Tuesday, August 24, 2010

Renewable Energy is the new High Tech for Hawaii

For the past 20 years, the State of Hawaii has pursued the development of a high tech industry to counterbalance our economic dependence on tourism, with mixed results.  Proponents of software-based companies note that these products are environmentally friendly, can be developed in any location, and bring in highly-skilled, highly paid jobs to the State.

These advantages are all true, and there are some notable high tech success stories.  Unfortunately, while Hawaii is well-suited to high tech, high tech may not be well suited to Hawaii.  The location-independence of software development means that it is just as easy to migrate high tech jobs out of Hawaii as it is to move them here, as is demonstrated by the frequent relocation of locally started high tech companies to California.

The problem is that the "value proposition" for locating the typical high tech company in Hawaii is weak: our cost of living is higher than the mainland, we are isolated and at least a five hour plane ride away from other companies, the number of qualified high tech professionals here is limited, and the physical geography of Hawaii does not provide a competitive advantage.

As a State and community, we now have an incredible opportunity before us:  the development of a new industry that can provide an alternative to tourism, and for which all of the traditional disadvantages of Hawaii suddenly become advantages.  That industry is renewable energy.  Here are some of the compelling value propositions for this industry in Hawaii:

1. Our geography is an advantage: Hawaii is "world class" with respect to its renewable energy resources.  There is no other single place on Earth with Hawaii's simultaneous availability of wind, wave, geothermal, and solar energy resources. That means we can work on multiple fronts, and explore complementary combinations of renewable energy. It also means that renewable energy companies started in Hawaii will tend to stay in Hawaii: there is a geographic disadvantage to moving them elsewhere.

2. Our high cost of living is an advantage: it makes it easier to make renewable energy economically viable.  We currently pay $0.25 per kWh, almost twice the cost on the mainland.  Furthermore, that cost can rise dramatically with increases in oil prices.  This means that alternative energies become cost-effective in Hawaii much sooner than on the mainland, making it easier to start businesses in renewable energy in Hawaii.

3. Our isolation is an advantage: our energy grid is autonomous.  On the mainland, all of the electrical grids are interconnected and many times larger than Hawaii's.  The fact that our grid is small and isolated makes us better suited to innovation; we provide a natural "laboratory" for experimentation with renewable energy sources.

4. The small number of high tech professionals in Hawaii is not a disadvantage: Renewable energy jobs are not just located in cubicles.  Unlike high tech software jobs, renewable energy jobs span the gamut from "high tech" engineering and business to "traditional tech" such as carpentry, electrical, and plumbing. A renewable energy industry creates jobs across the socio-economic spectrum of Hawaii.

5. A renewable energy industry creates a "virtuous circle" of economic development.  The development of a renewable energy industry has a singularly positive effect on our economy for one simple but profound reason:  every kilowatt-hour of energy created by local, renewable energy sources is one less kilowatt-hour of energy we pay for with foreign oil.  In addition to the positive environmental consequences, this means that every dollar generated by renewable energy is a dollar kept in Hawaii and not exported elsewhere.  Currently, out of our $60B gross domestic product, almost $8B is "bled away" to pay for foreign oil. Returning almost 15% of our GDP to Hawaii could enable us to improve government services while reducing our tax burden.   Renewable energy provides an unparalleled potential for economic development as it can simultaneously create jobs and reduce the flow of money away from our islands.

Creating a renewable energy industry in Hawaii requires vision and leadership from our political representatives and our educational institutions, but it is possible.   In general, we must create a legal and regulatory framework that enables energy innovation and provide workforce training for those who wish to pursue careers in this area.

Here are concrete steps we can take, starting today:

1. Ask the political candidates how they will further a renewable energy industry in Hawaii.  This election season provides an opportunity to raise the profile of this issue.

2. Lobby your representative for new laws to make renewable energy more affordable.  For example, PACE (Property Assessed Clean Energy) financing attaches the cost of solar energy installations to your property taxes. Essentially, your property taxes go up, but that increase is offset by your savings in energy, and if you sell your house, the remainder of the "loan" is paid off by the next owner.  

3. If you are a student, investigate renewable energy programs at your school. For example, the UH College of Engineering was recently awarded a $2.4M work force training grant by the Department of Energy to support renewable energy education.  Also at UH, the Sustainable UH student group provides a variety of educational opportunities related to renewable energy.  The more educated we are, the better we will be positioned to take advantage of opportunities as they occur.

Hawaii is uniquely positioned to be a world leader in renewable energy, with the potential for incredible benefits to us personally and to the wider world.  Let's work together to make it reality.

3 comments:

Lorin said...

Nice to see you blogging again, Philip!

csc said...

I like the message and encouraging a discussion leading up to elections and the 2011 legislative session.

I understood one of your arguments to be we should pursue renewable energy (RE) development over software development in pursuit of a high-tech economy. One could likely win over the local "proponents of software-based" tech by teaming up with them to move RE (and energy efficiency!) forward.

Perhaps if the two camps effectively team up they could transform the tourism industry here so that tourism-related activities minimize environmental impacts while optimizing economic benefits.

Tony in Hawaii said...

I love it. Hawaii needs to be energy independent. We ship way too much oil to the islands. We have plenty of sun and wind and wave energy, and just need to tap into it.

Hey Philip can you email me? I was trying to find your email on the blog but I don't see it. I have a question about the blog.