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Estimating the Opportunity for Load-Shifting in Hawaii: An Analysis of Proposed Residential Time-of-Use Rates

Hawaii’s largest electric utility, Hawaiian Electric Company (HECO) and its subsidiaries recently proposed a Time of Use (TOU) pricing scheme for residential rates. The TOU scheme has three tiers of prices: daytime, on-peak, and nighttime. The proposed rates have the highest cost during the on-peak period from 5pm to 10pm. For Oahu, the lowest cost is at nighttime, from 10pm to 9am. The difference between high and low rates is $0.33/kWh. For Maui and Hawaii Island, the lowest cost is during the daytime, 9am to 5pm. The difference between high and low rates are $0.35/kWh and $0.50/kWh, respectively. It is not stated whether the rates will be implemented as an opt-in, opt-out or mandatory program. This report summarizes literature on time varying pricing for residential rates to inform Hawaii’s electricity stakeholders, including ratepayers and policy-makers, of the potential impacts and considerations regarding the potential for TOU pricing in Hawaii.

Working Paper

Electric Vehicle Greenhouse Gas Emission Assessment for Hawaii

This study estimates greenhouse gas (GHG) emissions of electric vehicles (EVs) compared to that of other popular and similar cars in Hawaii, by county over an assumption of 150,000 miles driven. The GHG benefits of EVs depend critically on the electricity system from which they derive their power. The analysis shows that EVs statewide are an improvement in GHG emissions over similar and popular internal combustion engine vehicles (ICEVs). Due to Oahu’s relatively high dependence on fossil fuels, including coal-burning, however, hybrid electric vehicles (HEVs) offer an improvement over EVs. Notably, Oahu also has the most EVs on the road. Hawaii Island, where there are few EVs on the road, shows a clear GHG benefit from EVs because of its high penetration of low carbon sources for electricity. This difference in benefits suggests that policies supporting EV uptake should consider impacts per island, based on available types of electricity generation. For example, because EVs on Hawaii Island provide near to mid-term GHG benefits, there should be assessment of provision of fast-charging stations to overcome potential range anxiety. Until Oahu substantially transitions towards greater penetration of renewable sources for electricity, it may be too early to tout EVs on Oahu as a GHG emissions reduction strategy. This of course depends on the type of vehicle from which drivers switch to EVs. If EV drivers largely pull from potential HEV consumers, as is suggested in prior studies, then there is no gain in GHG emissions reduction. On the other hand, if EV consumers switch from ICEVs, there are GHG emissions savings. Oahu’s electricity generation mix must become similar to that in carbon intensity of Kauai and Maui to make high performing EVs at least comparable to high performing HEVs in GHG emissions.

Read the full report at the Electric Vehicle Transportation Center.

Electric Vehicle Lifecycle Cost Assessment for Hawaii

This study develops a model to estimate the total cost of ownership of electric vehicles (EVs) in comparison to similar internal combustion engine (ICEVs) and hybrid electric vehicles (HEVs). The model includes issues related to purchase/finance, insurance, maintenance, resale value, future fuel prices and access to solar photovoltaic (PV). It also estimates the impact of proposed EV time-of-use rates on ownership costs.

Key findings are as follows:

  •  EVs on average cost more than their internal combustion engine (ICE) or hybrid electric vehicle (HEV) counterparts, though this gap is substantially reduced with the federal tax credit.
  •  The Nissan Leaf is cost competitive without the federal tax credit and has the lowest lifecycle vehicle cost when incorporating the federal tax credit (among all vehicles considered).
  •  Electricity rates in Hawaii are much higher than the national average. Using the Energy Information Administration’s range of forecasts for future oil prices (low, reference and high), a set of future electricity and gasoline prices are determined. The model finds that when oil prices are low or reference, lifetime fuel costs are higher for EVs than other vehicles. When oil prices are high, on the other hand, EVs offer notable cost savings while accounting for Hawaii’s historic relationship between oil prices and electric rates.
  •  Having residential PV substantially brings down the cost of EV ownership, even considering the capital expenditure for PV panels.
  •  The pilot and proposed TOU rates offered by the utility reduce lifecycle EV fuel costs, assuming charging only when rates are lowest, by an average of 10%.

Read the full report at the Electric Vehicle Transportation Center.

Factors Affecting EV Adoption: A Literature Review and EV Forecast for Hawaii

Electric Vehicles (EVs) reduce or negate gasoline or diesel use in vehicles through integration with the electric grid. Both plug-in hybrid electric vehicles (PHEVs)—which can draw from a battery as well as liquid fuel—and battery electric vehicles (BEVs)—solely powered through electricity—provide the opportunity for power-sharing with the electric grid and can potentially ease the integration of sources of intermittent renewable energy. This is a potentially important technology to help reduce greenhouse gas (GHG) emissions, local air pollution, and vehicular noise.

In this paper, we review studies informing the factors that affect EV adoption. We also review and harmonize studies that develop forecasts of EV adoption over time. We select a set of forecasts that represent low, reference, and high EV adoption and apply them to Hawaii-specific EV and car sales data to provide a preliminary forecast of potential EV adoption in Hawaii.

Read the full report at the Electric Vehicle Transportation Center.

UHERO Brief: An Economic and GHG Analysis of LNG in Hawaii

Hawaii currently meets the majority of its electricity needs through oil-fired generation – causing rates to be nearly four times the national average. In response to rising oil prices and in line with State-led action combating climate change, Hawaii is aggressively pursuing alternative sources of energy for its electric sector. Hawaii’s Renewable Portfolio Standard (RPS) states that utilities must meet 40% of electricity sales with renewable sources of energy by the year 2030; however, the remaining 60% can come from fossil fuels. Lower natural gas prices as a result of the “shale gas revolution” is in part why the State and key stakeholders are deliberating importing large amounts of natural gas in liquefied form (liquefied natural gas or LNG) for use in the electric sector.

This study builds upon past Hawaii-based LNG studies and extends the analysis by assessing both the macroeconomic and electricity sector impacts of using natural gas for power generation. We draw upon two recent studies, by Facts Global Energy (2012) and Galway Energy Advisors (2013) for price estimates. In addition to economic outcomes, this study estimates GHG emissions impacts as well as qualitatively discusses other environmental impacts related to the extraction of natural gas.



Read the full report here

An Economic and GHG Analysis of LNG in Hawaii

Hawaii currently meets the majority of its electricity needs through costly oil-fired generation causing rates to be nearly four times the national average (EIA, 2013a). The "shale gas revolution" has led to rapidly declining natural gas prices within the continental U.S. The emergence of a natural gas market that is de-linked from oil prices has renewed Hawaii's interest in natural gas imports. Potentially lower natural gas prices as well as the view that it will help to reduce green house gas (GHG) emissions and increase energy supply security through domestic sourcing are major reasons why the State and key stakeholders are deliberating over importing large amounts of natural gas in liquefied form (liquefied natural gas or LNG). This study uses detailed models of Hawaii's electric sector and overall economy to estimate the impacts of Hawaii importing LNG for use in the electric sector.


Cost Implications of GHG Regulation in Hawai‘i

The State of Hawai‘i and the U.S. are developing greenhouse gas (GHG) emissions reduction regulations in parallel. The State requires that economy-wide GHG emissions be reduced to 1990 levels by the year 2020 and the U.S. Environmental Protection Agency is developing new source performance standards (NSPS) for new electricity generation units. The State Department of Health has proposed rules that would reduce existing large emitting electricity generating units by 16% from 2010 levels. The NSPS proposes GHG concentration limits for new electricity units.

We use a comprehensive model of Hawai‘i’s electricity sector to study the potential cost and GHG impacts of State and Federal GHG regulations. Given uncertainty about the final form and implementation of these regulations, we adopt a series of scenarios that bracket the range of possible outcomes. First we consider the State’s GHG cap (for existing units) and NSPS (for new units) being implemented at the facility level. Next, we consider the implications of allowing for partnering to meet the State GHG cap and the NSPS at a system-wide level. We also consider the case where the State GHG cap is extended to apply to both existing and new units. The current proposed State GHG rules exclude biogenic sources of emissions. We address the impacts of this decision through sensitivity analysis and explore the impact of GHG policy on new coal-fired units.

We find that regulating GHGs at the facility level leads to greater reductions in GHG emissions but at higher cost. Over the 30-year period that we study, when biogenic sources of emissions are ignored, facility level implementation of policy will add $3 billion to the cost of electricity generation at an average cost of $180/ton of GHG abatement. If biogenic sources of emissions are included within the accounting framework, abatement costs rise to $340/ton.

Overall, we find that the high cost of Hawai‘i’s current electricity generation provides a strong incentive to move towards less costly alternatives – in this consideration, primarily wind and rooftop PV. This leads to a reduction in GHG emissions. However, this finding would not hold if fuel prices were substantively lower than current levels, either from falling prices or fuel-switching to lower cost products. Regardless, the qualitative implications about the optimal structure of GHG policy are robust to changing assumptions about fuel prices. Implementing GHG policy at the facility level leads to relatively higher levels of GHG emissions reductions, though at substantially higher cost. If a greater level of GHG emissions reduction is desired, the least cost policy is to lower the level of the GHG cap while still allowing for the greatest flexibility in achieving targets.


PURPA and the Impact of Existing Avoided Cost Contracts on Hawai'i’s Electricity Sector

The United States has been trying to reduce its dependence on imported fossil fuel since the 1970s. Domestic fossil fuel supply initially peaked in 1970, and the oil crises of 1973 and 1979 accelerated domestic policy and investments to develop renewable sources of energy (Joskow, 1997). One such policy—passed in 1978 by the U.S. Congress—was the Public Utility Regulatory Policies Act (PURPA).

In this policy brief, we identify the existing PURPA-based contracts in Hawai'i and use a Hawai'i-specific electric sector generation planning model, The Hawai'i Electricity Model (HELM), to estimate the impact that PURPA contracts have on both total system cost and the mix of generation technologies. We study a variety of scenarios under the maintained assumption that the state will achieve the Hawai'i Renewable Portfolio Standard, which requires that 40% of electricity sales are generated using renewable sources by the year 2030.


A Policy Analysis of Hawaii's Solar Tax Credit Incentive

This study uses Hawaii as an illustrative case study in state level tax credits for PV. We examine the role of Hawaii’s tax credit policy in PV deployment, including distributional and tax payer impacts. Hawaii is interesting because its electricity rates are nearly four times the national average as well as has a 35% tax credit for PV, capped at $5,000 per system. We find that PV is an excellent investment for Hawaii’s homeowners, even without the state tax credit. For the typical household, the internal rate of return with the state tax credit is about 14% and, without it, 10%. Moreover, the vast majority of installations are demanded by households with the median income and higher. We estimate that single-family homeowner’s in Hawaii may demand as much as 1,100 MW of PV. There are, however, significant grid constraints. Policy currently limits PV generation to no more than 15% of peak load for any given circuit, or approximately 3% of aggregate electricity demand. Tax credits are therefore not likely to increase the overall deployment of PV, but rather spread the cost of installation from homeowners to taxpayers and accelerate the rate at which Hawaii reaches grid restrictions.

 Published version:  Coffman, Makena, Sherilyn Wee, Carl Bonham, and Germaine Salim. "A Policy Analysis of Hawaii's Solar Tax Credit." Renewable Energy 85 (2016): 1036-043. Web.

Tax Credit Incentives for Residential Solar Photovoltaic in Hawai‘i

Solar photovoltaic (PV) tax credits are at the center of a public debate in Hawai‘i. The controversy stems largely from unforeseen budgetary impacts, driven in part by the difference between the legislative intent and implementation of the PV tax credits. HRS 235-12.5 allows individual and corporate taxpayers to claim a 35% tax credit against Hawaii state individual or corporate net income tax for eligible renewable energy technology, including PV. The policy imposes a $5,000 cap per system, and excess credit amounts can be carried forward to future tax years. Because the law did not clearly define what constitutes a system or restrict the number of systems per roof, homeowners have claimed tax credits for multiple systems on a single property. In an attempt to address this issue, in November 2012, temporary administrative rules define a PV system as an installation with output capacity of at least 5 kW for a single-family residential property. The new rule does not constrain the total number of systems per roof, but rather defines system size and permits tax credits for no more than one sub-5 kW system. In other words, it is possible to install multiple 5 kW systems and claim credits capped at $5,000 for each system. There is an additional 30% tax credit for PV capital costs at the federal level. There is no cap for the federal tax credit and excess credits can be rolled over to subsequent years.