HEI Boston Consulting Group Matrix
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Stars
Utility-scale solar + storage buildout
HEI is leading Hawaii’s renewables push with multiple utility-scale solar-plus-storage projects coming online to serve ~95% of the state’s customers. Hawaii targets 70% renewable generation by 2030 and 100% by 2045, driving steep market growth and high visibility for HEI’s assets. These projects are capital hungry; continued investment is required to lock in scale before market saturation dampens returns.
Grid modernization platform
Advanced meters, automation and smarter substations are scaling rapidly—US smart meter deployments topped 120 million by 2023 and grid automation spend is projected to grow double digits through 2028. The market need is exploding as DER capacity and resilience mandates accelerate island electrification and backup needs. HEI’s home-field advantage across Hawaii’s islands and existing customer base makes it the natural consolidator. Fund it hard now to convert momentum into lasting dominance.
Rooftop solar + DER integration
Interconnections, smart inverters, and VPP pilots are accelerating: US utility-scale and distributed VPPs crossed the GW scale in pilots by 2024, pushing grid-facing inverter standards. HEI sits at the hub—using its ~$2.1B 2023 revenue base to shape standards and customer adoption across Hawaii. Growth is rapid and coordination heavy—cash in, cash out; nail the integration play and this matures into a cash cow platform.
Battery storage and resilience assets
Storage demand is surging on islands with fragile grids, and HEI’s early battery and resilience projects have given it operational scale, real-world performance data, and market credibility; Hawaii maintains a 100% renewable target by 2045, intensifying storage needs. Returns grow as stackable capacity, performance gains, and volume drive unit-cost declines; prioritize deployment while 2024 incentives and demand tailwinds persist.
- Stars: Battery storage & resilience
- Strength: Early-scale projects, performance data
- Opportunity: 100% by 2045 drives demand
- Action: Stack capacity during 2024 incentives
Community-based renewable energy (CBRE)
Community-based renewable energy sits in HEI’s Stars quadrant as shared solar opens growth to renters and underserved customers; U.S. community solar capacity surpassed 5 GW in 2024 (SEIA), and program adoption is rising as supply expands. HEI can capture value by owning interconnection, billing, and reliability. Invest now to win share; it converts to steady annuity later.
- Growth: shared solar >5 GW (2024)
- Market: renters + underserved access
- HEI play: interconnection, billing, reliability
- Strategy: invest for share → long-term annuity
Deploy storage & community solar: 70% 2030, US >5 GW
HEI’s Stars are battery storage and community solar—driven by Hawaii’s 70% by 2030 / 100% by 2045 targets and HEI’s ~2.1B revenue (2023). Storage demand and island resilience create high-growth, capital‑intensive returns; US shared solar >5 GW (2024) expands customer reach. Fund deployments during 2024 incentives to lock scale, data, and billing advantage for long-term annuities.
| Segment | Metric | Opportunity | Action |
|---|---|---|---|
| Battery storage | Hawaii targets 100% by 2045 | Grid resilience, high demand | Scale deployments 2024 |
| Community solar | >5 GW US (2024) | Renters/underserved | Own interconnect/billing |
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Cash Cows
Regulated transmission & distribution
High market share in a mature, essential service: HEI’s regulated transmission & distribution anchors utility cash generation. Allowed returns remain stable—regulatory ROEs around 9–10% in 2024—so steady volumes and cost recovery produce dependable cash flow. Targeted capex focuses on efficiency and reliability, prioritizing grid hardening and smart‑grid upgrades. Milk prudently while keeping regulators comfortable through transparent rates and reliability metrics.
American Savings Bank core franchise
American Savings Bank’s core franchise supplies established deposits, mortgage and small-business lending in a stable Hawaii market, delivering low-cost funding and consistent net interest margins driven by scale and brand. Growth is modest while cash flow remains strong, with ASB historically contributing a large share of HEI’s consolidated earnings and robust loan-deposit ratios. Priority actions: maintain productivity, accelerate digitization, and defend share against regional and fintech competitors.
Base residential & commercial load
Base residential & commercial load delivers predictable everyday demand—retail residential customers accounted for about 37% of U.S. retail electricity sales as cited by EIA in 2024—yielding low growth, high retention and steady bills. Minimal promotional spend is required; focus on optimizing operations and collections to widen cash yield and margins.
Service territory monopoly
Service territory monopoly
HEI’s exclusive footprint covers roughly 95% of Hawaii’s ~1.4 million residents, translating to a durable share in a mature, regulated market where the 100% RPS by 2045 shapes investment timing. Stable cash flows from regulated rates fund grid modernization and new ventures; maintaining high reliability is essential to preserve this privileged position.- coverage: ~95% of state population
- population: ~1.4 million (2024)
- policy: 100% RPS by 2045
- strategy: cash flows → capex for modernization
Billing and customer operations
Billing and customer operations is a cash cow: a large installed base generating recurring revenue with low churn (enterprise billing platforms averaged ~2–4% annual churn in 2024), where process improvements flow directly to operating income and upgrades pay back quickly via fewer support calls and ~1–3 day faster cash conversion in 2024 benchmarks; maintain and streamline, don’t overspend.
- Installed base: high recurring ARR
- Churn: ~2–4% (2024)
- Process ROI: immediate margin impact
- Upgrades: fewer calls, faster cash conversion (2024: ~1–3 days)
- Strategy: maintain, streamline, avoid large capex
Regulated T&D + ASB deposits drive steady cash: ~9-10% ROE, Hawaii 1.4M
HEI cash cows: regulated T&D yields stable cash (allowed ROE ~9–10% in 2024) funding capex; ASB supplies low‑cost deposits and steady NIMs from Hawaii’s ~1.4M population; base residential/commercial load is predictable with low growth and high retention; billing ops deliver recurring margin gains via low churn and fast cash conversion.
| Metric | Value (2024) |
|---|---|
| Allowed ROE | ~9–10% |
| Service coverage | ~95% of state |
| Population | ~1.4M |
| Billing churn | ~2–4% |
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Dogs
Oil-fired legacy generation
Oil-fired legacy plants face Brent averaging ~$85/bbl in 2024 and LCOE often above $200/MWh versus utility solar at ~$35/MWh (2024), driving high fuel costs and low growth. Retrofit capital (often >$400/kW) rarely pencils out as utilization and returns decline and cash stays tied up. Prioritize retirement or sale as renewables capture market share and social license erodes.
Diesel peaker units
Diesel peaker units are expensive to operate and emissions-heavy, emitting roughly 600–900 kg CO2 per MWh, and face rising O&M and fuel costs. Battery storage pack prices fell to around 120 USD/kWh in 2024, making batteries increasingly cheaper and dispatchable. Market demand is shifting away from diesel peakers; big turnarounds are hard to justify. Use sparingly and plan exits as storage scales.
Stranded interconnection bottlenecks
Stranded interconnection bottlenecks arise from old processes that add delay but no customer value, with 2024 industry surveys showing legacy maintenance consumes about 70% of IT budgets. These bottlenecks erode time and goodwill yet do not grow share. Remediation capex is high and often yields only break-even outcomes within multi-year horizons. Simplify or sunset legacy pieces to stop the drain.
Non-core real estate or legacy IT tools
Non-core real estate and legacy IT tools consume maintenance dollars without strategic upside; Gartner reported in 2024 that organizations spend about 70% of IT budgets on upkeep of legacy systems, while many firms cut office footprints ~15% in 2024 as part of portfolio optimization. Low market relevance and returns make turnarounds costly and slow; prioritize divestment or decommissioning to free cash.
- tag: high-maintenance, low-return
- tag: 70% IT upkeep (Gartner 2024)
- tag: ~15% office footprint reduction (2024)
- tag: divest/decommission to free cash
Paper-heavy banking workflows
Paper-heavy banking workflows are manual, slow, and out of step with customer expectations; they generate friction not growth and sit in the Dogs quadrant. Automation, shown in Deloitte 2024 case studies to cut operational costs 30–40% and speed processing 2–5x, beats overhaul-at-any-cost; reduce branch footprint and migrate clients to digital channels where 75%+ of interactions now occur.
- Manual friction
- 30–40% cost savings from automation (Deloitte 2024)
- 2–5x processing speed-up
- 75%+ digital interaction share
Retire oil plants (LCOE > $200/MWh); favor solar ~$35/MWh
Oil-fired plants face Brent ~$85/bbl and LCOE >$200/MWh vs utility solar ~$35/MWh (2024); prioritize retirement or sale. Diesel peakers emit ~600–900 kgCO2/MWh and lose to battery costs (~$120/kWh); plan phased exits. Legacy IT/real estate and paper workflows (70% IT upkeep; automation saves 30–40%) are low-return; divest or automate.
| Asset | 2024 Metric | Action |
|---|---|---|
| Oil plants | Brent ~$85/bbl; LCOE >$200/MWh | Retire/sell |
| Diesel peakers | 600–900 kgCO2/MWh; battery ~$120/kWh | Exit |
| Legacy IT | 70% upkeep | Decommission/automate |
Question Marks
EV charging ecosystem
EV charging is a fast-growing market with industry reports in 2024 projecting roughly a 28% CAGR to 2030, but HEI’s share remains nascent. Capital intensity and nimble competitors mean investment and rollout must be disciplined. A platform win is possible if HEI delivers superior geographic coverage and >99% uptime. Invest selectively in sites where utilization forecasts show clear ramp potential.
Virtual power plant (VPP) programs
Customer-sited batteries and smart devices can aggregate real dispatchable capacity, with pilots in 2023–24 demonstrating tens to low hundreds of MW per program across regions. Early-stage, low share and high coordination costs keep VPPs as question marks in the HEI BCG matrix. If adoption clicks and dispatch proves reliable, a program can graduate to a star; pilot hard, prove dispatch performance, then scale.
Green hydrogen pilots
Massive buzz but unclear unit economics near-term: 2024 LCOH estimates roughly $2.5–6/kg depending on renewable price and electrolyzer utilization, with $2/kg a common 2030 target. Limited market share today, under 1% of global hydrogen production in 2024, and meaningful technical scaling risk. It could unlock long-duration storage and decarbonize heavy transport. Bet small, chase grants (US H2 hubs ~$7bn, EU funds) and monitor electrolyzer and renewable cost curves.
Microgrids for critical facilities
Resilience demand is rising: the global microgrid market was about 18.4 billion in 2024 with ~13% CAGR, yet projects are bespoke and slow and market share is fragmented with no single vendor holding >10% in 2024; if HEI standardizes repeatable templates and financing to cut deployment time and costs (estimated 15–20% savings), it can capture a defensible niche serving hospitals, data centers and emergency services.
- Market: 18.4B (2024), ~13% CAGR
- Fragmentation: no vendor >10% market share (2024)
- Opportunity: standardization → 15–20% cost/time savings
- Targets: hospitals, data centers, emergency services
Banking-as-a-service/digital-only plays
Banking-as-a-service/digital-only sits in a high-growth, high-competition quadrant with regulatory hurdles; the global BaaS market is growing at ~26% CAGR and is projected around $30bn by 2026, while ASB’s share remains modest. If executed cleanly, BaaS can unlock new deposit flows and fee income streams; digital challengers captured roughly 10–15% of new retail deposits in several markets by 2023. Pilot tightly, partner to accelerate scale and mitigate compliance build costs.
Pilot to scale: prove >70% utilization, >99% uptime, then exit or expand
Question marks: high-growth adjacencies where HEI’s share is small, outcomes hinge on capex, unit economics and execution.
Prioritize pilots that prove utilization/dispatch (>70% for economics), reliability (>99% uptime) and scalable unit cost curves.
Allocate small bets, pursue grants/partners, exit or scale fast when clear path to >10% market share or positive IRR emerges.
| Segment | 2024 metric | Trigger |
|---|---|---|
| EV charging | 28% CAGR to 2030 | util>50%/>99% uptime |
| VPP | Pilots tens–100s MW | dispatch proven |
| H2 | <$1% global prod | LCOH <$2.5/kg |
| Microgrids | $18.4B; ~13% CAGR | 15–20% cost cut |
| BaaS | ~26% CAGR (to 2026) | regulatory/compliance ready |