The Public Utilities Commission cleared the way Monday for Molokai’s first large-scare renewable energy project.

The island’s first grid-scale solar and battery energy storage project will be owned and operated by Molokai New Energy Partners, which will sell electricity to Maui Electric Company.

According to MECO, federal New Market Tax Credits, provided through the community development organization Punawai O Puauhonua, will result in savings to MECO’s 3,200 customers in each year of the 22-year contract.

The project will deliver energy at a cost of 17 cents per kilowatt hour, which is cheaper than diesel-generated electricity, MECO stated in a news release Wednesday. MECO will pass on the savings directly to its customers.

“As this solar and battery project moves forward, we recognize there is still much to be done in our efforts to reach 100 percent renewable energy on Molokai,” said MECO president Sharon Suzuki. “We’ll be seeking more affordable renewables to power the island and look forward to continue working with the Molokai community, policy makers and renewable energy developers to achieve this ambitious goal.”

The facility will be located on vacant land owned by Molokai Ranch and leased by MNEP, adjacent to MECO’s Palaau Power Plant.

The project will include 4.88 megawatts of solar panels. Its battery system can store energy and discharge up to 2.64 megawatts during peak hours.