What to know about Hawaii's transition to clean energy

If you've ever lived in or visited Hawaii, you know it's a special place. One of the most biologically diverse areas in the world, with several endemic species, Preserving Hawaii is critical. However, like everywhere in the world, Hawaii's ecosystems face significant risks due to the Earth's warming climate.

Hawaii has led the country in terms of renewable energy goals. Still, it is currently facing a pivotal point in expanding its share of renewables, mainly due to the U.S.'s oil embargo against Russia. In this article, we'll explain what you need to know about energy in Hawaii and how the state can quickly expedite its clean energy transition.

Hawaii's energy setup differs from the U.S. in many ways. For one, it's the most petroleum-dependent state in the country! It's also among the five states with the lowest total energy consumption –  but its energy production is so low that it still uses about 12 times more energy than it produces. Overall, Hawaii is unique in terms of its electricity, heating, hot water, and utilities structure:

Electricity

Across the U.S., natural gas is the most predominant source of electricity. However, in Hawaii, there's no natural gas-fired electricity generation! Instead, the vast majority of electricity in Hawaii is generated by petroleum (at almost 60 percent), contributing to the state having the highest retail electricity price: about three times the U.S. average.

Hawaii net electricity generation by source

Source: US Energy Information Administration

Heating

Known for its warm, tropical weather, Hawaii doesn't need much energy for heating. About 60 percent of households in Hawaii have no heating system at all – the highest share of any state. Of those using heat in Hawaii, only five percent use natural gas, while about 30 percent use electricity.

Hot water

If you've ever driven around Hawaii, you've probably seen solar collectors (not to be confused with solar panels) on the rooftops of many houses – these heat hot water tanks. Hawaii has one of the most successful solar hot water heating programs. According to the most predominant utility company, about 25 percent of homes in its service territory have solar hot water heating. The popularity of these systems is mainly due to state building codes that require that all new single-family homes in the state have solar water heaters (with some exceptions).

Utilities

Did you know that each Hawaiian island has its independent electricity grid? Despite no undersea electricity cables connecting the islands, one monopoly company does control about 95 percent of electricity in the state: Hawaiian Electric Company (HECO). HECO owns three of the four utility companies in Hawaii – the only island that doesn't get its electricity from HECO is Kauai. There's also only one gas company in Hawaii named "The Gas Company," or Hawaii Gas.

A clean energy transition is essential everywhere in the world, but it's crucial for Hawaii. Between its renewable portfolio standard, oil dependence, and coal phase-out, Hawaii needs to transition to a more significant percentage of renewable energy quickly:

Renewable portfolio standard

In 2015, Hawaii amended its renewable portfolio standard (RPS) and became the first state in the country to set a legally required deadline for achieving 100% electricity sales from renewable sources. So far, Hawaii has met its interim requirements and is on track to meet its next target (40 percent by 2030). By 2045, the state must meet its 100% RPS – one of the most ambitious requirements of any state in the country.

Oil dependence

As previously explained, Hawaii is the most oil-dependent state in the country. Aside from this being a highly costly source of electricity, it's also now a national security issue. Amidst the war on Ukraine, the U.S. banned all oil imports from Russia to help deprive the country of a significant economic resource.

According to Canary Media, Hawaii has received about a third of its oil from Russia in recent years – meaning that the oil embargo will continue to amplify the already extreme electricity prices in the state. While HECO has stated that it's not concerned about the oil supply, it predicts electricity prices to rise by about 10% on Oahu and 20% on Hawaii and Maui. Reducing its dependence on outside imports of energy sources like oil would help protect Hawaii from the volatility of energy markets.

Coal phase-out

As required by its RPS, Hawaii will close its last coal-fired power plant (on Oahu) in September 2022. The coal plant contributed about 10 percent of Hawaii's total electricity generation in 2021. HECO and the Hawaii Public Utilities Commission (PUC) have warned that the plant's closure could lead to a shortage in energy supply (especially if oil sanctions against Russia remain).

The oil sanctions and coal phase-out indeed challenge Hawaii's energy supply, but they also present an opportunity to expedite the state's transition to clean energy. By achieving a more significant percentage of energy supply from renewables, Hawaii will become closer to reaching its 100 percent RPS while ultimately reducing its electricity prices and protecting itself from market volatility and energy shortages. We'll explain some of the significant ways in which Hawaii can ramp up its energy transition:

Improve solar programs

Solar panels adorn the roofs of many houses and businesses throughout the Hawaiian Islands; overall, small-scale solar provides the state's largest share of renewable energy (over twice as much as utility-scale solar). However, in 2015, HECO stopped accepting new net metering customers. If you install solar now, you won't be credited the retail electricity rate for every kilowatt-hour (kWh) your system sends to the grid. Not surprisingly, the number of new homeowners installing solar dropped substantially.

In 2021, Greentech Media reported that 78 percent of new rooftop installations in Hawaii included a storage system – and many of these houses are off-grid because they aren't being compensated fairly for sending excess energy back to the grid. Hawaii has limited space, meaning HECO has to rely heavily on its customers to meet its RPS; it can't just install its utility-scale solar farm as utilities do in other states. Thus, HECO needs to find ways to incentivize its solar customers to export to the grid.

According to reporting by Canary Media, in February 2022, HECO and the distributed energy community worked together to ask the Hawaii PUC to approve the Battery Bonus program. This program pays households an upfront cash bonus and a monthly credit on their bills for adding a battery to their solar system (a more limited version of this program was approved last summer). To earn money, customers will need to export power to the grid for two hours in the evening when electricity demand is higher – in return, they'll be compensated at the retail electricity rate.

Expand community solar

In 2015, Hawaii passed legislation supporting the expansion of community solar to make renewable energy more accessible to those who can't install solar directly on their properties. HECO supports community solar in Hawaii through its Shared Solar program. A subscriber agrees to pay a Subscriber Organization (a company, organization, or utility that owns, develops, or operates a community solar project) for a portion of its community solar project, typically at a discount on the retail electricity price. In turn, these subscribers receive credits on their electric bills.

Community solar is currently very limited in the state: Phase 1 of the Shared Solar program included only eight megawatts (MW) of solar development. Phase 2 began on March 10, 2022, allowing up to 250 MW across the five Hawaiian Islands HECO serves. However, nearly all Phase 1 and 2 projects have faced delays, and many projects have been canceled due to pandemic-related supply chain constraints felt across the industry.

HECO expects the program to run fully by 2023, but development and adoption must expand rapidly across the state to alleviate the rising electricity rates.

Support geothermal energy

When you think of Hawaii, volcanoes are probably one of the first things that come to mind – and for good reason! There are currently six volcanoes technically considered active in Hawaii, which presents an excellent opportunity for geothermal energy, or heat energy, from beneath the Earth's surface.

Hawaii has one geothermal power plant in the East Rift Zone of the Kilauea Volcano on the Big Island. In the first half of 2018, this geothermal plant contributed 10 percent of the island's electricity. However, in May 2018, operators had to shut it down after Kilauea erupted temporarily. Ground fissures and lava blocked access to the plant, and it didn't begin operating again until the end of 2020.

At the start of 2022, the plant is closer to maximum operating levels, and developing geothermal plants on the adjacent Mauna Loa volcano could significantly expedite the island's renewable energy transition.

While to some, this may sound like a great idea; it isn't straightforward. These volcanoes represent a long history of Hawaiian culture: Mauna Loa is home to the goddess Pele. Overall, Hawaiians are pretty divided on the issue – some believe it's disrespectful to extract resources from Pele's home, while others think we should gratefully accept her home's clean energy. It's not our place at EnergySage to opine one way or another, and at the end of the day, it's up to native Hawaiians to weigh the costs and benefits of supporting geothermal energy.

Install more electric vehicle charging stations

According to the Energy Industry Association, the Hawaii transportation sector accounts for almost three-fifths of energy consumed in Hawaii and is mainly fueled by petroleum. Hawaii has created incentives for electric vehicle (EV) adoption to improve clean transportation, and it's working! As of February 2022, there were 18,617 registered passenger EVs in Hawaii: a 33.2 percent increase from last year.

While reducing dependence on petroleum in the transportation sector is crucial for Hawaii's clean energy transition, EV adoption is starting to outpace charging infrastructure. EV charging stations are still limited in the state, making it difficult for anyone who can't install a charger at their home to purchase an EV.

Overall, the best way to lower your electric bill and reduce your dependence on fossil fuels is to go solar. When you sign up (for free!) on the EnergySage Marketplace, we connect you with our network of pre-vetted solar installers so you can find a system that meets your needs at the right price. While we don't currently operate in Hawaii, we're always expanding to new states (38 states + Washington D.C. right now and counting!), so be sure to check back!