How does one go about quantifying abstract concepts like climate resilience and reliability?
Hawaiian Electric Industries President and CEO Connie Lau and her team have grappled with that task, especially over the last few years as environmental, social, and governance reports have become part of mainstream expectations.
Lau, who has held the top post at HEI since 2006 and been a part of its portfolio of companies since 1984, told Pacific Business News recently that shareholders’ shift to leaning on ESGs to gauge a company’s climate progress is a “cataclysmic change in the financial markets.”
Yet it’s a task that she says HEI — which includes subsidiaries Hawaiian Electric Co., American Savings Bank and Pacific Current — is prepared to meet. The parent company issued its second ESG report in April, in which it highlighted a 35% renewable portfolio standard and a 56% increase in rooftop solar installations in 2020 for the HECO utility.
To her, Native Hawaiian principles of sustainability have long been something to uphold.
“This movement really benefits us because it validates the whole company’s strategy to not only do well financially … but to also run the business in a way that could help with societal goals like climate change,” said Lau, who has not put a specific date on her retirement.
How much more difficult do Renewable Portfolio Standard benchmarks (30% in 2020, 40% in 2030, 100% by 2045) get from here?
It’s a challenge.
It’s not clear that we have the technologies today that can get us all the way to 100% renewable. And that was something our company realized when we agreed to the 100% renewable [standard].
But there’s been a huge technological change in our industry; power generation technology that didn’t change for 100 years is now changing very rapidly. People have always thought about the sun as a power source, but it’s only been the last 10 years that some of those [solar plus storage] technologies became economically competitive to fossil generation.
Is HEI/HECO ready for the shift to performance-based regulation on June 1?
It is quite a significant shift. It has been a long time in coming.
Some of the initial, foundational elements of PBR went in [between 2010-12]. That was the concept of decoupling on the revenue side, where the utility no longer got paid for increasing kilowatt-hour sales.
They got paid a targeted revenue amount sufficient for covering the cost of the system. PBR … it’s right around the corner. It’s been a big lift for the company, but also for all these other players [like the PUC, solar companies, and community stakeholders]. It is definitely that ‘kakou’ thing where we all have to work together.
Are difficulties encountered by renewables projects like Kapolei Energy Storage and Hu Honua Biomass an outlier?
It’s not just [them], because maybe a year and a half ago, it was the Makani Wind Project [for AES in Kahuku]. When you live on islands with limited land, and you touch the land, it doesn’t matter whether you’re building a shopping center or a hotel or a wind farm or a solar farm.
You have to consider the local community, so I think the issues that these projects run into are not unexpected.
We have a strong belief that it’s important to work with communities up front, versus having something like Hu Honua, which goes all the way to completion and can’t get a power purchase agreement that will actually allow them to sell power to the utility.
What would you like your legacy to be?
The well-being of our companies is inextricably linked with the health and well-being of Hawaii. I’ve always thought the financial returns of the company were linked with what we did for the community, and if we could deliver value for the community here, then our company would grow.
And if we didn’t do that, or if we screwed up the environment, that was not a good thing.
So, I’m very proud of the fact that I’m one of the first people across the nation to sign a Clean Energy Initiative with government [in 2008] to move us on the way to 100% renewable, years and sometimes even a decade before other parts of the country.
President and CEO, Hawaiian Electric Industries
Address: 1001 Bishop St., Suite 2900
Honolulu, HI 96813
Website: hei.com
