The Need to be Self-Reliant
Kaua‘i Island Utility Cooperative got a bold start and never looked back
Derrill Holly | October 1, 2019
Article shares Jim’s involvement founding KIUC, full article here
Hurricane Iniki hit Hawaii’s Kaua‘i Island in September 1992, and its 145-mph winds caused an estimated $3 billion in damage. The investor-owned electric utility there at the time spent millions rebuilding its system, but less than a decade later, they wanted out.
Local bank executive Jim Mayfield and other island business leaders knew electricity was a basic necessity and looked at a number of options to help ensure local residents would maintain access to essential services.
“I had already gotten the financial statements and met surreptitiously with the controller of the utility company,” Mayfield recalls.
He also reached out to NRECA and the National Rural Utilities Cooperative Finance Corporation (CFC) to ask about electric co-ops, how they operate, and, more importantly, how they get started.
“I had a commitment letter from CFC for $225 million in two and a half weeks,” Mayfield says. “I couldn’t have gotten $100,000 approved by my bank in two and a half weeks.”
With some guidance from NRECA, and after a lot of meetings, Kaua‘i Island Utility Cooperative (KIUC) was up and running in 2003.
It was a bold start and the first step on a path that, over the next 16 years, would see KIUC become one of the nation’s most ambitious electric cooperatives in the renewable energy space, dropping its dependence on fossil fuel generation from more than 90 percent in 2011 to less than half now.
“We have a very forward-thinking community that understands the need to be self-reliant,” says Kaua‘i Mayor Derek Kawakami, who served on the co-op’s board early in its history. “Our community embraces clean, renewable energy.”
Kawakami proposed the co-op’s first renewable energy initiatives at a time when virtually every gallon of diesel fuel or naphtha used to generate electricity was shipped in from West Coast ports on the U.S. mainland.
“We cannot afford to be without power,” Kawakami says. “Any type of fossil fuel-based generation could be disrupted through challenges with shipping or natural disasters.”
Harnessing the island’s central Pacific breezes was quickly ruled out because of the hazards wind turbines would pose to birds, including species considered threatened or endangered. But solar, bio-diesel, hydro, and water and battery storage were all on the table.
KIUC’s fossil fuel plants, totaling 125 MW of production capacity, are modern and well maintained, and fuel shipments in excess of 20 million gallons annually continued through 2015.
But market pricing for fuels was frequently a budget buster. Diesel costs for the co-op in 2018 averaged 15 cents per kilowatt-hour, compared to 11 cents or less for its renewable energy.
“We haven’t had a rate increase since 2009,” says KIUC CEO David Bissell.
He joined KIUC in 2006, about the time directors started developing a strategic goal of boosting renewable capacity from 9 percent at the time to 50 percent of the co-op’s overall demand by 2023. The co-op hit the 50 percent mark late last year.
“Renewable generation is meeting close to 90 percent of our demand during midday on most sunny days,” says Bissell, crediting the diversity of KIUC’s available renewable assets. “When we became a cooperative in 2003, our rates were 78 percent higher than rates on Oahu, the most populated Hawaiian island. That cost difference fell to 17 percent by the end of 2017.”
KIUC’s renewable assets, either co-op-owned or available under power purchase agreements, include:
- 64 MW of utility-scale photovoltaic capacity.
- 152 MWh of utility-scale battery storage.
- 6.7 MW of biomass production fueled by wood chips.
- 16.3 MW of hydroelectric power.
In addition, nearly 4,300 residential and commercial rooftop arrays participate in the co-op’s distributed energy resources (DER) program with a total capacity of 31.3 MW.
“We’re on a small island, so virtually nothing is done out of sight,” Bissell says. “Residents are very aware for the most part of what we’re doing and are really supportive of it.”
At annual meetings and other community events, KIUC’s directors, Bissell, and other members of his management team often recap the results of the co-op’s renewable energy projects.
“Their commitment to renewable energy has helped us to move forward in reducing our own carbon footprint,” says Helen Cox, chancellor of Kaua‘i Community College. “KIUC consulted with us on our two photovoltaic systems so we could make sure they tied in well with the grid.”
Arriving on the island in 2008, Cox has watched many renewable projects advance.
“I was not terribly impressed back in 2008, but I am very impressed now and love the commitment that our co-op has made,” she says. “I hope our students are paying attention and being inspired by the work of KIUC.”
The co-op’s biomass plant is fueled by wood chips produced daily from 10,000 Albezia trees, an invasive mimosa species. The trees, cleared from about three acres of fallow agricultural land each day, produce baseload electricity for the co-op, available when other intermittent sources of power are inadequate or unavailable. The power purchase agreement calls for service availability up to 318 days per year, and the plant can be ramped up quickly if supply is needed to meet the co-op’s load.
KIUC is now developing 25 MW of additional solar and hydroelectric power with pumped storage in a project that could restore thousands of acres dormant since the island’s sugar plantations ceased operations in 2010.
“We will use the photovoltaic solar to pump water uphill during our daytime hours,” says Allan Smith, chair of the KIUC board.
Three older reservoirs at different elevations are being rehabilitated for the project, and water pumped into the upper reservoir can be released when needed to produce hydroelectric power. The co-op has been working with several state agencies, including the Department of Hawaiian Homelands, which plans to cede some of the reclaimed land back to local families.
“This will actually allow Hawaiian beneficiaries to get back on the land,” Smith says. “We’ll open up an area for agriculture homesteading that they’ve been unable to use because it didn’t have reliable water or any electricity.”
The area around the middle reservoir will be accessible by four-wheel drive vehicles, and the co-op plans to provide electric service to the area, which will not only make it usable but will also drive irrigation equipment.
“It’s a pretty novel project, capable of producing about 15 percent of the island’s energy upon completion,” Smith says. “We’ve got an engineering firm doing design work at it, and we’ll soon be filing for most of our permitting.”
Bissell says KIUC owes much of its success to the early decision to form as a cooperative. He also credits the partnerships the co-op has built with landowners; the local, state and federal governments; and its members.
“As a small island in the middle of the Pacific, we were already seeing the impacts of global climate change. Strategic planning for bringing renewable resources onto the grid was always at the forefront,” he says. “The founders of KIUC pursued the cooperative model because they felt the only way to move forward in an aggressive and progressive manner was to bring local control to utility planning and operations.”
Bissell says the ongoing solar-pumped hydro project, along with a solar-battery storage project under development with AES Corp. at the U.S. Navy’s Pacific Missile Range Facility Barking Sands, should boost KIUC’s renewable capacity to 80 percent of demand within five years.
But even that fall’s short of Bissell’s ultimate goal.
“As a cooperative, the foundation is in place, and we’ll get to that 100 percent goal while serving the best interests of our members.”