the Department of Energy will help Hawaii lead America in utilizing clean, renewable energy technologies. Governor Lingle

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1 The Hawaii Clean Energy Initiative (HCEI) was launched on January 28, 2008 with the signing of a Memorandum of Understanding between the State of Hawaii and the U.S. Department of Energy (DOE) the Department of Energy will help Hawaii lead America in utilizing clean, renewable energy technologies. Governor Lingle Hawaii s success will serve as an integrated model and demonstration test bed for the United States and other island communities globally... Assistant Secretary Karsner

2 Hawaii needs to transition to an economy powered by clean energy, instead of imported oil Percent Clean Energy Range of scenarios under transformational assumptions (i.e., exploiting technical & economic potential) GAP Fundamental systemic transformation is required Range of scenarios under business as usual assumptions (i.e., attainment of RPS, RFS) but doing so will require a transformation of regulatory, financial, and institutional systems

3 Energy Agreement signed 10/20/08 RPS (Renewable Portfolio Standard) This package will increase the existing RPS to 25% by 2020 and 40% by 2030 It will also limit the amount of biofuels that will count toward the utility obligation; until 2015, the utility can only meet 30% of its obligation by simply substituting biofuels for oil in its existing power plants The PUC will set financial penalties for utility non-compliance An RPS is critical because it sets a long term binding target for the utility; penalties make it more than a goal efficiency 30% renewable 40% fossil 30% Energy Scenario Planning To replace Integrated Resource Planning (IRP) To reach the RPS, the electricity system requires planning with clean energy as the priority

4 ASSETS Adding RE to the grid Identifies wind, ocean, biomass & other projects that the utility pledges to connect to the grid Net metering: eliminates systemwide cap PV host program: utility can install solar on rooftops while preserving market competition Any goal needs an implementation plan; this provision lays out the first steps to get to the 70% goal Power plant retirements The utility commits to retiring a number of oil-fired generating units to transition away from fossil fuels To reduce the use of oil, the utility must retire fossil-fired plants

5 PRICING Feed-in Tariff (FiT) Very successful in Europe Feed-in Tariff Standard prices for Power Purchase Agreements Rather than the utility negotiating each contract, the PUC will set prices for each technology, i.e. wind, solar, ocean, geothermal A feed-in tariff provides certainty to developers and fair prices to consumers Rate pricing Time of use rates: let consumers benefit from using electricity at offpeak times Clean energy infrastructure surcharge: to help fund grid upgrades Energy Cost Adjustment Clause: For now, the utility will be allowed to keep passing on fuel costs via ECAC to maintain a financially sound utility Restructuring rates will align rates and consumer price signals with clean energy goals Decoupling Decoupling weakens the utility bias for selling its own power before IPP power It also decouples the utility s revenue from the number of kilowatt-hours sold Decoupling ensures that the utility stays financially sound while kwh demand is driven down by energy efficiency

6 GRID Undersea Cable HECO commits to working with private developers and the state to buy power from a big wind project from Maui County, and integrating that power onto Oahu s grid via an inter-island cable A cable is a game-changer for Oahu, which has the highest demand of any island but limited RE opportunities Grid Management The utility will be responsible for demand response, storage, and other system upgrades to help incorporate and manage renewable energy on the grid The utility will do a big build-out of advanced metering infrastructure, which they can put into their rate base New grid systems & technologies help create a 21st century grid ready for high levels of renewables