Hawaiian Electric Co. is seeking suppliers of ultra-low sulfur diesel, biodiesel or biodiesel blends to power generators in Maui County and on the Big Island.
The request for proposals calls for up to 150,000 barrels per year for three-year contracts beginning Jan. 1, 2015, HECO said Friday in a news release. Biodiesel suppliers - including local biodiesel producers such as Kahului-based Pacific Biodiesel - will be offered "the opportunity to offer biodiesel or biodiesel blends for all or part of the required volumes on Maui, Molokai, Lanai or Hawaii island," HECO said.
The proposals will be considered if the biodiesel price is competitive with the price of the ultra-low sulfur diesel, HECO said.
While HECO may have to end up going with the ultra-low sulfur diesel, HECO spokesman Peter Rosegg said that the utility has purposely kept the contract period short, three years, to hold its options open, to not freeze out potential local biodiesel producers and to hopefully contract with local biofuel companies in the future.
He noted that Pacific Biodiesel - which has been supplying Maui Electric Co. with biofuels for nearly a decade - currently is the only Hawaii supplier of biofuels, with two other companies currently seeking approvals.
"We want to keep the market open," he said, adding that if a company puts land in production for five to eight years HECO wants to "make sure you have a market." He said that the utility wants to make a commitment to those companies: "When they got it, we'll buy it."
Rosegg said that HECO's goal is "to replace all the diesel we can with biodiesel" because the fuel is cleaner than regular petroleum diesel and emits almost no greenhouse gases. This is a critical factor with tighter Environmental Protection Agency rules set to come on line in the next five years, he said.
It is because biodiesel burns cleaner with low-opacity emissions that MECO uses the fuel in the startup and shutdown process of generators at Maalaea, Rosegg said. Steam emissions are OK, but if smoke is emitted, MECO faces potential EPA fines.
In 2012, MECO used 2,589.15 barrels of biodiesel from Pacific Biodiesel. The 150,000 barrels in the proposal only would be a small part of the overall consumption of diesel by MECO.
The utility burned 1.2 million barrels of diesel fuel on Maui, 57,500 barrels of diesel on Molokai and 43,800 barrels on Lanai in 2012.
Of the biodiesel/low-sulfur diesel in the proposals, HECO plans on sending most of the 108,200 barrels of the fuel earmarked for MECO to Molokai and Lanai. The plan is for 55,000 barrels to go to Molokai's Palaau plant and 43,000 barrels to go to two Lanai plants. On Maui, the Maalaea plant would receive 10,000 barrels.
"We are definitely looking at it (the HECO's proposal)," said Kelly King, vice president of Pacific Biodiesel, on Friday.
Asked whether Pacific Biodiesel could supply 150,000 barrels annually, King noted that the proposal used the phrase "up to" 150,000 barrels, indicating that there was room for less than that amount. She said that the company has opened a new biodiesel plant on the Big Island and has gone from a 2-million-gallon production capacity to 5.5 million gallons a year.
"We are building a market right now," King said.
Transportation fuel offers the highest value for her product, indicating some caution with allotting too high a percentage to the HECO proposal. At the moment however, Pacific Biodiesel is "pushing into all usage," she said.
King said she hoped that HECO would support locally produced biodiesel, which she called a "win-win." Going local would support the economy, create a smaller environmental footprint and encourage diversified agriculture.
"It's a new era in biodiesel production," King said, with the fuel of premium quality and clear colored, not amber as in the past.
Rosegg said that no modifications to MECO's generators will be required for biodiesel use. The only major difference between petroleum diesel and biodiesel is that the oil product produces a little higher temperature, which means more biodiesel will be required to run the plant, he said.
"You have to pour a little more into the tank for the same amount of heat," he said. "It's not a big deal."
King said that there was about a 5 percent British thermal unit reduction when comparing the petroleum diesel and biodiesel.
"We watch the horizon, but you never know with these small amounts," said Rosegg about prospective applicants. "You never know what is out there until you put out the RFP (request for proposals) that tests the market."
As with all fuel and power purchase contracts, the final negotiated contracts will be submitted for review by the state Public Utilities Commission with input from the Hawaii Office of Consumer Advocacy.
Prospective bidders can find more information at www.hawaiianelectric.com/fuels. Any biofuel provided must conform to environmental guidelines for the sustainable use of biofuels developed by HECO in partnership with the Natural Resources Defense Council.
The proposal deadline is Oct. 15.
* Lee Imada can be reached at firstname.lastname@example.org.