This State Is Reinventing America's Energy Landscape

As solar and wind power gain traction, Hawaii is saying "Aloha" to energy storage.

May 31, 2014 at 3:05PM


Source: Hawaiian Electric

The last state admitted to the union is one of the first states reimagining the country's energy practices. Hawaiian Electric Companies, a subsidiary of Hawaii Electric Industries (NYSE:HE), is looking to develop large-scale energy storage systems for the Oahu grid that are able to store 60 MW to 200 MW for up to 30 minutes.

In addition to the more than 11% of Hawaiian Electric's customers who use rooftop solar, the Oahu grid obtains its power from an increasing amount of utility-scale wind and solar projects. Addressing the island's clear commitment to renewable energy in a recent press release, Colton Ching, Hawaiian Electric vice president for energy delivery, said, "Energy storage is one of the key missing elements in integrating high levels of renewable energy from variable sources like solar and wind."

Islands in the sun
Surpassing the state's goal of 15% renewables by 2015, Hawaiian Electric Companies generates more than 18% of its power from renewable energy sources, and the utility shows no signs of slowing down. By 2016, Hawaiian Electric Companies is planning to deactivate 226 MW of fossil fuel power plants; moreover, the utility has said that pending annual reviews of its generation needs "additional units will likely be identified for deactivation in the years ahead."

Aloha, Hawaii
One company that may be a contender in submitting a proposal for the energy storage project is Parker Hannifin (NYSE:PH). Asserting itself as one of the companies at the forefront of energy storage systems, the company cites 35 years of experience and the production of over 100,000 inverters and drives per year. Especially suited for Oahu's renewable energy needs, Parker Hannifin's Power Conversion Systems for energy storage is intended to provide support for wind and solar power.

Source: AES

The AES Corp. (NYSE:AES) is another company that may show interest in Hawaiian Electric's project. A complete battery-based energy storage solution, the AES Advancion system is the latest offering from AES intended for utility and renewable energy developers. AES deployed the Advancion system last September at the Tait Energy Storage Array for Dayton Power and Light in Moraine, Ohio. With the putting of the 40 MW system in operation, AES brings its total U.S. energy storage in commercial operation at over 100 MW. Parker Hannifin is one of the first manufacturers to be named a certified supplier of the Advancion solution. The two companies have worked together before, partnering on the 64 MW Laurel Mountain Storage Array.

Bringing the trend to light
In addition to growing utility-scale facilities, distributed generation is gaining favor among Hawaii's residents. SolarCity, one of the nation's leaders in residential solar installations, is so sure of its continued success in Hawaii that it just opened its second operations center, a 6,300 square-foot facility, in the state. Currently staffed by only 12 people, the company expects to double that by the end of the year. RGS Energy is another company that sees the opportunity in the state, having signed a definitive agreement to acquire Sunetric, one of the state's leading solar developers and installers. Totaling over 65 MW, Sunetric has installed over 3,500 solar projects in Hawaii. Kam Mofid, CEO for RGS Energy, believes that, "the extremely high cost of utility power in Hawaii has made it one of the most attractive markets for solar systems in the U.S., and this has led to the highest penetration of solar systems in the country." Additionally, he addresses the importance of energy storage by saying that, "Hawaii leads the industry in important areas such as grid integration and is key to the evolution of solar combined with energy storage."

The Foolish conclusion
Far gone are the days where utilities were solely comprised of coal and fossil-fuel powered facilities. Now, solar and wind-generated power are representing larger and larger portions of utilities' portfolios. As a result, utilities will need to turn to energy storage solutions. Parker Hannifin and AES are two companies poised to profit from this evolution in the American energy landscape -- if not in Hawaii, then surely elsewhere in the country.

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Scott Levine has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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