Burning wood. It may be the oldest form of renewable energy, and yet making it part of the state’s portfolio has been a real challenge.
What’s called “biomass” is essentially using organic material to fire a turbine and generate electricity. In this case, the fuel would be thousands of acres of former sugarcane land up the Hamakua Coast, now a forest of eucalyptus trees.
Harvesting those trees and turning them into fuel seems a goal simple in concept but, in the experience of Hawaii islanders, endlessly frustrating to realize.
Hu Honua Bioenergy LLC is the entity that now has another chance to bring a long-planned biomass plant into production, the business to be enabled by a power purchase agreement with Hawaii Electric Light Co., the utility serving Hawaii island.
It’s a venture that deserves a chance to get underway, despite its history: various project delays and a now-backburnered legal dispute with HELCO.
Those impediments seem to be cleared for now. A timely decision by the state Public Utilities Commission on the revised agreement could enable an initiative with potential benefits for the island and manageable risks.
First, the risk: Hu Honua must hew closely to operational deadlines that have caused it problems in the past. In December 2013, the PUC approved the previous, 20-year agreement struck between HELCO and the biomass company.
But the alliance soured as Hu Honua fell behind in regulatory approvals and in constructing the 21.5-megawatt plant. The plan was to refit the original 1972 facility built for the Hilo Coast Processing Co. sugar mill in Pepeekeo.
Time was crucial to the project, financed in part via a federal tax-credit program that had deadlines of its own. In fact, the plant, now half finished, must be completed by the end of 2018 in order to claim this tax benefit, officials said.
A little more than a year ago, HELCO’s parent company, Hawaiian Electric Industries, was in the midst of PUC review of a plan by NextEra Energy Inc. to acquire HEI. Whether or not that buyout was a factor in the decision, HELCO then canceled the power purchase agreement.
After the PUC rejected the NextEra-HEI deal last summer, Hu Honua followed up months later with a federal antitrust lawsuit against HELCO challenging the termination of its biomass power pact. Now, the two have rejoined to propose a new 30-year agreement — putting the lawsuit on hold — that is before the PUC. A decision is expected at month’s end.
This remains an incredibly complex business and energy landscape — forecasts about pricing and savings to the ratepayer are certainly not guaranteed. But with more of the regulatory hurdles cleared, Hu Honua now seems better positioned for success.
There are projected costs to the ratepayer, especially in the early years, when startup costs are being recouped more aggressively. Monthly customer bills would be higher in the first 11 years, according to company officials, with $5.29 more on monthly bills the first year.
The increase would fall off fairly rapidly, and by the end of the contract, customers would be paying $10.95 less per month. Over the entire 30-year span, the average decrease in the bill would be around 83 cents per month.
By itself, that modest savings would not be enough justification for PUC approval. However, commissioners must keep in mind that the biomass plant — which has the capacity for 30 megawatts when completed — represents a significant element in Hawaii’s move toward an all-renewable energy portfolio.
When operating at capacity, Hu Honua officials said, it could produce about 15 percent of the island’s electricity needs. This contribution is too significant to be easily discounted.
The particular historical circumstances of this case are why this solution makes sense for Hamakua, even if it might not be practical to replicate elsewhere. In 1994 two of the sugar plantations shut down, Hilo Coast Processing Co. and Hamakua Sugar Co., which cultivated land between Hilo and Honokaa.
In the bankruptcy, Kamehameha Schools ended up with some 30,000 acres that it ultimately planted in eucalyptus, a fast-growing tree.
Plans to commercialize the crop did not materialize, but the forested acreage are suited and ideally located to the purpose Hu Honua has proposed. It is a dense hardwood with a good yield as an energy fuel, said Harold Robinson, president of Island Bioenergy, Hu Honua’s parent company.
Company officials also point to the jobs the operation can create, of tremendous value to the roughly 1,000 families who lost employment when sugar shut down. And there are internship and educational opportunities for the Hamakua school communities, as well.
These are attractive side benefits, but the deciding factor is whether Hu Honua has its construction timetable in hand and a prudent business plan to produce energy. Hawaii island needs that, and the state could use another innovative means of reaching its green energy goals.
