Last week, Alexander & Baldwin, HR BioPetroleum and Hawaiian Electric announced that they have made a "tentative" agreement to start building an algae farm on 1,000 acres of A&B land on Maui, next to the Ma'alaea power plant, in 2011. This is more than a routine announcement. When done, this project will be a major step for energy in Hawai'i.

This will be one of the first commercial algae farms in the world. Ed Shonsey, chief executive officer of HR BioPetroleum, says of the 20 companies in the world investigating this technology, only two have demonstrated the ability to grow the algae outside the lab and scale it up commercially. His company is one of them.

Algae produce lipid oils that can be converted into biodiesel. Like other plant life, algae use carbon dioxide. So it's a great idea to put an algae farm next to a power plant — the carbon dioxide can be pumped directly from the stacks to the algae. Shonsey says an acre of algae will yield 6,000 to 10,000 gallons of biodiesel per year, way more than the 600 gallons you get from an acre of palm or jatropha, or the 48 gallons you get from an acre of soybeans.

The farm would start at 200 acres and grow in increments. At 10,000 gallons per year, that acreage could yield as much as 2 million gallons of biodiesel. Last year, the Ma'alaea power plant used 56 million gallons of petrodiesel, plus some hydroelectric power from Lahaina and some wind power from West Maui. Hypothetically, to produce the same 56 million gallons at 10,000 gallons per acre, the farm would need 5,600 acres.

'WE SHOULD BE LOOKING FOR HOMEGROWN SOLUTIONS'

Jeff Mikulina, of the Sierra Club, said it will evaluate the ecological impact of the project but is encouraged to see Hawaiian Electric be an early adopter of this technology. He said that "we should be looking for homegrown solutions, and biodiesel from algae very well could be one."

One of many is right. What about other homegrown solutions, like wind and solar? Don't they get to feed the grid too? To take advantage of the incredible confluence of natural energy in Hawai'i, we should also include other technologies to capture the power of our diverse environment.

But historically, HECO has been reluctant to enter into what are called purchase power agreements for wind and solar power. HECO has said it couldn't accept renewable energy that's not reliable, especially from "nonfirm" sources that don't produce when the wind isn't blowing or the sun isn't shining. On that basis, HECO can pick and chose who it buys power from.

The key to including these homegrown solutions in the grid is to smooth out the fluctuations with energy storage systems. These would enable HECO to accept lots more power from renewable sources, and a statewide fleet of new electric cars could then happily be plugged into the grid, just as discussed in our ThinkTech column on July 13.

Don't forget that a $142.5 million 110-megawatt HECO generating plant is scheduled to open at Campbell Industrial Park in 2009. It will also run on biodiesel. Just as homegrown solutions should be included in the grid on Maui, they should likewise be included in the grid on O'ahu. This is all the more reason to develop an energy storage system for use on all islands. We need every kilowatt of renewable energy we can get.

SELECTING AN ENERGY STORAGE SYSTEM

So far, no single best energy storage system has emerged, but a number of them are in use or development. See the Web site of the Energy Storage Association, www.electricity storage.org/technologies.htm, which describes various systems, including batteries, flywheels, compressed air, reversible fuel cells and pumped hydro storage (pumping water uphill, then letting it run through a turbine when you need additional power).

In the end, advanced batteries will probably prevail, but that may take a while. In the meantime, we should pursue the more tried and true technologies, like pumped hydro storage, which is already in use in China, France, Germany, Iran, Italy, Japan, Luxembourg, Russia, South Africa, Taiwan, the U.K. and the Mainland. It's not cheap, but it is proven. In fact, HECO is considering pumped hydro storage for Maui.

But how much storage do you need? If it's for wind, you probably need storage of about 10 percent of production, depending on the characteristics of the site. If it's photovoltaic, you need more storage than with parabolic solar heat collector technology, which adjusts all day to track the sun.

There's another possibility too. The Campbell plant is coming online as a "peaking unit," that is, it will be programmed to add power to the grid when demand reaches its peak from 5 to 9 p.m. weekdays. Couldn't we use that technique to smooth the gaps from fluctuations in wind and solar?

A GENERATION OF RENEWABLE ENTREPRENEURS

Energy is the hottest technology worldwide, and the stakes are huge. Hawai'i needs to establish an easy path by which energy entrepreneurs can sell renewable energy to the grid. This goes beyond just the energy. It will reward entrepreneurs for their efforts, and it will make Hawai'i a living laboratory for research and development of renewable energy.

"Net metering" lets you sell power to HECO at retail, but only enough to zero out your bill. If you want to sell more than that, you need to have a purchase power agreement with the utility. This could give you an income stream from your backyard, assuming you have the equipment and zoning. It's not a cakewalk, but HECO says it's easier than before. If you can build the infrastructure yourself, like David Murdock did on Lana'i, they will give you a better deal.

There's more. HECO is now willing to provide the infrastructure for renewable sellers, including storage systems, cables, transformers and even substations, and has proposed a renewable energy infrastructure program to the state Public Utilities Commission. See www.thinktechhawaii.com/in frastructuredocket.pdf. This approach will entail a surcharge and will affect the rate base and the economics of your purchase power agreement, but it will also allow developers to focus on energy production rather than storage systems.

So although the Ma'alaea project is revolutionary, it's also a transitional step toward an important new energy model for Hawai'i, a model in which HECO becomes an infrastructure company purchasing renewable energy from energy entrepreneurs all around the state. That transition will be the biggest sea change of all, but it's not likely to happen anytime soon.

For now, you can learn about power in Hawai'i by attending a series of energy luncheon programs presented by the Hawaii Venture Capital Association from this month through November. See hvca.org.

Jay Fidell is a business lawyer practicing in Honolulu. He has followed tech and tech policy closely and is a founder of ThinkTech Hawaii. Check out his blog at http://HonoluluAdvertiser.com/Blogs