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Hawaiian Electric's Revised Renewable Portfolio Calculation May Affect Energy Costs for Businesses

·5 min read·👀 Watch

Executive Summary

Hawaiian Electric's recalculated Renewable Portfolio Standard (RPS) claims a 37% renewable energy usage based on new state law criteria, potentially impacting future energy procurement and costs. Businesses should monitor evolving energy pricing and regulatory filings.

  • Small Business Operators & Tourism Operators: Potential shifts in energy expenses require budget review.
  • Real Estate Owners & Investors: Assess implications for property operating costs and renewable energy project viability.
  • Entrepreneurs & Startups: Understand the energy landscape for infrastructure and operational planning.
  • Agriculture & Food Producers: Monitor impacts on operational costs for energy-intensive processes.
  • Action: Watch for updated cost-of-service filings and consumer rate adjustments from HECO.

Watch & Prepare

High Priority

Altered RPS calculations may affect energy pricing and the viability of renewable energy projects, requiring businesses to re-evaluate energy strategies.

Monitor Hawaiian Electric's official filings with the Hawaiʻi Public Utilities Commission (PUC) for any updated cost-of-service reports or proposed rate adjustments. Pay close attention to any public announcements or workshops regarding HECO's integrated resource planning and energy procurement strategies. Businesses should also review their current energy usage and explore opportunities for efficiency improvements or on-site generation, regardless of HECO's reported RPS figures, to build resilience against potential future rate fluctuations.

Who's Affected
Small Business OperatorsReal Estate OwnersTourism OperatorsEntrepreneurs & StartupsAgriculture & Food ProducersInvestors
Ripple Effects
  • →Revised RPS calculation → Different HECO procurement strategies → Potential shifts in energy costs → Increased operating expenses for businesses → Reduced profit margins or increased consumer prices → Impact on local cost of living and business competitiveness.
Wind turbines creating renewable energy under a serene sunset sky over a rural landscape.
Photo by Marshall Reyher

Hawaiian Electric's Revised Renewable Portfolio Calculation May Affect Energy Costs for Businesses

Hawaiian Electric (HECO) has announced it reached 37% renewable energy in its portfolio for 2023, a figure reported to be based on newly enacted state law criteria for calculating its Renewable Portfolio Standard (RPS). This revised calculation method for greenhouse gas emissions and renewable energy credits could influence how HECO procures power and how its costs are passed on to consumers and businesses.

The Change

In 2022, Hawaii's law governing the calculation of RPS procurement changed significantly. Previously, the RPS compliance was based on a complex methodology. The new methodology, as implemented by HECO, appears to reframe the calculation of what constitutes 'renewable' energy in their mix. While HECO has achieved its stated RPS target under this new framework, the precise implications for energy pricing, long-term contracts, and the development of future renewable projects require careful scrutiny by businesses.

Who's Affected

  • Small Business Operators: Businesses relying on stable and predictable energy costs will need to closely monitor any changes in HECO's rate filings. Shifts in how renewable energy is accounted for could indirectly influence the cost of electricity, impacting operating budgets for restaurants, retail shops, and service businesses.
  • Tourism Operators: Hotels and other hospitality businesses, significant energy consumers, should pay attention to any potential rate adjustments. Energy expenses are a major component of operating costs, and even minor fluctuations can affect profitability, particularly in a competitive market.
  • Real Estate Owners: Property owners and developers need to understand how this RPS calculation change might affect long-term energy infrastructure planning and property operating expenses. It could also influence the perceived value and viability of properties incorporating on-site renewable energy generation.
  • Entrepreneurs & Startups: Companies looking to establish or scale operations in Hawaii need a clear understanding of the state's energy landscape. Changes in energy cost structures and renewable energy mandates can affect business models and investment decisions.
  • Agriculture & Food Producers: For operations with significant energy needs (e.g., refrigeration, processing), any variance in energy costs or availability of renewable energy sourcing can be critical. Monitoring these changes is vital for maintaining competitive pricing and operational efficiency.
  • Investors: Investors in Hawaii's energy sector or businesses heavily dependent on HECO's services should assess the implications of this new calculation method. It could signal shifts in regulatory priorities and market opportunities for renewable energy investments.

Second-Order Effects

A revised RPS calculation methodology by HECO, while seemingly an internal accounting change, has broader economic implications:

  • Revised RPS calculation → Different HECO procurement strategies → Potential shifts in energy costs → Increased operating expenses for businesses → Reduced profit margins or increased consumer prices → Impact on local cost of living and business competitiveness.

Furthermore, changes in how renewable energy is accounted for could affect the pace and focus of future renewable energy project developments in Hawaii, influencing grid stability and diversification efforts.

What to Do

Action Level: WATCH

Given the changes in RPS calculation methodology and the potential for future impacts on energy costs and procurement, businesses should adopt a watchful stance. Focus on monitoring key indicators and regulatory updates from Hawaiian Electric. Immediate action is not required, but preparedness is essential.

Action Details:

Monitor Hawaiian Electric's official filings with the Hawaiʻi Public Utilities Commission (PUC) for any updated cost-of-service reports or proposed rate adjustments. Pay close attention to any public announcements or workshops regarding HECO's integrated resource planning and energy procurement strategies. Businesses should also review their current energy usage and explore opportunities for efficiency improvements or on-site generation, regardless of HECO's reported RPS figures, to build resilience against potential future rate fluctuations.

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