Tag Archives: Cost of Electricity

Geothermal Talk at the Democratic Party Convention

Richard Ha writes:

On Saturday, I was on a geothermal panel at the Hawai‘i Island Democratic Party Convention, which was held at the Volcano Art Center. Brian Schatz at Hawai‘i County Democratic Party Senator Brian Schatz speaking

Also on the panel were State Senator Russell Ruderman and former Big Island Mayor Harry Kim.

It went very well and I’m very optimistic. I think most of us just want to do the best for all of us.

I made it a point to tell the audience that I went to O‘ahu on behalf of the Big Island Community Coalition and testified in favor of four
geothermal bills. What the four bills had in common is that they all contained provisions for “home rule.” I told the audience: This was so you could have a say in the geothermal issue.

My main point was that we are competing with the world for oil. And we need to seek a competitive advantage for the Big Island, and this has to do with cost.

We all know that the price of oil price rise; it’s only a matter of when, and how high. So if we can find a lowest cost solution, this will protect us from a rising oil price. It does not matter what the alternative is, so long as it gives us a competitive advantage.

Right now, it’s geothermal that has the potential for giving us that competitive advantage, assuming we don’t drive up its cost so high that we lose that advantage. Whether or not we achieve its potential is up to our leaders and to the Puna community.

Here’s what I told the Democratic Party Convention:

We are on a search for “competitive advantage” for the Big Island. Organisms, organizations and civilizations do this – it is called “survival of the fittest.” It isn’t the strongest or the smartest that survive; it’s the ones that can adapt – Charles Darwin

My name is Richard Ha. I am a farmer here on the Big Island. Together with our 70 workers, we farm 600 fee simple acres at Pepe‘ekeo. We have produced multi-millions of pounds of bananas and tomatoes over the past 35 years.

In my search to find competitive advantage for my farm’s future, I’ve now been to five Association for the Study of Peak Oil (ASPO) conferences.

Here is what I took away from these conferences:

  1. Oil price quadrupled in the last 10 years.
  2. The last 11 recessions were associated with a spiking oil price.
  3. Oil is a finite resource.
  4. The world has been using three times the oil it has been finding for many years now.
  5. The days of cheap oil are over.
    1. The cost to produce the marginal barrel of oil – the last barrel, as in shale oil and tar sands – was $92 per barrel in 2011.
  6. The U.S. mainland uses oil for only two percent of its electrical generation. Hawai‘i uses oil for more than 70 percent of its electrical generation.
    1. Anything manufactured on the mainland with cheap oil embedded makes our local producers and manufacturers less competitive. This affects Ag products.
  7. It is not the supply or demand of oil that will cause the
    greatest damage; it is the cost of oil.
  8. How much time do we have? Because it is about oil cost, we have less time than we think.

ELECTRICITY ON THE BIG ISLAND

  1. Uses 180 MW at Peak.
  2. Most of the increase in electricity bills is caused by oil pass through.
  3. Bio mass – as in wood chips – and geothermal have base power potential.
  4. Solar and wind must add storage to become useful as base power.
  5. Storage at utility scale is prohibitively expensive today.

ECONOMY

  1. Big Island electricity rates have been 25 percent higher than O‘ahu’s rates for as long as anyone can remember.
  2. The Big Island has the lowest median family income in the state.
  3. The Pahoa School Complex has, at 89 percent, the highest percent of students participating in the free/reduced lunch program in the state. Ka‘u at 87 percent and Kea‘au at 86 percent are close behind.

Education is the best predictor of family income. Yet the Big Island’s high electricity cost takes away from its education budget.

Rising electricity rates act like a giant regressive tax. The folks who are able to leave the grid for PV do so. The folks left behind pay more for the grid. Many of these folks are the ones already on the lowest rungs of the economic ladder: THE ONES THE DEMOCRATIC PARTY IS CONCERNED ABOUT.

Rising electricity rates take away discretionary income. Two-thirds of our economy is made up of consumer spending. Bottom-up economics benefit all, from the rubbah slippah folks to the shiny shoe folks.

GEOTHERMAL

  1. Cost to generate electricity from geothermal is estimated at 10 cents per kilowatt hour. This is less than half the price of electricity generated by oil, which is estimated to be 21 cents per kilowatt hour.
  2. The cost of the feedstock steam will be stable for a long time. The Big Island is estimated to be over the “hot spot” for 500,000 to a million years.
  3. Concentrating geothermal on the East Rift increases risk. Iceland mitigated the risk by keeping some oil-fired plants in operational reserve.
  4. Home Rule. The Big Island Community Coalition, myself as representative, personally voted for four of the bills that contained the Home Rule provision.
  5. Mediation vs. contested case hearing. It is a risk/benefit, cost, competitive advantage question. The lowest cost solution to accomplish the objectives is our target.
  6. How much time do we have? If cost is our primary concern, we have less time than we think.

I asked Dr. Carl Bonham: What happens if the oil price hit $200 per barrel? He replied that it would devastate our tourism industry.

I asked Dr. Bonham: What if we used geothermal as our primary base power? Wouldn’t we have a competitive advantage to the rest of the world as the oil price rose? He said, “YES.”

And, I asked, isn’t it fair to say that our standard of living would rise? He said: “YES.”

By giving the Big Island a competitive advantage in electricity rates, we can take care of all of us; not just a few of us.

WHERE ARE WE TODAY?

We are on a good track.

  1. We have 38MW of geothermal. The 25MW original contract, which is still tied to oil, is being renegotiated right now.
  2. HELCO has signed a 22MW power purchase agreement with Hu Honua. This is proven, stable and affordable technology – firewood, boil water.
  3. HELCO has issued a 50MW request for geothermal proposals.

These 110MWs of stable, affordable electricity base power represent 60 percent of the Big Island’s peak power usage.

O‘ahu has 10 percent of its base power electricity coming from stable affordable sources.

If we all work together, to take care of each other, we can be on track to have a competitive advantageover the rest of the world.

***

Some good resources on this topic:

Geothermal Assessment & Roadmap is a report compiled by the Pacific International Center For High Technology Research (PICHTR) under contract to Hawaii Natural Energy Institute, University of Hawaii in January 2013.

Peak Oil Warning From an IMF Expert: Interview with Michael Kumhof is a modeling done by the International Monetary Fund (IMF) economic team. Although it is not an official IMF document, it was done by the team that does economic analysis and modeling for the IMF.

We are dependent on air transportation, and this video, Charles Schlumberger: Out of Gas: Implications for Transportation, gives a sobering view of what we can expect in the future. Dr. Schlumberger is head of the air transport division of the World Bank.

How To Dramatically Increase Big Island School Budgets

Richard Ha writes:

Because the Big Island pays 25 percent more for its electricity than O‘ahu does, it follows that Big Island schools have 25 percent less of their budgets available to pay teachers than O‘ahu’s schools. Did you ever think about it this way?

Some Big Island school complexes (an area’s elementary, middle and high school) are paying around $1 million/year just for electricity. As compared with O‘ahu, that’s around $250,000/year that isn’t going toward teachers and other education services. At $70K per teacher, that could be three full time-teachers, for instance.

On top of the Big Island having paid 25 percent more for its electricity than O‘ahu for as long as anyone can remember, our Puna district has one of the lowest median family incomes in the state.

And what’s the best predictor of family income? Level of education. Therefore, one of many benefits of cheaper electricity is that a lot more of our schools’ money would go toward educating our children. Lowering the cost of electricity would allow Puna schools more resources to focus on teachers and learning, and it follows that this could lead to increased median family incomes.

Geothermal done in a responsible manner can lower the cost of electricity. But we all must work together. It’s great that HELCO is moving forward with low-cost alternatives, such as calling for requests for proposals for expanding geothermal production.

There are a thousand reasons why NO CAN. We only need to find the one reason why CAN!

Amending HB 106: ‘Let’s Fix It”

Richard Ha writes:

I sent in testimony, on behalf of the Big Island Community Coalition, regarding HB 106, draft 1. This bill contemplates repealing Act 97 (geothermal subzones, etc.).

We should keep the good parts of this bill and add parts that make it better. We need balance as we take care of everyone’s needs. This is about all of us, not just a few of us.

Here’s my testimony:

To the Water & Land committee

Aloha Chair Evans and Vice Chair Lowen,

The BICC is very strongly in favor of amending this bill.

There are good things in this bill; let’s leverage that. We are strongly against repealing it in its entirety.

No question: home rule should be addressed. This was an unfortunate oversight the last time around. Let’s fix it.

The heart of the bill that must be kept is the part that allows geothermal exploration and development in various land use designations.  The geothermal resource exists where it exists, not where we want it to exist. So we need a larger area to explore, not less. By having more choices we can get further away from populated areas. And we can increase our chances of success. The permitting process gives the necessary checks and balances to protect the people.

The essential problem we must solve is how to protect the people from rising oil prices. Repealing Act 97 in its entirety will raise our electricity prices.

The petroleum era is less than 150 years old. Oil is a finite resource and we are observing increasing oil prices. Oil price has quadrupled in the last 10 years. In contrast, the Big Island will be over the “hot spot” for 500,000 to a million years.

Geothermal-generated electricity is less than half the cost of oil-generated electricity. And it will be stable for 500,000 years.

The Big Island’s electricity costs have been 25 percent higher than O‘ahu’s for as long as anyone can remember. The Big Island Community Coalition is a grass roots organization that was formed to drive the cost of electricity on the Big Island down.

One of the BICC members did a cost analysis of a local school district’s 12 month electricity bills – generally 2012. Their costs (total of all schools involved) averaged $115,900/month.

At O‘ahu’s rates, those costs would be $115,900/1.25 = $92,700. That’s a savings of $23,200/month or $278,400/year.

If we figure $70,000/year pay for a teacher, the difference is four teachers for the district.

Because of these kinds of things, the BICC said enough was enough.  People turned out at the PUC hearings, and consequently the governor issued a press release saying that HECO/HELCO had withdrawn its proposed 4.2 percent rate hike.

No one has ever told us: “We disagree with you; we want higher electricity rates.”

The members of the BICC are Dave DeLuz, Jr., John E.K. Dill, Rockne Freitas, Michelle Galimba, Richard Ha, Wallace Ishibashi, Ku‘ulei Kealoha Cooper, D. Noelani Kalipi, Ka‘iu Kimura, Robert Lindsey, H.M. “Monty” Richards, Marcia Sakai, Kumu Lehua Veincent and William Walter.

Rising electricity rates act like a regressive tax, but worse. As electricity prices rise, folks who can afford to get off the grid will do so. Those who cannot leave, the rubbah slippah folks, will be left to pay for the grid.

If we can achieve low-cost, stable electricity, trickle-up economics can result. If the rubbah slippah folks have money to spend, they will spend. Then businesses will be able to hire, and then we won’t have to send our children away to find jobs.

There is a lot at stake here.

Good luck.

Aloha,

Richard Ha
Cell 960-1057

I’ve been to five Association for the Study of Peak Oil conferences. I was co-chair of the Geothermal Working Group authorized by SCR99, and sit on the Hawaii Clean Energy Initiative (HCEI) steering committee and the State Board of Agriculture. I’ve been to Iceland to see geothermal in operation, and I was part of the Big Island delegation that toured geothermal resources in the Philippines.

At Hamakua Springs we farm 600 fee simple acres of diversified crops. I do an Ag and energy blog at hahaha.hamakuasprings.com.