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Balancing Opportunities and Costs in Hawaii’s Increasingly Green Grid

Author

Listed:
  • Karl Jandoc

    (University of Hawaii at Manoa, Department of Economics)

  • Michael Roberts

    (University of Hawaii at Manoa, Department of Economics)

Abstract

Hawaii’s tourism-dependent economy and oil-fired power plants make it the most oil dependent state in the United States. It also has the nation’s highest electricity prices, often between 3 and 4 times the national average over the last decade. These high prices, the state’s sunny and windy climate that make it amendable to increasingly economical renewable energy, plus a relatively progressive political culture have pushed the state to adopt an ambitious goal of being 100 percent renewable by 2045. Focusing mainly on the state’s largest grid on Oahu, where most people live, we discuss the cost structure of the current electricity system, the potential benefits and challenges of growing the share of renewable energy, and make a few policy suggestions. In particular, we argue that all homes and businesses should be given an opportunity to buy and sell electricity at the marginal cost of generation. Variable pricing could greatly the cost of renewable energy, and perhaps seed development of Hawaii as a technology center focused on batteries and smart machines that can help shift electricity demand to align with the variable supply of solar and wind energy.

Suggested Citation

  • Karl Jandoc & Michael Roberts, 2015. "Balancing Opportunities and Costs in Hawaii’s Increasingly Green Grid," Working Papers 201510, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:201510
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_15-10.pdf
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    References listed on IDEAS

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