District Energy - 2008 4th Quarter

Figure 2. Honolulu Seawater Air Conditioning’s Current Projected Fixed and Variable Costs. Customer costs under a seawater air-conditioning contract are far more stable and predictable than those associated with conventional air conditioning.

for approximately 80 percent of total customer costs (fig. 2). The customer contract is designed to seek stable, long-term, below-inflation charges to customers using the stable rates of District Energy St. Paul and District Cooling St. Paul as the model.

HSWAC has determined that all customers will have first-year savings, and these savings will increase as the price of fossil fuel-generated electricity increases.

Source: Ever-Green Energy LLC.

Just Begun

Deep fresh water and seawater air conditioning can play a critical part in the nation’s and the world’s requirement for carbon reduction. The HSWAC project is the first of many ocean air-conditioning projects that will serve not only the islands of the world but the continents with deep water accessibility and a concentration of air-conditioning load. These projects are complex, time-consuming, energy- and financing-intensive, but eminently doable. The Honolulu project has a remarkable amount of public support. HSWAC believes that when properly presented, that support may be duplicated in many places within and outside the U.S. Developing such a project is intensive, but it is exciting. It takes time, but is well worth the effort. Financing is a critical component, but the financing is achievable. An educated customer base will embrace the concept and allow a project to succeed. Deep water air-conditioning development has just begun.

The next major milestone will be completion of an environmental impact statement (EIS). The EIS will provide an opportunity to demonstrate the environmental benefits of the HSWAC project and present the company’s plans for mitigating potential negative impacts. For example, disturbance of coral habitats during construction will be avoided by using micro-tunneling or horizontal directional drilling under the coral habitats. The same care will be taken regarding cultural impacts by carefully selecting the onshore distribution piping route based on the cultural impact assessment, a part of the EIS.

A timeline for the permitting process has been prepared, identifying time-consuming permits and potential permitting ‘bottlenecks.’ Timely approval of all permits is anticipated, with all required permits issued by the end of April 2009.

To avoid disturbance of any human remains or cultural artifacts, HSWAC also retained a native Hawaiian cultural expert. This expert conducted a preliminary survey of cultural features and impacts along a potential chilled-water distribution route.

William Mahlum is the chief executive officer of Renewable Energy Innovations and Honolulu Seawater Air Conditioning. He has worked on energy law and financing for more than 30 years. Mahlum played a significant role in the founding of District Energy St. Paul, District Cooling St. Paul and Ever-Green Energy and is currently executive vice president and general counsel of Ever-Green Energy. He can be reached at william.mahlum@ honoluluswac.com.

Trudy Sherwood is the market-
ing communications manager for
Ever-Green Energy and District
Energy St. Paul. She has more than
25 years of experience in the energy
industry and is responsible for writ-
ing and producing marketing, sales and promo-
tional materials; advertising; media relations;
and community events for both organizations.
Sherwood is available at trudy.sherwood@
ever-greenenergy.com.

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Customer Contracts

Customer contracts will have a 25-year term. Under these contracts, HSWAC will provide chilled water at a specific location in the customer buildings at an agreed-on temperature for the contract term. The contract will provide for fixed and variable charges. The fixed charge accounts for approximately 70 percent of total contract payments; the variable, inflation-sensitive component is only 30 percent. This is in contrast to conventional air conditioning where the variable component accounts