Business

Hawai‘i Electric Proposes Purchase of Hamakua Plant

December 30, 2015, 2:00 PM HST
* Updated December 30, 1:52 PM
A
A
A

rooftop-solar

Hawai‘i Electric Light Company’s purchase of the Hamakua Energy Partners generating plant is expected to result in lower costs for customers and will support continued integration of renewable energy from variable sources such as solar and wind. Photo courtesy of EnergyQuest.

Hawai‘i Electric Light Company has signed an agreement to purchase the 60-megawatt Hamakua Energy Partners generating plant currently owned by an affiliate of ArcLight Capital Partners LLC, a Boston-based private equity firm.

The $84.5-million purchase agreement, which requires approval by the Hawai‘i Public Utilities Commission, is expected to result in lower costs for customers and will support continued integration of renewable energy from variable sources such as solar and wind.

“We’re pleased to reach an agreement that can benefit our customers in many ways,” said Jay Ignacio, president of Hawai‘i Electric Light. “It’s expected to result in immediate savings to our customers compared to what they would pay under the current contract. It will also allow us to make better use of the plant’s cycling capabilities to help us continue to lead the nation in integration of renewable energy.

“We are committed to achieving Hawai‘i’s 100 percent renewable portfolio standard goal and having the flexibility to operate this plant will help.”

Ignacio noted that ArcLight officials approached Hawai‘i Electric Light about the potential purchase of the plant.

ARTICLE CONTINUES BELOW AD

The negotiated sale is estimated to save customers a net $42 million after the purchase price over the remaining 15 years of the existing power purchase agreement.

ARTICLE CONTINUES BELOW AD

A typical Hawai‘i Island residential customer could save at least $1.40 per month on their electric bill.

If the plant remains in service for its full estimated useful life, projected net savings for customers could total approximately $80 million.

Customers will save from the elimination of payments to HEP under the current contract for making energy available 24 hours a day, as well as elimination or reduction of other costs. For example, the combustion turbine equipment used at the HEP facility is the same as that used at another Hawai‘i Electric Light generating station, leveraging operational expertise and allowing better procurement and utilization of equipment parts.

ARTICLE CONTINUES BELOW AD

Hawai‘i Electric Light will also be able to make the most of the HEP plant’s cycling ability to support the integration of variable renewable energy sources such as solar and wind power. The current contract limits how often the plant can be stopped and started. By owning the plant, Hawai‘i Electric Light will have greater flexibility to cycle HEP’s generating units, exercising greater operational flexibility to support renewable energy and use HEP’s efficient generating units.

The HEP plant comprises 23 percent of Hawai‘i Island’s generating capacity and produced about 16 percent of the island’s energy in 2014. The plant includes two combustion turbines, a steam generating unit, and two heat recovery steam generators.

This combination of generators allows the plant to operate as a more efficient “combined cycle” plant with the steam generator running on the captured waste heat from the two combustion turbines, producing additional power without burning more fuel.

The combustion turbines currently run on naphtha, a cleaner fossil fuel, and could be converted to use even cleaner and potentially lower-cost natural gas or renewable biofuels in the future.

The plant also includes a “black-start” generator that can restart the plant in the remote event of an island-wide outage.

Hawai‘i Electric Light intends to submit the purchase agreement to the PUC and the Hawai‘i Division of Consumer Advocacy for review before the end of the first quarter of 2016.

For more information, visit www.hawaiianelectric.com.

Hawaii Electric Light

Comments

This comments section is a public community forum for the purpose of free expression. Although Big Island Now encourages respectful communication only, some content may be considered offensive. Please view at your own discretion. View Comments

Newsletters

Get a quick summary of what’s happening on the Big Island with our daily & weekly email of news highlights.