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Hawaii’s Natural Energy Laboratory fuels innovation

Companies at the state’s Natural Energy Lab are expanding and innovating

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Next to Kona International Airport, at Keahole Point, sits a potential gold mine that is home to some of the state’s biggest exporters and groundbreaking research being done nowhere else in the world.

The Natural Energy Laboratory of Hawaii Authority is an 870-acre ocean and science technology park with 40 tenants – from unique aquaculture companies raising seahorses to a University of Hawaii laboratory that monitors and interprets atmospheric sounds. It is the only tech park in the world that pipes nutrient-rich deep seawater from 3,000 feet below the surface to its tenants. This chilly 43-degree Fahrenheit water is the ideal medium for aquaculture and is utilized by most of the other companies at NELHA.

Hawaii Island Mayor Billy Kenoi calls NELHA the Big Island’s sleeping giant. About 400 people work there, but, Kenoi says, someday soon it could provide hundreds more jobs to local children interested in careers in STEM (science, technology, engineering and mathematics).

“There is a lot of wonderful innovation and technology going on at NELHA, but there is potential for a lot more,” he says. “Hawaii Island is blessed with many natural resources – gifts – and I think NELHA is the perfect place to foster and incubate the most creative businesses in Hawaii.”

Here are updates on some of the innovative companies at NELHA.

Cellana’s long-term goal is to meet Hawaii’s needs for biofuel
and animal feed.
Photo: Courtesy of Cellana


Fuel for the future

Earlier this year, Cellana lost its partner and its biggest source of funding, but sees the split as a blessing in disguise.

Royal Dutch Shell teamed up with Hawaii-based HR BioPetroleum in 2007 to form Cellana and research the production of microalgae for biodiesel. Shell invested more than $80 million

in the company, including $20 million to build Cellana’s 6-acre demonstration facility at NELHA.

“Shell is a big international company with deep pockets, but, as an energy company, it changed its agenda with respect to biofuels,” says Jeff Obbard, Cellana’s VP of science and technology. “They became less interested in biodiesel, which is what our research focused on, and more interested in bioethanol technology, especially in Brazil.”

The end of the joint venture allows Cellana to explore other burgeoning markets in which Shell had no interest, such as aquaculture and animal feed, health products and cosmetics. “In order to make biomass profitable, all of these components need to exist,” Obbard says.

Cellana’s long-term goal is to meet Hawaii’s fuel and animal-feed needs. “We’ve already proven that we can do large-scale production – more than seven tons since January 2010 – so now we’re focused on optimization,” says CEO Martin Sabarsky. Recently, Cellana received a three-year $5.5 million grant from the U.S. departments of agriculture and energy to develop a protein supplement from algae and to demonstrate its nutritional and economic value in livestock feeds.

In 2008, Cellana signed a memorandum of understanding with Alexander & Baldwin, Hawaiian Electric Co. and Maui Electric Co. to pursue the joint development of a 240-acre commercial algae facility next to Maui Electric’s Maalaea power plant. The proposed facility would be the first of its kind in the U.S. and would use the carbon dioxide produced by the power plant to feed the algae, reducing both carbon emissions and the need for fossil fuel, and creating biodiesel and other products.

Sabarsky estimates it would cost $70 million to $100 million to create the facility, depending on how much government funding Cellana can secure, so it will need substantial support from the private sector. The earliest the plant would be running is 2014 or 2015, Sabarsky says.

Most of NELHA’s tenants rely on deep seawater that is piped from
3,000 feet below the surface of the ocean to operate their
businesses. The uses vary: Some use the water for aquaculture,
others use it to for air conditioning and others bottle it for sale.
Photo: Courtesy of NELHA

Cellana’s technology is designed to be duplicated all over the world, Sabarsky says. “We want to be known as a biorefinery of many products and now we have the freedom to make that happen.”

Koyo USA Corp.

Export success

Koyo may be Hawaii’s biggest exporter, but its product is something very basic: water.

Last year, it sold about $140 million worth of bottles of deep-ocean water and, since the devastating March earthquake and tsunami, Japanese sales have increased 20 percent, says plant manager Larry Visocky.

“That was an unfortunate disaster and our hearts go out to all those who were affected,” he says, “but the need for clean drinking water is greater than ever.”

Koyo’s water comes from an undersea current that travels the globe’s ocean floor. Koyo says the water, piped from 3,000 feet below the surface of the Pacific Ocean, is safe from surface pollutants and packed with minerals. Visocky says Koyo isn’t trying to compete with big companies, such as Nestle, that sell their water for $3 a case at Walmart. Instead, it targets affluent consumers who are willing to pay more for high-quality items.

Cellana says it uses “optimal turbulence” and selected nutrients
in its open seawater ponds to cultivate algae that is used as
high-quality biofuel.
Photo: Courtesy of Cellana

“We are one of the biggest exporters in Hawaii, if not the biggest,” Visocky says, “and we think we can keep that momentum going.”

The company continues to invest in its impressive NELHA facilities. Visocky estimates Koyo’s parent company, Koyosha Group – which he calls the Japanese version of Amway – has poured about $80 million into the company’s infrastructure since it started in 2002.

The investment is very visible: Around every turn, there are shiny, industrial-size machines that desalinate, bottle, transport or package Koyo’s Mahalo Hawaii Deep Sea Water. The company’s automated operations mean it only requires 18 employees at its 30-acre facility.

Currently, it is sold only through individual distributors in Japan at retail prices, Visocky says. However, Koyo is preparing to launch a smaller, 0.5-liter bottle, which will be sold on a home-shopping TV network in Japan.

“We thought we hit our peak, but then sales started to increase this year and we expect they will continue at this level,” he says, adding that the company is planning to focus more of its future sales efforts in the U.S. market and other parts of Asia. “We feel like we can take this business to the next level and that’ll be both good for us and great for Hawaii’s economy.”

Numbers on Mahalo Hawaii Deep Sea Water

2 million
Number of bottles of Mahalo water shipped every month.

Seconds it takes for a Koyo machine to pack a 12-bottle case.

Percentage of total production exported to Japan.

Number of independent distributors in Japan.

Price of a 1.5-liter bottle in Japan, Koyo’s No. 1 seller.

Makai Ocean Engineering

Ocean Thermal Energy Conversion

Ocean Thermal Energy Conversion is not a new concept at NELHA. In fact, the park was built three decades ago specifically to conduct OTEC research: generating electricity using the temperature difference between deep-ocean water and surface water. While the concept is well established, the creation of a commercially viable system has been an engineering and financial challenge, says Michael Eldred, project manager at Makai Ocean Engineering.

The high price of imported oil and the public’s desire for clean-energy solutions have renewed interest in OTEC. Many, including Mayor Kenoi, hope the latest round of R&D could lead soon to an OTEC plant in Hawaii.

Makai Ocean Engineering’s Heat Exchanger Test Facility
opened in July and was designed for R&D and expansion.
By adding a turbine and generator to the facility, electrical
power can be provided to the grid, and operation and
control procedures can be perfected before creating a
full-scale OTEC plant.
Photo: Courtesy of Makai Ocean Engineering

In July, Makai commissioned the first heat exchanger test facility in Hawaii, a five-story structure at NELHA. Heat exchangers are the most expensive component of an OTEC plant, so their cost, longevity and performance will make or break the project’s economic feasibility.

“What we have here is about one-tenth the size of an actual heat exchanger needed for a real OTEC plant,” says mechanical engineer Robert Loudon. “We’re in the R&D stage right now, but if we had an investor willing to take this project to the next level, we could bring it to a commercial scale pretty quickly.”

Loudon says in order for an OTEC plant to make economic sense, it would need to generate at least 100 megawatts of energy. With current technology, that kind of plant would cost about $1.5 billion, but Makai is testing aluminum as a substitute for titanium in the heat exchangers, which would lower costs dramatically.

Makai has teamed with Lockheed Martin’s Alternative Energy Development team to create a pilot OTEC plant for Hawaii, which would be the first of its kind in the world. It has also received support from the Japanese government and the U.S. military is also interested in OTEC technology, but Eldred says construction of a plant would still require significant private investment.

“Our plan is to have a two- to four-megawatt pilot plant offshore by 2014,” Eldred says, “and then we could test the reliability of an OTEC system. Nobody’s ever plugged in something like this to the grid, so we would need to know if it’s reliable and cost effective.”

Eldred says a successful OTEC operation would not only reduce Hawaii’s dependency on foreign oil and create clean energy, but a refined system could also decrease the price of electricity by up to 10 cents per kilowatt hour, or about $90 a month for the average Hawaii household, which consumes 900 kilowatt hours of energy per month

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

Old to new | New to old
Nov 22, 2011 02:04 pm
 Posted by  mstraub

OTEC is really gaining momentum all over the world. For example, the Bahamas are committed to building the first 2 commercial OTEC plants. The work at NELHA deserves a lot of credit for making it possible. It looks like other Caribbean nations are jumping on board and wanting to build OTEC plants of their own. Keep track of all the latest news and info at The On Project.

Mar 27, 2012 04:15 am
 Posted by  kingneece

Our University of Alabama patented personal solar desalination product (U.S. Made) uses no electricity, can be taken anywhere and extracts pure water from any contaminated water source. It removes radiation, fluoride, salt, pesticides, bacteria, dirt and other contaminants from any water source.

Jul 18, 2012 01:29 am
 Posted by  herryponting

Good one for the nice idea.

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