Kauai Island Utility Cooperative turned on the island’s largest solar facility Sept. 10, the cooperative said Thursday.

The 12-megawatt facility, Anahola, will produce 5 percent of Kauai’s annual energy needs, or enough electricity for 4,000 homes. During the daylight hours about 20 percent of the island’s electricity will come from the facility.

The Anahola system is going through reliability testing.

“Anahola is producing power, but it’s still in the 30-day testing period so not yet in full commercial operation, ” said Jim Kelly, spokesman for KIUC. “It is the largest operating in the state and the largest solar facility owned by KIUC.”

The solar project will generate electricity at a cost of about 12.5 cents per kilowatt-hour. The system will reduce KIUC’s consumption of oil by 1.7 million gallons a year, Kelly said.

REC Solar, a San Luis Obispo, Calif.-based commercial solar company, designed and constructed the project. Construction began in July 2014.

Drew Bradley, director of business development for REC Solar, said Anahola is the largest facility built by REC Solar in its 18 years of business.

The $54 million project consists of 59,000 panels, a utility substation and a 6-megawatt lithium-ion battery energy storage system. The battery system is for smoothing out power generation during the day, not for providing electricity at night, Bradley said.

The project was built on 60 acres leased from the Department of Hawaiian Home Lands under a 25-year lease. Ownership of Anahola will transfer to DHHL in 25 years.