The editors of the Wall Street Journal don’t understand something very basic about power companies:
The deadly fires in Maui last week are still being investigated, and there may have been more than one contributor. But one culprit that seems to be emerging is the tradeoff the local utility had to navigate between power grid safety and the government-mandated green energy transition.
Video footage points to fallen power lines as a possible cause of the deadly fires. Hawaiian Electric’s bonds and stocks have sold off this week as investors worry that the utility will be liable for fire damage.
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Hawaii’s mandate was an especially tall order since only about 20% of its power in 2015 came from renewables. The islands lack large amounts of empty land to build solar and wind. They also lack natural-gas power that can ramp up quickly to back them up. Most of Hawaii’s power was derived from oil and coal.
To meet the government mandate, Hawaiian Electric embarked on a rapid renewable build-out, which involved heavily subsidizing rooftop solar and batteries and contracting for large-scale renewables at elevated prices. Oil can be an expensive fuel source, but decommissioning fossil-fuel plants prematurely wastes sunk capital.
Every dollar the utility spent on subsidizing solar and connecting renewables to the grid was one less dollar available for strengthening equipment and removing combustible brush. Despite rising fire risk from non-native grass, Hawaiian Electric spent less than $245,000 on wildfire projects on the island of Maui between 2019 and 2022.
Unless they are compelled to by mandate and enforcement power companies will never pursue resilience. It doesn’t add to the bottom line and needing to spend more money on maintenance actually bolsters their case for higher rates. Whatever your views on government there are some things which require government action and more resilient power distribution is one of them.
You’re shit’n us, right?
The modality of power generation is not equal to resiliency. The utility could have used wind, solar, oil and coal, or gigantic banks of hamsters running on treadmills for additional power capacity. That’s different from resiliency. The issue is that government mandated capex on green was, or was judged to be, unsupportable by the prevailing or prospective rate structure. (And no doubt the green push came in part at the expense of current fossil fuel capacity: stranded, not fully amortized assets.) So how to finance resiliency, or the realities of remediation of farms where your power lines exist?
It may be true that a utility needs to have resiliency forced upon them. But a bureaucratic government rate setting body that doesn’t acknowledge tradeoffs in an environment driven by the politically driven hysteria of the day shouldn’t be let off the hook.
The mandate to use more renewables allowed them until 2045 to reach that goal. However, Hawaii had seen a surge of oil prices in 2018 that pushed them towards alternate power generation. As noted in the prior article they thought that they were different than California and not at risk of uncontrolled wildfires, they hadn’t seen any, so in spite of the wild claims made about the risks in the government reports saying otherwise they weren’t going to spend on maintenance since their own expertise made it clear the government was wrong.
Steve