Hawaiian Electric is asking the Public Utilities Commission of Hawaii for quick approval of a power purchase agreement (PPA) and related transmission facilities for renewable as-available energy from Kalaeloa Renewable Energy Yaik‘s Kalaeloa Renewable Energy Park (KREP) project.
As part of the Dec. 21, 2011, application, the utility is asking the commission to determine that the 46-kV line extension to serve this 5-MW project should be constructed above the surface of the ground.
Kalaeloa Renewable has requested that the commission issue a decision and order on the PPA on or before April 1 in order to provide an opportunity for it to meet its goal of constructing the solar field portion of the project by Nov. 30. Kalaeloa Renewable has represented that the Nov. 30 completion date is based on a one-month financing mid-mobilization period and a six-and-a-half month construction schedule.
Kalaeloa Renewable also told the utility that its energy payment rate under the PPA is based on Kalaeloa Renewable qualifying for: the Federal Tax Grant under Section 1603 of the American Recovery and Reinvestment Act of 2009; and the state of Hawaii refundable tax credit for solar energy technologies.
Kalaeloa Renewable believes that the project will qualify for the Federal ARRA Tax Grant safe harbor, which is essential to the commercial feasibility of the project, Hawaiian Electric said. According to Kalaeloa Renewable, the safe harbor treats a facility as having commenced construction on or before Dec. 31, 2011, if the applicant incurred or paid at least the first 5% of the total qualified cost of the facility. Kalaeloa Renewable will be required to file a U.S. Treasury application no later than Oct. 1 indicating construction has commenced.
Also, Kalaeloa Renewable represented that the negotiated energy price assumed qualifying for the Hawaii Refundable Tax Credit, and that Kalaeloa Renewable’s investors believe there is a significant risk that action in the 2012 or 2013 legislative sessions may eliminate the refundable credit.
Kalaeloa Renewable also said that its energy rate assumes it will be able to purchase solar panels at prices currently offered for panels manufactured in China. However, an ongoing investigation by the U.S. government may result in a tariff on solar panels manufactured in China, which may result in increased prices for solar panels in general. Kalaeloa Renewable could mitigate such risk by purchasing panels as soon as possible after commission approval of the PPA, the utility added.
Kalaeloa Renewable is owned by Scatec Solar North America (70%) and Hawaii Renewable Energy Ventures (30%). The KREP project is consistent with Hawaii’s energy policy, which encourages the use and development of renewable energy. “Moreover, the KREP project will help Hawaiian Electric meet the state’s energy policy goals by reducing Hawaiian Electric’s reliance on fossil fuels and implementing additional renewable energy resources,” the utility added. “It is estimated that the renewable energy supplied by the KREP project will initially save over 13,800 barrels of fuel per year, which over the term of the PPA amounts to approximately 139,000 barrels of fuel oil saved.”
The KREP facility would be located at Barbers Point, Kalaeloa, Oahu. The site is currently owned by the federal government through the Department of the Navy. According to Kalaeloa Renewable, it entered into a ground lease agreement with Ford Island Ventures in November 2011. The lease gives Kalaeloa Renewable a 20-year use of the site for a solar farm.
The facility will produce electricity using Suntech poly-crystalline PV modules and inverters manufactured by Advanced Energy. The facility will generate direct current electric energy using approximately 21,120 PV modules. The direct current will be converted to alternating current and then shunted into the 46-kV connect to the Hawaiian Electric system.
Hawaiian Electric is part of Hawaiian Electric Industries (NYSE:HE).