The state Public Utilities Commission has approved a 12.5-megawatt solar project with a 50-megawatt-hour energy storage system in West Oahu, according to the Hawaiian Electric Co.

The solar array, by AES Solar West Oahu, is slated to be built on 80 acres north of the University of Hawaii-West Oahu campus and the H-1 freeway near Kualakai Parkway.

It is capable of powering about 4,600 homes per year over the life of its 25-year contract and reduce greenhouse gas emissions by 244,394 tons, HECO said.

HECO agreed to purchase power from the solar project at about 10.6 cents per kilowatt-hour over 25 years, which it says is in line with prices for six other grid-scale solar-plus-battery projects that regulators approved earlier this year.

AES Solar is a subsidiary of AES Distributed Energy, which has more than 200 MW of operating solar projects and more than 300 MW in development, including a 60 MW project on Maui and a 30 MW project on Hawaii island.

The PUC is still reviewing one project of the eight selected last year — a 15 MW solar array on Maui that will include a 60-megawatt-hour storage system.

Over time, the project and others are expected to help reduce customer bills because the cost of generating electricity with solar is significantly lower than the current cost of fossil-fuel generation, which is now at about 15 cents per kWh. In addition, the projects are expected to provide stable, long-term prices in place of the volatile prices of fossil fuels.

Currently, Hawaiian Electric, Maui Electric and Hawaii Electric Light have more than 500 MW of renewable energy under contract.