Imported Fuel Full-Cost and Retirement Test

Research model · source context

HSEO’s alternative-fuels work finds that LNG used in an efficient plant could reduce lifecycle carbon intensity relative to low-sulfur fuel oil in specified scenarios. That is a scenario result, not an approval, a renewable-energy finding, or a full all-resource comparison. UHERO likewise identifies that delivered fuel cost, utilization, and plant-efficiency assumptions can materially change a comparison.

Sources: Alternative Fuels, Repowering and Energy Transition Study (Hawaiʻi State Energy Office) · What the LSFO–LNG price comparison really shows (UHERO)

PMF recommendation

PMF recommendation: begin every review with a defined reliability need—location, MW, duration, start time, reserve, grid-forming, black-start, transmission, or distribution function—and a service date. A narrow, demonstrated reliability gap may warrant consideration of a limited fuel-flexible option. The public record should not assume that batteries replace all central assets, or that a fuel option is justified merely because it is less carbon-intensive than an existing oil case.

The reviewing authority should require an independently governed, same-service portfolio test. Each portfolio must meet identical location, reliability, outage, weather, load-growth, and retirement assumptions. Eligible alternatives may include utility-scale clean generation, centralized storage, customer batteries, flexible thermal load, efficiency, targeted network work, and limited firm supply. Resources should receive credit only for functions they demonstrate under the stated scenario.

Procurement should remain open and competitive. Bidders should submit normalized annual service, installed capacity, usable energy, forced-outage, construction, land or marine, interconnection, and performance assumptions. The administrator should invite independent resource-adequacy, engineering, consumer-advocate, labor, environmental, and host-community review. A proposal that cannot disclose enough information for an equivalent comparison should not receive a presumption of cost recovery.

The full-cost record should include delivered fuel, liquefaction, shipping, regasification or terminal work, plant conversion, grid upgrades, finance, insurance, hedging, take-or-pay commitments, delay, decommissioning, and stranded-asset exposure. It should show high, central, and low utilization and fuel-price cases. The utilization chart illustrates a general fixed-cost problem; it is not an LNG-price forecast.

Lifecycle reporting must state its boundaries and report both 20-year and 100-year greenhouse-gas ranges. LNG supply-chain emissions vary materially by source and process, and combustion is a separate component of the comparison. PMF recommends that any costs or emissions not borne by the project sponsor be shown plainly as prospective ratepayer exposure rather than hidden in a generic reliability claim.

Sources: Assessing emissions from LNG supply and abatement options (International Energy Agency)

PMF recommends decision gates before any long-term customer obligation: verify the narrow reliability need; publish same-service alternatives; complete independent model and contract review; demonstrate that lower-risk portfolios cannot meet the need in time; and secure enforceable construction, emissions-monitoring, retirement, conversion, and decommissioning commitments. The default should be no irreversible cost recovery while an essential comparison remains unresolved.

After approval, regular public reporting should compare forecast and actual utilization, fuel and delivery costs, outages, emissions assumptions, contract obligations, and alternative-resource deployment. If the defined need changes, utilization collapses, or a competing portfolio becomes available, the reviewing authority should revisit the project’s ratepayer support. This is a fair test for any long-lived asset, not a predetermined verdict on a fuel or technology.