A Fast Solar Ramp in Hawaii Can Save $3-7 Billion

By Will Driscoll

Hawaii can save $3 to $7 billion by accelerating its transition to solar, according to an independent utility modeling analysis.  That conclusion is validated by the experience of the Hawaiian island of Kauai, where a new solar-plus-storage park will bring down the island’s electricity rates. 

A new state law in Hawaii advances its commitment to pursuing renewables aggressively, so now it’s up to Hawaiian Electric to verify the massive $3-7 billion savings potential from an aggressive solar transition, and then pursue that path.

Savings of $3 to $7 billion

Hawaii’s legislature has set a goal of 100 percent renewables by 2045, and Hawaiian Electric Industries is pursuing a state-approved plan to meet that goal.

Yet a new study of Hawaii’s grid by the Rhodium Group found that moving faster on solar (with minimal growth in other renewables) would save Hawaii $3 to $7 billion between 2020 and 2045.

Whereas Hawaii on its current path would reach 40 percent renewables by 2030, the study found that the least-cost path would achieve 46 percent renewables just three years from now, by 2021, and then 58 to 84 percent renewables by 2030.

The range in savings, between $3 and $7 billion, reflects two bounding analyses: 1) moderate renewables costs combined with low oil prices (for $3 billion in savings); and 2) low renewables costs combined with high oil prices (for $7 billion in savings).  (Hawaii generates most of its electricity using imported oil.)

Beyond solar, the study found that Hawaii would need “up to two gigawatts of lithium-ion battery or functionally equivalent storage in 2030” to achieve the least-cost energy system. Kauai has shown the way here, as it is relying on battery storage provided by Tesla and the AES Corporation to store solar power for later release onto the grid.  (The study’s methodology is described in a technical note below.)

Kauai’s new solar-plus-storage park will bring down electricity rates

Kauai, where a member-owned co-op utility provides the power, shows how easy it is to adopt renewables quickly. Kauai has advanced from 8 percent renewables in 2011 to 44 percent now.

That’s well above the 27 percent for the rest of Hawaii, which is served by Hawaiian Electric.

Kauai aims to generate 50 percent of its electricity from renewables by 2023, and 70 percent by 2030. That 70 percent figure is the approximate midpoint of the 58 to 84 percent range found in the Rhodium study to be the least-cost range for Hawaii as a whole by 2030.

The cost of electricity from a new AES-built solar-plus-storage system on Kauai will be 11 cents per kilowatt-hour—significantly lower than the 14.5 cents per kWh for Tesla’s system just two years ago—and “will provide downward pressure on rates,” said the Kauai utility’s CEO David Bissell.

The Government of Hawaii wants affordable electricity and rapid integration of renewables

Hawaii’s governor recently signed a law providing that by 2020 the public utilities commission must set performance incentives and penalties to tie an electric utility’s revenues to its achievement on performance metrics—breaking the direct link between investment levels and allowed revenues. Two of the key performance measures align with the solar progress in Kauai and the results of the Rhodium Group study—namely, affordability of customer electric bills, and rapid integration of renewable energy.

Hawaii’s elected officials have been concerned about Hawaiian Electric at least since 2015, when 40 elected officials called for a study of publicly owned electric utilities, as on Kauai, for all of Hawaii.

The Rhodium Group study itself indicated interest across Hawaii in accelerating solar, as it gained the participation of Hawaiian stakeholders in 200 hours of focus groups and interviews, and was funded by a Hawaiian technology firm incubator, Elemental Excelerator.

It’s now up to Hawaiian Electric to verify the projected $3-7 billion savings, and pursue a fast solar ramp

The best course for Hawaiian Electric would be to run the Rhodium Group’s numbers through its own utility model to develop its own estimate of the cost savings possible from a fast renewables ramp. If Hawaiian Electric does not yet have a sophisticated utility planning model for this purpose, which includes, for example, battery storage as an option, the utility would be wise to first upgrade its planning model, and then re-run the Rhodium Group’s analysis. Or, if Hawaiian Electric’s most recent planning analysis, as reflected in its December 2017 Power Supply Improvement Plan, was limited by any artificial constraint on the amount of solar that it would allow, the utility would do well to re-run its analysis without any such constraint.

Assuming that Hawaiian Electric confirms the Rhodium study’s results—which Kauai’s experience already validates—then it should roll out an aggressive solar ramp. To its credit, Hawaiian Electric has been working with the National Renewable Energy Laboratory to understand how it can best modernize its island grids to incorporate low-cost solar. Hawaiian Electric could now quicken its pace to accelerate its renewables transition. Its customers would be happier paying less for electricity, and Hawaiian Electric could receive performance incentives, rather than pay penalties for failing to meet performance metrics, under Hawaii’s new state law.


Technical Note: 
The Rhodium Group study simulated Hawaii’s grid using a modified version of SWITCH, an “open source optimization modeling platform,” which contained detailed representations of the electric grid on Hawaii’s four most populous islands. For oil price scenarios, the study used the upper and lower bounds of electric power sector diesel and residual fuel oil prices in Hawaii between 2006 and 2017. For renewable price scenarios, the study started with renewable energy costs assumed by Hawaiian Electric in its December 2017 Power Supply Improvement Plan. Then, to account for future cost reductions for renewables due to technological improvements and economies of scale, the study “scaled those prices to projections from NREL’s mid-cost and low-cost scenarios.” The study’s authors then ran the modified version of the SWITCH model to find the least-cost energy system for 1) moderate renewables costs combined with low oil prices, and 2) low renewables costs combined with high oil prices.

Global Battery Production Capacity Must Grow 21 Times To Electrify The Global Vehicle Fleet

By Will Driscoll

  • Market and policy forces may drive a global transition to electric vehicles.
  • Current and planned global battery manufacturing capacity is 313 gigawatt-hours per year.
  • An estimated battery manufacturing capacity of 6600 gigawatt-hours per year would be needed to electrify the global vehicle fleet.
  • That is about 21 times the current capacity.

Vehicle manufacturers are announcing plans for new and improved electric vehicle models on a seemingly daily basis. For passenger vehicles, the appeal is improved performance and lower operating costs; as prices fall, consumer demand will expand. For trucks and city buses, the appeal is lower life cycle costs and, especially for buses, cleaner air.

Nations may favor electric vehicles to reduce oil imports and protect the climate. Indeed, stabilizing the climate will require electrifying the global vehicle fleet and powering vehicles with solar and wind power.

Current and planned global battery manufacturing capacity is 313 gigawatt-hours (GWh) per year

The world’s major battery manufacturers include Panasonic, LG Chem, Samsung SDI, and Chinese newcomer CATL. These and other battery makers have an existing and planned manufacturing capacity of 313 GWh per year, according to Bloomberg.

About 6600 GWh of battery manufacturing capacity would be needed to electrify the global vehicle fleet

This analysis considers heavy commercial vehicle (HCV) trucks, medium commercial vehicle (MCV) trucks, city buses, passenger vehicles, and commercial vehicles made by auto manufacturers.

Because electric vehicles driven many hours per day achieve the greatest operating savings, fleets of trucks and buses are the strongest candidates for electrification, and thus are considered first.

Electric HCV trucks would require 900 GWh of battery manufacturing capacity

Deloitte projects that 1.8 million HCV trucks will be sold annually by 2026, while a Tesla Semi HCV with a range of 500 miles has been estimated to require a 500 kilowatt-hour (kWh) battery. Multiplying the two values yields an estimated 900 GWh of battery manufacturing capacity needed for HCV trucks. (Note that one million kWh equals one GWh.)

Electric MCV trucks would require 180 GWh of battery manufacturing capacity

Deloitte projects that 0.90 million MCV trucks will be sold annually by 2026, while Volvo plans an electric MCV with a 200 kWh battery. Multiplying the two values shows that about 180 GWh of battery manufacturing capacity would be needed for MCV trucks.

Electric city buses would require 50 GWh of battery manufacturing capacity

Bloomberg projects that 0.18 million city buses will be sold annually by 2025, while Proterra offers an average 275 kWh battery pack size for its city buses. Multiplying the two values shows that about 50 GWh of battery manufacturing capacity would be needed for city buses.

Passenger vehicles would require 3550 GWh of battery manufacturing capacity

An automaker’s association estimates that 71 million passenger vehicles were sold in 2017, while the standard Tesla Model 3 will have a 50 kWh battery pack. Multiplying the two values shows that an estimated 3550 GWh of battery manufacturing capacity would be needed for passenger vehicles.

Commercial vehicles made by auto manufacturers would require 1950 GWh of battery manufacturing capacity

An automaker’s association estimates that 26 million commercial vehicles were sold by automakers in 2017. This analysis assumes that on average they would have a battery capacity 50 percent larger than that for a passenger vehicle, or 75 kWh. Multiplying the two values shows that about 1950 GWh of battery manufacturing capacity would be needed for commercial vehicles.

Summing the capacity needed across the five vehicle types = 6600 GWh needed

Summing across all vehicle types shows that an estimated 6600 GWh of battery manufacturing capacity would be needed to electrify the global vehicle fleet.

Dividing 6600 by 313 (which is the current plus planned battery manufacturing capacity) shows that capacity must grow about 21 times to meet that target.