Alternative Fuels, Repowering and Energy Transition Study Updated
HSEO has published an update to the Alternative Fuel, Repowering, and Energy Transition Study (“Study”). The update includes the following revisions and corrections. The initial assumptions of the original study have not been changed.
- The low-sulfur fuel oil (LSFO) fuel cost formula has been corrected for Alternatives 1 and 2 to reference the appropriate input data. The revision results in the appropriately referenced LSFO price assumptions over the 2030-2044 period. In the initial analysis, the LCCA underestimated the projected LSFO fuel cost savings of an LNG transition by referencing LNG costs instead of LSFO costs in the Excel formula due to a misplaced parenthesis.
- Sensitivity analyses have been updated to remove a double-counted sensitivity factor that previously overstated the influence of capital costs on results. The update results in marginally less steep capital cost curves on the sensitivity charts.
- Alternative 3 has been removed. The Lifecycle Cost Analysis (LCCA) spreadsheet prepared by the HDR, the prime contractor for the study, was not structured to capture total system costs across all resource pathways. The analysis framework was intended to compare fuel switching among oil, liquefied natural gas (LNG), biodiesel, and hydrogen. Because Alternative 3, as previously structured, could not be evaluated on a comparable basis with Alternatives 1 and 2, it was removed from the revised analysis.
The corrected analysis does not support unsubstantiated assertions of a billion-dollar error.
Under the unchanged initial assumptions for each scenario, the NPVs for these alternatives range from $137 million to $903 million. This represents a $500 million to $595 million increase in system benefits over the initially reported amounts for Alternatives 1 and 2. Any scenarios that fail to meet renewable portfolio and carbon emission reduction targets or perpetuate the continued use of petroleum for power generation are not consistent with state policy.
The Study’s primary conclusion remains unchanged: investment in higher-efficiency power plants and the use of LNG warrant careful consideration as a transitional fuel to replace residual oil, subject to further detailed engineering, procurement, and regulatory review.
Notably, project costs to upgrade the Waiau Powerplant, as proposed by Hawaiian Electric under its Stage 3 procurement process are not included in the base case; if included, they would increase the cost of the “no gas” alternative.
We appreciate the opportunity to engage with stakeholders in this ongoing work.