(Honolulu, Hawaii) – To accelerate the development of renewable energy resources, Hawaiian Electric has asked the Public Utilities Commission for permission to negotiate with five proposed projects that could quickly provide low-cost electricity for Oahu.
If the PUC approves, Hawaiian Electric will negotiate power purchase agreements directly with the developers of the five projects, which include a mix of solar and wind technologies across Oahu with a combined capacity of 64 megawatts. Hawaiian Electric anticipates negotiating long term, 20-year contracts with each project.
Combined, the projects have committed to sell electricity to Hawaiian Electric at an average price of 15.9 cents per kilowatt-hour. This is about one-third less than prices paid to existing solar and wind energy projects on Oahu and the current cost of generating electricity from oil.
“These projects represent an important first step as we are starting to see lower market prices for renewable energy,” said Scott Seu, Hawaiian Electric vice president for Energy Resources and Operations. “The strong response we received demonstrates the high level of competition in our market. That’s good news for our customers.”
Based on preliminary estimates, Hawaiian Electric expects the combined effect of all five of these projects could reduce generation costs by approximately $7.4 million a year, compared to today’s cost of generation. Hawaiian Electric’s goal is to have as many of these projects as possible in service by the end of 2015.
“Every step we take toward reducing our customers’ bills helps. We can’t control the cost of oil, but we can try to accelerate the addition of more low cost renewable energy resources,” said Seu.
In addition, 20 projects that originally provided proposals but were not selected will be given the opportunity to update and resubmit their pricing proposals. If those projects meet lower pricing and other criteria such as site control, they could be considered in a supplemental request to negotiate power purchase agreements.
In February, Hawaiian Electric issued a call for low-cost renewable energy projects on Oahu that could qualify for a waiver from competitive bidding. Hawaiian Electric narrowed the responses to five projects based on prices and other criteria such as site control and development experience.
Under PUC rules, Hawaiian Electric normally must use competitive bidding to select generation projects larger than 5 megawatts. To accelerate the benefits of these low cost projects to customers, Hawaiian Electric is asking the PUC to waive competitive bidding for these five projects. After power purchase agreements are negotiated, each one must be submitted to the PUC for individual review and approval before it goes forward. The individual developers are also responsible for other key steps including environmental review, permitting and community outreach.