## MEMORANDUM

To: Greg Nudd, EPA/Region 9

From: Juanita Haydel, Aaron ICFI

Date: March 31, 2012

CC: Sarav Arunachalam, UNC; Uma Shankar, UNC, Mark Lee (ICFI)

Re: Point Source Inventory

Contract No: EP-D-07-102, Work Assignme nt: 5-12, Task No: 16.4, Version: 1

This technical memorandum documents ICF’s development of 2018 projected emissions for point sources in

Hawaii. In particular, ICF developed an assessment of existing generating units (EGUs) in Hawaii based on the

best available information and consistent with the 2008 emissions inventory for electric generating unit point

sources. In addition, ICF also identified new post

‐ 2008 point sources that will be coming on

‐ line prior to 2018.

Demand projections to 2018, combined with information on policies affecting new resource operation

(specifically clean energy goals) were used to guide an estimate of how the system would operate in 2018. This

estimated 2018 operating information, when compared to 2008 information was used to scale historic

emissions. For new plants, expected emissions characteristics and operations were used to derive emissions.

This generation

‐ based approach (as opposed to an overall scaling of historic emissions in proportion to

demand changes) was deemed a preferred approach given the renewable polices driving new renewable

resource additions in the future. Non

‐ EGU sources 2018 emissions were estimated using a growth factor

approach.

The approach and results are described further below.



### Electric Generating Units in Hawaii

The overall Hawaii point source inventory is primarily is composed of electric generating unit (EGU) facilities.

The islands are isolated electrically and must each be self

‐ sufficient for power generation. With few

exceptions, most facilities currently use distillate and residual fuel oil. There is a large coal unit, several

biomass facilities and a growing number of wind and solar units.

Most of the EGU facilities are owned and operated by the four main utilities:

• Hawaiian Electric Company, Inc. (HECO)

– largest utility (includes the island of Oahu);

• Hawaii Electric Light Company, Inc. (HELCO)

– subsidiary of HECO (includes the island of Hawaii);

• Maui Electric Company, Inc. (MECO)

– subsidiary of HECO (includes separate divisions for the islands of

Maui, Molokai, and Lanai); and

• Kauai Island Utility Cooperative

– independent of HECO (includes the island of Kauai).

In addition to these utility

‐ owned facilities, there are a number of other independent power producers (IPPs)

that supply power to the Hawaii electricity grid.G. Nudd, EPA/Region 9

March 31, 2012

Page 2

UNC-EMAQ (5-12)-014.v1 Prior demand forecasts and new unit forecasts were obtained from the utilities filings under the state’s

Integrated Resource Planning (IRP) Process. These documents were generally developed in the 2005

‐ 2008

timeframe. In March 2011, the State Public Utilities Commission instituted a new planning process. 1 The PUC

recently initiated the first cycle of IRPs under the new process.

Given the vintage of these documents, ICF decided to independently update the inventory of existing power

plants and planned units based on the best available information. The primary sources used for this included:

• The utilities web sites

• EIA electric power survey forms including EIA

‐ 860 (Electric Generator Report) and EIA 923 (Utility Data

files)

• Trade press information

• Utility databases (e.g., SNL)

Based on these sources, ICF developed an inventory of generating resources currently on

‐ line and expected to

be on line by 2018. Exhibit 1 summarizes this list. Planned resources expected to be on line prior to 2013 are

indicated by “NA” in the capacity column.

Electricity Demand Projections

In order to estimate future year emissions a forecast of electricity generation requirements is required.

Generation requirements are electricity sales adjusted for transmission and distribution (T&D) losses. 2

Electricity sales are electricity demand minus reductions in demand from energy efficiency. Hawaii’s has an

energy efficiency policy established in 2009 to have energy efficiency meet about 30 percent of electricity

demand by 2030 3

.

Because the utilities’ IRPs were dated, ICF researched alternative, more current electricity demand forecasts.

This included projections used by the Hawaii Department of Business, Economic Development and Tourism

(DBEDT) as part of an analysis of renewable energy in Hawaii. 4 These were largely based on electricity growth

rates included in the 2008 HECO IRP (the most recent of those available). The average annual growth rate

(AAGR) for electricity demand used in the DBEDT analysis was 1.23% per year. In the DBEDT study this AAGR

was applied to more recent historical data in order to project demand, energy efficiency requirements, RPS

requirements and generation requirements to 2030.

ICF also examined projections developed by the U.S. Energy Information Administration’s (EIA) forecast

prepared as part of the Annual Energy Outlook (2012). EIA’s AAGR rate was considerably lower at 0.84%. The

EIA projections are for electricity sales (as opposed to demand). Our understanding of the EIA demand

modeling methodology is that energy efficiency is assumed to be reflected in the forecast to the extent that it

is already in place and a trend in recent historical data. It may not reflect more aggressive goals recently

enacted. Thus, the DBEDT and EIA forecast are not directly comparable.

1 2009

‐ 0108 Public Utilities Commission

‐ Instituting A Proceeding To Investigate Proposed Amendments To The

Framework For Integrated Resource Planning, May 14, 2009, Docket 2009

‐ 108

2 T&D losses in Hawaii are about 3.2 percent Based on eGRID 2010, The Emissions & Generation Resource Integrated

Database For 2010 (Egrid2010) Technical Support Document

, Table III

‐ 4. eGRID2010 Year 2007 Gross Grid Loss Factors,

December 2010. http://www.epa.gov/cleanenergy/documents/egri dzips/eGRID2010Technica lSupportDocument.pdf

3 Act 155, SLH, 2009 created the Energy Efficiency Portfolio Standards (EEPS), which set a goal of 4,300 gigawatthour reduction in

electricity use by 2030.

4 Renewable Energy in Hawaii June 2011, Economic Report 2011, Hawaii Economic Issues, June 2011.G. Nudd, EPA/Region 9

March 31, 2012

Page 3

UNC-EMAQ (5-12)-014.v1 Because it is difficult to estimate the level of energy efficiency achieved in recent years without extensive

research, and the availability of a more explicit forecast in the DBEDT estimates, ICF elected to use the DBEDT’s

estimate of sales in 2030 as a basis for our 2018 estimates, simply interpolating between the 2030 estimate

and an historic year derive the intermediate 2018 estimates. Next, we reduced demand by the estimated

energy efficiency estimates for 2018 (also derived by interpolating between 2009 estimated levels and 2030

requirements) to derive an estimate of 2018 electricity sales. These estimates indicate that that if the energy

efficiency goals are met, all new electricity demand must be met by energy efficiency. Thus, sales are forecast

to remain flat through 2030 based on DBEDT’s forecast. Finally, this number was grossed up by a Hawaii

‐ specific loss factor (3.2%) to derive generation requirements.

The Renew able Portfolio Standard requirement is tied to this sales estimate. Based on the 2030 target of 40

percent, ICF calculated that a target level of renewable resources equal to 21% of sales (and generation) would

need to be met by 2018. Exhibit 2 summarizes these calculations.

These calculations were done for the entire state of Hawaii. The estimates of island

‐ level demand were based

on an allocation of state

‐ level demand based on relative historical shares. That implicitly assumes that each of

the islands is experiencing similar growth rates and that all will individually meet the energy efficiency and RPS

targets. This certainly is not the case ‐‐ aside from having difference mixes of sectors, services and industries,

some islands have more aggressive clean energy goals. However, absent utility

‐ specific IRPs this is the best

assumption that could be made. Exhibit 3 shows the shares used to allocate demand to the islands.

Emissions Estimation Methodology

Emissions were estimated for 2018 based on the estimated generation requirements considering the

renewable portfolio standards. A simple extrapolation of emissions based on the change in demand or

generation requirements between 2018 and 2008 is not a suitable approach given the substantial clean energy

goals of the state. This method would likely overstate 2018 emissions. Thus, as noted above, we have isolated

2018 demand

, sales

, renewable generation and fossil generation. The methodology instead relies on a set of

heuristics to estimate how the system will operate in 2018. Absent information on the dispatch costs and

operating constraints of each unit and an understanding of the transmission constraints, we relied on simple

rules tied to capacity factor, technology type and fuel to decide how much would be operated over the year.

The approach is admittedly simple, but captures the most important changes in the system over the time

frame

‐‐ the impact of renewable resources on the system.

The methodology applied is as follows:

 Meet the RPS first with existing, than with new resources. We assume that in 2018 each island is on a

path to meet the renewable energy targets. As noted above for 2018 this is about 21% of sales (and

generation requirements). Thus, renewable resources are assumed to be used to their full extent to

meet generation requirements.

- For existing units, historical operating information (capacity factor) is used. For new units,

typical capacity factors for the technology (based on Hawaii information if available; national

or other data if no relevant Hawaii information) are used.

- Biomass units are included within the RPS.

- If there are insufficient resources available (based on our identification of new units), we

assume just enough unidentified resources come on line to meet the requirement. If there are

excess resources, we use only enough of the new resources to meet the demand. Thus, we are

assuming the market will just meet the demand for renewable resources. This implicitlyG. Nudd, EPA/Region 9

March 31, 2012

Page 4

UNC-EMAQ (5-12)-014.v1 assumes that some of the new projects will not come to fruition or will be downsized or

delayed. In fact, investments are lumpy and there will be periods when supply exceeds

demand and vice versa; however for this exercise we assume equilibrium.

 Meet the remaining demand with the fossil units

- Existing units are dispatched first, starting with highly utilized base load units and continuing to

lower utilized units until the remaining generation requirements are met. Thus, capacity

factor is used as the proxy for dispatch order.

- Units are first dispatched according to the limits of their historic capacity factor.

- When there is excess availability of existing capacity it is necessary to reduce the utilization of

some units relative to historical levels. Here, some judgment was applied. Units that operate

in the mid range 40

‐ 60% were generally decreased. If there was a choice among technologies

or fuels, efficiency, and relative fuel prices were used to decide which was likely to be backed

off.

 Calculate the ratio between estimate d 2018 generation and 2008 generation for existing unit. This

ratio is applied to historic (2008) emissions to estimate 2018 emissions.

 For new units, calculate based on expected emission rates. For new units it is not possible to

calculate a ratio of future and past operation because there is no historic generation. These units were

predominantly zero emitting solar and wind units; however, there were a number of biomass facilities.

We were not able to identify permit information for all of the facilities. Many of these units are in the

preliminary stage and we could not identify what specific biomass fuels were planned. However, we

were able to identify permit data for two facilities

– a biodiesel generator (the Honolulu airport plant)

and a biomass facility (the Hu Honoa). We applied the reported permit information for these units to

the other planned biodiesel and biomass projects.

Exhibit 4 summarizes the results of these calculations.

Non

‐ EGU Sources Methodology

In addition to the EGU sources, there are five non

‐ EGU sources that were identified in the 2005 inventory.

These were excluded from the 2008 inventory. For these sources 2005 emissions were scaled by a general

growth factor to estimate 2018 emissions. The factor reflects the expected growth rate in Gross State Product

(GSP) as reported by DBEDT, estimated at 1.6% per year through 2030. The relationship between growth in

Gross Domestic Product (GDP) and growth in energy consumption in the industrial sector was estimated based

on national level projections (from EIA’s AEO 2012). The relationship between GDP and energy consumption

nationally was assumed to apply to Hawaii. Growth in emissions for these sources was assumed to trend with

the growth in energy. Exhibit 4 summarizes the results of these calculations.G. Nudd, EPA/Region 9

March 31, 2012

Page 5

UNC-EMAQ (5-12)-014.v1 Exhibit 1 Hawaii Point Sources

Source Name County Island Source Type Unit Type (Coal

Steam, CT, CC, etc) Primary Fuel (Coal, NG,

Dist, Bio) Capacity

(MW)

La Ola Solar Project Maui Lanai SOLAR Renewable Solar 1.2

Miki Basin Maui Lanai OIL Combustion Turbine Distillate Fuel Oil 10.4

Palaau Power Maui Molokai OIL Combustion Turbine Distillate Fuel Oil 15.1

Hawaiian Comm & Sugar Pu u Maui Maui BIOMASS Steam Turbine Biomass 46.1

Kaheawa Pastures Wind Fa r Maui Maui WIND Renewable Wind 30.0

Kaheka Hydro Maui Maui HYDRO Renewable Hydro 4.5

Auwahi Wind Maui Maui WIND Renewable Wind N/A

Kaheawa Wind Power II Maui Maui WIND Renewable Wind N/A

Hana Substation Maui Maui OIL Combustion Turbine Distillate Fuel Oil 2.0

Kahului Maui Maui OIL Steam Turbine Residual Fuel Oil 34.0

Maalaea Maui Maui OIL Combined Cycle Distillate Fuel Oil 229.8

Kalaheo Hydro Kauai Kauai HYDRO Renewable Hydro 1.1

Kapaa Photovoltaic Project Kauai Kauai SOLAR Renewable Solar 1.2

Wainiha Hydro Kauai Kauai HYDRO Renewable Hydro 3.6

Poipu Koloa Solar PV Kauai Kauai SOLAR Renewable Solar N/A

Anahola Solar Energy Projec t Kauai Kauai SOLAR Renewable Solar N/A

Kauai Solar Plant Kauai Kauai SOLAR Renewable Solar N/A

Additional Renewables Kauai Kauai HYDRO/SOLAR Renewable N/A

Kapaia Power Station Kauai Kauai OIL Combustion Turbine Jet Fuel, Distillate Fuel Oil 39.1

Port Allen Kauai Kauai OIL Combined Cycle Distillate Fuel Oil 99.5

Hawi Wind Farm Hawaii Hawaii WIND Renewable Wind 10.5

Pakini Nui Wind Farm Hawaii Hawaii WIND Renewable Wind 21.0

Puna Geothermal Venture I Hawaii Hawaii GEOTHERMAL Renewable Geothermal 35.0

Puueo Hawaii Hawaii HYDRO Renewable Hydro 3.1

Waiau Hydro Hawaii Hawaii HYDRO Renewable Hydro 1.0

Wailuku River Hydroelectric Hawaii Hawaii HYDRO Renewable Hydro 10.4

Holaniku at Keahole Point Hawaii Hawaii SOLAR Renewable Solar N/A

Hu Honoa Bioenergy (Eucaly p Hawaii Hawaii BIOMASS Steam Turbine Biomass N/A

Hamakua Energy Plant Hawaii Hawaii OIL Combined Cycle Waste Oil 66.0

Kanoelehua Hawaii Hawaii OIL Combustion Turbine Distillate Fuel Oil 21.0

Keahole** Hawaii Hawaii OIL Combustion Turbine Distillate Fuel Oil 71.1

Puna Hawaii Hawaii OIL Steam Turbine Residual Fuel Oil 39.1

Shipman Hawaii Hawaii OIL Steam Turbine Residual Fuel Oil 15.0

W H Hill Hawaii Hawaii OIL Steam Turbine Residual Fuel Oil 37.1

Waimea Hawaii Hawaii OIL Combustion Turbine Distillate Fuel Oil 7.5

H Power Honolulu Oahu BIOMASS Steam Turbine Biomass 60

Kahuku Wind Power Project Honolulu Oahu WIND Renewable Wind 30

Kapolei Sustainable Energy P Honolulu Oahu SOLAR Renewable Solar 1.18

Campbell Industrial Park*** Honolulu Oahu BIOMASS Combustion Turbine Biodiesel/Distillate Fuel Oil 113

Kawailoa Wind Honolulu Oahu WIND Renewable Wind N/A

Honua Power Biomass (Wa s Honolulu Oahu BIOMASS Steam Turbine Biomass N/A

Campbell Industrial Park Sol a Honolulu Oahu SOLAR Renewable Solar N/A

Kalaeloa Solar One* Honolulu Oahu SOLAR Renewable Solar N/A

Kalaeloa Solar Two Honolulu Oahu SOLAR Renewable Solar N/A

Kalaeola RE Park Honolulu Oahu SOLAR Renewable Solar N/A

Pearl Harbor Solar Project Honolulu Oahu SOLAR Renewable Solar N/A

Honolulu International Airport Honolulu Oahu BIOMASS Combustion Turbine Biomass N/A

AES Hawaii Honolulu Oahu COAL Coal Steam Coal (Bit) 203

Hawaii Cogen Honolulu Oahu OIL Combustion Turbine Distillate Fuel Oil 9

Honolulu Honolulu Oahu OIL Steam Turbine Residual Fuel Oil 104.4

Kahe Honolulu Oahu OIL Steam Turbine Residual Fuel Oil 609.7

Kalaeola Cogen Plant Honolulu Oahu OIL Combined Cycle Residual Fuel Oil 299.4

Tesoro Hawaii Honolulu Oahu OIL Combustion Turbine Kerosene 20

Waiau Honolulu Oahu OIL Steam Turbine Residual Fuel Oil 474.6

Non-EGUs

Chevron Marine Terminal Ho n Honolulu Oahu

Shell Oil Marine Terminal Hawaii Hawaii

Maui Pineapple Co. Maui Maui

Ameron Hawaii Kapaa Quarr y Honolulu Oahu

Ameron Hawaii Camp 10 Qu a Maui MauiG. Nudd, EPA/Region 9

March 31, 2012

Page 6

UNC-EMAQ (5-12)-014.v1 Exhibit 2 Demand, RPS, and Generation Requirements

Exhibit 3 Allocation of Energy Sales and Generation Data to Islands

Exhibit 4 Emissions Projections for Hawaii, 2008 and 2018 2009 2018 2,030

Demand (GWh) 11,109 12,502 14,360

Energy Efficiency (GWh) 983 2,409 4,310

Sales (GWh) 10,126 10,093 10,050

Generation Requirements (GWh) * 10,416 10,372

RPS Law

‐ 40% of sales

= 40% of gen 2,187 4,149

21% by 2018

* 3.2% T&D Los s ra te for HI (eGRID)



### Honolulu 72.9%

Hawaii 11.0%

Maui 11.3%

Lanai 0.2%

Molokai 0.3%

Kaui 4.3%

Tons/Year

2008 Volatile Organic

Compounds Carbon

Monoxide Nitrogen

Oxides Primary PM10

(Filterables +

Condensibles) Primary PM2.5

(Filterables +

Condensibles) Sulfur Dioxide Ammonia

Lanai 7.60 60.80 288.34 13.67 13.53 6.43 0.88

Molokai 11.99 76.18 291.63 10.95 10.90 7.70 1.05

Maui 272.94 5,995.72 4,366.41 615.97 460.48 4,113.81 32.10

Kauai 122.33 680.51 3,212.21 190.10 186.59 92.03 32.70

Hawaii 213.68 466.54 2,650.00 423.31 345.78 5,745.27 24.84

Oahu 1,461.61 2,036.47 12,875.56 2,379.66 2,018.00 16,858.68 492.36

Total 2,090.16 9,316.23 23,684.16 3,633.67 3,035.27 26,823.91 583.93

2018 Volatile Organic

Compounds Carbon

Monoxide Nitrogen

Oxides Primary PM10

(Filterables +

Condensibles) Primary PM2.5

(Filterables +

Condensibles) Sulfur Dioxide Ammonia

Lanai 4.44 35.48 168.25 7.98 7.89 3.75 0.51

Molokai 11.27 71.58 274.01 10.29 10.24 7.23 0.98

Maui 255.80 5,858.68 3,469.67 432.50 315.93 1,137.56 20.50

Kauai 90.10 538.94 2,460.97 132.15 130.05 66.95 19.21

Hawaii 256.76 2,071.19 1,966.01 244.98 195.08 1,389.98 288.68

Oahu 1,437.23 1,795.05 10,324.44 2,681.75 2,345.13 12,919.50 642.97

Total 2,055.60 10,370.90 18,663.35 3,509.65 3,004.32 15,524.98 972.86