Paradise is about to get pricier.
Hawaii, which already struggles with the nation’s highest electric bills, could see them jump by as much as 20 percent in just two years thanks to new regulations on fuel use in oceangoing ships.
The state depends on mostly low-sulfur fuel oil for about 70 percent of its power. In 2020, though, demand for that fuel is expected to surge, pushing up prices. The reason: New maritime rules that require ships worldwide to lower the amount of sulfur in their fuel. Meanwhile, Hawaii’s shift to 100 percent renewables isn’t slated to be complete until 2045.
“The average person has no clue,” said Shasha Fesharaki, the Honolulu-based executive vice chairman at FGE, an energy industry consultant. “The rates are going to have to go up.”
Individually, Hawaii residents paid 32.4 cents per kilowatt-hour for electricity in August, more than 40 percent more than the amount paid by residents in Alaska, according to U.S. Energy Department data. That could easily rise by 20 percent, Fesharaki said.
Last year, the state generated about a fifth of its power from renewables, a level that included a geothermal plant that was knocked out by lava earlier this year from the Big Island’s Kilauea Volcano, according to U.S. Energy Information Administration.
Wind turbines near Oahu’s North Shore generate about 3 percent of the island’s power. And the state already produces more per capita solar power than any other, with a 35 percent state tax credit combined with a 30 percent federal credit for homeowners who install solar panels.
“We may still have to have fossil fuels here, but we’re investing in projects that will pull carbon out of the atmosphere,” Scott Glenn, director of the state Office of Environmental Quality Control, said in a phone interview.
Still, major renewables projects can take years to plan, pay for and build. And in the meantime, the hotel lights that brighten the white sand of Waikiki beach need to keep glowing, drawing the tourists that fuel Hawaii’s top industry.
At one point the state was examining plans to use liquefied natural gas, which can be brought in by ship and would provide cheaper and cleaner electricity than oil. But Gov. David Ige dismissed that alternative in 2015, saying the cost of installing the infrastructure needed to use LNG as a transitional fuel didn’t make sense.
Now Hawaii’s utilities are being forced to adjust their plans to handle the new rules.
Hawaiian Electric Co., the state’s largest utility, expects its fuel costs to rise on Oahu. HECO uses only low-sulfur fuel, according to Shannon Tangonan, a company spokeswoman. Hawaiian Electric Industries’ utilities on other islands use both low and high sulfur fuel, potentially balancing off the shifting costs.
One solution being pursued is to accelerate as much as possible the schedule for renewables, she wrote. The company is in contract talks with developers of seven solar-plus-storage projects on three islands, Tangonan said. Eventually, those projects could produce about 260 megawatts of energy on Oahu, Maui and Hawaii island, she said, which would be enough to power 78,000 homes.
The utility is also getting a nudge from another direction. On Oct. 25, ValueAct Capital Management, a San Francisco-based hedge fund, said it had bought more than $50 million of shares in the utility, and would be pushing it to further speed up the shift into renewables.
In announcing the move, ValueAct cited a study by the Rhodium Group that said Hawaii could get more than 80 percent of its power from renewable sources by 2030 if oil prices continue to rise and the cost of renewables drops. That would generate about $6.5 billion in electric system cost savings between 2020 and 2045, the study authors said.
While that’s being developed, however, islanders need to ready themselves to shoulder higher prices, at least initially. “If their electricity bill goes up $30 a month, that can affect a lot of people,” FGE’s Fesharaki said. “They’re going to get hit hard.”
ON THE MOVE
Stripsteak Waikiki has announced MINA Group veteran Justin Yu is its new general manager. He joined MINA Group as of 2012 and previously served as a corporate operations manager, helping to oversee the openings at Mina Brasserie at Four Seasons Hotel Dubai DIFC as well as Mi Almita Cantina at The Street Food Hall by Michael Mina in Honolulu.
Orangetheory Fitness has promoted Blasi Jacobi to head trainer for the Waikiki studio at 449 Kapahulu Ave. She was previously the coach at OTF Kapiolani studio and OTF Waikiki studio. Blasi has 16 years of fitness industry experience, including having served as a health and wellness coach for 20 years. Prior to OTF, she was a group fitness instructor for 24 Hour Fitness Honolulu.