Continue Reading Below
Image Source: Nosha/Flickr.
In the year 2045, Hawaii could generate 100% of its electricity from renewable energy -- That is, if a bill passed by the state legislature earlier this month is signed into law. It's an ambitious goal nonetheless, especially considering that today the state imports nearly 93% of its total energy requirements, boasts electricity rates that are over 200% the national average, and relies heavily on petroleum-fired electricity generation (yes, petroleum).
Can the goal be achieved? I don't see why not, although it's impossible to predict outcomes 30 years into the future with absolute certainty. But I do know that for Hawaii to succeed it needs heavy support from one company: NextEra Energy .
0 to 100, real quick
Today, Hawaii generates 10.5% of its electricity from renewable sources, according to the U.S. Energy Information Administration. Geothermal accounts for 2.4% of total electricity generation, while the remaining 8.1% is produced from wind and solar. So there's quite a bit of progress left to be made in the next 30 years.
The recently passed bill actually buys Hawaii more time to meet its goals. The previous Hawaii Electric Plan set a 70% renewable target by 2030, while House Bill 623 doesn't expect the 70% threshold to be met until 2040. Of course, that means the state must transition the remaining 30% of its generation capacity to renewable sources in the last five years of the effort. In other words, the state will probably fail to meet its goal if it doesn't exceed the capacity targets set by House Bill 623 earlier rather than later.
Continue Reading Below
Enter NextEra Energy, one of the world's largest renewable-energy power generators. In late 2014, the company stepped up to offer a progressive solution to an otherwise messy situation that pitted state regulators and residential solar customers against the suddenly non-competitive utilities owned by Hawaiian Electric Industries. How? NextEra Energy agreed to acquire the utility business of Hawaiian Electric Industries and embrace renewable energy and rooftop solar; plans that stood in stark contrast to previous attempts to intentionally slow the growth of residential solar (which state regulators shot down).
The fast-falling costs of residential solar panels and leasing programs, the emergence of residential energy storage solutions, the increasing efficiency of energy management software, and the entrance of NextEra Energy all bode well for Hawaii's long-term plans. But what's in it for the company?
By the numbers, Hawaii doesn't use much electricity. It accounts for just 0.2% of the nation's residential, commercial, and residential consumption (but its heavy reliance on petroleum means it accounts for 0.4% of the nation's carbon dioxide emissions from the power industry). But thanks to House Bill 623, NextEra Energy now has the perfect sandbox to play around in as it attempts to create the utility of the future -- one that favors distributed generation over centralized production and focuses instead on providing grid management services. That's incredibly advantageous.
NextEra Energy can experiment with different tools, technologies, and business models in a real-world environment to hone its offerings. Then, gradually, it can roll out the most efficient services and combination of technologies to states with higher energy consumption and similar problems, especially as rooftop solar achieves grid parity across North America in coming years. It could all add up to a tremendous long-term opportunity (that extends far beyond Hawaii) for the company and its investors.
The article Hawaii Commits to 100% Renewable Energy -- and Needs This Company's Help originally appeared on Fool.com.
Maxx Chatsko 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.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.