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The site of Oʻahu’s demolished coal plant may become the home of a new fossil fuel facility. That’s one part of a plan released Tuesday by the Hawaiʻi State Energy Office that calls for liquefied natural gas to play a role in Oʻahu’s energy mix.
The office seeks to address the state’s continued dependence on oil by replacing it with liquefied natural gas over the next two decades. Liquefied natural gas, or LNG, could be cheaper and cleaner than oil under certain conditions, according to the energy office’s analysis.
The shift to LNG would not happen overnight, but it is under a tight timeframe to save the most money while still meeting the state’s clean energy mandate. It would also require billions of dollars in capital expenditures, and the report recommends that Hawaiian Electric explore available options for funding. The report cites a Japanese energy company that has expressed interest in investing in HECO, along with other potential sources of capital.
Importing LNG would be a major departure from previous state energy policy. Former Gov. David Ige nixed the idea of using LNG as a bridge fuel a decade ago and subsequently signed Hawaiʻi’s state mandate to achieve 100% renewable energy production by 2045.
But Gov. Josh Green tasked the energy office, led by Chief Energy Officer Mark Glick, to develop a new energy strategy to address electricity costs and the increasing unreliability of Hawaiʻi’s firm power generation, as well as cut carbon emissions associated with the state’s consumption of low-sulfur fuel oil.
Glick said his team evaluated “every possible fuel that is available for import into Hawaiʻi” for commercial viability, cost-effectiveness, and carbon intensity.
“The only one in the near-term that could meet all of those criteria was natural gas,” he said. “There’s a pathway, and a pretty narrow pathway, in which natural gas could be an improvement in terms of cost and in terms of carbon over residual oil.”
Glick said the seeds for fuels analysis were planted after the Maui wildfires in August 2023, which dramatically impacted the financial stability of Hawaiʻi’s major utility, Hawaiian Electric.
“It was quite clear that we needed to come up with solutions to create a much more affordable energy environment in the state, and to come up with ways to capitalize improvements to the grid,” he said.
According to Glick, Green released COVID emergency relief funds to pay for the analysis in November 2023 and work began on the report that December.
The energy office said it awarded two contracts totaling about $900,000 to complete the report and was assisted by Facts Global Energy, HDR, and the National Renewable Energy Laboratory.
How would importing LNG work?
The energy office’s plan suggests retooling several of Oʻahu’s oil-fired power plants to run on LNG instead, as well as building a brand new LNG facility in the footprint of Oʻahu’s old coal plant near Barbers Point.
The United States is the largest exporter of liquefied natural gas in the world, and President Trump recently ended the Biden administration’s moratorium on new licenses to export LNG.
However, the Jones Act, which prevents foreign carriers and crews from shipping cargo between U.S. ports, would complicate Hawaiʻi’s efforts to import LNG domestically.
The energy office contends that sufficient LNG could also be sourced from Canada, Australia, Mexico, or Asia.
To get LNG to Oʻahu’s power plants, a ship that can store LNG called a Floating Storage and Regasification Unit would be moored 2 miles off the coast of Barbers Point on Oʻahu. LNG would be transferred from the ship to land via subsea pipeline.
In order for this strategy to be cost-effective, the state would need to be able to swap out oil for LNG by about 2030, according to the report. And those plants need to be able to run on something other than LNG by 2045, when state law requires the phasing out of all fossil fuels.
The report states that ensuring new infrastructure has fuel flexibility to be compatible with hydrogen or another alternative is key to making the investment in LNG worth it.
Although technically feasible, powering Hawaiʻi’s energy grid with hydrogen is not currently commercially viable, as clean hydrogen supplies are extremely limited and expensive.
“It’s not cost-effective today, but hopefully, as the technology advances, it will become more cost-effective in the future,” said the energy office’s Monique Schafer, the lead on the report.
The office’s approach “anticipates the maturation of carbon-free alternatives for combustion, such as hydrogen and ammonia technologies.” It also names biodiesel and renewable natural gas as possible LNG replacements after 2045.
“The key there is you don’t want stranded assets. You want to have some payback period, and that’s partially why the timeline is so tight,” Schafer said. “If we decide to move forward collectively, the sooner we sort of progress, the more cost-effective it becomes.”
Japanese energy company looking to invest in Hawaiian Electric
The report says that without “major capital investment in new combustion power plants,” the costs of keeping Oʻahu’s aging infrastructure online are expected to rise, especially as the demand for energy grows.
The investment necessary to incorporate LNG into Oʻahu’s energy mix at scale is more than $2 billion.
Glick said there are a number of utilities and financial institutions that could be tapped for investment, which are outlined in the report’s section on capitalization.
JERA, Japan’s largest power generation company, “has recently expressed interest in investing in Hawaiian Electric,” according to the report.
“We do understand that they have reached out to Hawaiian Electric, and so there may be discussions underway there,” Glick said.
According to Glick, JERA reached out about investing in HECO shortly after the Maui wildfires, including providing direct funding for the global wildfire settlement and helping develop projects.
“But we don’t have any details on any specifics about that,” he said.
JERA is Japan’s largest importer of LNG. Materials prepared for the energy office by the consultant group Facts Global Energy state that “JERA’s Global CEO is keen to invest in Australia and the US.”
A 2024 study from the Institute of Energy Economics and Financial Analysis found that Japanese utilities, including JERA, are dealing with an oversupply of LNG as demand within Japan declines due to the rise of alternative energy resources. That trend will push Japanese energy companies to seek buyers abroad.
Glick said he did not know whether any investments made by JERA into Hawaiian Electric were contingent on Hawaiʻi importing LNG.
“We understood that as an extremely large buyer of natural gas, that JERA had great comfort in operating their systems on natural gas and was quite surprised at the fact that Hawaiʻi still uses residual oil,” he said.
“So it seemed logical in their sense to improve operations by bringing in natural gas. I don’t know whether that was a condition, but it certainly seemed to make practical sense,” he said.
HPR reached out to Hawaiian Electric for comment on possible investments by JERA. HECO vice president Jim Kelly confirmed that the utility had spoken to JERA, along with “a number of organizations that have expressed interest in potentially providing financing to invest in our system.”
HECO declined to provide specifics in response to a later follow-up request.
New executive order on renewable energy
Green issued an executive order on the heels of the new energy plan Tuesday that moves up the deadline for the neighbor islands to run on 100% renewable energy.
Kauaʻi, Hawaiʻi Island, and Maui County are now expected to be 100% renewable by 2035 — a decade ahead of schedule.
Kauaʻi, which is served by the Kauaʻi Island Utility Cooperative, currently produces 60% of its electricity from renewable resources. Under the right conditions, the island can run on 100% renewable energy generation for several hours a day.
Hawaiʻi and Maui counties are further behind. According to data from Hawaiian Electric, Hawaiʻi gets a little over half of its energy from renewable sources, and Maui County gets about a third.
Glick said he believes the new goal is achievable if the other islands accelerate the production of renewable resources, including geothermal. But he added that the picture is different on Oʻahu, the most densely populated island in the archipelago that relies on residual oil to meet 67% of its energy demand.
“On Oʻahu, that doesn’t appear to be practical and cost-effective,” he said.
While the executive order does not address LNG directly, Schafer said the order and their report can work in tandem.
“The executive order provides a lot of the policy guardrails to ensure this isn’t a side step from the renewable energy transition,” Schafer said. “It is ensuring that, if we go down this path, we are also working on accelerating renewable energy.”
This is a developing story.
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