Pacific Business News (Honolulu) - March 23, 2006

Ethanol -- it isn't just for gasoline any more. The electric company says it can use plenty of it for a new power station on Oahu.

"We would love to use locally produced ethanol in the new Campbell Industrial Park plant from day one of operation in 2009," said Hawaiian Electric Co. President Mike May.

The announcement is important because it means another major customer for an industry that is still in the process of creating itself in Oahu.

A new state law requires that 85 percent of gasoline used in Hawaii contain 10 percent ethanol, which is produced from farm waste such as sugar cane refuse. The requirement that ethanol be mixed with gasoline takes effect the week after next.

No ethanol producer is ready to go online, however, and, since the legislature decided against postponing the requirement date, the state must initially import ethanol. Companies that want to produce ethanol are likely to have an easier time raising capital if investors know that Hawaii's electric utilities are on record as saying they want to buy the stuff, too.

"We know that reducing our reliance on fossil fuels is the right path for our community," May said. "Renewable ethanol represents a clear opportunity to grow a significant amount of our own fuel locally and begin to break the hold imported fuels have on us."

He said HECO also is exploring whether its other plants, which mostly burn diesel, can be tweaked to burn an ethanol mixture. Hawaiian Electric Co. is the electric utility for Oahu, and counts among its subsidiaries Maui Electric Co. and the Big Island's Hawaii Electric Light Co. May specified that HECO is exploring the diesel-ethanol route in all three counties and is contacting prospective ethanol producers in all of these locales.

May said 80 percent of electric power demand is on Oahu where there is less available land for solar power, wind power or other alternative fuels, so the use of ethanol produced on former sugar cane or pineapple farm land is an intriguing idea for reducing the use of imported petroleum.

An interesting factor in the consideration of this is that Oahu Ethanol Corp., which already was preparing to produce ethanol next year, is at Campbell Industrial Park, next-door to the HECO power plant site. Oahu Ethanol President Dan KenKnight plans to produce ethanol initially from imported molasses and then get local growers to supply him with sorghum.