Hawaiian Electric works out 64 MW of renewable energy deals

To accelerate the development of renewable energy resources, Hawaiian Electric Co. (HECO) has asked the state Public Utilities Commission for permission to negotiate with five proposed projects that could quickly provide low-cost electricity for Oahu.

HECO is a subsidiary of Hawaiian Electric Industries (NYSE: HE). 

If the PUC approves, HECO will negotiate power purchase agreements (PPAs) directly with the developers of the five projects, which include a mix of solar and wind technologies across Oahu with a combined capacity of 64 MW. HECO anticipates negotiating long term, 20-year contracts with each project.

Combined, the projects have committed to sell electricity at an average price of 15.9 cents per kilowatt-hour. This is about one-third less than prices paid to existing solar and wind energy projects on Oahu and the current cost of generating electricity from oil.   

“These projects represent an important first step as we are starting to see lower market prices for renewable energy,” said Scott Seu, HECO vice president for Energy Resources and Operations. “The strong response we received demonstrates the high level of competition in our market. That’s good news for our customers.”

Based on preliminary estimates, HECO expects the combined effect of all five of these projects could reduce generation costs by about $7.4m a year, compared to today’s cost of generation. The utility’s goal is to have as many of these projects as possible in service by the end of 2015.

In addition, 20 projects that originally provided proposals but were not selected will be given the opportunity to update and resubmit their pricing proposals, HECO said. If those projects meet lower pricing and other criteria such as site control, they could be considered in a supplemental request to negotiate PPAs. 

In February, the utility issued a call for low-cost renewable energy projects on Oahu that could qualify for a waiver from competitive bidding. It narrowed the responses to five projects based on prices and other criteria such as site control and development experience.

Under PUC rules, HECO normally must use competitive bidding to select generation projects larger than 5 MW. To accelerate the benefits of these low cost projects to customers, HECO said it is asking the PUC to waive competitive bidding for these five projects. After PPAs are negotiated, each one must be submitted to the PUC for individual review and approval before it goes forward. The project developers are responsible for other key steps including environmental review, permitting and community outreach.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.