DOE’s Evolving Position on GEMS Bills

posted in: March 2016 | 0

Kathryn Matayoshi, state superintendent of education, had little to say about the proposal to loan the Department of Education $100 million from the Green Energy Market Securitization (GEMS) fund when the House Committee on Energy and Environmental Protection heard the bill in early February.

In a short statement, submitted as late testimony, she merely noted that “these funds will allow the Department [of Education] to reach the goal of installing AC in 1,000 classrooms. Additionally, the GEMS financing will boost efforts in implementing heat abatement and energy efficient measures towards cooling additional classrooms, while offsetting anticipated energy uses.”

But a week later, when the revised proposal was heard before the House Committee on Education, Matayoshi’s position was far more nuanced and seemed to put a damper on Governor David Ige’s promise to use GEMS funds to air-condition 1,000 classrooms by the end of the year.

The House Committee on Energy and Environmental Protection had voted to combine the GEMS bill with another bill calling for the Department of Education to become net-zero with respect to energy use by 2035 and to “expedite the cooling of all public school classrooms to a temperature acceptable for student learning,” among other things.

This time, Matayoshi’s testified that the GEMS funds would be directed – not to air conditioning – but to “enable the DOE to install LED lighting and increase energy efficiency on a statewide basis. Energy efficiency is an important first step to reduce the energy usage at the schools.

“Step two is to size the renewable energy systems to meet this reduced load along with any increases from air conditioning. … While the DOE agrees that thermal conditions in many classrooms need to be improved, this must be done with careful consideration of both the up-front initial costs and the costs that are to be carried into the future. Therefore, funding provisions for heat abatement must also include considerations for the ongoing electricity, maintenance, and replacement costs of any systems installed, and that these costs will need to be built into the DOE’s operating budget.”

Matayoshi explained how recent actions of the Public Utilities Commission to end net-energy metering have hobbled schools.

“Current regulatory options of ‘grid-supplied’ and ‘self-supplied’ are problematic for the DOE for two reasons,” she stated, referring to the alternatives the PUC has approved for utility customers still wishing to install solar arrays to offset demands from the grid.

Those reasons are, first, “the size limit of 100 kilowatt photo-voltaic systems only cover a portion of a schools energy needs.” Second, “the credits earned for PV energy generation cannot be carried over month to month. Solar PV systems produce the most energy in the summer months, but this is the time of lowest usage for the schools. The changes to net energy metering no longer give the DOE the ability to carry over credits. As a result, the DOE does not have a cost-effective pathway to achieving 90 percent clean energy without policy changes.”

Matayoshi warned against burdening schools with the additional energy costs associated with air-conditioning. “While the DOE agrees that thermal conditions in many classrooms need to be improved, this must be done with careful consideration of both the up-front initial costs and the costs that are to be carried into the future. Therefore, funding provisions for heat abatement must also include considerations for the ongoing electricity, maintenance, and replacement costs of any systems installed, and that these costs will need to be built into the DOE’s operating budget.”

A Head Start

Since 2014, the DOE has contracted with OpTerra Energy Services to undertake a sort of energy audit of public schools in a project it calls Ka Hei, referring to the snare used by the Hawaiian god Maui to catch the sun.

So how does the work of OpTerra mesh with the proposal for the DOE to spend up to $100 million to cool Hawai`i schools with a loan from the state Green Energy Market Securitization fund?

According to the DOE’s Gilbert Chun, who oversees the OpTerra contract, “the first thing OpTerra did was to assess O`ahu in terms of energy generation, see how many schools we could put photovoltaic systems on.”

As a result, the DOE has had about 80 net-energy metering applications approved by Hawaiian Electric, Chun said, and construction of the PV systems is “in various phases” for those schools.

Those PV systems have been funded with power-purchase agreements, he continued. “OpTerra also helped us get financers who were interested in investing in PPAs. They also helped us bid out labor and equipment.”

As for energy efficiency, OpTerra conducted audits at a number of schools. Financing for energy efficiency improvements “are not typically funded with PPAs,” Chun added, “so OpTerra was working with us to determine how we would finance that.”

“Right now, after conducting audits at several schools, they determined that replacing fluorescent lighting with LED probably would give us the biggest bang for the buck, in terms of efficiency and reducing utility costs. So under the GEMS financing, what we are going to look at first is replacing fluorescent lights with LED and using GEMS to pay for that.”

Part of the GEMS money might also be used for air conditioning, he added, but “there’s no breakdown yet” of how the funds will be spent.

Chun was not supportive of the idea that the DOE get the full amount of GEMS funding proposed by the governor — $100 million – all in one year. “In talking to them,” he said, referring to talks held with representatives of Governor David Ige’s administration, “we told them there was no way we could put out $100 million worth of contracts in one year. We would have to figure out the life span of that funding and figure out, based on that, how many projects we could put out in a given time.”

— Patricia Tummons

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