Monday, July 28, 2014

Energy Storage is the next frontier

By Henry Curtis

In recent years Hawaiian Electric Company (HECO) and its subsidiaries MECO and HELCO have downplayed the use of pumped storage hydroelectric which accounts for over 90% of all energy storage in the United States.

Maui County, Parker Ranch and Life of the Land are all proponents of pumped storage hydroelectric.

A HECO spokesperson dismissed energy storage as not ready for prime time at a 2014 Legislative hearing, noting that there are only a few small Hawai`i pilot projects. 

Those entities examining the potential of batteries include the Hawai'i Natural Energy Institute (HNEI), the Natural Energy Laboratory of Hawaii Authority (NELHA) and the Energy Excelerator, a project of the Pacific International Center for High Technology Research (PICHTR).

Then later in the spring of 2014 HECO appeared to change its tune when it released a battery Request for Proposal.

HECO wants “one or more large-scale energy storage systems able to store 60 to 200 megawatts for up to 30 minutes” to be installed in 2017.

Is this a change at heart or similar to other utility negotiations that go on and on without resolution?

While negotiations continue, the utility makes money and the battery company loses money.

Kauai Island Utility Cooperative (KIUC) released a battery Request for Proposal in March, recently reached an agreement with the French battery company Saft and installation is expected to occur in October.

Most solar installation companies in Hawai`i focus on large-scale utility projects, military projects and grid-connected net energy metered projects.

Only a few Hawaii companies promote non-grid connected solar/battery systems.

Voltaic Systems may establish a foothold here.

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Sunday, July 27, 2014

DBEDT proposes updating the Hawaii Clean Energy Initiative

By Henry Curtis

The State of Hawai`i has published energy plans for four decades.

In 2008 the Hawaii Clean Energy Initiative (HCEI) Energy Agreement was signed by Governor Linda Lingle, Connie Lau (HEI), Robbie Alm (HECO), Ted Liu (DBEDT) and Cat Awakuni (Consumer Advocate).

All parties agree to support …expedited permit and approval review and action by all State and County agencies.”

The State will support, facilitate and expedite all required land use, environmental and regulatory permits and approvals associated with Hawaiian Electric's land-based connections and infrastructure Improvements.”

The Energy Agreement proposed replacing Integrated Resource Planning (IRP) with Clean Energy Scenario Plan (CESP).

The utility would take three years to come up with a 20-year long-range-plan and a five-year short-range action plan.

The Public Utilities Commission would then be limited to a six month review of the plans and would have to justify to the utility why it disagreed with anything the utility asked for.

If the Commission rejects all or parts of the CESP, there should be an explanation for non-approval and the implications of that non-approval on the utility's asset investment and strategic choices for the upcoming three-year period.”

The utility would also be able to steamroll the public.

There would be a “presumption of need in any subsequent siting proceeding” for anything in the plan.

Rather than HECO proving projects were good and necessary, the community would have to convince regulators to override the presumption that any given project is needed.

In May 2014 DBEDT State Energy Office Administrator Mark Glick announced the next phase in energy planning. 

HCEI 1.0 would be updated to HCEI 2.0.

HCEI 2.0 will focus on “action over process” including an undersea transmission line and the importation of liquefied natural gas (LNG).

Mark Glick asserted that “when Gov. Neil Abercrombie established the state’s first energy policy directives in 2013, he dedicated the state to move beyond 40 percent of the state’s electricity to be generated from renewable energy by 2030.

The prime movers to get there are regulatory action, building a service-oriented 21st century utility, interconnection and innovation, and energy diversity. 

We call this next phase of the Hawaii Clean Energy Initiative HCEI 2.0, and we anticipate significant progress on this agenda over the next five to 10 years.”

"We expect to see an undersea transmission cable unifying the Oahu and Maui grids to greatly expand renewable penetration while lowering rates, enhancing grid stability and reducing curtailment of renewable energy. …

This requires a new utility model to support that vision and a sea change in services that utilities provide to its energy consumers.”

HCEI 2.0 will be rolled out at the Asia Pacific Resilience Innovation Summit and Expo (APRISE2014) being held in September at the Hawai`i Convention Center.

The summit is intended for the global the “business, technology and policy leadership.” Members of the public may attend the summit for $495.

HCEI Advisory Board member Robin Campaniano will moderate a panel on HCEI 2.0.

The panelists will be Mark Glick, Consumer Advocate Jeffrey Ono, PUC Chair Hermina Morita and the US Department of Energy’s Jennifer DeCesaro.

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Saturday, July 26, 2014

Prohibition, Racism and the Failed War on Drugs

By Henry Curtis

Hawaii prosecutors, Mexican Drug traffickers, Big Pharma (multinational drug and pharmaceutical companies) and the U.S. Drug Enforcement Agency (DEA) agree: marijuana is bad, prohibition is good.

A few years ago we visited a winery in Napa which proudly proclaimed it was the only winery in the area which had legally stayed in business during Prohibition.

Households including wineries were allowed to produce 200 gallons per year.

The national Prohibition on alcohol lasted from 1920 until 1933. 

During the thirteen years of Prohibition, the number of California wineries dropped from 700 to 160.

 Prohibition loopholes were numerous.

Pharmacists could prescribe whiskey, hence the number of pharmacies increased dramatically.

Churches could have wine for religious purposes, hence attendance rose.

Ships operating outside the 3-mile coastal limit could legally sell alcohol.

Home products were sold with warning labels against leaving concentrates at room temperature for too long since the product could ferment.

Americans could obtain information at libraries on how to make stills and could legally buy the parts at hardware stores.

Ken Burns and Lynn Novick made a three-part, five-and-a-half-hour documentary film series titled PROHIBITION (available via live streaming on Netflix)

“Prohibition turned law-abiding citizens into criminals, made a mockery of the justice system, caused illicit drinking to seem glamorous and fun, encouraged neighborhood gangs to become national crime syndicates, permitted government officials to bend and sometimes even break the law, and fostered cynicism and hypocrisy that corroded the social contract all across the country.”

Organized crime firmly established itself. The Mafia rose in power. In 1927 alone, Al Capone employed 700 people and made approximately $60 million - most of it from beer.

One thousand Americans died every year from “bad” alcohol.

Prohibition ended in 1933. Following the failed campaign against alcohol, a new evil target was needed. The Bureau of Alcohol, Tobacco, Firearms employees wanted to keep their jobs.

Just as rural prohibitionists had targeted the growing power of cities fueled by Irish and German immigrants, the new prohibitionists targeted Mexicans immigrants and Blacks.

Huffington Post and others have reported on Henry Anslinger, the first Commissioner of the Federal Bureau of Narcotics, who testified before Congress in 1937. 

"There are 100,000 total marijuana smokers in the US, and most are Negroes, Hispanics, Filipinos and entertainers. Their Satanic music, jazz and swing, result from marijuana usage. This marijuana causes white women to seek sexual relations with Negroes, entertainers and any others."
In 2012 there were 749,825 people arrested for marijuana according to the FBI's annual Uniform Crime Reports. Of those, 658,231 were arrested for possession and 91,593 for Trafficking/Sales

NORML reported that “State and local justice costs for marijuana arrests are now estimated to be $7.6 billion, approximately $10,400 per arrest. Of this total, annual police costs are $3.7 billion, judicial/legal costs are $853 million, and correctional costs are $3.1 billion.”

In the last decade, 6.5 million Americans were arrested for marijuana.

 A Gallup Poll (July 2013) found that 38% of American adults have tried marijuana and 7% use marijuana. 

Have Tried
Smoke Marijuana
Age  18-29
Age  30-49
Age  50-64
Age  65+

Twenty states and D.C. have legalized medical marijuana.

The New York Times reported this month that Washington State is focusing on ways to impede the voter approved program. 

For instance, the State is only issuing 24 of 334 available licenses. 

Although most voters who approved the use of marijuana live in western Washington which includes Seattle, that area will be given fewer dispensaries. Seattle will have just one dispensary. 

On the other hand, areas that opposed the law will get more dispensaries. 

It will be easier to get illegal pot than legal pot.

The Colorado Department of Revenue reported that during the fiscal year ending on June 30, 2013, Colorado’s 520 dispensaries generated about $633,000 in revenue each with a total revenue of $39 million. They paid $9 million in state taxes.

Colorado mandates that marijuana businesses have vertical integration; 70% of what is sold must be grown by the dispensary.

Under federal tax code (280E) businesses can write off the costs of growing marijuana but not the costs (rent, payroll, etc.) for selling marijuana. They can write-off the expense of side sales such as acupuncture, yoga, T-shirts, pipes.

Business Insider wrote last year that “It’s a job killing policy” in which “people are designing their businesses to minimize the number of employees on the retail side in order to minimize their liabilities. That's hurting the potential employment the industry could support.”

CNN reported in 2011 that potential dispensaries need high amounts of seed money to start their business. Since 70% must be grown by the dispensary, a catastrophic crop failure could wipe out the business. The owners need strict inventory control. Dispensaries must install surveillance equipment.

“Colorado is the only one with a government-sanctioned, for-profit distribution model up and running. …Perhaps worst of all for business owners is a provision that allows local communities to adopt even stricter standards than the state, including outright bans. With each new election, dispensary owners must worry about whether they will be voted out of business.”

Huffington Press wrote “Marijuana Dispensaries Becoming Exclusive Domain Of The 1 Percent” since dispensary owners must spend $1-2 million before they can open their doors for business.

Last month the Boston Globe reported that nearly half of the dispensary applicants who were given given initial approval for medical marijuana dispensaries were eliminated in subsequent regulatory reviews.

Friday, July 25, 2014

Financial Disclosure for UH Regents

John C. Dean, Jr., a former member of the Board of Regents at the University of Hawai'i, announced that he would resign rather than allow his financial information to be made public.

“Just for the record, and for everyone, obviously, I would resign. I’m willing to share my personal information with the Ethics Commission, but I have no interest in sharing it with the entire state of Hawaii,” Dean stated in May 2014.

Governor Abercrombie allowed SB 2682 (Act 230) to become law without his signature.

John Dean's financial data is readily found on the web.

John and Sue Dean prefer philanthropic to political donations. John Dean ranks only 187th on the Hawaii State Campaign Spending Commission’s List of the Top 200 political donors. The Dean's donated to Neil Abercrombie, Calvin Say, Mufi Hannemann and Fred Hemmings

They are deeply involved in the philanthropic community in Hawaii, supporting Catholic Charities, Aloha United Way, the University of Hawaii’s Shidler College of Business, sponsoring a math program at Waimanalo Elementary School, and founding and sponsoring the UH Kipapa i ke Ala Lecture Series and establishing a nonprofit called the Entrepreneurs Foundation of Hawaii.

John C. Dean was a Director of Hawaii Superferry, Inc.

 Dean is involved in several venture capital enterprises focused on high technology development including Hoku Scientific, the marine biotechnology firm Kona Bay Marine Resources, Inc. ,and  the nanotechnology-based advanced materials firm Adama Materials, Inc.

 In 1997, John C. Dean was recognized by Business Week as one of Silicon Valley’s top 25 movers and shakers.

In 2001, John C. Dean was recognized by Forbes as one of the 50 most powerful deal makers.

In 2001, under Mr. Dean’s leadership, Fortune ranked Silicon Valley Bancshares among the 100 Fastest-Growing Companies based on growth in revenues, earnings per share and total market return over three years.

In 2010 the Hawai‘i Venture Capital Association (HVCA) has named John Dean as its Social Entrepreneur of the Year.

In 2012 Hawaii Business Magazine named John Dean as the CEO of the Year.

Bloomberg Business Week’s Executive Profile notes that 65 year old John Dean “is connected to 100 board members in 21 different organizations across 15 different industries.”

As Chairman, Chief Executive Officer, Chairman of Central Pacific Bank and Chief Executive Officer of Central Pacific Bank, his total compensation was $1,262,335 (2013).

Mr. Dean graduated from St. Mary’s of Redford High School in Detroit in 1965, received a B.A. in Economics from the College of The Holy Cross in 1969 and an M.B.A. in Finance from The Wharton School at the University of Pennsylvania in 1974.

Holy Cross is the oldest Catholic college in New England and offers personalized education to 2,900 students in the Jesuit tradition.

John and his future wife Sue served as Peace Corps Volunteers in Western Samoa where he met. After Samoa they spent time in Hawaii and bought a house in the exclusive Waimanalo beach community near Makai Pier. The Dean family includes daughters Monica and Sally.

Dean turned around several struggle banks including Silicon Valley Bank (SVB) and Central Pacific Bank (CPB).

He served as Chief Executive Officer (CEO) of several financial institutions: First Interstate Bank of Oklahoma (1986-89); First Interstate Bank of Washington (1989-91); Pacific First Bank CEO (1991-93); Silicon Valley Bank (1993-2001); and Central Pacific Financial Corp and Central Pacific Bank (2011- ).
Dean is a Director of the Pacific Asian Center for Entrepreneurship and E-Business (PACE) at the business school.

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Thursday, July 24, 2014

Hawai`i to host energy, water, agriculture, military conference in September

The Asia Pacific Resilience Innovation Summit and Expo (APRISE2014) will be held at the Hawai‘i Convention Center from September 15 to 17, 2014.

Over the past four years the conference has established itself as Hawaii's premier energy event of the year.

The conference has traditional political stump speeches, fascinating energy talks and cutting edge projects under development.

LaserMotive was highlighted in 2011. They won a Defense Department challenge by developing a plane with solar panels on the underside of wings.

Everything from unmanned aerial vehicles (UAVs) to helicopters and planes can avoid the need to have heavy fuels on board. They can be powered by ground-based lasers.

In 2013 Governor Abercrombie gave one of his famous “My Way is the Only Way” speeches.

The Governor announced that his three prong Action Plan – Interisland Transmission Lines, Smart Grids and Liquefied Natural Gas (LNG) – was the only path forward.

Failure to act, on this kind of an Action Plan, is not an option, not an option if we’re going to survive. We’re not willing to allow our engines for economic transformation to hit the brick wall of indifference.”

True to his often bombastic style, Abercrombie then chastised those with opposing positions describing them as those who focus on “inaction and words to no effect.”

He stressed that the three Commissioners on the Public Utilities Commission are “political appointments” there to do his will. Only months later he tried to get rid of PUC Chair Hermina Morita.

Governor Abercrombie described how carefully he balances his views and how weak his opponents are.

Our third strategy is to balance technical, economic, environmental and cultural considerations. Yes, we have to take points of view into account. But an opinion that is merely opinion is not going to be good enough. It has to be science-based. It has to be reality-based.”

Governor Abercrombie was largely speaking to a business audience, as he had back in March 2012 when he addressed the Kona-Kohala Chamber of Commerce.

West Hawaii Today editor Reed Flickinger captured the Governor’s speech that day.

“’There will be no more obstruction from someone who found their cultural roots six minutes ago.’ 

Abercrombie then leaned further to the right and addressed environmental laws, sounding particularly and uncharacteristically conservative.

Moving projects forward, in light of environmental laws, is important, but he said he ‘helped write some of those laws’ and ‘they are not meant to stop things.’ ‘Historic preservation (laws) never meant ‘I don’t like it so I’m going to stop it.’

He spoke of his quest for authority to move past ‘pseudo-environmental’ and cultural issues to fast-track things, adding ‘if you don’t approve, throw me out of office; I am accountable.’

He then took a strong right jab at due process and a long stride from constitutional balance of powers and said he’d like to throw some of the environmental and cultural opponents of projects ‘out of court.’”

Governor Abercrombie will open the 2014 conference the month after the primary, where residents of the Aloha State will decide if they want to re-elect the Governor.

During the past three years the conference has been called the Asia Pacific Clean Energy (APCE) conference, sometimes confused with the Asia Pacific Economic Cooperation (APEC) meetings.

 This year the conference has been renamed: Asia Pacific Resilience Innovation Summit and Expo (APRISE2014). The conference is aimed at global business, technology and policy leadership.

The four pillars of the conference are energy, agriculture, water and security.

The new buzz word is resilience. How fast can a system recover from a disaster?

Registration by August 15 lowers the cost of the conference by $100.

The full conference fee is $595 (Hawaii residents), $695 (Out-of-state Government/Academic/Start-up) and $1095 (Industry/Corporate).

Over 30 exhibitors have signed up including Hawaiian Electric Company, Hawaii Energy, Hawaii Gas, Hawai`i State Energy Office (DBEDT), First Wind, AECOM and Sempra.

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Wednesday, July 23, 2014

Hawaiian Electric's new rate case under scrutiny

By Henry Curtis

Hawaiian Electric Company (HECO) is required to file a rate case with the Public Utilities Commission every three years.

In June Hawaiian Electric filed their latest rate case, asking the Public Utilities Commission to accept an abbreviated filing with no adjustment to rates.

On the one hand, having no rate hike might seem desirable because customers are tired of high rates. But rates can still rise because of numerous surcharges imposed on customers.

What HECO actually asserted was that they can save $16,000,000. 

The savings could reduce rates.

But instead HECO wishes to reallocate those savings to fund other programs.

HECO is apparently re-submitting its disapproved Integrated Resource Planning (IRP) Report albeit in a different format, in the current “abbreviated” rate case.

One of the largest proposed expenditures is on Smart Grid pilot projects.

There are arguments for and against a Smart Grid.

There is sharp disagreement about what a Smart Grid is.

At one end of the spectrum, anything added to the system that increases efficiency, reliability and/or resilience is smart.

At the other end of the spectrum, a smart grid is a sophisticated electric/telecommunications transmission grid system that can self-monitor and self-heal.

HECO pilot projects and research require less PUC scrutiny than full-blown programs.

Rather than face any community opposition, HECO appears to be seeing how much money they can spend on the pilot project before seeking authorization for the program.

One argument goes -- the larger the wedge they can get into the doorway, the less likely the proposal will be stopped in the end.

Life of the Land and the Department of the Navy filed Motions to Intervene in the rate case.

On July 17 the Consumer Advocate wrote a letter to the Public Utilities Commission

“On June 27, 2014, Hawaiian Electric Company, Inc. ("Hawaiian Electric") filed a letter with certain attachments related to a 2014 test year rate increase application. …

At present, Hawaiian Electric's business and operations are subject to significant change as a result of the four orders issued by the Commission on April 28, 2014.

Hawaiian Electric is required to submit its Power Supply Improvement Plan ("PSIP") by August 26, 2014 that will state how it intends to integrate substantial amounts of variable renewable energy resources in a reliable and economic manner without significant curtailment of renewable resources.

Further, the ongoing investigation in Docket No. 2013-0141 may lead to structural changes to the existing decoupling mechanism.

The results from Docket No. 2013-0141 and the PSIP could have significant impacts on the determination of Hawaiian Electric's revenue requirements,' and the Consumer Advocate has concerns about the allocation of its resources towards reviewing the June 27 Letter as a rate increase application when the underlying assumptions may dramatically change as a result of Docket No. 2013-0141 and/or the PSIP.

Given the combination of the novel nature of the June 27 Letter and other ongoing regulatory matters, the next appropriate procedural step is not evident.

The breadth and scope of ongoing regulatory analyses are stretching the Consumer Advocate's ability to adequately allocate its resources.

Commission guidance on this matter would certainly clarify the necessary actions to follow Hawaiian Electric's June 27 Letter and the Consumer Advocate would proceed as appropriate to best serve the consumers' interests.”

The Public Utilities Commission must now decide how to handle to Consumer Advocate letter and Life of the Land’s Motion to Intervene.

The Public Utilities Commission may decide to wait until HECO files its Power Supply Improvement Plan before deciding what to do with the rate case.

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Tuesday, July 22, 2014

Cellana receives additional funding for algal-biofuel research

By Henry Curtis

The U.S. Department of Energy announced in July that Cellana will be given $3.5 million to further its research into algae-based biofuel and related products.

This new funding would bolster the $100 million already invested in the company.

The goal of the company is to use carbon dioxide (CO2) emissions from power plants to grow algae which could then be used as feedstock to make biofuels, marine and animal feed, cosmetics and industrial chemicals.

Cellana had been founded as a joint venture of HR BioPetroleum and Royal Dutch Shell PLC in 2007.

In 2008 Cellana signed a memoranda of understanding with Alexander & Baldwin and Hawaiian Electric Company and its subsidiary Maui Electric Company.

The joint venture would pursue development of an algae facility next to the Ma'alaea power plant on the island of Maui.

Royal Dutch Shell left the joint venture in 2011 and then HR BioPetroleum renamed itself Cellana.

HR BioPetroleum had been founded in 2004 by C. Barry Raleigh, following his retirement as the Dean of the School of Ocean, Earth Science and Technology (SOEST) at the University of Hawaii at Manoa in 2003.

Former Hawaiian Electric Company CEO T. Michael May joined the Cellana board of directors in 2011. He is no longer associated with the project.

The dream of converting algae into biofuel and other useful projects is more than 70 years oil.

During WW2 German scientists proposed that microalgae be grown for food and fuel.

Massachusetts Institute of Technology (MIT) mass produced algae on a rooftop in the 50s.

The University of California, Berkeley studied the algae to methane process in the 60s.

The US Department of Energy funded the Aquatic Species Program (1980-96). Twenty-five million dollars was invested by DOE.

There are three general problems with the generation of algae and its conversion to biofuel.

First is the percentage of oil found in the algae. The dream of algae scientists is to find or develop algae which is at least half oil. This may be possible through bioprospecting, genetic engineering and/or natural selection.

“We prefer to be in the tropical or subtropical regions because we want to rely on natural algae if possible, as opposed to genetically modified algae” said Cellana CEO Martin Sabarsky in 2011.

“We’re not opposed to genetically modified algae, we just think it’s easier to get regulatory and customer and partner acceptance when you’re dealing with natural strains.”

The second issue deals with removing the water content (drying out) the algae. This can create a smelly mess.

The third issue is the cost. To date, no one has penciled out a cost-effective process.

If algal-biofuel does pencil out in the long-run, it could be a game changer. Algae could provide green fuel for ground, marine and air transportation.

CELLANA LLC is listed with the Department of Commerce and Consumer Affairs (DCCA) Business Registration Division (BREG) as a “Foreign Limited Liability Company (LLC)” that was incorporated in Delaware.

“The purpose of the company shall be the further development and commercialization (including licensing and sub-licensing) of photosynthetic microbe-based co2 capture and biomass production technology and the production of the products (which consist of the following products that can be derived from photosynthetic microbes (a) feedstock for bio fuels products and for other substitutes for items currently made from petroleum and its derivatives, (b) fame, (c) proteins, and (d) carbohydrates and to engage in any and all activities related or incidental to the foregoing.”

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