Hawaii Gas Works to Advance Hawaii’s Clean Energy Future

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Under the leadership of Hawaii Gas President Alicia Moy, Hawaii’s only gas utility has taken a diligent, measured approach to working with key stakeholders and obtaining market demand and supply information to create a scalable LNG plan to meet the needs of its customers and possibly help Hawaii transition to a 100 percent renewable energy future. We asked Ms. Moy to talk with us about the company and its plans.

How does Hawaii Gas contribute to the advancement of the economic, social and environmental aspects of sustainable development?

Hawaii is our home, and we care about the economic, social and environmental well-being of our state. Our vision is to improve Hawaii’s quality of life as the premier provider of gas and other clean energy solutions. We believe that development should be conducted in a responsible, sustainable and collaborative manner that takes into account the views of stakeholders and the community.

As the state’s only regulated gas utility, we provide residential and commercial customers with clean, affordable and reliable gas energy. We have been serving Hawaii since 1904, and our principal products are clean burning gaseous fuels, including synthetic natural gas (SNG) and propane, which have historically been byproducts of the on-island refineries. In addition, we continue to explore opportunities to develop renewable natural gas (RNG) derived from biogas. We are also seeking to import additional quantities of liquefied natural gas (LNG) for our customers, Hawaii’s ground and marine transportation needs, as well as potentially for power generation as a temporary transitional fuel.

As the state’s only regulated gas utility, we provide residential and commercial customers with clean, affordable and reliable gas energy.

We are committed to our state’s clean energy future and to lowering energy costs. Hawaii imports 90 percent of its energy, and we pay the highest electricity prices in the nation, approximately three times the national average. There is no question that our island communities need relief from the high cost of energy.

We believe that natural gas can play a vital role in Hawaii’s energy transformation. It can potentially serve as a temporary bridge fuel while our state transitions from oil to renewable energy for power generation. Natural gas is the cleanest of all fossil fuels, producing 50 percent less carbon dioxide emissions than coal and 30 percent less emissions than oil. It is also less expensive than oil. Furthermore, the direct use of gas energy in appliances is three times more efficient than electricity derived from fossil fuels, which saves energy and dollars. Natural gas is versatile and can be used for cooking, water heating, clothes drying, cooling and outdoor lighting in exactly the same way that our customers use gas today.

The use of gas energy reduces costs for families and businesses, giving them more spending power to invest in what matters most; increases sustainability and quality of life; and, when compared to oil, reduces carbon emissions, which is better for the environment.

What is Hawaii Gas’ proposed LNG Plan?

Our State has set a bold vision of 100 percent renewable power generation by 2045, which we strongly support. We believe that natural gas, which is cleaner and cheaper than oil, can potentially serve as a temporary bridge fuel to accelerate renewable energy penetration and help Hawaii achieve its 100 percent goal faster, while providing immediate relief from the high cost of energy. It can also diversify Hawaii’s fuel supplies and increase reliability and energy security. Our proposed LNG plan is scalable and can work at different volume levels. It has been purposefully designed to ramp down to allow faster penetration of renewables into the market.

Hawaii Gas began exploring the possibility of bringing in LNG five years ago to diversify our fuel supply, given the uncertainty of the long-term viability of the local refineries, which supply the feedstock for our synthetic natural gas (SNG) operations. Natural gas is interchangeable with SNG. Since last April, we have been importing LNG in limited quantities via ISO containers as a backup fuel for SNG.

Our State has set a bold vision of 100 percent renewable power generation by 2045, which we strongly support.

Our estimates indicate that we would need approximately 300,000 metric tonnes per annum (MTPA) of LNG to supply our SNG utility customers on Oahu as well as interested independent power producers. If the use of LNG were to be expanded to include all statewide power generation as a bridge fuel, the volumes needed would be approximately 1 million MTPA initially, but would decline over time as renewable power generation increases. A minimal amount of new infrastructure would be required to implement this program, which would have very little impact on pricing.

Our scalable plan would use an offshore or near-shore LNG Floating Storage and Regasification Unit (FSRU). No other infrastructure would be needed other than the ship-to-shore pipelines to connect to our existing thousand miles of pipeline on the island of Oahu. This would provide the greatest economies of scale, the least environmental impact, and would leverage existing infrastructure. Once approved, an FSRU could be operational fairly quickly to provide ratepayers with savings as soon as possible. The FSRU would both store and regasify the LNG. It would be moored over a mile off the coast of Oahu, and the regasified LNG would be delivered to shore via a subsea pipeline, eliminating the need for land-based staging facilities and avoiding harbor traffic congestion. There are several candidate locations, including a site off of Barbers Point near the moorings for the refineries, or at a location in Pearl Harbor.

Last August, we completed a Request for Information (RFI) on the technical and economic feasibility of delivering LNG via an FSRU. The responses from more than 30 companies showed significant market interest, clearly demonstrated the potential for cost savings, and confirmed the feasibility of receiving LNG via an FSRU at Barbers Point. With that information, last November, we released an Invitation to Bid (ITB) for an LNG purchase agreement – with the flexibility to decrease the quantity of LNG over a 15-year period – and for the charter and operation of an FSRU. Responses to the ITB have been very encouraging, and have confirmed that the project is technically viable with compelling economics compared to oil. We are reviewing the bids and anticipate sharing these market results with stakeholders this year.

Why should LNG be considered as a bridging fuel for power generation?

The shipping and regasification of LNG and the use of natural gas for power generation are proven technologies. That’s important to consider as our state ventures into developing a diversified portfolio of renewable generation to reach its 100 percent goal. Natural gas is a widely used and abundant energy resource that can reduce carbon emissions, lower costs, diversify Hawaii’s fuel supply, and increase our state’s energy security.

We are…exploring new solutions and leveraging our existing gas infrastructure…to reduce energy costs…and provide more options to the community.

Natural gas can also complement the intermittency of renewables, as it provides firm, reliable, quick-start and continuous power, when the sun has set and the wind is slow.

A key challenge for renewable energy is cost-effective storage. Natural gas can complement renewable energy development by providing cleaner, cheaper ‘base load’ power, so Hawaii can meet its energy needs while storage technologies continue to develop. A flexible 15-year fuel supply arrangement would allow a decrease of LNG as renewable energy development and use increase.

What can you tell us about Hawaii Gas’ activities with respect to biogas?

Biogas, also known as renewable natural gas (RNG), is an important component of our fuel source diversification efforts. Wastewater treatment plants and landfills produce biogas. Some of this biogas in Hawaii is used on-site to provide energy for process heating, but most of it is flared into the atmosphere. We see potential to capture, clean up and inject this biogas into our existing gas distribution infrastructure to serve our customers.
The City & County of Honolulu recently released a request for bids for the sale of biogas from the Honouliuli Wastewater Treatment Plant, and we will be submitting a proposal.

In the long term, we are looking into the possible use of biomass production to produce biogas. We are also working with government and industry stakeholders to develop new pathways for clean, reliable and cost-effective hydrogen fuel supplies.

What do you hope that other energy providers could learn from Hawaii Gas?

Collaboration of key stakeholders in an island community is just as important as balancing the dependable technology of natural gas power generation with the emerging technologies for renewable generation. The key stakeholders and leaders in the energy sector, including Hawaii Gas, have been collaborating with one another to advance Hawaii’s clean energy future. Through conversations with policymakers, regulators, other utilities, and business and community leaders, it is clear to me that we all desire to increase renewables and lower the high cost of energy in our state. Finding scalable, sustainable solutions will require us to partner with one another to achieve this common vision. I believe we can create a pathway for success if we are guided by principles such as transparency, open and honest communication, and flexibility that takes into account changing scenarios.

At Hawaii Gas, we are striving to improve the quality of life for Hawaii’s people as the premier provider of gas and other clean energy solutions. Diversity, reliability and security are key for Hawaii’s energy future. We are being proactive in exploring new solutions and leveraging our existing gas infrastructure and expertise to reduce energy costs for ratepayers and provide more options to the community.

What would you describe as the key partnerships behind Hawaii Gas’ success to date?

Our customers and our employees are the keys to our success. We serve more than 68,000 customers statewide, including nearly every major market segment in Hawaii: residents, food service, military, hospitality, healthcare, education, government, agriculture and more. Our team of gas experts is the largest in Hawaii and includes more than 300 energy professionals.

We are working with key stakeholders and leaders on Hawaii’s clean energy transformation, including policymakers at the local, state and federal levels; the Hawaii Public Utilities Commission and the Consumer Advocate; the State Energy Office under the Department of Business, Economic Development & Tourism; industry leaders and other organizations that share the common vision of advancing Hawaii’s energy future and reducing high energy costs quickly and responsibly.

 Biogas, or renewable natural gas (RNG), is an important component of our fuel source diversification efforts.

We believe that everyone needs to be at the table to develop a comprehensive energy strategy for our state. Although we may have different approaches, by listening and collaborating, we can bring our resources together and develop viable solutions.

What can you tell us about Hawaii Gas’ parent company, Macquarie Infrastructure Company, and what weight are they able to bring to bear regarding positively impacting Hawaii’s clean energy revolution?

Macquarie Infrastructure Company (NYSE: MIC) is a $6 billion publicly traded company that owns, operates and invests in a diversified group of infrastructure businesses in the U.S. and has energy-related holdings in 12 countries. In addition to Hawaii Gas, MIC’s holdings include Macquarie Renewable Energy Holdings, a portfolio of seven wind and solar generation facilities, producing up to 260 megawatts of renewable energy in Texas, Arizona, California, New Mexico and Idaho.

MIC has worldwide experience in infrastructure investment and is committed to Hawaii. Through its backing, Hawaii Gas is able to dedicate a wide breadth of experience and resources to transformational projects for Hawaii.

How do you measure success at Hawaii Gas?

Our number one priority is to continue to provide safe, clean, reliable and affordable gas energy to Hawaii’s families and businesses. In all that we do, we strive to embody our philosophy of “Good Energy,” ensuring that our products and services meet the needs of our customers and contribute toward a brighter future for our state. Our vision is to improve Hawaii’s quality of life as the premier provider of gas and other clean energy solutions. Our employees are responsible for serving more than 68,000 customers on all major Hawaiian Islands and for maintaining our statewide gas distribution system, including 1,000 miles of pipelines on Oahu, Hawaii’s most populous island.

Looking at the bigger picture, Hawaii’s successful energy transformation would mean achieving the goal of 100 percent renewable energy for power generation by 2045. As the only regulated gas utility in the state, we support the responsible achievement of this goal in collaboration with all stakeholders.

We strive to embody our philosophy of  ‘Good Energy’…

We believe that LNG, as a temporary bridge fuel, could ease the transition to renewable energy, while helping Hawaii’s families and businesses save money on energy in the meantime. With LNG, they won’t have to wait 30 years to experience lower energy costs.

Do you think Hawaii consumers, policymakers and lawmakers understand and support the merits of gas?

Yes. Gas continues to be an important energy source for Hawaii, just as it has been for the past 100 years. Thousands of families in Hawaii rely on gas for cooking, water heating, clothes drying and outdoor lighting. Hotels, hospitals, restaurants, farms, the military and government agencies, all of which represent major sectors of our economy, choose gas because of its efficiency, reliability, cost-effectiveness and low carbon emissions.
In addition, in times of emergency, when the lights go out, the gas stays on. Last year, after Tropical Storm Iselle downed power lines, the residents of Puna on the Big Island of Hawaii used gas to cook and to heat water until power was restored several days later. Energy is critical for our daily lives. Having a diverse fuel supply in our state is essential to ensure energy security and people’s safety and well-being.

Last April, the PUC approved Hawaii Gas’ use of LNG as a backup fuel for our SNG operations. The concept of LNG as a bridge fuel is currently being evaluated and discussed among regulators and policymakers. We believe LNG, as a cleaner, cheaper alternative to oil, has significant potential to assist Hawaii in its transition toward 100 percent renewable energy for power generation by 2045.

For more information, visit www.hawaiigas.com.