Can It Fuel Hawaii's Future?
Energy costs affect the bottom line of almost any business. The big buzzword on Hawaii’s energy front these days is hydrogen. “It’s a major energy trend and it’s real disruptive technology,” says local hydrogen champion state Rep. Hermina Morita. “Businesses just have to be aware of it. I think it would have the same kind of impact, or more so, than computers and wireless communications in that it could change everybody’s life.”
NASA uses hydrogen for rocket propulsion. Today, most of the major auto manufacturers and oil companies have divisions to research hydrogen and fuel cells. Early this year, the Bush administration announced the Freedom Car Program, a government subsidy to develop hydrogen fuel-cell-powered cars and trucks.
The U.S. Department of Energy has stated, “In the next 20 years, concerns about global climate change and energy security will create the platform for the penetration of hydrogen into initial commercial markets. Ultimately, hydrogen and electricity will come from sustainable renewable energy resources, but fossil fuels will be a significant transitional resource during this period.”
Hydrogen is the most abundant element in the world, a key element of the water covering most of the Earth’s surface. It is most widely harvested from water using electrolysis or an electric current. Hydrogen can currently be transported or stored in either liquid or gaseous form. According to the energy department, it can be used to generate electricity, heat homes and businesses, fuel vehicles and produce other commodities. Fuel cells, which use hydrogen to produce electricity, using processes that emit nothing more than a little water, are being looked at for a wide variety of applications, including powering cars and buildings.
The major obstacles to a “Hydrogen Economy” today are: the high cost of making fuel cells; the high cost of hydrogen production using renewable energy sources such as photovoltaic, wind or geothermal energy; the lack of cost-effective, compact hydrogen transportation and storage methods; and the uncertainty of potential markets.
These obstacles are not stopping other countries from going full steam ahead. Two venues with abundant renewable energy sources already have ambitious plans. Iceland wants to convert to hydrogen power by 2030. The Pacific Island nation of Vanuatu plans to stop importing petroleum by 2010 and become the world’s first hydrogen economy by 2020.
“Our niche, I think, will be that we can leapfrog the technology by generating hydrogen primarily from renewable sources of energy,” says Maurice Kaya, administrator of the Energy Resources and Technology Division of the state Department of Business, Economic Development and Tourism (DBEDT). “The emphasis on fuel cells and hydrogen elsewhere is largely being based on reforming natural gas to be put into fuel cells.”
Last year, Gov. Ben Cayetano signed Act 283, appropriating $200,000 for hydrogen development and research. The act says that the federal government spends an average of $18 million annually for hydrogen research and development and puts the market capitalization of fuel-cell companies that use hydrogen as a fuel source at more than $10 billion. DBEDT used the appropriation to contract with the University of Hawaii’s Hawaii Natural Energy Institute, which has been recognized by the DOE as a hydrogen research center of excellence. The natural energy institute partnered with SenTech Corp. of Maryland to produce a report on the feasibility of hydrogen and fuel- cell use in Hawaii.
The Hawaii Natural Energy Institute/SenTech report says, “The state of Hawaii with its vast renewable energy resources, energy expertise, critical need for greater fuel diversity and stated policy to achieve increased energy self-sufficiency, provides a natural ‘testbed’ for hydrogen and fuel-cell research; and could also significantly benefit, both environmentally and economically, from the utilization of hydrogen in the state’s transportation and power-generation sectors.”
Since then, the natural-energy institute has laid the groundwork to set some major demonstration projects into motion, including partnerships with some of the big hydrogen players such as Connecticut-based UTC Fuel Cells, a unit of United Technologies Corp. (NYSE: UTX), and Canada’s Stuart Energy Systems (TSE:HHO) as well as local utilities, such as the Hawaiian Electric Co. Inc. (HECO) and Hawaiian Electric Light Co. (HELCO), subsidiaries of Hawaiian Electric Industries Inc. (NYSE:HE) and The Gas Co.
“It’s all about trying to build a critical mass, so that you can go after product and go after some market,” says Richard Rocheleau, director and research chemical engineer for the natural-energy institute. “And it’s not entirely clear where the market is going to be yet.”
Mitch Ewan, an executive in the fuel-cell and energy industries, was recently hired by the natural-energy institute as its hydrogen systems program manager. Ewan says, “There are going to be a lot of people doing this. We can’t expect to be the only people doing it. I think we have a little bit of a lead right now, because of leadership in the past from our senators like Sen. (Daniel) Inouye and Sen. (Spark) Matsunaga (the author of the Hydrogen Research, Development and Demonstration Program Act of 1990).”
He says it will take entrepreneurs to get Hawaii moving toward a hydrogen economy. Research establishments, such as the natural-energy institute, must provide some of the basic technology and some of the facilities to support those entrepreneurs.
Christopher Bordeaux of the U.S. Department of Energy’s Office of Hydrogen, Fuel Cells and Infrastructure Technologies says, “Hawaii is a leader in hydrogen production technologies from renewable resources and will continue to be in the future.”
Hydrogen and Hawaii’s Businesses
Hawaii’s largest company, Hawaiian Electric Industries, has formed partnerships and invested in hydrogen-related research. One of the company’s subsidiaries, Hawaiian Electric Co., has hired Karl Stahlkopf, a scientist from the Electric Power Research Insitute in California, for the newly created position of senior vice president for energy solutions and chief technology officer (see sidebar). Its most high-profile partnership is with UTC Fuel Cells and the U.S. Department of Defense, for a hydrogen fuel-cell test facility on Cooke Street. The Hydrogen Power Park is another project formed through partnerships with various organizations.
The $3 million Natural Energy Laboratory of Hawaii (NELHA) Gateway Project, located on the Big Island, is the proposed site for the Hydrogen Power Park (contingent on permitting and receiving a requested $450,000 this year from the Department of Energy). The goal of phase two of the Hydrogen Power Park is to engineer and introduce a working renewable energy-to-hydrogen-to-electricity system and advance bringing hydrogen systems into the marketplace.
The Gas Co., which already can manufacture about 1 million cubic feet of hydrogen daily at its Campbell Industrial Park facility, is planning to provide gas storage and engineering support services worth about $30,000. “Issues currently being examined include transportation of hydrogen and the purity that is required for various applications, such as fuel cells,” says Steven P. Golden, The Gas Co.’s director of external affairs and planning.
Another HNEI project would set up photovoltaic cells able to generate 200 kilowatts at a Hawaii Navy base. It is a partnership with Hawaiian Electric Co., the natural-energy institute and the Office of Naval Research and is contingent on a $2.5 million award working its way through Congress at press time. If completed, Hawaiian Electric would operate it. Subsequent phases would look at using the photovoltaic array to produce hydrogen and utilizing the hydrogen to generate electricity.
Puna Geothermal Venture (PGV) on the Big Island, which already generates about a quarter of the electricity for the Big Island, has been in general discussion with the natural-energy laboratory and DBEDT about hydrogen and fuel cells. Puna Geothermal’s owner’s representative, Barry Mizuno, says, “Hydrogen technology is certainly fascinating, but PGV does not have the expertise in the area and looks to other experts to guide the process.”
Hydrogen has also piqued the interest of a couple of small local companies. The Hydrogen Renewable Energy Enterprise LLC (THREE) on the Big Island, which has as its slogan, “Using energy from wind, solar and geothermal to produce the fuel of tomorrow … today!” has former Puna Geothermal Ventures head Jack Dean as one of its principals. Hoku Scientific, a hydrogen fuel-cell development company, recently completed its Series A round of funding (see sidebar). Additionally, the National Tropical Botanical Garden on Kauai has plans to have a hydrogen fuel-cell demonstration project of enough scale to power a single-family residence, using solar energy to generate hydrogen that will be converted into electricity by a fuel cell when the sun is not available. Former Kauai County Finance Director Michael Veith’s Washington-based H2 Energy Systems LLC is putting the system together.Hydrogen Hype
There are many good reasons for Hawaii to lead the way to a hydrogen economy, but there’s been a fair amount of hydrogen hype, too.
Even those who support hydrogen research and development in Hawaii are cautiously optimistic. Karl Stahlkopf of Hawaiian Electric Co. says, “I think that hydrogen can be a key piece, but I think there’s a false sense of when hydrogen is going to come in. I’m a technologist and what I love more than anything else is to see the development of new technology. We’re on the front end of that developmental curve with hydrogen.”
Says Rep. Hermina Morita: “We need more of a political commitment if we really want to attract the R & D projects here. We need the governor to be saying it. We need the president of the university to be saying it. We have Hawaiian Electric saying it, which is really encouraging, and we already have Sen. Inouye saying yes, Hawaii is a good place. We want people to say ‘hydrogen’ and ‘Hawaii’ in the same breath.”