Kaua’i Island Utility Cooperative shows us how it’s done

As Hawaii considers the ramifications of a contentious sale of its major utility companies to giant Florida-based utility company NextEra, Kaua’i Island Utility Cooperative (KIUC) stands out as an alternative model of utility ownership, and is leading the way in expanding renewable energy production.  In early September, I visited with Jim Kelly of the KIUC to learn more about the cooperative and its approach.

As a cooperative, the utility provider is entirely owned by its members—its employees and customers—who actively participate in setting policies and making decisions. With a strong commitment to renewables, KIUC has utilized multiple strategies to increase its green energy capacity. From Power Purchase Agreements made with owners of large renewable energy facilities—including a solar array owned by Greenbacker Renewable Energy, a company in which many NI clients are investors—to directly investing in the construction of member-owned facilities, the cooperative is well on its way to achieving its goal of 50% renewables by 2023.

With the completion this year of its second 12 megawatt solar facility in Anahola, the coop will be providing a higher percentage of solar power in its mix than any other utility in the country.  This new project, built by SolarCity and owned by the members of KIUC, will provide electricity for 4,000 homes, meeting 20% of the island’s daytime energy needs and 5% of its total annual need.  I got to see their first solar array in Koloa first hand.  It is a literal farm of solar panels stretching for acres and acres, and as an added super-sustainable touch, the cooperative brought in a flock of sheep to maintain the grass throughout the field.

The cooperative has made tremendous strides since 2009 when 91% of its power was generated using expensive, imported fossil fuels. As of 2014, KIUC had reduced its use of imported oil by 2.5 million gallons and cut greenhouse gas emissions by 9 percent. Today, 38% of power is supplied via renewable sources—mostly solar, but also hydro power and biomass. As they set their sights toward the future and ultimately meeting the state of Hawaii’s very ambitious goal to provide 100% of its energy from renewable sources, the cooperative is getting even more creative. I learned about three very cool projects in the works.

First is the newly completed 7 megawatt biomass facility built by Green Energy which uses woodchips made from a fast growing weed tree called Albizzia as fuel to generate electricity in a closed loop system. This project is the first of its kind in the country and is able to generate power 24 hours a day, replacing an additional 3.7 million gallons of oil annually.  Second, another project with SolarCity, a 60 acre, 13 megawatt solar field, will incorporate the nation’s first utility scale battery storage system, allowing the cooperative to deliver solar energy in the evening when demand is highest.  And finally is a project that’s now in the planning stages, which will use an interesting combination of hydro and solar power generation. The island has two existing large water reservoirs with a significant elevation difference between them. The plan is that during the day, a solar powered pump system would move water from the lower reservoir to the upper one, and then at night, the water would be allowed to run back down to generate hydroelectric power for use in the grid.  Additionally, the project would capture and make use of surges of excess energy throughout the day that usually have to be curtailed to protect the grid system from power spikes.  Storage of solar power is the big challenge, and this ingenious storage system will help expand capacity.

The cooperative was founded in 1999 by a group of local business leaders when Citizens Utilities, a Connecticut-based corporation that owned Kaua’i Electric, decided to sell off its utility holdings.  The local group had to do a lot of outreach to educate Kaua’i residents about cooperatives and develop the community support needed to back a locally owned utility. In 2002, with a $215 million loan from the Rural Utility Service, the community purchased Kaua’i Electric and launched the cooperative.

The KIUC is a part of a network called the National Rural Electric Cooperative Association, a trade organization that does research and lobbying on behalf of utility cooperatives and provides organizational infrastructure in the form of pension funds, 401k plans, and insurance for coop member employees. NRECA’s members include primarily consumer-owned local distribution systems as well as generation and transmission cooperatives that supply wholesale power to their distribution cooperative owner-members. Over 900 cooperatives now serve an estimated 42 million people in 47 states.

Rural utility cooperatives were first established by the U.S. Congress and President Roosevelt in the 1930s as part of the Rural Electrification Act. Since for-profit utility companies favored cities where profits were easy to make, rural areas, with lots of land mass and a small number of consumers per mile of expensive power line were pretty much ignored as unattractive investments. It took rural citizens banding together to figure out how to meet their own energy needs, and the not-for profit cooperative business structure was a natural solution for delivering electricity in areas where making a profit would be difficult. Today, cooperatives serve approximately 80 percent of America’s land mass, yet just 12 percent of its population.

On the Big Island of Hawaii, a group of local community and business leaders would like to follow in Kaua’i’s footsteps.  The Hawaii Island Energy Cooperative sees the impending sale of the island’s utility company to NextEra as a momentous opportunity for island residents to grab the chance to “own the power” and choose a locally owned, democratic cooperative model instead.  We say, go for it!

Malaika Maphalala

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