Hawaiian Electric Co. said moving forward with the three recently rejected solar farms would push back the state from its renewable-energy goals because the potential bankruptcy of the facilities’ current owner, SunEdison, could freeze the projects for years.
The electrical utility, which made its case Thursday in a 238-page filing with the state Public Utilities Commission, explained, in response to questions posed by state regulators, that rejecting three utility-scale solar projects was in the best interest of the public.
PUC Chairman Randy Iwase said last week he was disappointed with HECO’s actions because they set a bad precedent and the state would miss out on a large amount of lower-cost renewable energy — a hit to the state’s 100 percent renewable goal.
“(HECO) determined that exposing our state to a potential freeze on over 100 megawatts of renewable energy on our grid is not in the best interest of customers or the state’s renewable goals. … (HECO) determined that it would be irresponsible to not terminate the PPA (power purchase agreement),” HECO said.
The three solar-energy facilities include 50-megawatt Kawailoa Solar, to be built in Haleiwa; 15-megawatt Lanikuhana Solar, to be built southwest of Mililani; and 47-megawatt Waiawa PV, being built in Waipio. The solar farms were set to go online by the end of the year and would have sold solar power to HECO for approximately 14 cents a kilowatt-hour for the duration of their 22-year life spans.
HECO said the utility was concerned ratepayers would not be protected
if SunEdison Inc. were to file for bankruptcy, even if
new owners took over the projects, because of the company’s financial health and pending litigation. Appaloosa Management LP is suing SunEdison over its acquisition of Vivint Solar Inc. SunEdison now has 23 times debt to equity, whereas the normal utility operates at 1 time debt to equity. Debt to equity is the proportion of shareholders’ equity and debt used to finance a company’s assets. HECO operates on less than 1 time debt to equity.
“If (SunEdison) filed bankruptcy before the PPA was terminated, this project — and (HECO’s) and the commission’s opportunity to seek a replacement renewable energy project to fill this finite capacity on the grid — could be held in limbo indefinitely pending bankruptcy proceedings,” HECO said.
HECO said it would have been forced to wait out a lawsuit and could have been prevented from securing replacement low-cost renewable energy until a decision was made in a bankruptcy court. HECO said this would have resulted in its customers experiencing a significant delay in savings from the solar facilities or receiving no savings at all if the projects did not survive the bankruptcy proceedings.
D.E. Shaw is purchasing the facilities from SunEdison. In a filing Tuesday, D.E. Shaw said it can have the 112 megawatts of solar energy online before the end of the year.
D.E. Shaw group, Madison Dearborn Capital Partners IV LP and Northwestern University said they would buy the Oahu solar farms and other projects to pay off $336 million of SunEdison’s debt.
HECO said D.E. Shaw, as a creditor of SunEdison, raises concerns.
“Even if accepted, the D.E. Shaw proposal did not guarantee that this project would be timely financed and completed,” HECO said.
