Located in the heart of the Pacific Ocean, Hawaii is an archipelago with a modern, energy-intensive, population which creates the basis for the state’s energy problems. Hawaii’s isolated geographic location forces the state to import fossil fuels through a tanker fleet. Transportation costs associated with this method of importing energy imposes significant costs on Hawaiian consumers: Hawaii spends around $5 billion dollars per year to import 36 million barrels of crude oil.1 And, to make matters worse, Hawaii is the most fossil fuel-dependent state in the nation: as of 2014, Hawaii relied on oil and coal for 67 percent and 14 percent of its fuel mix, respectively, for the generation of electricity. The result of this combination of geographic isolation and fossil-fuel dependence is that, on average, Hawaiians pay 2.5-3 times more for their electricity bills than consumers living in the continental United States.2

In response to these metrics, the State of Hawaii has mandated that by 2045, 100 percent of the electricity sold by utilities must come from renewable energy sources. As part of this overall goal, the Hawaiian state legislature has set a series of policy objectives to be implemented through the state's Energy Office: 1) diversify the energy portfolio, 2) connect and modernize the regional grid by balancing technology, economic, environmental, and cultural concerns, 3) leverage Hawaii's position as an innovation test bed, and 4) create an efficient marketplace that benefits both producers and consumers of electricity. To achieve the state’s policy goals, the Hawaii State Energy Office has developed a holistic approach aimed at creating a new energy ecosystem. Hawaii aims to phase out fossil fuels from its energy portfolio through an integrated planning process that will advance renewable energy technologies, smart grid technology, and a sustainable transportation sector.

To generate 100 percent of its electricity from renewable resources by 2045, Hawaii is aggressively pursuing renewable energy projects in bioenergy, geothermal, hydroelectric, and hydrokinetic power, as well as continuing its extensive investments in solar and wind power. These last two are expected to be major pieces in Hawaii's energy transition. As forms of distributed generation, solar and wind are particularly attractive because the lack of interconnections between the Hawaiian islands' electric grids make large-scale generation less economical than on the mainland.

Solar panels form part of the Renewable Hydrogen Fueling and Production Station on Joint Base Pearl Harbor-Hickam. About 30 hydrogen-powered vehicles use the JBPHH station. (Courtesy U.S. Navy, photo by Daniel Barker).

Solar energy is currently the largest source of renewable energy in Hawaii, and as of 2015 Hawaii led the United States in installed solar capacity per capita.3 Due to the state's already high energy prices, solar energy projects are more cost competitive in Hawaii. Distributed photovoltaics (PV) and community solar are the two most prevalent forms of solar, and account for 27.3 percent and 3.4 percent of electricity generated, respectively, in Hawaii for 2015.4

Increasing the prevalence of wind energy within the electricity generation portfolio is a key objective as the capacity factors in Hawaii make the state one of the most consistent and resilient wind markets.5 According to a 2016 report produced by the state’s energy office, significant opportunities exist to expand off-shore wind production in the state. In 2015, wind energy accounted for 28 percent of the renewable electricity portfolio and accounted for 6.5 percent of the total energy sold by Hawaiian utilities.6

Generating a greater percentage of total electricity from wind and solar projects will also allow Hawaii to reduce fossil fuel use in the transportation sector. Excess electricity can be used to electrify sections of the transportation sector and power a new fleet of electric vehicles. Policy incentives at the state level are helping to create the necessary infrastructure to support a consumer transition to electric vehicles and improve the ability of utilities to balance the supply and demand for renewable electricity.

To achieve its aggressive renewable energy goals, Hawaii is also investing in bioenergy. Bioenergy consists of generating electricity from biomass (plant matter) and using biofuels to displace fossil fuels in the transportation sector. Reducing the reliance of the transportation sector on fossil fuels is a key objective that must be achieved for Hawaii to achieve energy independence.

Surrounded by the Pacific Ocean, Hawaii is pursuing marine hydrokinetic energy on a commercial scale. Hydrokinetic power generates electricity by tapping into the movement of the ocean (waves and current). The multiple berth wave energy test site (WETS) is a joint partnership between the U.S. Navy and the Hawaii National Marine Renewable Energy Center (HNMREC), created to improve the feasibility of wave power as a renewable alternative. Hydrokinetic energy technology is not yet cost-competitive and so does not supply electricity beyond a research scale.7

Hawaii has created several incentives for consumers to install renewable energy systems and energy-efficient appliances, including the Solar and Wind Energy Tax Credit, the Residential Energy Efficiency Tax Credit, and the Residential Energy Efficiency Rebate Program. The Solar and Wind Energy tax credit was first enacted to allow individuals to receive an income tax credit up to 20 percent of the cost of a wind system and 35 percent of a solar PV one. Hawaii’s Residential Energy Efficiency Tax Credit and Rebate Program were developed to encourage consumers to transition to energy-efficient home appliances. Both programs aim to offset the high costs associated with purchasing energy-efficient heating/cooling systems, water heaters, heat pumps, and improving the efficiency of a home’s building envelope. Access to tax credits and rebates helps residential ratepayers make cost-effective energy choices that translate to lower electric bills and a reduction in total energy consumed.

Hawi wind farm in Hawaii, with a nameplate capacity of 10.56 MW (Courtesy Wind Power, photo by Mason Bryant)

Transitioning to 100 percent renewable energy by 2045 will not be an easy task: there are several challenges that result from the intermittent nature of the most widespread forms of renewable energy, solar and wind. The electricity generated from solar panels or wind turbines varies over time, depending on the time of day and season.8 In addition to their output variability, these technologies are also subject to location dependence.9 Wind turbines, for instance, must be in a favorable location to produce electricity at a cost-competitive price. Not only must there be wind blowing at an adequate speed to continually generate electricity, there is also usually a need for additional infrastructure to transmit electricity from the generation source to the end-use consumer.

In addition, Hawaii presents a unique set of problems that must be overcome. The greatest challenge is the lack of interconnectivity between the islands’ separate, centralized electric grids. Each island operates a separate electric grid, which imposes market barriers on the renewable energy industry in Hawaii. Electricity generated from distributed energy resources and utility-scale generation assets cannot be transferred between islands, which pushes up costs by limiting economies of scale and making it necessary to build more backup capacity. To achieve the state's clean energy mandate as cost effectively as possible, the interconnection problem must be addressed. One option is the Oahu-Maui Grid Tide Project. The Grid Tide interconnection, projected to cost $526 million,10 would connect the electric grid of their islands by cable, allowing for maximum use of the energy produced by utility-scale renewable energy plants.

An aging grid and electricity infrastructure also create a challenge by decreasing the potential savings that can be realized from energy efficiency programs. Implementing a modernized electric grid would allow for improved management of end-use consumption by utilities through demand response and peak-load shedding programs. A modern, smart grid could also help solve some of the issues associated with the output variability of solar and wind energy. Greater penetration of smart-grid technology, though it would require significant capital investments, is an important step for Hawaii to achieve energy independence.11


Author: Tyler Smith




1 Department of Business, Economic Development and Tourism, Hawaii State Energy Office. 2016. State of Hawaii Energy Resources Coordinator’s Annual Report 2015. http://energy.hawaii.gov/wp-content/uploads/2014/12/DBEDT_2015ERC-Report_Nov2015.pdf

2 Department of Business, Economic Development and Tourism, Hawaii State Energy Office. 2016. Hawaii Energy Facts and Figures. May. http://energy.hawaii.gov/wp-content/uploads/2011/10/FF_May2016_FINAL_5.13.16.pdf

3 State of Hawaii Energy Resources Coordinator’s Annual Report 2015.

4 Hawaii Energy Facts and Figures. 2016.

5 Hawaii Energy Facts and Figures. 2016. Page 26.

6 Hawaii Energy Facts and Figures. 2016. Page 26.

7 Cross, Patrick and Vega Luis. 2016. “U.S. Navy Wave Energy Test Site.” Hawaii Natural Energy Institute. http://www.hnei.hawaii.edu/sites/www.hnei.hawaii.edu/files/Wave%20Energy%20Test%20Site.pdf (accessed October 4, 2016).

8 Lazar, Jim. 2014. Teaching the “Duck” to Fly. Regulatory Assistance Project (RAP), January. http://www.raponline.org/wp-content/uploads/2016/05/rap-lazar-teachingducktofly-2014-jan.pdf.

9 Mai, Trieu, David Mulcahy, M. Maureen Hand, and Samuel F. Baldwin. 2014. "Envisioning a renewable electricity future for the United States." Energy 65, 374-386. Academic Search Premier, EBSCOhost. Page 374.

10 Hawaii Energy Facts and Figures. 2016. Page 18.

11 Hawaii Energy Facts and Figures. 2016. Page 21-22.