An Economic and GHG Analysis of LNG in Hawaii

by Makena Coffman, UHERO, October 29, 2014

Hawaii currently meets the majority of its electricity needs through costly oil-fired generation causing rates to be nearly four times the national average (EIA, 2013a).

The "shale gas revolution" has led to rapidly declining natural gas prices within the continental U.S. 

The emergence of a natural gas market that is de-linked from oil prices has renewed Hawaii's interest in natural gas imports. Potentially lower natural gas prices as well as the view that it will help to reduce green house gas (GHG) emissions and increase energy supply security through domestic sourcing are major reasons why the State and key stakeholders are deliberating over importing large amounts of natural gas in liquefied form (liquefied natural gas or LNG).

This study uses detailed models of Hawaii's electric sector and overall economy to estimate the impacts of Hawaii importing LNG for use in the electric sector.

LINK >>> Working Paper  Excerpt: "In the case that natural gas prices are Low, we find that electric sector costs could be reduced by nearly $4 billion in the period 2036-2040. For illustration, if consumer electricity rates are $0.34/kWh, which is close to today’s prices, then a 25% reduction leads to a reduction in electricity rates of about $0.05/kWh, or a lowering of rates to $0.29/kWh."