Linking Hawaii’s Islands with wind energy

Makena Coffman () and Paul Bernstein ()

The Annals of Regional Science, 2015, vol. 54, issue 1, 21 pages

Abstract: This study assesses the economic and greenhouse gas (GHG) emissions impacts of a proposed 400-MW wind farm (Big Wind) in Hawaii. Due to its island setting, this project is a hybrid between onshore and offshore wind development. An undersea cable would carry the power from Maui County, which has high-quality wind areas, to the population center of Oahu, which has fewer sites for wind power. The project is additionally motivated by Hawaii’s high electricity rates, which are nearly three times the national average, and a renewable portfolio standard (RPS) mandating that 40 % of the State’s electricity sales be met through renewable sources by the year 2030. Using an economy-wide computable general equilibrium model coupled with a fully dynamic optimization model for the electric sector, we find that the 400- MW wind project increases gross state product by $2.2 billion (in net present value) and average annual per capita income by $60 per year. Although there are potentially near-term welfare losses if there are capital cost overruns, fuel costs are a dominant factor in determining the cost-effectiveness of the project. However, without upgrades to Hawaii’s grid and/or its operations, there is a trade-off between investment in wind energy projects and solar PV. If higher levels of intermittent resources cannot be integrated into the system, higher-cost biofuels serve a more prominent role in meeting the RPS. Without upgrades, wind and solar PV generation are restricted, and hence, reduction in GHG emissions in excess of those present without the Big Wind project is negligible. With upgrades, the project is estimated to reduce GHG emissions by an additional $$\hbox {12 MMTCO}_{2}$$ 12 MMTCO 2 from 2020 to 2040. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: C68 General equilibrium models; Q42 Alternative energy sources; Q43 Energy and the macroeconomy; R13 General equilibrium and welfare economic analysis of regional economies (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s00168-014-0644-y

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