DFN: Castle & Cook is involved here. Wind farms on Lanai, cable will transport electricity underseas to Oahu.
Planning begins for Hawaii undersea cable system
Project could reduce state’s oil use, but at a cost of up to $3B
By Sean Hao
Advertiser Staff Writer
While a plan to build a $5.4 billion commuter rail line on O’ahu has generated an intense public debate, another major project in Hawai’i that could have a total price tag of up to $3 billion has avoided similar attention.
The state has started the planning necessary for laying a network of undersea cables to transfer wind-generated electricity from Lana’i and Moloka’i to O’ahu. The generators could provide up to one-third of Honolulu’s power needs and would play a key role in reducing the state’s dependence on fossil fuels.
The cables could cost up to $1 billion, and two envisioned wind farms could cost private developers up to $1 billion each.
Much of the money will ultimately come from taxpayers and utility customers. However, the exact cost of the cable project is still unclear, as is who will build it and how it will be financed.
The state hopes to answer those questions during the next year by spending $5 million in federal stimulus money on consultants and studies.
Ted Liu, director of the state Department of Business, Economic Development and Tourism, acknowledged last week that there’s no guarantee the investment will pay off.
"End of the day, we can’t guarantee that the project will actually get done," he said during a legislative briefing on how agencies are spending stimulus money. "A lot of it depends on market conditions, but in our discussions with developers there’s been a lot of interest."
A recently released $1.5 million report conducted for DBEDT by the University of Hawai’i concluded that the undersea power cable project is feasible, despite environmental and engineering challenges.
Now the state plans to spend $4.94 million in federal stimulus money on consulting contracts and an environmental impact study. The state is rushing to spend the money before a federal deadline of April 2012 for using stimulus funds.
The money for cable studies represents about 20 percent of federal Department of Energy stimulus funds awarded to Hawai’i to pay for alternative energy and energy-efficiency projects. Much of that money is being spent on projects that are likely to have a clear and immediate payoff such as building retrofits and appliance rebates.
"What we are doing as government is making sure we’re doing the front-end, up-front work, which usually the private sector doesn’t do. This will facilitate the private capital coming in," Liu said.
Development of the cable hinges on construction of two privately developed 200-megawatt wind farm projects expected to cost $500 million to $1 billion each, as well as power grid upgrades by Hawaiian Electric Co. The cable itself is preliminarily estimated to cost $800 million to $1 billion.
The goal is to have the cable installed and the wind farms running by 2014, according to DBEDT.
The cable is one component of a Lingle administration plan calling for 70 percent of the state’s energy to come from renewable resources by 2030.
Undersea power cable projects already connect New Jersey to Long Island and Long Island to Connecticut, said Josh Strickler, facilitator of DBEDT’s renewable energy programs. Another undersea cable project is under way in San Francisco Bay. What makes Hawai’i’s project unique is how it will transmit wind-generated power to O’ahu via an open-ocean sea cable, he said.
The cables would transport energy from a planned 200-megawatt wind farm proposed for Moloka’i by First Wind Holdings Inc. and a similarly sized project on Lana’i by Castle & Cooke Inc.
Whether consumers end up paying more for renewable energy transmitted via the planned cable likely will depend on a variety of factors including the cost of oil, the cable’s cost and the price of wind-generated power, DBEDT said.
Costs still unclear
State officials hope to have a better idea of what the cable will cost after the environmental impact studies begin and a private developer is hired next summer.
Hawaiian Electric spokes-man Peter Rosegg said the utility is working closely with the state on project financing issues.
"The cost will ultimately be paid for by some combination of utility customer and taxpayer funds," Rosegg said in an e-mail. "The state will seek additional federal funding and/or long-term loan guarantees to keep the total cost under control."
The cost of the project should be weighed against the cost of importing fossil fuels to satisfy state electricity needs, Rosegg added. Hawai’i sends about 10 percent of its gross state product out of the Islands each year to buy that fuel, he said.
A recent study by the UH School of Ocean and Earth Science and Technology relied on ocean mapping and geological studies to recommend the four potential cable routes. The routes included a Lana’i to Pearl Harbor route; a cable connecting Moloka’i, Lana’i and Maui; an O’ahu, Moloka’i and Lana’i cable; and a Kane’ohe-to-Moloka’i line.
"Right now we think this is the right idea, and we’re moving forward with it, but we’re still doing a lot of analysis," said DBEDT’s Strickler. "We have some of the best wind in the world … To just ignore that resource would be foolish."