If there were any lingering doubts that Hawaii’s energy landscape is shifting dramatically, events this past week dispelled them — and, reveal the conflicts already at our regulatory doorstep. An ambitious state law targeting 100 percent renewable energy for Hawaii by 2045 was signed, even as news emerged that one high-profile solar-farm project has been rejected and seven others are in jeopardy. Meanwhile, shareholders of Hawaii’s energy monopoly, Hawaiian Electric Industries, just barely approved the utility’s pending sale to Florida-based NextEra Energy.
The proposed solar projects provide valuable insight into the difficult road ahead as alternative-energy proposals go before the state Public Utilities Commission.
The PUC is rightly showing a healthy skepticism, to ensure that the many lofty promises sure to come from project developers are followed through and, ultimately, are sound for ratepayers.
Further, the higher "green" bar brings with it heightened responsibility from applicants to come well-prepared when pitching their clean-energy projects.
The PUC this month rejected the 20-megawatt Mililani South Solar Park — and deferred for at least a month seven other photovoltaic projects that promised an additional 220 megawatts of "clean" energy that would feed into HECO’s power grid. It was a needed pause, one that sends HECO — or NextEra, if its sale is successful within a year — a powerful message that fuller disclosure of information is imperative, and that monopolistic schemes won’t fly.
Contracted with four companies to build these solar projects, HECO was asking the PUC to waive requirements for competitive bidding to quicken the approval process in hopes of providing low-cost renewable energy sooner. Not only did HECO fail to convince, the PUC scolded it for a "superficial and deficient" request that only reinforced longstanding concerns about a power monopoly.
"We want to make sure we don’t go back to where we are trying to get away from: one group or company monopolizing power production," said PUC Chairman Randy Iwase.
It’s clear from HECO’s deficient answers to the PUC’s reasonable questions that the utility has itself to blame for the setbacks. Among the major concerns: Could HECO’s grid reliably handle the 240 MW of renewable energy that would come from these eight projects?
"Their response was they can handle it," said Iwase. "It didn’t go into any detail."
Given HECO’s chronic lament about overloading the grid — which held up approvals for months of residential rooftop PV installations — it’s puzzling, and counterproductive, that details weren’t provided in a timely matter.
Further, when asked to prioritize the solar projects, HECO again failed to provide information. That HECO failed to see the importance of stepping up with answers that could justify the projects reveals a mindset that must change; for now, most utility-scale energy projects must plug into HECO’s grid, so it’s HECO that petitions the PUC.
Given the state’s ambitious renewable energy goal, the lack of details under questioning is concerning. Adding to the time pressure: the trickle-down savings from a federal 30 percent Investment Tax Credit (ITC), applicable only for solar projects in operation by December 2016.
IN deferring the seven PV projects, the PUC’s frustration was palpable, and it put the blame for delay squarely on HECO’s lack of information and transparency.
"The commission is deeply troubled by HECO’s failure in this regard because, collectively, the waived projects represent one of the largest private investments in clean energy resources to date in the state of Hawaii (potentially over $600 million in cumulative capital investment for the seven projects noted above) and these projects are on a tight timeline so as to qualify for the federal ITC."
The PUC’s denial of the 20-megawatt Mililani solar park also cited unanswered questions of customer benefits versus costs, risks and other uncertainties.
And, it agreed with the Consumer Advocate that HECO’s decision to contract this project outside competitive bidding with a sole entity — SunEdison — was unacceptable, since the PV park was promised to be done with four different firms supplying 5 megawatts each.
The Consumer Advocate rightly said allowing this shortcut through the agreed-to process would be a bad precedent.
HECO has long been the state’s energy monopoly, but Hawaii is at a pivot point in its energy future. So many assumptions are changing that business as usual — whether it’s HECO or NextEra — is not acceptable, especially with a PUC that will be sifting through more alternative energy proposals and asking hard questions.
Valid questions such as grid capacity and reliability, renewable energy going unused, innovative technologies, and cost risks and benefits to customers.
Green may be the goal — but the green light must apply only to those that can economically, and openly, justify how the project is in the public’s best interest.
