Cost of undersea electric cable put at $700M

It will cost ratepayers roughly $700 million to develop an undersea cable to connect the electrical grids of Oahu and Maui, but the project would save customers money over the long run, according to a new analysis done by the state Department of Business, Economic Development and Tourism.

DBEDT’s report issued last week concluded that despite the initial outlay associated with a cable, it would result in $425 million in net savings for ratepayers over a 30-year period. The savings would come from a variety of sources, including the ability to accommodate more wind energy from Maui, which can produce electricity at a lower cost than the oil that is used to generate about 73 percent of the state’s power. DBEDT also noted that Maui’s wind farms currently produce a surplus of power at night that could be sent to Oahu via a cable.

Linking the Oahu and Maui grids also will allow the utilities on each island to lower the amount of reserve power they need, according to DBEDT.

DBEDT said linking Oahu to Maui could be the first step in eventually interconnecting all the islands to create a statewide electrical grid.

"With its central location among the islands, Maui could be the natural hub for a fully integrated Hawaiian Islands electric system," the report’s authors wrote, noting the significant potential for geothermal energy development on Hawaii island.

Gov. Neil Abercrombie last week reiterated his administration’s commitment to connecting the state’s electrical grids with an undersea cable, saying it would allow the islands to share renewable energy resources and ultimately bring down electricity costs.

The estimated cost for the cable — which would be a high-voltage, direct current system — is $702 million, DBEDT said. The cost estimate includes the installation of the cable itself, the construction of stations on both islands to convert the DC power to alternating current, and equipment to hook into the Oahu and Maui electrical grids.

The Oahu-to-Maui cable would allow a two-way flow of power from both renewable and traditional sources, the 220-page DBEDT report said. DBEDT officials prepared the document with the help of Navigant, a Chicago-based energy consultancy.

A group that opposes the so-called "Big Wind" project on Lanai — which called for linking a large wind farm on that island to Oahu via undersea cable — said the failure of the Lanai plan to advance indicates the lack of community appetite for an electric cable.

"It’s disturbing to us to think that the Abercrombie administration has learned nothing from the failed Big Wind fiasco," said Robin Kaye, spokesman for Friends of Lanai. "Five years of wasted tax and ratepayer dollars later, of division, lies and intimidation, and they’ve simply made a left turn to focus on Maui."

Kaye continued: "Big Wind on Lanai was a poorly conceived, developer-led, invasive, destructive and absurdly expensive boon­doggle. It’s strange to see this pursuit continue, especially given HECO’s (Hawaiian Electric Co.’s) recent comments about not needing the resources of the neighbor islands to reach their RPS (renewable portfolio standards) goals. So why is the state still pushing the undersea cable?"

The state Public Utilities Commission in July asked DBEDT to assess the pros and cons of an undersea cable between Oahu and Maui. The PUC launched a separate proceeding in July to review the Lanai wind project. DBEDT officials said they envision the 200-megawatt cable being developed and owned by a third party that would make it available to Hawaiian Electric Co. and Maui Electric Co. for a fee passed through to ratepayers. The developer would be required to gain approval from the PUC to become a regulated utility.

Florida-based NextEra Energy has indicated its interest in pursuing the project, should the PUC allow it to go forward. It is the only developer so far to outline its plans to the commission for an Oahu-to-Maui undersea cable. NextEra established a presence in Hawaii two years ago when its officials attended a PUC conference to consider the value of interconnecting island grids.

NextEra, the largest developer of wind energy in the U.S., has spent about $10 million to date in Hawaii assembling a local team, acquiring site control, developing viable cable routes and undertaking preliminary engineering studies, said Eric Gleason, president of Next­Era Energy Transmission.

"The commission has laid out a very sensible path forward and frankly, we’re here to support that process," Gleason said.

In a filing with the PUC last week, NextEra estimated it could build a 200-megawatt cable between Oahu and Maui for $600 million. That would include all development and construction activities, including the cost to connect to the existing HECO and MECO grids. However, it excluded the cost of any future grid connections and upgrades to the HECO and MECO systems, according to the filing.

If the cable concept is approved, and NextEra is chosen for the project, the company would expect to receive final PUC approval by 2017, Gleason said. Next­Era also would have to conduct an environmental impact statement and obtain all necessary permits before construction could begin. The company expects the cable could be operational by 2020, he said.