"We're in a death match," says Mark Duda, president of the Hawaii Solar Energy Association, which is in a heated battle with the Hawaiian utility over the terms of a new subsidy that's meant to encourage renewable energy installations. It's a key part of the state's ambitious effort to use 70 percent clean energy by 2030. Other states and island nations are keeping a close eye on what's happening here: Hawaii could be an almost ideal laboratory for understanding how to incorporate vast amounts of renewable energy into the power grid.

Tonight the "death match" seems more like a friendly rivalry: one of Duda's main opponents is standing next to him, Peter Rosegg, an amiable tanned man who represents the Hawaiian Electric Company, who sees working at the utility as a chance to be "doing good." As a group stands around drinking beers at a reception in an art gallery, he and Duda banter and joke, but there's a strong undercurrent of seriousness. The stakes are high. If the terms are right for the proposed subsidy, a feed-in tariff, it could lead to an explosion of solar installations in Hawaii, helping the island state use one of its main resources--sunshine--to escape its almost exclusive dependence on oil for its electricity and transportation. A supertanker arrives every week to keep the island running. "If the ships don't come, we're stuck," says Linda Lingle, the governor of Hawaii, who has spearheaded efforts to use more renewable energy. "We have no choice but to make this shift."

Yet if solar does take off, it could be a nightmare for the utility. The state is known for its brilliant rainbows, induced by the brief bursts of rain and mist in one area, while the sun shines brilliantly n nearby. As clouds moved quickly overhead, power output from solar panels will plunge and then soar again, creating a variable supply of power that the utility can't control. "We're the ones responsible for reliability," Rosegg says. "We're the ones who get the calls when there's a problem with the power."

The debate rages on because no one has concrete data about just how much solar the Hawaiian grid can take and still remain stable. Decisions are being based on models and theories, with speculations about what might go wrong. The utility wants to play it safe, and set relatively low levels for the feed-in tariff subsidy, to moderate the introduction of solar power. But that could make it harder for the state to meet its goals. The state will have to rely more on wind, another variable resource, but one that the utility will have more control over. (It can control how much power it lets onto the grid from a wind farm, but not from hundreds or thousands of distributed solar installations.) The utility also wants to use rely more on biofuels to power its oil-fired power plants. This would give the utility what it calls "firm" power, because these oil power plants aren't vulnerable to passing clouds and changes to the wind. And biofuels could displace the oil used for cars and planes as well. But it's not clear the islands can generate enough biofuel economically to reach the state's targets--there isn't very much land here to work with. One of the biofuel sources that could be grown in high density here--algae-- has been notoriously expensive so far. Another abundant renewable source, geothermal energy, has faced opposition from some Hawaiians on cultural and religious grounds, and faces some technical challenges. Harvesting thermal energy from the ocean is also a hope--it could provide steady power, but it's very expensive to do, and no one has proved it can work on a large scale.

It's not at all clear how Hawaii will meet its goals--or even if it can in the time frame it's set up. But what happens here is worth keeping an eye on. The high electricity prices here (about two to five times the price on the mainland), and the real need to diversify the islands sources of energy, are providing the motivation that many of the mainland states lack. And if Hawaii can solve some of the problems around renewables, it could make it easier to introduce them at a very large scale elsewhere.

I'll be posting a series of blogs as I travel for a three-week fellowship through the East-West Center, based in Hawaii. The trip will include a look at what's happening with clean energy in California and China. The first stop is Hawaii, where the particular energy challenges of this island state are driving a push to develop renewable energy.

Hawaii relies heavily on oil (which has to be imported) and as a result electricity prices are roughly two to five times the average price on the mainland. Hawaii is also home to multiple military bases and the headquarters for U.S. Pacific Command, which overseas military operations throughout Asia and the Pacific, over half of the world's total area. Like the state of Hawaii, the military also has special energy needs. In the field, it's reliance on fossil fuels requires expensive and vulnerable supply lines. Its bases also depend on the aging power grid in the U.S., which likewise is vulnerable to attack.

Tomorrow I'll write more about what the state of Hawaii is doing to reduce its use of oil. Today, the focus is on the military, which is planning to reduce its fossil energy use in Hawaii by about 70 percent by 2030 (not including the fuel used by tactical vehicles, like troop transports) through a combination of renewable energy, biofuels and energy efficiency. A lot of what it's doing is conventional stuff, such as installing solar panels and energy analysis of buildings to identify wasted energy.

But it's also doing some unusual things. The U.S. Navy has paid Lockheed Martin $9.32 million to develop Ocean Thermal Energy Conversion (OTEC) technology, which uses temperature differences between warm surface waters and deep, cold water to generate power. (It can use a Rankine cycle that involves a liquid with a low boiling point. Warm sea water boils the liquid, producing steam that drives a turbine to generate electricity. Cold water condenses the coolant to a liquid to be reused.) The idea behind OTEC isn't new, and the potential to generate electricity is vast, but it hasn't been used commercially because it's expensive. It requires costly infrastructure to deliver cold water from the depths, and it doesn't produce much power for the amount of equipment required because the temperature difference between the cold and warm water isn't very much. The hope is that tricks can be found to lower the energy needed to deliver the cold water, lower materials costs, and to make the whole system durable enough to eventually pay for itself. The technology is risky--in addition to its high initial capital costs, the systems are vulnerable to storms. But it's attractive to the military because it could produce power day and night--it's not intermittent like solar and wind.

The military is also investing in solar-powered hydrogen production. This is in part to produce hydrogen for vehicles (either fuel cell cars or internal combustion engines made to burn hydrogen). What's more interesting is the potential of hydrogen as an energy storage medium. A large part of wind power produced in Hawaii is wasted because the power is generated at night, when demand is low, and storing that energy as hydrogen, which can be used to generate electricity when it's needed, could be cheaper (though much less efficient) than using batteries. The military could use solar powered hydrogen generation in the field to power its bases, without the need for supply trucks to deliver diesel for generators.

Both hydrogen energy storage and OTEC are expensive technologies that aren't going to be used for large scale power any time soon. But in investing in these technologies, the military may be performing a very useful service for clean energy. Companies with new energy technologies have a problem. For many other new technologies--better flat screen televisions, say--companies can count on a cadre of early adopters to pay exorbitant prices, which can pave the way for larger scale production to drive down costs. But in general, electricity consumers won't pay much more, if any, for clean energy. Certainly not if the costs are several times that of conventional power. Without the early adopters, solar and wind companies have relied on government mandates and subsidies, but now that those technologies are becoming cheaper, alternatives like OTEC, which have a lot of potential and have the advantage of being more reliable than solar or wind, might not be able to compete, even under the mandates and subsidies (in states with renewable energy mandates, utilities typically turn to solar and wind). The military is stepping in as an early adopter--with immense purchasing power. Of course, it's risky, but the pay off could be big.

Novozymes, based in Bagsvaerd, Denmark, recently announced it is taking steps to build a demonstration plant for converting agricultural waste into ethanol in China, with the help of partners there. On the same day UOP Honeywell, based in Des Plaines, IL, and Boeing announced plans to work with Chinese partners to develop renewable aviation fuel .

The projects are part of an effort in China to find alternatives to petroleum, which it largely has to import--gas costs over a dollar more in China than it does in the United States. Demand is growing as the number of cars increases from 130 million today to an expected 200 million in ten years. The Novozymes plant, to be built in cooperation with China-based COFCO and Sinopec, will produce 3 million gallons of bioethanol a year. China's agricultural waste could supply about 10 percent of the country's oil consumption by 2020, according to Novozymes.