Hawaii Makes Big Bet on Electric Cars

By REBECCA SMITH

Hawaii's governor unveiled a plan to create an electric-car network for the islands by 2012, part of an ambitious effort to wean the state from near-complete dependence on oil for its energy needs.
The plan, put forth by Republican Gov. Linda Lingle, calls for creating a public-private partnership with closely held Better Place to create 70,000 to 100,000 recharging points that would support plug-in electric cars expected to be available after 2011. Hawaii's biggest utility, Hawaiian Electric Co., also will aid in the rollout, and may offer special recharging rates, but doesn't intend to be an investor.
Gov. Linda Lingle aims to wean Hawaii from its dependence on oil.

Better Place, a Palo Alto, Calif., company founded in 2007 by former SAP AG executive Shai Agassi, is pursuing similar arrangements in Israel, Australia, Denmark and the San Francisco area. The challenge of building a huge number of recharging points is daunting, and Better Place has yet to line up financing, estimated at $75 million to $100 million, for the Hawaii venture.
Under the plan, consumers would buy or lease electric cars, and Better Place would supply recharging services and batteries. Consumers would have a choice of buying mileage plans -- which would include recharging services and battery swaps -- or being guests on the network and paying for each battery charge. Mr. Agassi said his firm will buy renewable electricity to cover his network's needs.
Gov. Lingle said Tuesday the arrangement with Better Place will "help Hawaii get off its extreme oil addiction," which costs the state $7 billion a year.
Under the Hawaii Clean Energy Initiative, created in January, the state intends to cut its dependence on oil to 30% from 90% by 2030. To do so, it must ramp up electricity production from renewable resources, like the wind and sun, and use electricity to displace gasoline in some portion of its 1.1 million vehicles. The state also sees a big role for biodiesel to fuel cars and power plants, especially if made by returning fallow land to agricultural use.

Hawaiians pay high electricity prices because costly oil is burned to produce power. The price of electricity ranges from 24.9 cents per kilowatt hour on Oahu to 38.5 cents on Hawaii, the big island, compared with an average of 8.9 cents in the continental U.S. Such high prices should encourage the development of renewable energy. But there has been a big impediment: Electricity can't be moved among the six major islands, because there aren't adequate transmission lines.
That could be changing. There are now proposals to build large wind farms on Molokai and Lanai, and to turn those two islands, along with Maui, into a single grid, with the help of undersea cables. Surplus energy would be sent to Oahu, which consumes 80% of the state's electricity, on another undersea transmission line. These transmission upgrades could cost $750 million to $1 billion.
Other structural impediments could be removed. In late October, the Hawaii Public Utilities Commission opened proceedings that will change the way utilities are compensated for electricity sales, in an attempt to sweep away financial rewards for selling more kilowatt hours. The regulatory body is considering creating wholesale prices for power purchased by utilities from green sources.
Write to Rebecca Smith at rebecca.smith@wsj.com