Hawaii cooperative seeks okay to buy power from SolarCity solar/battery project

Kauai Island Utility Cooperative Inc. (KIUC) is asking the Hawaii Public Utilities Commission for an approval by Feb. 29, 2016, of a power purchase agreement it has worked out with SolarCity Corp. for the output of a 17-MW solar project.

KIUC’s Sept. 10 application to the commission noted as of April 22, 2015, SolarCity had installed more than 1,800 commercial projects in 21 states. As of May 28, 2015, SolarCity had raised funds to finance the installation of approximately $8 billion in renewable energy assets with investments from a number of leading financial institutions and corporations.

Under the proposed PPA, SolarCity will construct an approximately 17 MW (dc)/13 MW (ac) solar photovoltaic system together with related interconnection facilities, coupled with a 13 MW (ac)/52 megawatt hour (MWh) battery energy storage system (BESS). Under the PPA and the Interconnection Agreement, SolarCity will build, operate, maintain and repair the facility, and KlUC will dispatch the facility in KlUC’s preferred manner and in compliance with certain standards.

The key benefit of this facility is that the BESS will enable it to be “firm-like” and KlUC will utilize stored energy from the BESS to help with ramping toward KlUC’s afternoon/evening peak. KlUC intends to use approximately 80%-85% of the output from the solar PV system to charge the BESS, such that KlUC will be able to dispatch the stored energy to: help with ramping towards KlUC’s afternoon/evening peak (which will avoid or reduce the need for KlUC to ramp up its conventional oil-fueled units); and shave the evening peak (which will avoid or reduce the need to dispatch KlUC’s most inefficient conventional oil-fueled unit(s)).

The project will be located on an approximately 50-acre parcel of land owned by Grove Farm, located immediately west of KlUC’s Kapaia Power Station across Ehiku Road.

Construction of the project is currently expected to commence around the end of March or early April 2016 (i.e., within approximately one month from the requested Feb. 29, 2016, date for obtaining the final decision and order in this docket) and the facility is anticipated to reach full-scale commercial operation in the fourth quarter of 2016. In order to qualify for the federal investment tax credit, the facility must deliver energy to KlUC by the end of 2016.

KlUC anticipates that once the facility is placed into service, it and its members/customers will use approximately 37,474 fewer barrels of oil annually. If the price of a barrel of oil averages $60 over the 20-year term of the PPA, depending on whether electricity sales decrease, remain flat, or increase, KlUC anticipates that this would result in $12.8 million to $52.6 million (net present value) in total savings over the 20-year term of the PPA.

The energy to be purchased under the PPA will assist KlUC in achieving the goal set forth in KlUC’s Strategic Plan to move towards energy independence and decreased reliance on foreign imported oil by meeting at least 50% of KlUC’s annual electricity sales with energy generated by renewable resources by the year 2023. With flat sales growth, KlUC’s current renewable energy projects will achieve about 43% supply side renewable energy by 2023. The PPA will add approximately 5% supply side renewable energy, bringing KlUC very close to its renewable energy goal of 50% by 2023.

The 52 MWh of storage to be gained pursuant to the PPA will contribute substantially towards KlUC’s goal, set forth in KlUC’s 2013-2025 Strategic Plan, of obtaining 100 MWh of storage to enable more low-cost solar to come online by expanding the ability to use solar energy from day to night-time use.

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.