The Hawaiian Electric Co. drive to convert to green energy sources was always going to have its fits and starts. The vehicle now seems to be stalling out, though, and that is a real disappointment.
HECO was transmitting messages late last week, following the announced cancellation of a key solar energy deal, that it, too, was disappointed. Even so, the state is owed a full explanation of the breakdown — and the plans to get the project on the road again.
It was the latest sour note sounded about HECO’s family of companies. Its parent, Hawaiian Electric Industries, also sits in the midst of a protracted campaign for approval from the state Public Utilities Commission for its merger deal with
NextEra Energy Inc.
Last week NextEra was sharing analyst reports that put prospects for the deal in jeopardy, a way of signalling that it could walk away from the deal.
The PUC has been deliberative about the application, even looking askance at what it has rightly termed as ambiguous promises of ratepayer benefits.
The solar-deal cancellation notification, filed more than a week ago, did not make PUC Chairman Randy Iwase smile, either. In a formal letter, HECO announced the end to its contract with SunEdison Inc., touted as the world’s biggest clean-energy developer.
The pact had been for three utility-scale solar facilities on Oahu, which would have produced a total of 112 megawatts; the power was supposed to have been switched on at the end of the year, yielding solar power HECO would have bought for about 14 cents per kilowatt-hour, over the course of its 22-year life span.
The utility cited the developer’s financial problems and missed deadlines in the way the photovoltaic (PV) projects — planned on sites near Haleiwa, Mililani and Waiawa — were playing out.
SunEdison was said to be in the process of conveying its solar farms to D.E. Shaw &Co., a global investment and technology development firm. But then, HECO officials said, various signs of financial distress came through. There was a precipitous decline in stock value and ambiguous evidence that its financing was coming. And this put the utility on notice.
“We wanted to express how disappointed we are to have put so much time and effort into securing these projects, because we hoped to have them be an important part of the renewable portfolio, going forward,” said Lynne Unemori, vice president of corporate relations.
“It was part of a request that we initiated to seek these projects,” Unemori added. “We’ve spent about three years working on that process with them and other developers. … We don’t want at all to give the impression that this was a decision that we made lightly.”
Still, in the wake of that decision, Iwase correctly laid down the law, instructing HECO to explain its fallback strategy “to get 100 megawatts of renewable energy online ready to go, at less than 14 cents per kilowatt-hour, by December 2016.”
SunEdison, meanwhile, is contesting the decision.
Reviewing the decision represents prudent oversight by the commission. The PUC has to look out for the interests of the ratepayers, who now won’t have the benefit of green-energy savings on electric bills for some time, so it should press the utility to justify the decision and to develop an alternative option.
Unemori declined to say whether NextEra, which has worked collaboratively with HEI on the merger presentations to the PUC, had a voice in the cancellation. HECO does have prospects for resuscitating the projects with other developers, she said.
NextEra and HEI are undoubtedly feeling uncomfortable under the glare of public scrutiny.
Some justifiable pressure is coming from the Legislature, where the House energy chairman, Rep. Chris Lee, has posed questions about plans that don’t seem to advance the green agenda.
For example: HECO plans to replace three older oil-fired steam generator units at the Kahe Point generator with new equipment that would run on liquefied natural gas.
But where, meanwhile, are the replacement renewable-energy plants?
Lee also wants to raise the bar for the merger. His measure, House Bill 2567, would set the standard for transferring ownership of the utility as “substantial net benefit.” It deserves attention.
On Friday, NextEra was distributing an announcement that it had been ranked first in its industry on Fortune’s 2016 list of “World’s Most Admired Companies.”
That’s nice. But what Hawaii ratepayers would find more admirable would be its firm assurances that the green energy goals will be met — and that they will, in fact, be better off under NextEra, should the merger be approved.