Economics of Submarine Transmission Cables in Hawaii

Alexander Ho
October 21, 2010

Submitted as coursework for Physics 240, Stanford University, Fall 2010


Hawaii is located 2,400 miles away from the United States. Due to its remote location, it does not have interconnections with utilities in other states and cannot rely on neighboring utilities for backup power in an event of a problem. The utilities are made of a series of isolated systems. According to the United States Energy Information Administration (EIA), Hawaii imports more than 70% of crude oil to meet their electric generation needs.[1] As a result, the cost of electricity fluctuates due to the volatility of oil prices, which are passed down to residents. With the concern of rising oil prices, Hawaii is seeking to meet their energy demand by acquiring and developing renewable energy. Under Hawaii's HB 1464 legislation, the state of Hawaii has declared the definition of renewable energy sources as wind, solar and geothermal. [6] The purpose of this legislature is for utilities in Hawaii to development renewable energy projects to reduce dependence on crude oil.


Although Hawaii has great renewable resources, land availability and mixed land uses has impacted the viability of such development. Moreover, the development for any renewable project will face current issues with the lack of transmission capacity and land availability for utility scale size projects. Since Hawaii's source of economic growth is dependent on tourism, development of hotels and attractions are put first.

In 1986, Lesperance and Eaton published a journal in Geothermics stating the possibility of a submarine transmission cable in Hawaii that wheels in power from other islands to Oahu, where demand is highest. [3] Lesperance and Eaton both stated in their journal that transmission of geothermal energy over a submarine transmission cable from Big Island to Oahu would be economically feasible if the cost of oil imports rise significantly. Hawaii Electric Company (HECO) is the major utility on the island of Oahu. The advantage of wheeling in power from other islands such as Maui or Big Island can drastically reduce the reliance on oil and minimizing cost to residents. However, the commitment of such an endeavor comes at a steep price.

The United States government in 1982 helped fund Hawaii's Deep Water Cable (HDWC) program to determine the overall technical feasibility of deploying a submarine transmission cable from Oahu to Big Island over a useful life of at least 30 years stated by Lesperance and Eaton. [3] Preliminary studies indicate that there were no drastic environmental impacts however; the estimated capital cost for a direct route from Oahu to Big Island will require significant capital investment. In addition, materials testing were conducted on the submarine cables to determine the abrasiveness and corrosiveness underwater.

In 2009, Hawaii State Legislature passed HB 1464 that expanded their renewable portfolio standard. Under HB 1464, Hawaii has a strict renewable portfolio standard of 40% of renewable generation by 2030 and 25% by 2020. [5] Hawaii is looking to develop wind farms, solar arrays and geothermal plants in Molokai, Lani and Big Island and deliver up to 400 MW through a submarine transmission cable to help meet the state's goal [4]. Since renewable energy such as solar and wind are an intermittent source, firming its power distribution can make renewable energy an attractive base load. However, energy storage is very expensive, which makes grid parity unlikely until prices come down. Also, efficiencies and life cycle analysis are being researched to ensure that the intermittencies are addressed. Other prospective firm renewable energy like geothermal have great baseload power distribution. Until the energy storage problem is solved, the viability of a submarine transmission cable might have to tackle huge economic and political hurdles.

The magnitude of this project will be hard for Hawaii to finance given the deficit it's facing. Alternate methods of financing may include project financing with an equity sponsor that is typically a non-recourse loan. Other methods may be privatizing the asset while charging a fee for utilities to use the transmission cables. Regardless of which financing option, public funding and investment banks will have to develop a consortium to secure financing to fund this project.

A proven example in the United States is the Neptune Project, that is a 65-mile submarine transmission cable connecting Long Island Sound and New Jersey. The $600 million dollar project can help offset load demand with up to 660 MW of reliable power. [2] The submarine portion of the transmission line contains three 500 kV HVDC cables to reduce losses when arriving at the converter stations. It is estimated that the Long Island Power Authority saved $20 million during the first 100 days of operation and over $1 billion over the next 20 years. [7] Hawaii can use Neptune Project as a case study to facilitate their study on the interisland cable. Furthermore, the Neptune project was completed within a reasonable time period of six years. The savings in both cost and carbon emissions from crude oil imports can change Hawaii's landscape, while maintaining its island beauty.


The interconnection within the Hawaiian Islands via submarine transmission cables would be ideal for the utilities in Hawaii. With the uncertainty of oil prices and the push for renewable energy generation in Hawaii, the feasibility of an interisland cable system is likely. There are numerous proven examples such as the Neptune Project connecting Long Island Power Authority to New Jersey's Mid-Atlantic grid. While many environmental and technical studies indicate viability, the construction aspect of the project is not a huge undertaking compared to securing financing to fund the project. Although the problem of firming renewable energy generation hasn't been perfected yet, both energy storage and submarine transmission cables can help solve Hawaii's energy problem in the near distant future.

© Alexander Ho. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "State Electricity Profiles," US Energy Information Agency.

[2] C. Hocker and L. Martin, "Undersea Success- The Neptune Project," Electric Energy Online, 29 Jun 07.

[3] G. Lesperance and R. Eaton, "Hawaii's Geothermal and Deep Water Cable Programs," Geothermics 15, 4 (1986).

[4] K. Tweed, "Hawaii Weighs Undersea Cable to Deliver Wind Power," Greentech Grid, 7 Jun 10.

[5] "Financial Incentives," DSIRE, NC State University.

[6] "Hawaii HB 1464," Hawaii State Legislature.

[7] Neptune Submarine Cable Saved $20 Million for LIPA," Transmission and Distribution World, 11 Oct 07.