Will Government Condemnation Jump Start Hawaii's Long-Stalled $3 Billion Big Wind Project?

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A long-delayed $3 billion windfarm in Hawaii may have a new lease on life now that Pattern Energy LP (San Francisco, California) has replaced First Wind Holdings LLC (Boston, Massachusetts) as one of the project developers. But faced with continued strong "not in my backyard" (NIMBY) opposition to the 400-megawatt (MW) windfarm, Hawaii's governor has threatened to condemn land on two islands to jumpstart the complicated multibillion-dollar project known locally as "Big Wind."

The state of Hawaii, and local utility Hawaiian Electric Company (HECO), a subsidiary of Hawaiian Electric Industries Incorporated (NYSE:HE) (Honolulu, Hawaii), are eager to build "Big Wind," because an estimated 90% of the state's electricity is generated from oil. All of the oil is delivered by ship, and about half of it originates in Middle Eastern or Southeast Asian countries, Peter Rosegg, a HECO spokesman, told Industrial Info in an interview.

"Our high reliance on imported oil puts HECO, our customers and the state of Hawaii in a very vulnerable position," Rosegg said. "We are living in dread of our summer electric bills, because electric usage rises sharply during June, July and August." Right now, HECO charges an average of 29 cents per kilowatt-hour (kWh) for its electricity, nearly three times the national average. And HECO's current electric price doesn't yet reflect months of oil prices above $100 per barrel, Rosegg said. HECO is bracing for summer electric prices to hit 35 cents per kWh or more.

Hawaii's electric problem is not new, but today's high oil prices are giving the state a higher sense of urgency about reducing its use of oil to generate electricity.

The "Big Wind" project was proposed several years ago as part of an effort to wean Hawaii from its high reliance on oil. To support that effort, the state enacted one of the nation's stiffest renewable portfolio standards (RPS): by 2030, 40% of Hawaii's electricity must come from renewable resources. Today, about 10% comes from renewable resources.

According to an article posted on First Wind's website, "Every Hawaiian island has its own treasure trove of renewable energy. Maui has magnificant waves; Lanai and Molokai receive those pleasant Pacific winds; the sun bakes both tourists and solar panels in Oahu; biomass from crops and sugarcane grow fast and green in rainy Kauai. And on the Big Island, there's a little bit of everything, including immense geothermal resources."

But the idyllic potential of renewable energy on the Hawaiian Islands has proven exceptionally hard to realize.

Beyond its high reliance on oil to generate electricity, Hawaii has another unusual electricity challenge: The state has six different electric grids, each serving a separate island. But none of these islands are interconnected. So each island must maintain its own electric generating resources, causing significant economic inefficiencies.

The Big Wind project seeks to help the state achieve its RPS goal and lower its dependence on imported oil. The project is actually several separate but interrelated projects that include:

• Building 400 megawatts (MW) of wind generation
• Laying undersea transmission cables that connect the wind generation to load centers
• Upgrading the distribution system on Oahu, where the capital city of Honolulu is located, to accommodate generation from Big Wind.

One early version of Big Wind had the entire 400-MW windfarm sited on the tiny island of Lanai. But a subsequent version allowed the 400 MW of wind generation to be split between the islands of Lanai and Molokai.

"There are a lot of upscale homes on Lanai, and people there aren't crazy about the idea that their island will be used to power Oahu," Rosegg said. "I can't say I blame them--after all, people paid a lot of money to build a home there and get away from it all."

Property owner Castle & Cooke Incorporated (Los Angeles, California) owns virtually the entire island of Lanai, but that doesn't mean that local inhabitants have accepted as inevitable the siting of a 200-MW windfarm. While by no means a given, the Lanai potion of Big Wind appears to be moving forward, according to local sources.

But Big Wind faces stronger and more organized opposition on the island of Molokai, where the project is opposed by a wide range of conservation, community, cultural and religious groups. Despite three years of effort, wind developer First Wind Holdings was unable to acquire the land necessary to site 200 MW of wind generation. Recently, First Wind was replaced by Pattern Energy as a project developer, and there are rumors that a deal between Pattern and Castle & Cooke is afoot to move the stalled project forward. Representatives from Pattern and Castle & Cooke declined to be interviewed for this article.

Hawaii Governor Neil Abercrombie has threatened to condemn up to 10,000 acres of land on Molokai to facilitate the construction of 200 MW of wind power on the island. Under the concept of eminent domain, a state is generally empowered to confiscate private land for a broader public purpose--such as constructing electric infrastructure--but affected landowners are entitled to compensation from the state.

There has been less public controversy over the proposed undersea transmission cable that will connect the proposed windfarms to the island of Oahu. Rosegg estimated the cost of the transmission cable as $800 million to $1 billion.

Constructing an undersea transmission cable does not pose an insurmountable technological challenge, Rosegg said. There is such an electric line linking San Francisco and Oakland, he said. Across the continent, an undersea electric transmission cable connects Long Island with Connecticut. And there are overseas examples of these lines being built as well, he said. "It's really a question of apportioning risk: HECO can't bear it, and the state of Hawaii can't bear it. We're looking for a company to come here, become a public utility, and build and operate the line as a regulated utility."

"Condemning land is a last resort that everyone wants to avoid," said HECO's Rosegg. "But I don't see the state backing away from its 40% RPS by 2030, and there is nothing on the horizon to replace Big Wind, barring some unforeseen technology breakthrough. We're in a desperate energy situation, and sometimes desperate situations drive action."

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