Switching to liquefied natural gas could save Hawaiian Electric Co. more than 50 percent at two of its power plants, according to a new report commissioned by the Hawaii Natural Energy Institute.

Hawaiian Electric could save an estimated 43 percent to 55 percent at its Waiau plant and 40 percent to 52 percent at its Kahe facility by switching to LNG instead of continuing to burn low-sulfur fuel oil and installing new emission controls that will soon be required at plants burning low-sulfur fuel, the report said. Hawaii’s reliance on oil-burning power plants is the primary reason the state’s electricity costs are more than triple the national average.

The savings estimate was included in a 252-page report produced by a subsidiary of Facts Global Energy, a Singaporean-based consulting firm with offices in Hono­lulu.

Facts Global Energy disclosed in the report, dated Nov. 30, that one of its 200 clients globally is Hawai‘i Gas, a local gas utility that stands to benefit if regulators approve LNG shipments to the state. "Beyond payment for this study, FGE will receive no compensation whatsoever whether the state decides to import LNG or not, and no matter under what terms it is imported," the report said.

The Hawaii Natural Energy Institute, which commissioned the report, is a research unit of the University of Hawaii at Manoa.

Switching to LNG would help Hawaiian Electric save costs at the two power plants because LNG is cheaper than the oil currently used and because Hawaiian Electric could avoid having to add equipment to control emissions, the report said. New federal emissions standards coming later this decade will force some utilities to either switch to cleaner-burning fuels, such as LNG, or install costly scrubbing equipment, according to the report.

The report’s cost comparison between fuel oil and LNG includes shipping and handling costs associated with the latter. The scenario outlined in the report includes several other assumptions, such as the availability of LNG from export terminals that have not yet been built.

The report projected that the cheapest LNG available to Hawaii would come from planned export terminals in Oregon, Alaska and Canada. LNG shipped from an export terminal being developed in Louisiana would carry higher transportation costs. LNG from Australia, another potential source for Hawaii, also would have higher transportation costs, according to the report.

For Hawaii to receive domestic LNG shipments, authorities would have to contend with the Jones Act, a federal law that requires that all cargo shipped between two U.S. seaports be carried on vessels built in the United States, owned by a U.S. citizen or company and manned by a U.S. crew. Because most LNG carriers are foreign-flagged, authorities would have to get a waiver from the Jones Act to bring in LNG from U.S. terminals, the report said.

LNG also has the potential to reduce costs for ground transportation, which accounts for more than a quarter of all liquid fuel use in the state, according to the report. Motorists who switch from gasoline-powered vehicles to ones fueled by compressed natural gas could save as much as 34 percent at the pump, the report said.

The report also countered a view expressed by several environmental and clean energy groups that bringing in LNG would negatively affect Hawaii’s push to develop more renewable-energy sources.

"Savings from the LNG in the power sector are large enough to compensate for more expensive renewables," the report’s authors wrote.

The Sierra Club disputed a similar contention made by Hawai‘i Gas in its application with the Federal Energy Regulatory Commission to bring LNG to Hawaii in shipping containers.

"Even assuming Hawaii can consistently access affordable LNG, it is unclear how infrastructure facilitating the use of fossil fuel energy will assist Hawaii in developing renewable energy resources," the Sierra Club said in a filing responding to Hawaii Gas’ application.

"In fact, investors’ incentives to invest in innovative renewable energy technologies may diminish if opportunities to invest in more ‘familiar’ fossil fuel technologies become available."

The Sierra Club cited a report by the International Energy Agency that the natural gas boom in the United States will result in a 10 percent reduction in renewable-energy development.