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Smart Transportation   –  Energy Efficient Urban Transport Network:

ST-1.1 Energy-Efficient Vehicles

Strategy

Hawaii is the most petroleum dependent state in the United States. As the most geographically isolated population center on earth, this dependence leaves Hawaii vulnerable to supply disruptions resulting in the nation’s highest energy prices.

Hawaii has long recognized that its abundant natural resources offer a great opportunity for energy self-sufficiency in its two primary sectors for energy consumption: electricity generation and transportation. The favorable economics of efficiency measures and renewable energy vis-à-vis carbon-based fuels is attracting investments in Hawaii as a clean energy test bed and positioning the State of Hawaii as a global leader in renewable energy.

A key policy driver for progress on clean energy occurred in 2008 when the U.S. Department of Energy (USDOE) and the State of Hawaii entered into a Memorandum of Understanding (MOU) establishing the Hawaii Clean Energy Initiative (HCEI) with a pledge to establish a long-term partnership to make a fundamental and sustained transformation in the way in which renewable energy efficiency resources are planned and used in the State. In 2014, the USDOE and the State of Hawaii reaffirmed the commitment to build a national model for other states and political jurisdictions to meet the challenges of a future energy ecosystem launching HCEI 2.0.

This includes jointly pursuing innovative policies, technologies, and deployment strategies relating to, without limitation: energy efficiency; renewable energy; alternate fuels; electric transmission and distribution systems; energy storage; alternative fuel vehicles; and other forms of clean transportation.

Overview

HCEI, under the direction of the Hawaii State Energy Office, is a body of laws and regulations that provide guidance and structure on the key objectives of Hawaii’s clean energy future. HCEI is also the group of stakeholders who support the policy framework and are committed to collaborate on achieving HCEI’s policy objectives. A key policy driver was passage of HB 1464 by the Hawaii Legislature in 2009, establishing separate energy efficiency target and strengthening the renewable portfolio standard by requiring each electric utility company that sells electricity for consumption in the state to establish a renewable portfolio standard (RPS) of 40% by 2030. HB 1464 (2009) required the Hawaii Public Utilities Commission (PUC) to establish energy-efficiency portfolio standards (EEPS) that will maximize cost-effective energy-efficiency programs and technologies. In 2009 the combined 40% RPS and 30% EEPS goals equated to a target of 70 % clean energy by 2030.

Since HCEI’s inception, more than 500 megawatts of generating capacity from wind, solar and biomass have been installed statewide. Rooftop solar PV has been a major contributor to the effort which put Hawaii two years ahead of its interim 2015 RPS target. Additionally Hawaii was also ahead of its EEPS goals of 30%. A report prepared for the PUC concluded that Hawaii has the potential to significantly exceed its 2030 target of 4,300 gigawatt-hours of savings. The study estimated the cumulative energy efficiency potential in 2030 is 6,210 gigawatt-hours, or 144 percent of the current EEPS goals.

With HCEI 2.0 it became clear that the original goals of 40% RPS and EEPS by 2030 were too conservative. In 2015, Hawaii passed HB623 that set a new renewable portfolio standard of 100% renewable energy by 2045 and increased Hawaii’s 2020 RPS target to 30%. By becoming the first state in the nation to adopt a 100% renewable portfolio objective, Hawaii has effectively defined the end state objective for all future investments in Hawaii’s electricity sector. This allows the planning of systemic change, not incremental change, towards a new clean energy future that is structurally different than the present model. While interim objectives drive investment, all of the steps must be taken in support of the long-term goal.

HCEI 2.0 will also be reevaluating the EEPS goals. In December of this year HCEI will be hosting a series of charrettes with policymakers, the PUC and additional stakeholders in the community to disseminate the report provided to the PUC estimating Hawaii’s cumulative energy efficiency potential and reassessing the original EEPS goal.

HCEI 2.0 will refocus on tackling transportation. Previously Hawaii’s efforts under HCEI were focused largely on the electricity sector. Although transportation was targeted in the original Hawaii Clean Energy Initiative, minimal progress has been made in curbing petroleum use in the sector. HCEI 2.0, through the Hawaii State Energy Office, enlisted the International Council on Clean Transportation to provide the technical expertise and policy knowledge needed to establish a renewed commitment on a set of goals and a timeline to reduce petroleum-based fuels for transportation.

In 2015 ICCT wrapped up a series of stakeholder consultations and issued a draft Transportation Energy Analysis Report that includes nearly two dozen tactics to be pursued now as well as enabling actions and further analysis to develop a larger pipeline of petroleum reducing tactics to be pursued in the long term. The next step will feature a reconvening of stakeholders to collaborate on development of a transportation roadmap that will most certainly be a major focus of HCEI for many years to come.

HCEI 2.0 is furthermore helping grow Hawaii’s innovation sector. This new emphasis will stimulate deployment of clean energy infrastructure as a catalyst for economic growth, energy system innovation, and test bed investments. Hawaii’s emergence as a clean energy test bed is a vital part of the growing clean energy economic cluster beyond tourism and military spending.

In 2014, Hawaii established a clean energy financing program called Green Energy Market Securitization. The GEMS program employs an innovative financing structure to channel low-cost capital from the bond market to make clean energy more affordable. GEMS has begun accepting applications from nonprofit organizations and consumers, who can borrow from the program to install PV systems that will save them money on their electric bills from Day 1, with no money down. Capitalized with $150 million, GEMS is also being offered to residential utility customers for the installation of solar photovoltaic systems and other technologies that support PV interconnection.

Another innovative program signed into law by Governor Ige will help democratize renewable energy by creating a structure allowing renters, condominium owners and others who have been largely shut out of Hawaii’s clean energy transformation to purchase electricity generated at an off-site renewable energy facility, such as a large-scale solar farm.

Act 100, which establishes a community-based renewable energy program, will be particularly valuable on Oahu where there is a high concentration of high-rise condominiums that don’t have sufficient roof space to support on-site solar panels. The law also is expected to provide relief to homeowners and businesses that are located on highly saturated circuits that can’t accommodate additional PV installations.

The community-based renewable energy program also compliments the state’s recently launched Green Energy Market Securitization program. Renters, nonprofit organizations and others who have been turned down for clean energy financing can obtain a loan from the GEMS program which can be used to participate in a community-based renewable project.

The next phase of HCEI will develop a roadmap addressing Hawaii’s challenges for greater renewable penetration and energy efficiency measures and the long-term, comprehensive and systematic energy strategies to fulfill that agenda. HCEI 2.0 will focus on stimulating deployment of clean energy infrastructure as a catalyst for economic growth, energy system innovation, and test bed investments. There will also be a renewed emphasis on engaging a wider group of external stakeholders to continue forward momentum toward meeting Hawaii’s clean energy goals.

Project Cost Description

"Hawaii is the most petroleum-dependent state in the U.S. As a result, we have America’s highest energy prices. Energy costs are 10% of our gross State product. Roughly 96% of the $4 billion we spend on petroleum not only leaves the State, but goes to countries in Asia and Africa. Hawaii’s economic vitality is reduced by approximately $2.75 for every dollar that leaves our islands. This is a result of a multiplier effect that impacts local businesses as cash is taken out of circulation in the economy through import payments.

Clearly, we have to reduce Hawaii’s dependence on imported oil and we must do it quickly for the benefit of future generations. High oil price volatility makes it crucial. Limited oil reserves around the world make it critical. Climate change makes it urgent. And most importantly–Hawaii’s abundant renewable energy resources and energy efficiency technologies will make it possible within a relatively short period of time.

Clean, locally developed, renewable energy will, in the long run, boost Hawaii’s economy because the land, the sea, the wind, and the sun are all capable of providing limitless amounts of indigenous energy–forever."

Cost Analysis

"After establishing the scenarios, Booz Allen developed a cost model to determine the net present value (NPV) of each scenario under different long-run oil price expectations. The intention was to provide an “order-of-magnitude” cost estimate. The cost model essentially uses the present value of the avoided oil expenditures to offset the present value of capital costs of each scenario. Since oil prices are the main variable in the “revenue” side of the NPV calculation (i.e., the avoided expenditure on oil is essentially a revenue to the NPV calculation), this analysis was run at a variety of different oil prices, which helps illustrate the approximate break-even price of oil that would justify the capital expenditure on renewable technologies. Key findings from that analysis are summarized below.

Booz Allen used the revised capital cost inputs and a Monte Carlo simulation to further refine the total capital cost estimate. The result of this modeling is a capital cost estimate of $14 billion for the scenario with no undersea cable and $16 billion for the scenario with an undersea cable.

These capital costs invest in technologies that either produced electricity instead of oil-fired generation, avoided the use of electricity (i.e., energy-efficiency investments), or provided transportation fuels in place of petroleum products. The number of kWh generated by each technology is a function of the amount of installed capacity and the capacity factors (i.e., percentage of time a generation asset is available or able to generate electricity) or the number of kWh saved (in the case of energy-efficiency investments). Each of these variables has been discussed in previous sections of this report. The revenue generated by these capital investments is then the avoided expense in terms of oil imports. Since oil prices are inherently unpredictable, Booz Allen employed a range of oil prices, from a minimum of $30 per barrel to a maximum of $200 per barrel, with a most likely value of $100 per barrel and a triangular distribution.

For the scenario without an undersea cable, the long-term average oil price needs to be approximately $60 to $75 per barrel. Above that point, the NPV is consistently positive. As expected, for the scenario with an undersea cable the long-term average oil price needs to be slightly higher to consistently provide a positive NPV, approximately $65 to $85 per barrel. This slightly higher range is understandable based on additional capital costs for the undersea cable, but additionally provides for a higher penetration of clean energy (55% clean energy versus 70% clean energy, as noted in the Scenario Results section of this report).

At a high level, the results of the cost modeling show that both scenarios (with and without an undersea cable) are viable within a reasonable range of oil price expectations. That is, if the results of the analysis had determined that an average $200 per barrel oil price was necessary to create a break-even NPV, the scenarios as currently developed may not be attractive. The analysis results show a need for average oil prices between $65 and $85 per barrel, which, in light of recent years’ average oil prices, appears to be in the reasonable range of forward projections. This test of reasonableness was used to conclude that the specific investments warranted further examination"

Emissions Calculations Description

Short-Term Goals: 2011 – 2015

"Advanced technologies for large-scale production of renewable fuels are approximately 5 years away from being commercially viable. Therefore, our short-term goals for the fuels sector are relatively conservative. The key goal is 45 MGY of green generation fuel (e.g., crude biofuel, biodiesel) used by HECO in 2015. In addition to projects already completed, this will require a number of actions, including (a) preservation of agricultural lands and water, (b) establishing work-force training programs to rebuild our agricultural and expand our refining knowledge base, (c) streamlining the permitting process from start (crop growth) to finish (fuel refining), and (d) developing long-term contracts for the use of biofuels in electricity generation and military transport."

Mid-Term Goals: 2016 – 2020

"By the end of 2020, the key goal will be 80 MGY of green generation fuel for HECO, 32 MGY of green jet and marine fuel for the Department of Defense, and 50 MGY of renewable fuels for the ground transportation sector. This will e facilitated by rapid development of the State’s agricultural sector once the optimal business models for deployment have been fully understood."

Long-Term Goals: 2021 – 2025

"At this stage of the HCEI, significant progress will have been made, and many of our initial technology options replaced by next generation ones not in existence today. Therefore, all goals beyond 10 years are more general in nature. However, if steady progress is made based on all of our current options, by 2025, HCEI hopes to see 32.5% of Hawaii’s electricity generated by renewable sources; end-use efficiency reductions in the area of 3500 GWh (subject to PUC revision); alternative ground transport options offsetting 300 MGY of petroleum fuel and overall domestic production of renewable fuels in the order of 350 MGY."

Fuel Displacement Calculations Description

Strategy

"The overall goal for the transportation sector is to reduce the consumption of petroleum in ground transportation by 70% or approximately 385 million gallons per year (MGY) by 2030… Marine and aviation biofuel alternatives may be substituted to help meet the goal by displacing the equivalent of 70% of ground transportation demand with non-fossil fuels. Primary areas of concern will be (1) improve the standard vehicle efficiency of the fleet, (2) reduce the overall number of vehicle miles traveled (VMT), (3) expand the use of renewable fuels in the transportation sector, and (4) accelerate the deployment of electric and hydrogen vehicles and related infrastructure."

Displacement goals for 2030 are measured in four categories: vehicle efficiency; reduced vehicle miles traveled; electric vehicles; and biofuels.

All new cars and trucks are expected to have fuel efficiencies of 35 MPG and 28 MPG (or greater), respectively. Subsequent displacement amounting to 120 MGY by 2030.

An 8% decrease in vehicle miles traveled from 2010 miles traveled. Subsequent displacement amounting to 40 MGY by 2030.

20% of the total vehicle fleet to be composed of electric vehicles. Subsequent displacement amounting to 75 MGY by 2030.

150 MGY of biofuels consumed. Subsequent displacement amounting to 150 MGY by 2030.


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