Hawaii
Energy Policy Forum > 2001
Articles
Hawaii establishing itself as an alternative-energy hub
Ben DiPietro
Pacific Business News
December 21, 2001
This week, PowerSources -- a PBN series on alternative energy
in Hawaii -- looks at a start-up and two companies that do
business with Hawaiian Electric Industries Inc., one as a
power supplier, the other as a subsidiary.
Hawaii's isolated location tends to work against the state
when it comes to companies looking for places to base their
business. The opposite is true for the alternative energy
industry, those in the business say. The islands are a hotbed
of research and development and are well-positioned to lead
in the search to find new technologies
to provide cleaner and less-expensive electricity, says Dustin
Shindo, CEO of Hoku Scientific, a fuel-cell development company.
Alternative-energy
companies based on the mainland are so spread out, it's hard
for them to develop synergies, he says. "There
are a lot of companies starting to pop up here," Shindo
says. "It's a good opportunity for us to start working
together. Our ability to partner with some of these companies
will be an advantage. Mainland companies are scattered all
over the place. Here, you can just drive down the street
or hop a quick plane and you're there."
Hoku Scientific
The company is led by two Hilo natives and
just received a $100,000 Small Business Innovative Research
award from
the National Science Foundation for its new fuel cell design.
The Hoku Fuel Cell has lower production costs and improved
efficiencies over the current generation of fuel cells, says
CEO Shindo, a former principal in ActiveMatrix.com who started
Hoku Scientific in November 2000. Because of the federal
grant, the state's High Tech Development Corp. will give
the company a grant totaling between $20,000 and $25,000,
Shindo says. The money is for the first phase of testing
of the fuel cell, he says. If successful, another $750,000
in government money could be available.
Hoku Scientific this
week to moved from Bishop Street to the Manoa Innovation
Center operated by the HTDC. The company
has five employees, but plans to hire 100 more people in
the next year or two, as refinement and further testing of
the prototype fuel cell continues, Shindo says. About 75
of the new jobs will be technical, the rest in marketing
and administration.
The new membrane fuel cell technology
was developed by Kaleo Taft, Shindo's childhood friend in
Hilo, who moved back to
Hawaii from Oregon last year to join the venture. The company
has a patent pending with the federal government. The University
of Hawaii recently issued the company a "proof of concept" that
Shindo says certifies its claims that its Hoku Fuel Cell
prototype works better than existing models. "What needs
to be done now is building optimized prototypes where we
can show other companies that the innovations are something
they can use and work with," he says.
Hoku Scientific
is working on securing $5 million in "angel" investment
from local and mainland sources and already has received
a small amount of that. Shindo expects to get the rest by
mid-2002. Shindo wouldn't provide more specifics, but says
the money will be enough to keep the company in operation
for the next two years, the minimum time he expects will
be needed before its fuel cells become commercially viable.
Shindo
doesn't envision Hoku Scientific manufacturing its own fuel
cells, but instead selling its technology to the
major fuel cell makers. Meetings with manufacturers also
are scheduled for next year.
Kalaeloa Partners LP
This Kapolei-based company provides Hawaiian Electric Co.
Inc. with enough electricity to power 20 percent of the homes
on Oahu and has done so for the past 10 years. The company
produces 180 megawatts of electricity each year, or enough
to power 200,000 homes, says Dan Nugent, the company's general
manager. Kalaeloa takes the steam produced by burning heavy
oil to create electricity, and uses it to produce thermal
power that it sells to Tesoro Hawaii for use in the oil company's
refinery process. "We are generating electricity and
thermal energy with one fuel," Nugent says.
Employing
an efficient co-generation system saves Kalaeloa between
500,000 and 700,000 barrels of oil each year, Nugent
says. The savings are based on what it would cost Hawaiian
Electric to produce the amount of energy Kalaeloa does using
the utility company's boilers. "Our facility is the
most thermally-efficient power plant on Oahu," he says.
Kalaeloa
is owned by New Jersey-based Public Service Electric and
Gas Co. and Alabama-based Harbert Power Corp., and employs
30 workers in Hawaii. The company is among Hawaii's top 250
businesses, with annual revenues exceeding $100 million,
Nugent says.
The company last month became one of the first
to switch to using reverse osmosis water provided by the
Honolulu Board
of Water Supply. By using the industrial-grade water to boil
to make steam, Kalaeloa saves 500,000 gallons of drinking
water each day, Nugent says. The switch also reduces by 90
percent the amount of toxic chemicals the company uses, since
it no longer has to treat the city water to bring it to the
quality needed to make steam. "Next to fuel, water is
our largest raw commodity to make electricity," Nugent
says. Kalaeloa has additional capacity at its facility at
Campbell Industrial Park, and continues to negotiate with
Hawaiian Electric to supply more electricity. "We have
had discussions," Nugent says. "We are both interested
in doing it. It's a matter of how do we get there. Any deal
would involve Public Utilities Commission approval."
Pro
Vision Technologies Inc.
Incorporated in 1998, this Hilo-based, wholly owned subsidiary
of Hawaiian Electric Industries didn't begin operations until
fall 2000. Pro Vision and its full-time staff of three is
structured to work with all types of alternative energy,
but the company primarily focuses on solar, since photovaltaics
are more commercially viable at this time than technologies
like fuel cells and micro turbines, says Steve Burns, the
company's senior technical service engineer. "It's a
commercially available technology, it's tried and true and
proved technology, and a number of tax incentives make it
economically attractive," Burns says.
The company will get more involved in other technologies
as they become more mature and commercially viable, he says.
Pro Vision to this point has focused on designing and installing
solar systems for residences and businesses that are located
too far from their local power grid to make it economically
feasible to connect. It designs and installs solar-powered
lighting systems for schools, parks and businesses, with
one such system at Laupahoehoe Elementary School on the Big
Island. Since the state earlier this year enacted a net-metering
law to allow on-grid customers to sell power back to the
utility company, the company has installed the first net-metered
system in the state at Plum Hall Inc., a Big Island computer
consulting company.
More and more inquiries are coming in
about net metering, but sales of off-grid systems, including
the pre-packaged
Power House system, still make up the bulk of sales, Burns
says. Pro Vision is developing a product that integrates
photovaltaic cells into traditional building materials, including
its "Sun Slate" tile that can be used as a roof
covering that also generates power. "It defers some
of the costs of building and construction," Burns says. "Aesthetically,
it doesn't look like an add-on, like solar panels can. It
looks like it's part of the original structure.
Efforts also
are under way to develop projects to supply solar systems
to villages in Asian and Pacific nations that
presently don't have electricity, Burns says, although such
projects remain a few years off. Pro Vision contracts with
other solar and energy companies across the state to help
install and maintain its systems, and this helps the company
keep its costs down while spreading some business to other
alternative-energy companies, Burns says.
The company expects
to make a profit by the end of 2002, although Burns says
there is no pressure from parent HEI
to make money at this point. "Like any new company,
we're expected to grow and be profitable for HEI," Burns
says. HEI has made a "fair amount of investment" in
Pro Vision, although Burns wouldn't say exactly how much.
While Hawaiian Electric often isn't associated with being
a champion of alternative energy technologies, Burns says
Pro Vision customers like the stability that comes from working
with a company backed by the state's largest business.
"
When you're talking about having a technology put in your
home that is going to be around for 30 years, people want
to work with a company that has long-standing ties and has
a certain amount of integrity, as far as being available
to service warranties over the long term."
Reach Ben DiPietro by e-mail at bdipietro@ bizjournals.com
or by phone at 955-8039.
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