Hawaiʻi is considering liquefied natural gas as a transitional fuel to bridge the gap toward the state’s mandate of achieving 100% renewable electricity generation by 2045. While LNG could temporarily replace oil and potentially reduce generation costs, state energy officials have identified green ammonia and hydrogen as possible renewable replacements for the fossil fuel infrastructure once built.
A detailed economic analysis reveals substantial cost disparities in the proposed transition pathway. When LNG infrastructure is modeled at high utilization rates, electricity generation costs approximately 21 cents per kilowatt-hour at the generation boundary. By contrast, the green-ammonia pathway—which involves producing hydrogen using renewable electricity abroad, converting it to ammonia for transport, shipping it across the Pacific, and reconverting it to hydrogen for electricity generation—reaches approximately 95 cents per kilowatt-hour on the same boundary. Each step in this conversion chain consumes additional energy and introduces equipment, operating, and efficiency losses.
The economic modeling demonstrates that distributed renewable energy at the household level may offer more favorable economics than centralized LNG infrastructure transitioning to imported fuels. A modeled detached home on Oʻahu with a rooftop solar system, battery storage, and demand management capabilities could cover roughly three-quarters of annual electricity consumption. Under current rate assumptions, such a system achieves simple payback in approximately 8.4 years. If the additional costs of ammonia-based generation were reflected in electricity rates, payback time would drop to roughly 4.4 years, creating stronger incentives for household-level solar adoption.
A significant systemic challenge emerges from this dynamic: as more households and businesses install distributed solar and storage, centralized thermal plants sell fewer kilowatt-hours, forcing fixed infrastructure costs across a reduced volume and raising per-unit generation costs. This feedback mechanism weakens the economic case for the LNG bridge itself by reducing plant utilization rates.
An alternative pathway built around rooftop and parking-canopy solar, batteries, managed electric vehicle charging, localized wind generation, and grid improvements could address Hawaiʻi’s energy transition without repeated conversion of electricity to imported fuel and back. Before committing to LNG infrastructure, comprehensive analysis comparing the full lifecycle costs of the proposed bridge, exit costs through renewable fuels, and local alternatives would be warranted to ensure optimal long-term outcomes.
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