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Smart Grid Demonstration Project in Hawaii

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First Financial Institution to Participate in a Smart Grid Demonstration Project

In Charge of Economic Feasibility Assessment and Business Model Construction for Implementation and Promotion

With attention focusing on the problems of climate change and energy security, countries throughout the world are increasingly interested in clean energy alternatives like solar, wind, and geothermal power. Based on the Japan – U.S. Clean Energy Technologies Action Plan signed by the two countries in a high–level meeting held in November 2009, Japan and the U.S. are presently working together to advance various joint research and practical application experiments.

One such project is the Japan–U.S. Collaborative Demonstration Project for World–leading Remote Island Smart Grid, which NEDO (the New Energy and Industrial Technology Development Organization) began to pursue in earnest in November 11, 2011. This project will use renewable energy and electric vehicles (EV) to build a model for the world's most advanced low–carbon society on a remote island, the Hawaiian island of Maui. Taking place over a period of three and a half years, ending in March 2015, the project is intended to demonstrate the effectiveness of smart grid technologies and assess the economic rationality of the systems built. Anticipating proliferation of the approach, the project will also build and test a business model designed for high applicability to other locales. Participants on the U.S. side include the State of Hawaii, Hawaiian Electric Co., Inc., and the University of Hawaii, among others. On the Japanese side are three companies – Hitachi, Ltd., which is in charge of the overall coordination and assessment; Cyber Defense Institute, Inc., and MHCB – all of which were selected by NEDO as project consortium participants. The project is emphasizing not only the testing of advanced technology but also the assessment of economic feasibility and development and testing of a business model with an eye toward commercialization. MHCB was chosen to perform these latter roles because of its long track record and early start in working with various manufacturers on overseas smart–grid/smart–community projects.

Promoting the Stability of Power Grid through the Use of EVs and Advanced Control Technologies

The State of Hawaii, where the project is being conducted, faces high fuel transportation and other cost issues – problems unique to remote islands – that make the cost of electric power generation 2 to 3 times the U.S. average. In addition, because Hawaii's economy is highly dependent on tourism, it is imperative that its natural environment, its greatest tourism resource, be protected. In its drive to hold down fuel costs and environmental burden, the state has devoted significant efforts toward the adoption of wind, solar, biomass, and other renewable energy sources. Efforts have been particularly successful on the island of Maui, where, for example, wind power accounting for 15% of total electricity generation as of 2011 has made the island a model for the rest of the state.

However, Maui's use of a substantial amount of renewable energy, which is vulnerable to large variations in power generation due to climate and weather conditions, means it is facing new problems in terms of power grid frequency variation, which can cause power outages, and how to use excess power. The island has a greater need, in other words, for balancing electricity demand and supply. And it is against that background that the demonstration project got underway in the part of Maui known as Kihei, in November 2011.

Under the demonstration project, wind power and residential solar power will be incorporated into the power grid, and EVs, adoption of which is expected to spread, will be used as an application for effectively using excess power. Plans call for 200 EVs equipped with storage batteries, and information communication technologies will be used to encourage users to plug in their EV and charge it whenever weather conditions or other factors have created an excess of electric power.

At the same time, the latest control equipment will be installed at every level of the power grid, from the power company's transformer and transmission facilities to the distribution equipment for households cooperating in the demonstration project. This control equipment will be used to test the practicality and effectiveness of a demand control approach that automatically cuts power to household water heaters for a certain amount of time when power supplies become tight.

Smart Grid Demonstration Project in Hawaii (Conceptual Diagram)

Aiming to Build a Business Model with Benefits for All Stakeholders

Making the demonstration project a success requires that sufficient understanding and cooperation be gained for the project from local communities. To identify conditions for success and build a highly implementable, applicable business model, MHCB is proactively communicating with local residents, governmental bodies, and other stakeholders to smooth the way forward for the project.

Regarding the project requirement for 200 EVs, for example, MHCB joined the working group of the Maui EV Alliance, which was established by parties including the University of Hawaii and various governmental and business partners to promote the adoption of EVs. As a member of the working group, MHCB is participating in discussions of charging stands and other infrastructure, and tax incentives, subsidies, and other approaches for promoting EV adoption. It is also helping to encourage ordinary households, car rental companies, hotels, and public facilities to adopt EVs.

The business model under construction aims to contribute to the local economy by attracting tourists and creating new industries. Only a small fraction of tourists traveling to Hawaii go to Maui, so expanding tourism is a high priority for the island's economic development. MHCB, focusing on the fact that seeing the islands by car is one of the primary purposes of Japanese visitors, is working to develop proposals that would contribute to Maui's economic development. EV driving tours to be developed in cooperation with the local tourism industry and Japanese travel agencies are just one example.

MHCB, as a consortium member, is endeavoring through painstaking attention to detail to build a business model that would benefit local residents and businesses, the electric power company, local governments, manufacturers participating in the project, and all other stakeholders. Looking to the future, MHCB aims to contribute to the realization of sustainable low–carbon societies and the development of local economies by drawing on the experience gained through the current project to package the advanced technologies and operational know–how of Japanese companies in a way that permits application to other regions and can win support for smart grid construction tailored to local characteristics on remote islands throughout the world.

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