverages private capitol toward the safe and secure renewable energy grid of our future.
Our grid will require a diversity in renewable energy sources to match the differing demands in our islands. Sensitivity to energy demands based on the time of the day is especially important as we move towards our 100 percent renewable energy future. The sun will only serve us during the day, while wind will be needed at night. As an energy grid moves closer and closer to 100 percent renewable, diversity in renewables and a massive storage capacity (both residential and utility in type and scale, likely funded by carefully planned subsidies to spur the industry, initially) are unquestionable musts.
Proper planning is also a must to avoid blackouts as we balance the phasing out of fossil fuel plants and their replacement with renewable sources. We can look to countries like Germany, France and Spain as we build out our renewable energy grid with the objective of keeping as few fossil fuel-fired plants online during peak periods, and avoiding costly subsidies to keep old plants online, in what are known as capacity markets. We will also have to rebalance our Federal energy subsidy expenditures in order to be in accord with our national renewable energy goals as currently, about four times more is spent on oil and gas than renewables, while four times less is spent on efficiency than that of oil and gas as well—our elected officials will have to start that conversation in Washington.
When it comes to a renewable energy future, we in Hawaii have the right resources, the intelligence and the will of our people. Working toward a 100 percent renewable future isn’t simply for the betterment of we here in the Pacific; as the nation’s 100 percent renewable energy model, we can lead the rest of America to a cleaner, safer, more responsible future. And we can do it without NextEra or HEI.