At the start of this month, Hawaiian Electric warned customers that their electric bills could rise by nearly a third this summer. The culprit? The surge in oil prices as a result of the U.S.-Israel war with Iran.
Iran largely controls the Strait of Hormuz, a key waterway that transports about 20 million barrels of oil a day. After the U.S. and Israel launched their joint assault on Iran, Iran blocked the strait, effectively choking off a major portion of the global oil supply.
Although this conflict is playing out on the other side of the world, Hawaiʻi households may have to contend with some of the costs firsthand, as the state’s dependence on imported oil to run its electric grids makes it vulnerable to shocks in the global oil market.
A future for Hawaiʻi without oil is on the horizon. State law prohibits Hawaiʻi from using fossil fuels for power generation after 2045. In the meantime, policymakers and energy experts are looking for a way to reduce energy costs.
Gov. Josh Green is in favor of importing liquefied natural gas in lieu of oil.
Like oil, natural gas is a fossil fuel. Green acknowledged on The Conversation last week that many people in Hawaiʻi may be reluctant to tether Oʻahu’s energy grid to another fossil fuel.
“But right now, the idea of continuing to rely on oil… it's just insanity. I'm just not going to be a governor that sits on my butt and doesn't do something when I can try to make things more affordable,” he said.
Green has endorsed a proposal from Japan’s largest energy company, JERA, to build a 500 MW natural gas plant on Oʻahu.
That facility could generate about a third of Oʻahu’s energy demand and allow for the decommissioning of older, oil-fired power plants.
JERA says that lower costs from burning natural gas instead of oil could net Oʻahu customers up to $500 in savings on their electricity bills each year.
But some experts are questioning whether such savings are possible.
University of Hawaiʻi at Mānoa economist Michael Roberts, grid analyst Matthias Fripp, and UH Ph.D. student Ethan Hartley have been working to model the lowest-cost path for Oʻahu’s energy future. Their analyses compare different fuel prices and project costs for resources like solar and wind.
After running over 100 scenarios through their model, Roberts said only one narrow set of circumstances shows natural gas coming out on top — the price of solar projects would have to go through the roof while fuel costs would have to be moderate.
Even then, Roberts said that fuel savings from natural gas would be negligible.
"It would be less than one penny per kilowatt hour," he said.
Roberts and his colleagues believe the math shows that investments in grid-scale solar, not natural gas, will deliver the lowest costs for Oʻahu energy customers. Roberts said that competitive prices for new solar projects could result in up to a 20% reduction in energy costs over the long run.
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The group presented their findings to state representatives last Thursday in a hearing chaired by Rep. Nicole Lowen. They plan to compile further results of their modeling into a paper published by the University of Hawaiʻi Economic Research Organization. Roberts also published a brief on this topic on April 14.
The Hawaiʻi State Energy Office sent HPR a statement critiquing the group’s analysis, saying that it omitted important considerations, including the high cost of some current solar and battery projects.
According to the energy office, the power purchase agreements for Puʻuloa Solar and Mahi Solar — two new solar and battery farms slated for Oʻahu — were set at 21 cents per kWh and 23 cents per kWh, respectively. That’s more than double the typical cost for solar projects in Hawaiʻi.
In response, Roberts said that HSEO was taking a snapshot of the "worst PPA offers in years." He added that solar project costs are projected to come down.
The Energy Office released its own study on Hawaiʻi’s energy pathways in January 2025, which concluded that liquefied natural gas could result in savings for Hawaiʻi ratepayers.
But the office withdrew the section of the study that demonstrated the most significant savings in energy costs after Roberts’ colleague, Matthias Fripp, found errors in their calculations.
The Energy Office said it is in the process of recalculating its study.
