The pension fund for Hawaii public employees has written off what it considers to be a bad $2.5 million investment it made in the Hu Honua Bioenergy project on Hawaii island after concluding the company won’t be able to resolve its engineering and other challenges.

Hawaii Electric Light Co. last week announced it intends to terminate its agreement to buy power from Hu Honua after the company missed two development deadlines under its agreement with HELCO.

So far investors have sunk about $100 million into Hu Honua, a project to convert an old power plant that once burned coal and bagasse, a sugar cane byproduct, to produce electricity into a modern 21.5-megawatt biomass plant that would burn locally grown wood.

John Sylvia, president of Hu Honua, said the project is about half finished and will require an additional investment of about $100 million before it can finally come online. Sylvia said the project has investors who are prepared to commit the additional money, and said it will require 10 to 12 months of additional construction to make the plant operational.

Thomas Williams, executive director of the Employees Retirement System, said the pension fund made investments in the project in February 2012 and January 2013 but wrote off those investments in December 2014.

“We just didn’t see, as I understand it, that they were going to be able to address the engineering challenges — at least, not in a cost- effective way,” Williams said.

If the plant finally comes online, the pension fund might recoup some of that loss, he said. “I think we could get something out of it, but we’re not anticipating that we will, quite frankly,” Williams said.

The pension fund put money into Hu Honua through its Hawaii Targeted Investment Program (HITIP), a $25 million pool of funding that is invested in Hawaii initiatives and businesses. HITIP is designed to stimulate technology and other investment across the state, and to create jobs, he said.

Williams said the HITIP investments overall have done well, earning a 10.6 percent rate of return with distributions of $4.8 million back to the ERS, since the local investment program started in 2011.

The ERS is the pension fund for more than 118,000 state and county workers and retirees.

HELCO reported to the Public Utilities Commission last week that Hu Honua missed two contract milestone deadlines, and “absent compelling changes in circumstances,” the utility plans to terminate its agreement with Hu Honua on March 1.

Sylvia said Hu Honua will respond with a PUC filing this week.

“Our goal, our plan is to find a way to invest the remaining capital to complete the plant, because we think it’s a terrific asset for the Big Island’s electrical system,” Sylvia said.