Island Utility Aims for Two-Thirds Renewable Energy by 2020 — Episode 92 of Local Energy Rules Podcast

David Bissell

Every piece of generating equipment, whether it’s conventional, whether it’s renewable, fails at times, and it’s just got to be part of the planning. There is no perfect system.

John Farrell

Can an electric utility go from 10% to 50% renewable energy in just five years and simultaneously lower costs for customers? It is not a theoretical question. To give the answer, we’re joined by the CEO of the Kauai Island Utility Cooperative David Bissell. He’ll explain how this Island utility made the massive jump to clean energy since 2014 and what lessons its technological progress and its cooperative ownership model provides for utilities across the United States and their shift to solar batteries and other clean technologies. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance and this is Local Energy Rules, a podcast sharing powerful stories about local renewable energy. Welcome to the program, David.

David Bissell

Thank you John and Aloha from Kauai.

John Farrell

Well, again, thanks so much for joining me. We last spoke with a member of Kauai Island Utility Cooperatives board back in 2014, and at the time, there was a lot of interest in renewable energy as a way to solve really high fuel prices for the islands, electricity generation, mostly oil fired. So I would love to just start out by asking you what has changed since 2014 in terms of what you’ve already been able to develop and kind of what the plans are going forward.

David Bissell

Yeah. So there’s been an incredible amount of change since 2014 to put a little context back then when you were speaking to our board chairman at the time, Jan TenBruggencate, who is still on our board, I believe we were about 13% renewable and rolling forward from 2014 to 2019 this year we’ll be around 55%. So Jan I believe, made some broad predictions about storage becoming a key component of our renewable efforts. And that’s came true since then. We’ve developed and having service to large PV and storage projects. The first was done with Tesla and that was the first really large scale PV and storage project done anywhere in the world. That one’s a 13 megawatts by four hours of storage, so 52 megawatt hours and about five or six percent of our islands energy and then somewhere around 20% of our nighttime peak. From that, that project was able to be met and then just this year we about doubled that with a project we’ve done with a solar that is a 20 megawatt AC PV project with a hundred megawatt hours of storage, so five hours of storage that enables us to use meet up the 40% of our nighttime peak where that, and we have in construction this year while in the construction, another storage project with  solar on the military base on the Island, which will be about the size of the Tesla project in terms of solar and that’ll also have five hours worth of storage. The really interesting thing about the one on the base is that project is located within the fence of the Navy base and there’ll be more than enough storage to power the whole base for a number of days if there was any, a great event or other issue when they couldn’t rely on the grid. So there’ll be able to actually Island to face from a security and operational side and run off the batteries. So a lot of great projects since we last talked and that by the end of next year when the base project is completed, we’ll be up at 60 to 65% and we’re also working on a large integrated pump storage project on our West side that will really have a, a little bit of everything we’re calling it the hybrid project. It’ll have run of ditch hydro, it’ll have pump storage, hydro, and we’ll have a large PV field and we’ll also have a battery in it so it’ll have a little bit of all the technologies. That project will provide around 15 to 20% of Kauai’s energy and all told all these projects we’ll be pushing us real close to 80% renewable.

John Farrell

Wow. And people say that batteries and water don’t mix. This is terrific. One of the reasons it’s so exciting to talk to you about this is that Kauai is an Island. So whereas many other communities are trying to make these decisions in the context of a larger grid, you know, if Minnesota is talking about shifting to renewables, there’s always power we can draw from Wisconsin or the Dakotas or from Iowa. And here when you’re planning your system, you are doing it in isolation. You’ve, you know, the resources that you have are the only resources that you can tap. The other one that I think is really interesting to talk about is the cost. Some of the stories that I’ve read that got me interested in Kauai in the first place was about how the utility had been served by another company. The company was no longer interested in giving utility service. So you know, it was a cooperative that bought it out. And one of the big challenges that you faced back then was that the utility rates, the costs for customers were among the highest of any on the Hawaiian islands. And not only has this renewable energy transition really lowered the carbon emissions and the cost of buying oil, it sounds like it’s also having an impact on making your rates more competitive. Is that right?

David Bissell

Absolutely. And it’s really a combination of at least two factors. One is the renewable projects that’s that succeeded in bringing online, and two is just the co-op nature and a focus on reducing costs and keeping costs as low as we possibly can. But just to give you an idea of how much we’ve changed since we were formed in 2002 back then we were 80% higher than Oahu. And over the last several months we’ve been below 10% higher than a Oahu. So we’ve radically narrowed the gap to an island that’s 10 times our size and currently burns coal as well as uh, oil over there. So we’ve got real close to Oahu and we’ve been at par or below Maui. And the big Island over the last year. So the combination of the co-op and the renewables have essentially done away with a great disparity between the islands.

John Farrell

What do you see happening in the future with costs? You said they end next year near the 80% renewable. You’re going to be presumably burning less oil than ever in order to supply that energy. Do you think costs will continue to fall because these newer supplies, the technology keeps getting better, et cetera? Or are you going to reach a limit kind of on how low prices can go simply because once you’ve installed these things in all the cost is up front, you don’t have fuel costs and you know with the batteries or with the hydro or with the solar power.

David Bissell Yeah, what we’re, we’re emphasizing stability and our goal is really to hold costs. They may drop a little bit as we bring in some more projects, but really our goal is to keep our rates at about the same level. But looking out over a 20 year period, we think we have a very legitimate chance of holding that, that level, even considering inflation. So while Hawaii’s rates are going to be higher than the mainland, over time, we expect the mainland rates will keep going up with inflation. We think because of our word, essentially have our prices fixed that we can hold at a steady rate. So over a 20 year period, our rates should become more competitive even with the mainland. So it’s a, it’s a stability issue.

John Farrell

I find that fascinating. Actually, I’m gonna, I’m gonna circle back to that in a little bit here because I have a quote from Adam Browning of Vote Solar I want to share, but I want to ask before that just in terms of this shift to renewables, you have named a number of fairly large projects, the Tesla project and the ones with AEs. I was curious about what the role of customers have been. You know, a co-op is this unique structure for a utility where the customers are actually part owners. First of all, why does that matter? What’s important about that distinction in terms of a cooperative ownership structure versus a traditional utility? And then what has been the role of customers in this transition? Whether that’s in terms of the decision making process or in terms of what they may have done themselves with renewable energy?

David Bissell

Well, the, the role of a co-op is fundamentally different than an investor owned and we only have one interest and that’s providing reliable electrical service to our members at as low a cost as we possibly can, while still staying financially viable. We don’t have any outside shareholders or anybody else that we have to please and make earnings for. So we’re totally focused on, on our rates for our members and over time that’s reflecting in, in our success relative to the investor realm. Now in terms of rooftop solar, we’ve been very supportive since we’ve been formed. Our approach has always been if our members want it, we’re trying to find way to allow them to have solar on their, their houses or businesses. And that’s coming up with ways not to stop them from having solar. And since 2014 again, where we started, our conversation about rooftop systems on the Island have increased by 80% and we currently have 31 megawatts of distributed solar on the Island. So really that’s almost as big as the Tesla and AEs projects sitting on the rest throughout the Island. So it’s been a part of us was about 25% of our total renewable generation. It helps provide diversity to our system and we’ve been really supportive of it from the start our approaches, our members should be able to do what they want and their homes or businesses as long as it doesn’t cause a significant uh, system issue for us.

John Farrell

I want to talk a little bit about, there was a power outage in July and I just ran across this because I was doing background research to make sure I was up to speed before we had our conversation and you know it was I guess fairly widespread and I just want to lead with one question. I think that lots of people ask and are curious about when it comes to renewables, was this outage caused by being too aggressive on renewables? Is that because you didn’t have enough solar or wind or whatever? Are there lessons from this I guess is what I would say about the technical challenges of operating a grid with a lot of renewables on it?

David Bissell

Yeah. The initial outage really had little or nothing to do with renewables. It was a failed piece of equipment at our largest generator. Now maybe would the whole Island outage been avoided if we’d ahead total fossil fuel generators out there? Perhaps the interplay of a lot of renewables being ran on inverters and a significant fault may have contributed to the Island going black, but the initial cause of it was actually on our conventional generation really rolling forward from once we got the Island back up online, which we’re pretty good at that here because we have a lot of small generators that can start up pretty quickly. So we had the whole Island back in two or three hours, but after that we then had a generation resource problem that necessitated rolling blackouts for a day or so period. And that’s where the renewables definitely came into play because we were short for a couple of factors including scheduled maintenance and some unscheduled outages on conventional generation. We’ve gotten where we’ve been able to count increasingly on our battery storage to help us out during a peak periods, but batteries are of course dependent on having energy from the sun to charge them and after we had this outage, just kind of on a streak of bad luck the next day when we needed those batteries was one of the worst weather days we’ve had over the last year or so where it was just socked in bad weather throughout the Island where we had very, very little solar production. So we were only able to charge those batteries up, I think, the 15 or 20% and it was not enough to get us through to our peak periods. There’s probably been over the last year, a year and a half, two days like that where we don’t get enough to put a significant charge in the battery. And it was just kind of a perfect storm of bad luck that it happened when we were short on generation. Also, another factor we didn’t really think much about is this bad weather compounded our generation issue because that 30 or 35 megawatts or 30 megawatts of distributed solar, all of that really goes away as well. And it’s gotta be covered by something else when the sun isn’t shining. So there was several compounding factors on availability of conventional generation and essentially our backup renewable generation that all came through over that next day period. And uh, we had no choice but to roll blackouts.

John Farrell

That’s really interesting. I think it’s fascinating to hear that you have some lessons that are, you’re learning about the way that the renewables interact. But funny that the whole issue started with a problem with a conventional generator. And so I think it  kind of speaks to this issue of there’s this perception that, Oh, if it’s a gas or a nuclear facility or an oil fired one, well it’s always available. It’s dispatchable is the term we like to use in the industry. You can count on it whenever, but you can count on it until you can’t. And it’s just, it may be, you know, I remember looking into this a little bit with wind a few years back where folks are talking about how as forecasting has gotten better, the shortages if you will, from renewables become more knowable. Like we, we can tell you, hey, tomorrow is not going to be a windy day or tomorrow is not likely to be a very sunny day. And we’re getting better at knowing that ahead of time. But with conventional generation, because there are moving parts and motors and engines or whatever, I think sometimes just break and we, you know, you can’t always account for that. I guess. Do you have any thoughts about what that means as you have fewer conventional sources on there? You said you know, you the batteries. It sounds like this is not likely to be a problem that recurs very often to have this perfect storm of a failure of a conventional generator and a bad day for renewables. Have you thought much about how you might plan for that?

David Bissell

Well, every utility designs its system that handled some contingencies and not just losing one generator shouldn’t cause your system to go black or not have enough resources available. We had a situation where both our first and third units were down and one of our, essentially with the battery is not there. That becomes either our second or third largest. Again, not counting. So really probably three of our four largest generators were unavailable. That’s a problem. Whether it’s conventional, whether it’s renewable or whatever, no system builds enough redundancy to cover that many problems. Now, if we’re on a grid, the overall grid has the ability for mainland grid has more generators to compensate for that. But on a standalone Island that would be prohibitively expensive. So back to your original point, every piece of generating equipment, whether it’s conventional, whether it’s renewable fails at times, and it’s just gotta be part of the planning. There is no perfect system. You know, one of the things we’re looking at is we have an aging conventional fleet and how do we deal with periods if we have generating problems and there’s an extended, uh, bad weather event. We’ve had times where it’s rain for 40 days and solar and batteries are not going to be the answer in that situation. You have to have a mix of conventional and some other technology to cover for. So it’s one of the reasons why we’re really excited about the pump storage and hydro project because that’ll give us within the storage capability of the reservoirs a day or up to several days of generation, we can count on if the weather’s bad. So that becomes another way to diversify our fleet and reduce the risk. But it’s really, you gotta have all available resources to transition to very high percentage renewable and we don’t have any, we’re unable to do wind. So there’s one major technology really off the table to start with because of endangered species issues. So we got to use resources or solar and hydro and if you start moving towards 100% renewable, if you’d have, you could use conventional generating fleet, but you’d have to run biofuels, which are very expensive. So we’re trying to do it. We’re trying to continue to develop hydro to have another low cost option to running biofuels.

John Farrell

Well, as folks would know, of course, even at 80% renewable, you would have accomplished something far ahead of what is happening in other places around the country, uh, even around the world, which is pretty remarkable for a small island utility.

We’re going to take a short break. When we come back, we ask what lessons Kauai Island’s move to renewable energy might provide for Puerto Rico, whose mostly fossil fuel grid system was devastated by hurricane Maria in 2017. We’ll also check in if Hawaii will continue to be a postcard from the future for mainland U.S. energy systems

John Farrell

Hey, thanks for listening to Local Energy Rules. If you’ve made it this far, you’re obviously a fan and we could use your help for just two minutes. As you’ve probably noticed, we don’t have any corporate sponsors or ads for any of our podcasts. The reason is that our mission at ILSR is to reinvigorate democracy by decentralizing economic power. Instead, we rely on you, our listeners. Your donations not only underwrite this podcast, but also help us produce all of the research and resources that we make available on our website and all of the technical assistance we provide to grassroots organizations every year. Each year, our small staff helps hundreds of communities challenge monopoly power directly and rebuild their local economies. So please take a minute and go to Ilsr.org and click on the donate button. And if making a donation isn’t something you can do, please consider helping us in other ways. You can help other folks find this podcast by telling them about it or by giving it a review on iTunes, stitcher, or wherever you get your podcasts. The more ratings from listeners like you, the more folks can find this podcast and ILSR’s other podcasts: Community Broadband Bits and Building Local Power. Thanks again for listening. Now, back to the program.

John Farrell

Speaking of small islands, you know, you and I met this past March in Puerto Rico at a conference kind of talking about the opportunities for their grid system. For folks that don’t know, their grid system suffered a catastrophic outage with hurricane Maria, strike of a category four or five hurricane back in 2017 that left the entire Island blacked out for months. We’ve recorded a couple of other podcasts actually that you can check out with some folks from Puerto Rico about what happened there and the rebuilding effort. You came to that event to talk about some of the lessons that you’ve learned in the work on Kauai and I was curious, you know, what do you think Puerto Rico could learn from the Kauai Island utility for one, should they try to transform their ailing utility into a cooperative instead of having it be a state owned utility?

David Bissell

I think the cooperative model is worth looking into for Puerto Rico, but the situation over there, it’s so complicated that I don’t think there’s one answer that really solves their problem. You know, co-ops there, there’s a strong interest as you probably observed when you were over there from the population, they’d like cooperatives over there, the concept of it, they have very strong credit union presence in Puerto Rico. That’s essentially a cooperative model. Whether it could work for the whole Island or not with the dense population is unknown. I think it could certainly work in areas and maybe it’s a more informal collapse of, of groups of citizens sharing a solar resource or sharing of solar and battery to give themselves more resiliency. I think there are certainly pockets where the co-op model could help them. Um, but, and I don’t know if that’s the total answer there. It should certainly be looked at. The nice part about a co-op is the people themselves are in control of what the co-op does.

John Farrell

Taking out the sort of governance issue for a moment and probably having to ignore, unfortunately the really complicated financial issues that are facing the entire Island as well as the utility company, it seems like just from a technical perspective, but probably also in terms of a long-term cost perspective that Puerto Rico in some ways is a lot like Hawaii was a few years ago. Although of course their conventional generation is even older and I think in much poorer condition, but it seems like the lesson from Kauai at least technically and economically speaking would be, hey, if you transition to renewables, you have a really great opportunity to lower the cost of the system, make it more resilient, make it more affordable. Would you agree with that?

David Bissell

To an extent, I, I think the better analogy may be to look at what’s going on and why, who over here Puerto Rico is and other dense urban area and the challenges of moving towards renewables is much, much more difficult for them. We’re seeing it in a while who you know, they’re struggling to get to 25 or 30% renewable despite working really hard at it because they don’t have the land available that we do. For example, to put large scale solar down. They can move the needle so far, but I personally don’t think there’s a technology, low cost technology that could move Oahu to the 80% level that we’re at now. Puerto Rico certainly can move further. Getting that 30% renewable would be a real plus over there and conventional. They could do a wind and they’ve got some room for large scale solar and of course there’s room for distributed solar, but I think we’re different with our rural nature and the huge amount of land we have available that is much harder to do in a in a dense urban environment.

John Farrell

Yeah, that’s a really important distinction I think and appreciate that. I just want to wrap up by asking, you are coming back to this thing I alluded to earlier when you were talking about the comparison to mainland utilities, Adam Browning of Vote Solar and other folks have often called Hawaii a postcard from the future as in things that are happening on Kauai or on Oahu, especially with the electricity system, given the high costs of the fossil fuels that have dominated the system for so long are going to be lessons for what might happen on the mainland in future years as our costs rise to similar levels, but also because the technologies that you have shown to be effective there will become, are often even less expensive on the mainland. So what advice would you offer to mainland U.S. utilities, whether they’re rural co-ops or urban investor owned utilities that often already know that renewable energy is inexpensive about this shift to renewable energy?

David Bissell

Well, each utility is different. Each location is different. So all of that made the move at their own pace and work with what their customers or members desire and what the opportunities are. But certainly we have been a postcard of the future. You look where we were originally moving into distributed solar area that’s becoming widespread throughout the mainland U.S. now. We were early adapters of grid size solar that started to become pretty mainstream, so they’re certainly moving that way. And I think pricing for the large scale solar is actually relatively to the fairly high degree cheaper than it is over here in most locations because land and labor is cheaper, transportation costs are cheaper and interconnect costs tend to be cheaper. So as what we like to encourage the co-ops and I and our network to do is to look long-term planning and look at their generation resources and as a plan look, you know, if we have a whole amount invested in a coal plant for example, can we look and say in 15 years we likely could replace that with PV and batteries or some other renewable technology. It’s really, I think becoming a core part of any utilities planning now is to look at renewables as opposed to a conventional.

John Farrell

Oh actually it’s a good point about something I forgot to ask you, which about or think about asking you is one I think key difference in the co-op space between Kauai Island and other co-ops is that a lot of co-ops on the mainland kind of decades ago banded together to say, well, you know, we’re going to go out and buy our power together collectively to improve our buying power capture economies of scale. And there were some big investments made in coal plants or other large facilities, many of which are aging at this point, although some that still have a number of years left in terms of their useful life in theory, although in some cases those resources that they owned collectively aren’t as economic as renewables. You know, we’re starting to see, there was a study just this week from Rocky Mountain Institute saying that within the next decade, new renewables plus storage will be able to provide cheaper electricity than even existing natural gas plants. Do you see that as an advantage that the Kauai Island Utility has had and not having those contractual relationships in the way that some other cooperatives have where you can, you know, you’re making all the choices yourself. You’re not obligated to anyone outside the Island.

David Bissell

Yeah, I think, I think without a doubt our circumstances have allowed us to go aggressive on renewables. That’s how much is not being part of a group. Just the way our generating fleet was that we don’t, didn’t have a huge long-term fixed investment in a big generating station. That and ultimately from an economic side you’re looking at the marginal cost of producing because the cost of having to generate stations fixed when once you buy into it. So you have a large coal plant or a large gas plant. The cost is the cost of fuel and operating at that you got to look at and be able to beat. So I think the co-op network is moving towards renewable. There’s been some very good progress and tell him where the Southern States, North Carolina’s banded together and has a large renewable cooperative that can still use the strength of a network and the nonprofit status to bring in resources cheaply and shared amongst them. But if you’re a small co-op or a small group of co-ops and you’re tied to a large fixed cost, it’s going to be there for a while. Yeah, that’s going to slow down the transition. So each co-op is, is that starting started say off with utilities in general, each co-op in each area of the country’s co-ops are in different situations, and that will impact the speed of their transition.

John Farrell

So David, to wrap up, I was hoping to just ask you if there was something that you’ve read recently or something you’ve looked to that gives you some inspiration in the work that you do to provide low cost renewable energy to folks on Kauai Island that other folks could look to.

David Bissell You know, our inspiration here and one thing we’re really focused on is resiliency and sea level changes. And climate change is a, is a huge concern for us. All we got to do is watch last week with hurricane Dorian out there and we really want to do our part to show that we can transition to a less greenhouse gas intensive way of generating and to, to help the planet. When you’re on an Island in the middle of the ocean, it’s, it’s critically important to us so that that’s really where we take our inspiration from the environment and also from the economic side.

John Farrell

Well, David, thank you so much for taking the time to talk with me. It’s exciting to hear about what you are doing on Kauai Island and how it can be an inspiration for the rest of us.

David Bissell

Well, thank you so much for reaching back out to us after a few years and hopefully a couple of years down the road, we can talk about being at 80% plus renewable.

John Farrell

We’ll plan to circle back. We’d like to hear that story.

David Bissell

All right. Thank you, John.

John Farrell

This is John Farrell, director of ILSR’s Energy Democracy Initiative. I was speaking with David Bissell, CEO of the Kauai Island utility cooperative in Hawaii about their dramatic move into renewable energy over the past five years, helping reduce costs and improve resiliency. For more information on cooperatives and clean energy, check out “Re-Membering the Electric Cooperative,” one of our reports from the Institute for Local Self-Reliance. You can also learn more about Puerto Rico’s grid challenges and two other local energy rules podcasts with Ingrid Vila and Marcel Castro Sitiriche from early 2019. While you’re at our website, you can also find more than 80 past episodes of the Local Energy Rules podcast. Until next time, keep your energy local and thanks for listening.