The Hawaiʻi State Energy Office has acknowledged that its liquefied natural gas study miscalculated the cost-savings ratepayers could see if the state swapped in natural gas for oil.
Independent grid expert Matthias Fripp was the first person to raise concerns about possible spreadsheet mistakes in the study.
The study presents a handful of scenarios in which Oʻahu uses natural gas to power its grid instead of oil. Scenario 3A shows the highest benefits, with ratepayers saving an average of $340 annually on their electricity bills.
But Fripp claimed a key spreadsheet equation for Scenario 3A did not factor in the costs of natural gas, and that the actual savings ratepayers could see may be far lower than the study projected.
The energy office initially rejected Fripp's analysis, but changed course after further review.
In a second response to lawmakers last Thursday, the energy office concurred with Fripp that there is indeed a mistake in the modeling in the study's Scenario 3A.
The energy office said it plans to update its study to remove references to Scenario 3A, but it’s not backing down from its position that using natural gas instead of oil may be a cost-effective way to lower carbon emissions.
In its latest response, the energy office highlighted Scenario 1A, another pathway in the study that shows cost-benefits as a result of importing liquefied natural gas.
Scenario 1A estimates the state could see $150 million in savings — a fraction of the $867 million projected in cost-benefits in Scenario 3A.
The energy office stated that no errors had been found affecting the calculations in Scenario 1A.
Rick Rocheleau is the director of the Hawaiʻi Natural Energy Institute, which has been conducting a separate independent analysis of the study's calculations.
He said the institute has identified multiple data input errors in Scenario 3A and suggested that the other scenarios in the study should be reviewed for accuracy as well.
Rocheleau expressed surprise that the errors hadn’t been caught before the study's publication.
"The analysis they've done is not sufficiently vetted to use it for decision-making," he said.
JERA's path to power
Amid the back-and-forth about the validity of the energy office's study, Gov. Josh Green's office shared details on how the Japanese energy company JERA plans to overhaul Oʻahu’s grid to run on natural gas.
The plan includes the construction of a new 500 MW natural gas plant on Oʻahu, which JERA hopes to bring online by 2030.
JERA, the largest buyer of liquefied natural gas in the world, claims it can deliver $500 in annual savings per Hawaiʻi household, exceeding even the most optimistic projections in the energy office’s study.
Erik Montague, vice president of development at JERA Americas, told HPR on Friday that the company can achieve higher savings by building one larger natural gas plant rather than repowering multiple plants, as proposed by the energy office’s study.
"A larger power plant on a unit basis is a much more efficient investment than building multiple smaller plants,” Montague said. “We think that's one of the key reasons why these benefits are landing where they are."
In order to bring this infrastructure online by 2030, JERA may try to bypass the current competitive approval process for new power projects.
"We would propose that this is all done under a regulated framework, but a little bit different than maybe how power is currently procured today in Hawaiʻi," Montague said.
The Hawaiʻi Public Utilities Commission established a competitive bidding framework almost two decades ago to ensure that ratepayers were getting the best deal on energy.
Hawaiian Electric must follow the competitive bidding process for any new power generation it seeks to procure.
HECO can request that the commission waive the competitive bidding process, but the commission rarely grants exemptions.
In a House hearing on Thursday, the commission's utility analyst, Daniel Park, emphasized the importance of the process to lawmakers.
"We’re very confident that as long as we continue to utilize this framework that we have in place, we’re going to keep generation costs as low as possible for our ratepayers," Park said.
Montague did not specify whether JERA planned to have HECO request a waiver for their liquefied natural gas project or pursue a different pathway to commission approval.
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