Some lawmakers are excited about the possible creation of a local ethanol market after Hawaiian Electric Co. announced yesterday that it plans to use the renewable fuel in its new 110-megawatt generating plant in Campbell Industrial Park.

State Sen. Kalani English, D-6th (E. Maui, Moloka'i, Lana'i), said HECO's initiative will create a "large and instant market for ethanol" in the state.

"I think it's a big step for Hawai'i in moving toward renewable energy," English said.

HECO announced yesterday that it wants to use locally produced ethanol blended with naphtha in the $130-million generating plant, which will begin operating in 2009. It will become the first plant in Hawai'i to use this renewable fuel, officials said yesterday.

"Our goal is to replace imported fossil fuels with local agricultural energy as much as possible," said T. Michael May, president and chief executive officer of HECO, at a press conference on the University of Hawai'i-Manoa campus yesterday.

However, HECO faces several challenges.

For instance, no local company currently produces ethanol and no farmers grow sorghum — one of the main crops that would be used to create ethanol, said Daniel KenKnight, of O'ahu Ethanol Corp. His company plans to build a plant here in hopes of capitalizing on the growing interest in ethanol in the state, including an effort to blend ethanol with gasoline.

The use of ethanol will also depend on the level of interest generated to produce the fuel and logistical challenges like receiving, storing, blending and burning ethanol, May said.

Jeff Mikulina, director of the Sierra Club Hawai'i Chapter, said while he supports HECO's suggestion that it would use ethanol, the utility has not committed to using it.

"There are a whole bunch of caveats that they offer," Mikulina said. "We'd like to hear a full commitment."

May said he hopes the HECO initiative will jump-start the ethanol industry in Hawai'i and encourage the local production of ethanol. About six local companies have expressed interest in producing the fuel, including O'ahu Ethanol Corp., he said.

"Ethanol represents a very clear opportunity to grow a significant portion of our own fuel and to break the stranglehold imported fuels have on our state," May said.

If this project is successful, ethanol blends could also be used in other HECO power plants, May said.

HECO has said that the cost of building the plant will likely be passed on to consumers, but May said the use of ethanol could result in lower electricity bills in the long run.

"Hopefully as we look at the economics, it will prove to be a benefit to us," he said.

HECO's announcement comes as the governor and state lawmakers are pushing to reduce Hawai'i's dependence on fossil fuels. The utility is already under a state mandate to have 20 percent of the energy produced be from a renewable source by 2009.

Gov. Linda Lingle said yesterday that HECO is taking a "positive and proactive approach" to decreasing the state's dependence on fossil fuels, but she would "continue to watch it real closely."

"It will certainly help create that market for biofuels, for ethanol, so I think it's a very good development," she said.

The Hawai'i Energy Reliability Committee, composed of business leaders committed to ensuring Hawai'i's reliable energy future, called HECO's plan a "historic and much-needed step," in a statement yesterday.

HECO's plans should also help the utility to reach its 20 percent renewable mandate, May said. Currently 8 percent of the energy HECO produces is from a renewable source such as wind or other biofuels. The addition of ethanol should "contribute significantly" to helping HECO reach its 20 percent goal, he said.

Local ethanol production companies will also be challenged with finding local growers of ethanol crop such as sorghum and sugar cane, said KenKnight.

Potentially unused agricultural lands, like the closing Del Monte farm in Kunia, could be used as farms for ethanol crops, he said.

Until a significant local crop is produced, KenKnight said his company would use imported molasses to manufacture ethanol.

O'ahu Ethanol Corp. plans a 15 million gallons-a-year ethanol production plant in Campbell Industrial Park near the new HECO plant, said KenKnight. He expects the plant to be operating in April 2007.

Reach Loren Moreno at lmoreno@honoluluadvertiser.com.