Hawaii’s Shift to Gas Highlights Energy Cost Concerns

Hawaii has unveiled a plan to generate all of its energy from low-emission sources by 2045. This ambitious initiative, however, comes with a significant shift towards importing liquefied natural gas (LNG). Currently, Hawaii residents face the highest electricity rates in the United States, even surpassing those in California, which also has lofty goals for net-zero transitions. The geographical isolation of the islands necessitates the shipping of fuel oil for power generation, which contributes to elevated electricity costs.

According to the Energy Information Administration (EIA), the high cost of baseload electricity in Hawaii results in residents paying the steepest electricity bills nationwide, despite consuming the least grid-delivered electricity. The EIA notes that Hawaii ranks third-lowest in total energy consumption among U.S. states, yet utilizes 16 times more energy than it produces. This imbalance raises concerns about the state’s energy supply, particularly regarding reliable baseload power.

About a quarter of Hawaii’s electricity is currently generated from solar panels. However, this energy source is intermittent and does not provide a consistent, round-the-clock supply. The state has invested in battery storage, including a significant installation with a capacity of 185 MW, but this is insufficient to meet demand. In 2020, Hawaii closed its final coal-powered plant, further limiting its energy options.

The previous administration was firmly opposed to natural gas in pursuit of a 100% low-carbon energy goal. In contrast, the current administration has adopted a more flexible approach. Recently, it signed a preliminary agreement with Japan’s JERA for a long-term LNG supply. This transition to gas-powered generation is anticipated to lower costs, particularly as Hawaii develops its LNG import infrastructure.

Opponents of the gas strategy argue that it undermines the state’s commitment to achieving a fully decarbonized energy system. They contend that any reliance on hydrocarbons deviates from the path to net-zero emissions, especially as electricity costs have risen in tandem with the phase-out of coal and the expansion of solar energy.

The situation in Hawaii mirrors challenges faced by other countries, notably Germany, which also aims for a significant reduction in carbon emissions through an increased reliance on renewable sources. Germany has been rapidly building LNG import facilities to replace Russian pipeline supplies, demonstrating that its substantial wind and solar capacity cannot entirely fulfill demand, even with battery support.

Like Hawaii, Germany plans to transition from gas to hydrogen in the future, contingent on the economic viability of green hydrogen. In the interim, the reliance on gas is seen as a necessary measure to prevent blackouts.

The dilemma facing both Hawaii and Germany raises critical questions about energy priorities. The choice lies between ensuring an uninterrupted and affordable electricity supply or opting for a more intermittent and potentially costlier renewable energy source that aligns with lower emissions. The current administration in Hawaii appears to favor maintaining reliable energy access, prioritizing affordability over a strictly low-carbon approach.

As Hawaii navigates its energy transition, it faces the challenge of balancing the immediate need for reliable energy with its long-term emissions goals. The state’s decisions on energy sources will likely shape its economic landscape and the well-being of its residents in the years to come.