Legislature(2021 - 2022)BARNES 124
03/10/2022 10:15 AM House ENERGY
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| HB301 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
| += | HB 301 | TELECONFERENCED | |
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 10, 2022
10:19 a.m.
MEMBERS PRESENT
Representative Calvin Schrage, Chair
Representative Matt Claman
Representative Zack Fields
Representative George Rauscher
Representative James Kaufman
MEMBERS ABSENT
Representative Chris Tuck
Representative Tiffany Zulkosky
COMMITTEE CALENDAR
HOUSE BILL NO. 301
"An Act relating to the establishment of a renewable portfolio
standard for regulated electric utilities; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 301
SHORT TITLE: UTILITIES: RENEWABLE PORTFOLIO STANDARD
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/04/22 (H) READ THE FIRST TIME - REFERRALS
02/04/22 (H) ENE, L&C, FIN
03/08/22 (H) ENE AT 10:15 AM BARNES 124
03/08/22 (H) Heard & Held
03/08/22 (H) MINUTE(ENE)
03/10/22 (H) ENE AT 10:15 AM BARNES 124
WITNESS REGISTER
CHRIS ROSE, Executive Director
Renewable Energy Alaska Project
Anchorage, Alaska
POSITION STATEMENT: Offered a PowerPoint presentation and
testified in support of HB 301.
TOM PLANT, Senior Policy Advisor
Center for the New Energy Economy
Colorado State University
Fort Collins, Colorado
POSITION STATEMENT: Offered a PowerPoint presentation and
testified in support of HB 301.
MARK GLICK, Energy Policy Specialist
Hawai'i Natural Energy Institute
University of Hawai'i
Honolulu, Hawai'i
POSITION STATEMENT: Offered a PowerPoint presentation and
testified in support of HB 301.
ACTION NARRATIVE
10:19:48 AM
CHAIR CALVIN SCHRAGE called the House Special Committee on
Energy meeting to order at 10:19 a.m. Representatives Claman,
Kaufman, Rauscher, and Schrage were present at the call to
order. Representatives Fields arrived as the meeting was in
progress.
HB 301-UTILITIES: RENEWABLE PORTFOLIO STANDARD
10:20:24 AM
CHAIR SCHRAGE announced that the only order of business would be
HOUSE BILL NO. 301, "An Act relating to the establishment of a
renewable portfolio standard for regulated electric utilities;
and providing for an effective date."
10:20:50 AM
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project
(REAP), offered the PowerPoint presentation, ["Support for HB
301, An RPS for Alaska's Railbelt," hard copy included in the
committee packet]. He stated that REAP is a statewide nonprofit
coalition of diverse energy stakeholders, [listed on slide 2],
promoting renewable energy and energy efficiency in Alaska since
2004. He stated that REAP is an education and advocacy group
working throughout the state providing a variety of conferences,
webinars, and presentations, supporting K-12 STEM [science,
technology, engineering, and math] education as well as
developing clean energy pathways for jobs [listed on slide 3].
He cited that in 2008 REAP helped develop the legislation that
resulted in the Renewable Energy Fund. Referencing [slide 4],
he said, since 2008, $275 million has been appropriated to the
fund, and another $250 million is being leveraged to build 90
renewable energy projects, mostly in rural Alaska. He stated
other advocacy efforts include House Bill 306 [passed during the
Twenty-Sixth Alaska State Legislature], which created a 50
percent goal by 2025 for renewable energy. More recently REAP
has been involved in the reform of the Railbelt grid,
specifically with Senate Bill 123 [passed during the Thirty-
First Alaska State Legislature], which creates a new form of
governance that would help execute renewable portfolio standards
(RPS).
10:23:57 AM
MR. ROSE, [moving to slide 5], explained that energy generation
in the Railbelt is "lopsided" because the Cook Inlet natural gas
supply generates about 80 percent of all the electricity from
Homer to Fairbanks. He said this fuel is about twice the
national average. As a result, Alaska has some of the highest
electricity costs in the nation. He expressed the opinion that
high electricity cost is a problem because it discourages
investment and economic activity. He stated that, meanwhile,
the Railbelt region has massive renewable energy potential from
wind, solar, hydro, geothermal, biomass, and tidal. He
expressed the opinion that no energy policy in the state focuses
on consumer-based policies and triggers action. He added that
75 percent of the state lives in the Railbelt region, which has
a history of inaction [in relation to energy policies]. He
pointed out that the graph [on slide 6] shows how quickly the
price of wind and solar has dropped over the last 10 years. He
explained that the price of wind and solar in Alaska has dropped
below the price of gas in the Lower 48, and the price of gas in
the Lower 48 is half the price of Cook Inlet gas.
10:27:28 AM
REPRESENTATIVE RAUSCHER questioned whether the overall drop in
costs of renewable energy is because of China's participation.
He questioned whether materials have become cheaper and
technology has gotten better.
MR. ROSE responded that the price reduction [for renewables] is
the result of "all of the above, and I would also add policy ...
because it drives markets." He stated that 30 states have RPS,
and multiple countries have renewable energy requirements, so
more utilities need equipment. This need increases the volume
and the economy of scale. Once the requirement is set in
policy, prices come down. He posited that this has happened
across the planet for the last 10 years, because more usage
drives down prices. He stated that this includes technological
innovations. He gave an example of wind technology, explaining
that wind towers are getting taller because there is "better
wind up higher," and blades are getting bigger, which means it
can "sweep more area with the wind turbine." He concluded that
technological innovations are driving the prices down.
10:29:15 AM
MR. ROSE stated that Lazard, a consulting group, created the
graph [on slide 7], which shows the unsubsidized costs of
different energy technologies in "an apples-to-apples
comparison." He outlined the cost comparisons between
renewables and conventional energy resources, stating that wind
and solar, with the new technology, are cheaper than natural
gas. He added that building new nuclear or natural gas plants
would be more expensive than building new wind and solar plants.
Answering a question from the committee meeting [on 3/8/2022],
he pointed out the percentage of wind energy used in different
states, [depicted on slide 8]. He noted that Iowa produces 58
percent of all its electricity from wind. He expressed the
belief that this is the highest in the world. He referenced
Texas, which generates more megawatt hours than Iowa, but Texas
has a bigger population. He pointed out other states listed on
the slide with high levels of wind-generated energy.
MR. ROSE noted that intermittent wind energy can be stored in
batteries and pointed to the graph [on slide 9] depicting the
cost of lithium-ion batteries. He explained that the cost of
batteries is being driven down by electric vehicles, consumer
electronics, and utility-scale energy storage. As the vehicle
industry transitions to electric, he expressed the opinion that
the economy of scale will drive down the battery prices, which
results in another important cost driver for the utilization of
wind and solar. He informed the committee that many independent
producers in the Lower 48 bid on package deals that include
energy generation, battery installation, and a flat price for
the power. He mentioned that some of these packages have lower
prices than natural gas.
10:33:39 AM
MR. ROSE stated that [slide 10] graphs the electricity
generation in the U.S. He contrasted the graph with the graph
that the Alaska Energy Authority (AEA) presented in the
committee meeting [on 3/8/2022]. He clarified that this graph
includes every type of electricity from different resources
produced across the country. Addressing the electricity
production in the U.S., he said 20 percent comes from
renewables. He pointed out that wind surpassed hydro and solar,
moving to 10 percent. He added that nuclear, [which is not
considered renewable on the graph], produces about 20 percent of
the electricity, coal has dropped dramatically to 19 percent,
and natural gas generates about 40 percent. He reiterated that
80 percent of electricity in the Railbelt comes from natural
gas.
MR. ROSE stated that [slide 11] shows a map of the states with
RPS. He pointed out the 10 jurisdictions with standards at 100
percent by 2040 or 2050. He noted that, to be included on the
map, the U.S. Department of Energy (DoE) requires the states'
renewable goals to be codified. He identified Alaska as not
having codified goals; thus, DoE did not include it on the map.
In addressing a question from the committee meeting [on
3/8/2022], he indicated that many states have more aggressive
standards than the standards proposed in HB 301, which is 80
percent by 2040.
10:36:22 AM
REPRESENTATIVE RAUSCHER expressed the assumption that codified
states represented on the map would incur a penalty if the
appropriate percentage [of renewable energy] was not met. He
questioned whether utility companies have been penalized. He
referenced the penalty in the proposed legislation and
questioned whether it would match penalties in the Lower 48.
MR. ROSE began by reiterating that Alaska's energy goal is not
in statute because it is not codified. He answered the question
by confirming that states with RPS would enforce the standard
through a fine, or an alternative compliance payment. He gave
the example that Hawai'i is an RPS state with a fine for
noncompliance, but utilities have complied, so the state has
never enforced fines. He offered that he does not know whether
states have had to enforce penalties on utilities, but he argued
that using penalties would be the only way to enforce a
standard. He stated the difference would be that a standard
would be enforced, and a goal would not be enforced. He opined
that the fine written in HB 301 is "much, much lower" compared
to other states, and this would be his only concern with the
legislation. He compared the average fine of $47 per megawatt
hour with the proposed legislation's fine of $20 per megawatt
hour, concluding that the penalty in HB 301 is less than half of
the average in the U.S.
10:39:18 AM
MR. ROSE, in response to a follow-up request, assured
Representative Rauscher that he would follow up with a
spreadsheet of the state-by-state breakdown of standards and
fines.
10:41:11 AM
REPRESENTATIVE KAUFMAN expressed the assumption that RPS in
other states are based on an energy mix. He questioned whether
states would set renewable goals and let market dynamics arrive
at the energy mix based on high reliability and affordable cost.
MR. ROSE responded that some states have a carve out requiring a
certain percentage of the renewable energy be from solar, for
example. He noted that HB 301 does not have a carve out, and
all renewable technologies would be eligible to count towards
compliance. Addressing reliability and cost, he explained that
the Federal Energy Regulatory Commission and the market would
control this. He said that in the Lower 48 there are
reliability standards that all utilities have to meet, or they
pay fines; thus, they would not purchase or generate renewable
energy unless it is reliable.
MR. ROSE stated that, in the Lower 48, independent power
producers selling renewable energies generate 40 percent of all
electricity. He voiced the opinion that the Railbelt needs
competition, as now there is a history of "self-built bias." He
explained that all the utilities in the Railbelt have built
their own energy generation with very little competition. He
suggested that RPS would bring in more companies to compete and
drive down the price, similar to the Lower 48. He stated that
before the legislature passed Senate Bill 123, the Regulatory
Commission of Alaska (RCA) had no preapproval authority over the
utilities built in the Railbelt. He expressed the opinion that,
before this, the utility companies had not planned together, and
many projects were unnecessary and not the cheapest for
consumers. He said that reliability and price are taken care of
in the Lower 48 [through the market], and this could be the case
in Alaska.
10:45:26 AM
REPRESENTATIVE KAUFMAN reasoned that if the price point is going
down for power generated by alternative energy methods,
economics would create [a market]. He expressed his lack of
understanding why the market would not lower the price point.
MR. ROSE responded in agreement but emphasized that five
utilities have operated in "their own little sphere" in the
Railbelt, and the market has never been open to competition. He
explained that, until Senate Bill 123, each utility had a
different interconnection standard, and if an independent
company had wanted to sell solar or wind, five different
standards for interconnection would be needed. He stated that
Senate Bill 123 created a nondiscriminatory, open-access
standard. He said another barrier for an open market is that
the entire system is not dispatched by one unit. He explained
that the utilities are good at balancing supply and demand, but
they are doing this independently of each other, not as one
unit. He suggested that a portfolio standard would move the
Railbelt toward a single-load balancing area, creating "a much
better market." He relayed that RCA acknowledges that this
would be a good thing for consumers. In agreement with
Representative Kaufman, he said a market would do this if Alaska
had the same conditions as the Lower 48.
10:48:42 AM
REPRESENTATIVE RAUSCHER requested an explanation of
"reliability." He expressed the opinion that it could have two
different meanings: consistent cost of electricity to the
ratepayer or consistent availability of hydrocarbons.
MR. ROSE explained that in the electrical industry "reliability"
means a standard for making sure system frequency remains
constant and supply and demand is balanced perfectly with no
flickering or blackouts. He voiced the opinion that
Representative Rauscher may be articulating the concepts of
resiliency and volatility. He gave examples, and he explained
that if there is a reliance on the market price of a commodity,
there would be less resilience because of the exposure to
volatility.
REPRESENTATIVE RAUSCHER commented that, looking out the window,
with reliance on wind or solar today, "it'd be a rough day for
reliability."
MR. ROSE explained, if there is a single-load balancing area in
the Railbelt, "I could be powering my little office here with
wind from 100 miles away." With a larger-balancing area, wind
may be in one place but not another. He added that fossil fuels
would be a backup, but the goal is to have less reliance on
fossil fuels.
MR. ROSE moved to [slide 12], which outlined the dangers of
relying on Cook Inlet gas. He said Cook Inlet gas is
"essentially under monopoly control," as Hilcorp Energy Company
controls 85 percent of the gas, which is twice the price of gas
in the Lower 48. He argued that a flat demand, high offshore
production costs, and an aging infrastructure are "a recipe for
higher and higher and higher costs for gas." He added that
there is a dangerous dependence on Cook Inlet gas because
production is highly subsidized.
10:52:14 AM
MR. ROSE pointed out the graph [on slide 13] detailing the
change in gas prices in Cook Inlet since 1994. He said the
price has changed from $2 to the current $8, so this is not "the
good old days" with cheap gas. He added that until the recent
rise of prices in the Lower 48, Railbelt utilities had been
paying three times the price than Lower 48 utilities.
MR. ROSE stated that, in conjunction with introducing HB 301,
the governor requested the National Renewable Energy Laboratory
(NREL) perform a feasibility analysis, resulting in a 50-page
report [hard copy included in the committee packet]. The study
found two major things [as seen on slide 14]: 80 percent of
renewable energy can be obtained by using the existing hydro
with better energy storage, without impacting reliability; and,
if there is 80 percent energy from renewables, there would be a
savings in natural gas fuel costs between $4 million and $5
million per year. He noted that NREL plans to study costs in
various scenarios in the future, but because of time
constraints, NREL considered only five scenarios.
10:55:08 AM
MR. ROSE provided background information on Alan Mitchell, who
has owned Analysis North since 1986, [as seen on slide 15]. He
moved to [slide 16], titled, "Preliminary Benefit/Cost Analysis
of NREL's RPS Scenario 3." He stated that this scenario
consists of mostly wind and solar and was picked [to review]
because the cost of wind and solar is known. This analysis
shows that 80 percent of wind and solar would have a capital
cost of $3.2 billion, with a savings of $6.7 billion in natural
gas over a 22-year period.
MR. ROSE pointed out that in Mr. Mitchell's analysis he used the
assumptions listed [on slide 17]. He stated that NREL's fuel
savings were based on AEA's fuel-price forecast. He explained
that the capital cost is mostly from wind and solar, but it also
includes the costs of a 63-megawatt generator, some hydro, and
some biomass. The costs of new transmission and energy storage
are not included in the analysis because utility companies are
already planning [to spend money] on storage and transmission.
He referenced the assumption that, for the ease of modeling, all
the investments would happen in one year. To determine the
assumed cost of wind, he said, Mr. Mitchell accounted for the
"Alaska factor" by using the cost of the Eagle Creek project in
Fairbanks to determine the cost to build a wind plant in Golden
Valley, which is double the cost to build a wind plant in the
Lower 48. He stated that Mr. Mitchell used the same type of
assumptions for the solar analysis.
11:00:13 AM
MR. ROSE stated that [slide 18] lists the benefits not
considered in the analysis: possible decrease of wind and solar
costs, possible increase in future fuel costs, avoidance of a
carbon tax, and federal subsidies that could be reintroduced.
He said, "This is a fairly conservative back-of-the-envelope
analysis." He moved to [slide 19], explaining that since the
passage of Senate Bill 123 the Railbelt is required to establish
an electric liability organization (ERO) to enforce standards
and do regional integrated resource planning. He reiterated
that, before this, the Railbelt had no mechanism for executing
RPS because utility companies were not mandated to work together
with standards. He stated that ERO's first project would be a
technical and economic feasibility analysis of renewable
percentages for future milestones. He added that the plan would
be submitted for approval to RCA. He stated that the last slide
presents a summary of the goals of HB 301, as follows: diversify
the portfolio by decreasing reliance on gas, utilize local
renewable energy, not impact reliability, make the market
competitive, create energy independence, move consumers to
renewables, create jobs with economic benefits, and - "most
importantly" - establish a standard that triggers activity, as
there will be a penalty for noncompliance.
11:05:56 AM
REPRESENTATIVE RAUSCHER indicated that he had four questions.
First, he questioned whether ERO is the organization that should
be determining the projections and percentages to be attained,
asking, "Have we gotten the cart before the horse?" Second, he
questioned the projected fuel-cost savings used for the model.
Third, he questioned whether the 80 percent was "derived from
the current limitations with the system or was that derived from
what could be in the future system, if we implement ...
transmission upgrades." Fourth, if the upgrades were
incorporated in the model, he questioned the cost of the
upgrades.
MR. ROSE, in response to the first question, explained that
creating ERO would be a first step. The legislature would set
the policy, and ERO would implement this in the Railbelt. He
said [the stakeholders] did not want to introduce RPS until
there was a mechanism for execution. In reference to the second
question, he provided that a representative from NREL would
explain the numbers obtained from the utilities and modeling in
a subsequent hearing. He expressed the opinion that the "gas
burn" today is easy to determine, and the price projections came
from AEA and are consistent with other projections. In
reference to the last two questions, he expressed the belief
that "80 percent is not aggressive in the country," but a "happy
medium," which is achievable with available technology. He
stated that NREL has clarified this with multiple scenarios.
11:10:01 AM
REPRESENTATIVE FIELDS expressed the opinion that RPS is needed
in Alaska, but the Susitna-Watana Hydroelectric Project would
not be built, so the majority of renewable energy is not "on the
table." He questioned the amount of storage required in NREL
scenarios [that do not use the maximum amount of hydro], the
location of the pump-storage facilities, and the cost to support
48 percent wind and solar generation.
MR. ROSE responded that this is a good question, but the answer
is unknown. He explained that ERO would integrate a resource
plan, as the proposed legislation would require 30 percent
renewable energy by 2030. He explained that 20 percent is
achievable by 2025, because the percentage is almost there. He
continued that ERO's resource plan would likely be done by 2025,
giving five years of "runway" on how to increase renewables by
10 percent. He stated that the pump-storage locations would be
unknown until the resources are determined. He expressed the
opinion that they would be located close to existing
transmission and battery storage. He expressed the belief that
the utilities in the Railbelt already have plans to build
battery storage regardless of the legislation; likewise, AEA and
other authorities are planning to build transmission upgrades.
He stated that to achieve 30 percent renewables by 2030 requires
action. In example, he stated that the Matanuska Electric
Association equates to the size of West Virginia and has never
prospected for wind. The proposed legislation would require the
utilities to seek out resources, and once found, the most
appropriate energy-storage scenario would be determined. He
stated that 55 percent by 2035 is a big jump, but other
technologies, like geothermal and tidal energy, are being
considered. The world is making tidal-energy technology
cheaper, and he hypothesized that tidal energy in Cook Inlet
would produce 50 times the power that is in the Railbelt now.
11:15:08 AM
TOM PLANT, Senior Policy Advisor, Center for the New Energy
Economy (CNEE), in support of HB 301, presented a PowerPoint
[hard copy included in the committee packet]. He stated that
CNEE collaborates with legislators and governors from all over
the country and is a nonprofit part of Colorado State
University. He shared that he has served in the state
legislature of Colorado and ran the state's energy office. He
said that while he worked for the government, Colorado passed
its RPS, along with other policies that targeted new energy.
Because of its success, other states have reached out for advice
on energy policies, which has become the focus of CNEE. He
explained that CNEE runs databases for advanced searches on
energy legislation, [as seen on slide 2]. He described [the
database as a tool to help states understand what is happening
across the nation], so ideas can be borrowed for effective
energy legislation. He stated that CNEE also runs a yearly
academy on clean energy legislation, bringing together
bipartisan legislative groups with energy professionals to help
craft the best policy for their state.
MR. PLANT, [moving to slide 3], stated that the results of a
study by Lazard showed the dramatic decline in costs of wind and
solar over the past 12 years. He stated that when Colorado
passed its RPS, prices had been higher [for renewable
technology]. He stated that Alaska would benefit from lower
prices, as the graph shows the cost of wind decreasing by 72
percent and the cost of solar decreasing by 90 percent. He
said, because of "growing pains" in other states, Alaska is in a
good situation [to benefit].
11:20:23 AM
MR. PLANT indicated that the table [on slide 4] lists states
with RPS. He explained that most of these states have increased
standards and extended expiration dates. He referred to
Colorado's process, [listed on slide 5], which began with a
citizen's ballot initiative passing renewable standards in 2004.
He noted that Xcel Energy was the main opposition to the
initiative, with the concerns that costs would increase,
engineering would not be possible with the grid, and no
resources would be available to meet the standard. The negative
assumptions never materialized, and Colorado updated its RPS in
2007 to 20 percent renewables by 2020, and, because technology
had become more familiar and improved, Xcel Energy supported the
measure. He emphasized that now Xcel Energy has learned to
incorporate renewable energy without integration or reliability
problems, and it has moved ahead without a legislative mandate
[as seen on slide 6]. He said that Colorado's goal is 66
percent renewables [for electricity] by 2030, with an overall
objective [of 100 percent] by 2040. He explained that for Xcel
Energy to move ahead without requirement was a shift.
11:26:25 AM
MR. PLANT pointed out [on slide 7] the renewable standard has
helped drive down emission levels even while population has
rapidly grown. To understand what drives costs, [slide 8] is a
graph of data collected from [consumers'] energy bills. He
pointed out that plants producing energy from fuel create
fluctuation and volatility in an energy bill, and utility
companies discovered that the incorporation of renewables
reduced the associated risk of the fuel-cost adjustment. He
said that the cost of renewable energy is upfront in the capital
cost, and this cost would remain flat over time. He explained
that even with fuel-cost volatility, electricity rates have
stayed below the consumer price index.
11:30:36 AM
MR. PLANT, addressing the graph [on slide 9], stated that the
rural electric cooperatives copied Xcel Energy's approach to
renewable energy and reduced their coal assets. Because the
costs of renewables are less than the marginal operating costs
of the existing coal plants, the cooperatives are projected to
save 8 percent. Concluding the presentation, he said that when
Colorado began transitioning to renewables not many states had
RPS to use for examples, but results have far exceeded
expectations. He remarked that there has been a strong economic
response and gave examples of companies that have invested in
manufacturing and technology for renewable energy.
11:34:28 AM
REPRESENTATIVE FIELDS, referencing the differences between
Colorado and Alaska, stated that Alaska has very little coal-
generated energy, and, unlike Colorado, the Railbelt grid is not
connected with other grids. He requested comments on these
differences and the issues Alaska may face in relation to
storage.
MR. PLANT responded that storage is starting to play a larger
part in the various requests for proposals. Even adding
storage, the requests for proposals are far below other marginal
costs. He stated that a wind-plus-storage project financed at
under $2 per megawatt hour, including incentives, is a
"remarkably low price." He noted Colorado is not integrated
with the Western grid, as there is not a regional transmission
organization like the Eastern Interconnection. He stated
Colorado is restrained, but the state is looking at ways to
expand regional integration of its resources with other states,
and the plan going forward would be using 60 percent or 70
percent renewables, which would require managing these resources
over a larger geographic area.
11:37:17 AM
REPRESENTATIVE RAUSCHER questioned why both presentations listed
Alaska as a state with no renewable standard or goal.
MR. PLANT responded that the graph with this information came
from the National Council of State Legislators (NCSL), and it
examines statutory requirements. He expressed the understanding
that Alaska does not have a renewable standard in the statutes;
therefore, it is not counted. He stated NCSL obtains
information from NREL, so this standard is the same.
11:39:09 AM
REPRESENTATIVE KAUFMAN, considering the goals of having reliable
power and reducing carbon, questioned whether nuclear power, or
other energy, should be considered as part of the overall
portfolio.
MR. PLANT responded that different states react differently. He
noted that a number of states have defined and established clean
energy standards. He stated that, if an objective is the
reduction of carbon, nuclear would fit in this, much like
natural gas has replaced coal. He added that about 20 percent
of the power in the Lower 48 comes from nuclear power. While
nuclear is a zero-carbon resource, various states have concerns.
He said that each state can propose to meet its objectives
differently, and a number of states have transitioned their
portfolios to be based on the level of carbon output from the
entire system.
11:42:38 AM
MARK GLICK, Energy Policy Specialist, Hawai'i Natural Energy
Institute (HNEI), in support of HB 301, presented the
PowerPoint, ["Hawaii's Energy Transition Framework: Binding
Commitments and Stakeholder Alliance," hard copy included in the
committee packet]. He described Hawai'i as the most isolated
and populated land mass in the world. Like Alaska, the state
has the challenge of being disconnected from neighboring
electrical grids and common supply lines. He said Hawai'i is
transitioning from an almost total dependence on fossil fuels to
a greater energy self-sufficiency. He offered support for HB
301, and said, "It is the right measure at the right time." He
shared that HNEI is a research unit of the School of Ocean and
Earth Science and Technology, University of Hawai'i, [as seen on
slide 2]. He stated that, combining a diverse staff of experts,
HNEI, the Hawai'i State Energy Office, and the Hawai'i Public
Utilities Commission (PUC) have been appointed to lead the
state's energy transition. He listed multiple organizations he
has worked with throughout his career, including organizations
in Alaska.
11:46:05 AM
MR. GLICK, [referencing slide 3], pointed out that the
geographical isolation of Hawai'i is central to the evolution of
its energy system, and even with the rapid growth of renewables,
more than 80 percent of the state's energy mix still relies on
petroleum, with the transportation sector using most of the mix.
He continued that economics and energy security had been the
initial drivers for clean energy plans after the [1973] oil
shock, but the plans did not turn into action for 30 years, and
historical reliance on petroleum led to an "inertia" because of
the adverse effect on the two local oil refineries. The
refineries supplied jet fuel, gasoline, and diesel [to the
entire state]. He referenced that the 2008 recession created
pressure to move from petroleum because of oil price volatility,
and in 2009 the legislature passed 40 percent RPS by 2030.
11:48:16 AM
MR. GLICK stated that Hawai'i has historically imported crude
oil for its electrical power generation and transportation
markets. Tourism dominates the economy, with 10.5 million
visitors coming to the islands in 2019. He added that after the
COVID-19 pandemic the industry is bouncing back. He stated
that, according to economic research, the impact of oil
volatility on residents and visitors is "profound," [as seen on
slide 4]. He pointed out that even though the fossil fuel
energy producers gain from high prices, those gains are
deceptive, and a study from 2007 showed oil volatility has more
of an impact on the economy than slower, steadier oil price
increases.
11:50:04 AM
MR. GLICK moved to [slide 5], which details the economic
recession in Hawai'i in 2008. He said because of global
factors, fuel prices greatly reduced travel and tourism. He
explained that supply chain issues compounded the recession.
Explaining the vulnerabilities, [detailed on slide 6], he stated
that if any of the [fuel] supply chain is damaged, the entire
energy system is at risk.
MR. GLICK pointed out the Hawai'i Clean Energy Initiative [on
slide 7], with the essential components being the stakeholder
alliance and a body of laws and regulations. He said the agenda
works best when all the constituencies and resource partners are
at the table with a sense of ownership with the process and the
outcomes. He spoke about the history of the stakeholder
alliance.
11:54:51 AM
MR. GLICK pointed out that Hawai'i has two utilities operating
six isolated grids. The state's challenges for a renewable
energy transition are listed [on slide 8], as follows: Oahu,
with the highest population and energy usage, has less landmass
for effective solar and wind; no interconnections between the
islands; unwillingness in communities to support the development
of large-scale infrastructure projects; real estate's rising
prices; and requirements for permitting. Nonetheless, the
economics and stakeholder alliance have kept the state ahead of
its RPS schedule [as seen on slide 9]. He shared that Hawai'i
received international attention when it passed legislation in
2015 establishing an electricity standard of 100 percent
renewable by 2045. This target is now the defining objective
for all future investments in the state's electricity sector,
allowing for a systemic change to a clean-energy future.
11:57:09 AM
MR. GLICK, [moving to slide 10], stated that deploying renewable
energy in Hawai'i depends on competitive bids in purchase power
agreements (PPAs). He noted that the "remoteness factor" of
Hawai'i and Alaska makes renewable energy more expensive than
markets in the mainland U.S. and Europe, and Hawai'i has not
experienced PPAs with 3 cents or 4 cents per kilowatt hour. He
voiced the opinion that Alaska would not experience this either
but expressed hope that neither state would be immune to global
trends. He pointed out that the adoption of RPS removed any
ambiguity over the intention of Hawai'i to establish a reliable
and renewable energy market, and this has created competition in
PPAs. He said that, with competitive bids and PUC oversight,
solar prices are on a downward trend. He pointed out [on slide
10] seven solar projects with energy storage, making
intermittent energy more reliable. He speculated that the
Railbelt would have competitive renewable energy because of
rising natural gas prices, wind potential, and a large land mass
for renewables. He stated that Hawai'i passed its RPS without
any clear analytical findings. He expressed the opinion that,
while studies should be performed, the absence of these studies
should not be a barrier to the urgent action needed to get the
transition underway. He expressed the expectation that Alaska
would be the benefactor of a long-term global price curve.
12:00:55 PM
MR. GLICK stated that [slide 11] comes from Hawaiian Electric's
2020-2021 sustainability report. The report details Hawaiian
Electric's move from a 12 percent renewable portfolio in 2011 to
a 35 percent renewable portfolio in 2020. He provided details
on the state's solar installations, which have produced 4.5
percent [more energy] than specified in the mandated target. He
briefly reviewed [slide 12], which details the updated status of
the state's renewable energy projects. He noted that Hawaiian
Electric reached the current percentage with a combination of
biomass, utility-scale solar, battery, rooftop solar, and wind.
He added that progress would also be made from the completion of
existing projects. Moving to [slide 13], he provided details on
the comparison of fossil fuel energy costs with renewable energy
costs, over time. He detailed the graph [on slide 14], which
depicted the downward-price curve of renewable energy generation
from 2010 to 2019. He pointed out the significant savings by
avoiding oil cost and the cost of maintaining the associated
facilities.
12:05:19 PM
MR. GLICK stated that HNEI's analysis shows planned additions of
solar and solar-plus-wind projects in the state would achieve 70
percent renewable energy by 2030 without significant changes in
the existing energy infrastructure. He reviewed the details of
this analysis and gave the scenarios that would create a path to
100 percent renewable energy [as seen on slide 15]. He
mentioned the Kauai Island Utility Cooperative's pumped-hydro
renewable energy project. He stated that this project will help
Hawai'i meet 70 percent of electricity sales with renewables by
2030. He said, "While there is not a silver bullet for finding
an energy transition, it's critically important to set the
agenda with binding commitments that carry the force of law and
that are effectively enforced by an oversight agency." He
reviewed that transition in Hawai'i was stimulated by decisive
leadership during an economic recession with the support of a
broad-based coalition of energy stakeholders committed to energy
self-sufficiency. He concluded that, given the "great harm done
by the dependence on foreign oil and gas," [HB 301] is timely,
and HNEI would assist in any way possible.
12:10:57 PM
REPRESENTATIVE FIELDS requested that Mr. Glick follow up after
the meeting with information on the wind-plus-storage project on
Kauai.
12:11:38 PM
CHAIR SCHRAGE announced that HB 301 was held over.
12:11:49 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 12:12 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 301 Tom Plant RPS Presentation.pdf |
HENE 3/10/2022 10:15:00 AM |
HB 301 |
| HB 301 Chris Rose RPS Presentation.pdf |
HENE 3/10/2022 10:15:00 AM |
HB 301 |
| HB 301 Mark Glick Alaska RPS-Hawaii Energy Transition.pdf |
HENE 3/10/2022 10:15:00 AM |
HB 301 |