What to do With the Island You Own?

December 28, 2008

If you owned an island in Hawaii, there are many things you could do with it. Castle & Cooke owns Lanai island. And the developer is doing the things you would expect a developer to do: a Four Seasons Resort, homes, retail. But Castle & Cooke departs the traditional territory of the developer as it contemplates bringing the largest wind farm on the Hawaiian Islands to its little island. Castle & Cooke would build a 300 to 500 megawatt farm on the relatively small 90,000 acre island, exporting the excess production to neighboring Oahu island via underwater cable.

This fits nicely within an emerging picture of Hawaii at the forefront of an American energy revolution. There is much to recommend this project. Electricity on Lanai costs a staggering 55 cents a kilowatt hour, so wind doesn't have to work as hard to make budget. The Hawaii Clean Energy Initiative promises help from the state and the Department of Energy to create an environment conducive to such projects (one help would be to knock down the five to seven year permitting process anticipated by Castle & Cooke). Hawaii's deal with electric car infrastructure company Better Place creates significant potential demand for the otherwise unusable electricity that is produced by wind during the night, which is usually wind's prime production time. (Better Place founder Shai Agassi notes in this interview that Denmark, which produces 20 percent of its electricity from wind, can't wait for the electric car, because they actually have to pay Germany to take nighttime wind off their hands). Throw on top of this any incentives coming from the Obama administration's pledge to create the green collar economy, and one wonders if the Lanai Wind Farm is fronting a new wave of wind projects for the islands.

Wind speed at 50 meters in the Hawaiian Islands, courtesy HECO

Comments

[stomv]

I didn't watch the interview [can't right now], but this doesn't pass the smell test:

Better Place founder Shai Agassi notes in this interview that Denmark, which produces 20 percent of its electricity from wind, can't wait for the electric car, because they actually have to pay Germany to take nighttime wind off their hands

Pay to take the electricity off their hands? That doesn't pass the smell test. Just shut down the turbines at night, either by locking the blades or disconnecting the motor from the axle. Heat homes with electric heat for free. Etc. etc. Paying Germany? Doesn't make sense unless there's some sort of other contractual agreement or some such...

anybody got an explanation?

[Chris]

stomv, you're right, selling at a loss is counterintuitive and bears looking into. there's plenty in print that the dutch sold the wind to the germans at little cost, or no cost, but nothing that says at a loss. i hope to dig into this a little further. i'll keep you posted
.

[Chris Davis]

Shai's comments regarding Denmark start at about 14:20 into the interview. He talks about the turbines producing excess power at night, not being able to shut them down, and paying the Germans to take their excess production. "They actually get times when they sell it at negative few cents per kilowatt-hour."

[Jeff Paul Scam]

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