The goal is to create 70 percent of Hawaii's energy use from clean energy sources by 2030. Currently, the state gets about 10 percent of its energy from renewable sources.
Under the latest agreement, Hawaiian Electric Co. commits to not build any new coal plants, integrate up to 1,100 megawatts of renewable energy into the power grid and convert existing fossil fuel generators to biofuels using locally grown crops.
"We don't have years and years anymore to make these changes," Gov. Linda Lingle said Monday. "These are not hopes or dreams or wishes, these are our specific plans that we hope to achieve."
The transition from fossil fuels to renewable energy is a major step for Hawaiian Electric, said Connie Lau, chairwoman of the board of directors for the utility, which powers Oahu, Maui and the Big Island.
"This is a historic moment for all of us, and it really does take us far beyond what our companies have done historically," Lau said.
But some of the biggest ideas in the overall deal - including expensive undersea power cables to move wind-generated energy between the islands - lack funding or even cost estimates for how they'll become reality.
The undersea cables, which could cost hundreds of millions of dollars, would link potential wind farms on Lanai or Molokai to population centers on Maui and Oahu.
It's unclear exactly where the money will come from. Private companies could step in, the state may pursue revenue bonds, or Sen. Daniel Inouye, D-Hawaii, could seek federal funds.
Inouye said it's essential that Hawaii emphasize its energy independence efforts because of the state's isolation and the steady long-term rise of oil prices.
"It's not going to be easy, but we must do it, because of all the 50 states in the union, our state is the most vulnerable," Inouye said. "We have no fossil fuels, so we have to manufacture our own energy."
Additional parts of the plan call for creating incentives to encourage adoption of electric vehicles and making it easier for customers to get credits for electricity contributed to the power grid from home solar or wind systems.
The agreement stems from the Hawaii Clean Energy Initiative, a partnership between the state and the federal Department of Energy launched in January with the goal of making Hawaii a model for how the United States can become energy independent.