Wednesday, April 13, 2011


Big Wind = Big Money

By Henry Curtis

There are many ways Big Wind is being marketed. It will reduce price volatility, keep money within the State, and lower our electric bill. The bottom line is Big Wind is all about Big Money. Our money would be being given to increase other people’s profits.


The inter-island cable will cost $800M-$1B, depending on the number of undersea cables built. Originally the focus was on building one line. This violates both the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) and Hawaiian Electric Company (HECO) reliability criteria. NREL Reliability Criteria requires two lines, while HECO Reliability Standards requires three lines.

The HECO upgrades, according to HECO, will cost “$300M and up.” The wind farms will cost around $2M+ per MW. This financial cost includes the required upgrades to the Lana`i and Moloka`i harbors and roads.

The total cost of the cable, Oahu upgrades, and the wind farms will be an absolute minimum of $2B.

Most of the wind and cable parts will come from elsewhere. The windmills, the cable, the cable laying ships, and some of the personal will need to be imported.

Thus instead of exporting money each year to buy foreign (non-Hawai`i) petroleum, at least $1.5B will be exported up front to pay for the wind/cable system and jobs for people from somewhere else.

There is currently a yearly outflow of money to buy out-of-state petroleum. There would be a large outflow of money to pay for the wind/cable components followed by negligible outflow once the wind farms became operational. A comparison of the net present value of the two financial outflows have not been completed, therefore it is unknown which would have a greater financial impact on the State.


Virtually every endeavor of the installation and use of the O’ahu upgrades, the undersea cable, the wind farms, etc, can be done under the current regulatory scheme. SB367 proposes a new regulatory scheme.

The only thing that can be done under the new scheme but not under the old scheme is the treatment of the O`ahu upgrades. Under the existing scheme HECO could collect the money from ratepayers before building it, but in a rate case HECO would have to show that the upgrade were needed for the reliability of the grid. If HECO could not do so, the money would be refunded to the ratepayer. Under the new scheme the need is assumed to be true.

Thus the only risk to ratepayers is that HECO builds unneeded infrastructure and passes the costs on to the ratepayer. HECO and the Consumer Advocate assert that the risk is low. The amount of money that could be wasted would probably be low. However, it could be “$300M and up.” HECO and the Consumer Advocate say don’t worry. However, they have not incorporated a financial cap, an upper limit, into the bill.


In the early days of electricity, in the century before last, two models of energy delivery were developed. Edison favored distributed generation where generators were built near where the electricity was needed. Westinghouse and Tesla developed the central station model where large generators were built far from the load centers, and were connected to the load centers with long transmission lines.

At that time, in the 19th century, the latter model was more cost effective. SB367 assumes this to still be the case. SB367 states: “In order to achieve the State's aggressive renewable portfolio standard goals, electric utility companies need to emphasize technologies that are ...available on a large scale, and may be used to generate electricity that may be delivered to Hawaii's load centers.”

SB367 goes on to state that: “The cost of the energy delivered to the load center is expected to be at or below the cost of other commercially available large scale renewable resources in the near-term.”


Ted Liu and Robbie Alm wrote an opinion piece that appeared in the Honolulu Advertiser on December 30, 2009: "Contrary to comments by Henry Curtis in The Advertiser (Island Voices, Dec. 24), the state of Hawai'i, Hawaiian Electric Co. and the developers of proposed wind farms on Läna'i and Moloka'i have pledged to do a complete and thorough environmental review of all parts of the project."

According to many who reviewed the Big Wind Programmatic EIS Preparation Notice, the Big Wind preferred option was not calculated to be the most cost effective, rather, it was the only alternative evaluated.

US EPA: “We recommend analysis of additional alternatives as early as possible

U.S. Fish and Wildlife Service: “The NOI [Notice of Intent] does not indicate that an appropriate range of alternatives will be analyzed

Hawai`i Office of Planning: “It is necessary for the draft EIS to explore alternatives.”

Maui County: “In our opinion ...resources in the vicinity of Oahu have been arbitrarily excluded

Historic Hawai`i Foundation: “HHP recommends that the EIS include alternatives

Native Hawaiian Legal Corporation: “The EIS must explore reasonable alternatives

SB367 went on to try to justify this one chosen selection: “Economic analyses have shown that harnessing the wind resources for the islands appears to be a relatively cost-effective means for helping to meet Hawaii's energy policy objectives.”

This argument is less than credible. The economic analyses were written by the project proponents, were not peer reviewed, and the analysis is not available to the public. The economic arguments were overly restricted to seek answers to certain questions designed by proponents. The assumptions used can’t be justified.


Suppose that in 1990 the Hawai`i Government had come up with a 20-year vision for telecommunications. Suppose that in 1990, Hawai`i had restricted what could be considered for 2010, to that technology available in 1990. All the innovations made since 1990 would be excluded. This includes the Internet, Facebook, Twitter, Blogs, cells phones, Kindle, hand-held video cameras, terabyte hard drives, etc.

SB367 makes this error: “In order to achieve the State's aggressive renewable portfolio standard [2030] goals, electric utility companies need to emphasize technologies that are commercially available [today]

Interestingly, the HCEI Energy Agreement includes two items that have never been done anywhere in the world: a super rapid adoption of energy efficiency and powering generators using rainforest biodiesel made from palm oil. At the same time the HCEI Energy Agreement minimizes distributed generation.


Courts look to the purpose clause of a Act to see the intent of the Legislature. The SB367 purpose clause states that Hawai`i’s energy future should be based on a centralized model where utility risks are minimized, ratepayer risks are maximized, and assertions by project proponents are assumed to be true.

SB367 is more that a new regulatory scheme, it adopts a value system.


The Kaheawa Wind Farm had a tortured decade long history during which time there was little indication that anything would ever be built. The proposed facility was acquired, sold and transferred to a number of companies including Maui Power Partners, Zond Pacific, Enron Wind Corp, General Electric (GE), Hawi Renewable Development (HRD), and UPC Hawai‘i Wind Partners.

The proposed wind farm finally became a commercial reality when UPC wind gave 49% ownership to Makani Nui Associates, LLC, a Maui based company, which in turn was controlled by KSD Hawaii, another Maui company. The major shareholder of Makani had made recent generous donations to Governor Lingle and the Hawai`i Republican Party. The wind farm was built.

Then UPC decided to build a second wind farm on the site, and to reduce the Makani ownership share to 0%. UPC filed a complaint with the PUC that MECO refused to negotiate seriously with them. Finally UPC realized their mistake, and gave Makani a slice of the action. Again, the project was quickly approved.

Governor Lingle appointed the President of KSD Hawaii to the Hawaii 2050 Sustainable Task Force and to the Board of Land and Natural Resources.


Between 2003-2010 Castle & Cooke contributed $1,144,445 in campaign contributions. The biggest winners were the Arnold Schwarzenegger’s California Recovery Team ($147,000), and Arnold Schwarzenegger ($42,000).

Castle & Cooke gave to Hawaii Political Parties: Republican ($35,500) and Democratic ($22,000). Castle & Cooke also donated to 121 candidates of which 95 were in Hawai`i. Generally the larger donations went to Republicans and conservative Democrats.


First Wind and Castle & Cooke focused on working with NREL, GE, Sentech and others in researching innovative solutions. This kicked in Hawai`i’s Act 221, whereby investors could make a 220% return on their money.


The Marine Corps Air Station Kaneohe Bay was chosen as the landing site for the undersea cable. This did not occur because there is a secret military reason for the cable. Rather, Congressional Democrats could supplement shorter-term ARRA Stimulus Funds with longer-term Department of Defense (DoD) earmarks to finance cable studies.


Hawai`i has a state gross product of about $60B. The total value of all goods and services exported is about $3B, while the total value of all goods and services imported is about $15B, resulting in a net outflow of about $12B or 20% of the state’s economic activity. To recoup this loss, Hawai`i must rely on foreign investment (tourism and military expenditures). Thus the State government is fixated on strategies to lure foreign investment into the State.

The biggest outflow is for energy.

Wind energy is relatively free but requires a huge initial financial outlay. The wind turbines, the cable, the transmission lines, even much of the high paid personnel, come from elsewhere.

To evaluate two different revenue streams (a continuous bleeding and a large initial bleeding) one must conduct net present value analysis to see which outflow does more destruction to the local economy. That analysis has not been done.

Henry Curtis
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Take $2B create a fund for interest free loans for PV on residential and business roofs. Duh, this is so simple it is disgusting that the huge cable is even considered.

If "bad people" wanted to disrupt that cable, i.e. destroy it, a single SCUBA diver with 1 lb of plastic explosives could do it and no security system could stop them. energy security? give me a break, distributed is the way to go.

The cable might spur a whole new category of copper thieves...

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