KAHULUI, Maui — Whether it’s utility executives or state regulators who are to blame, renewable energy projects often take years to come to fruition in Hawaii, something that’s deterring investors and hampering efforts to stop producing electricity from oil and coal.
That was the sentiment Thursday from experts on a panel at the Maui Energy Conference. They cited times when the Public Utilities Commission and Hawaiian Electric companies have delayed progress in reaching the state’s 100 percent renewable energy goal by 2045.
Murray Clay, managing partner at Ulupono Initiative, a sustainability-focused investment firm, highlighted four projects that have been “pushed off the bridge” — 112 megawatts of solar capacity from SunEdison, 25 megawatts of geothermal from Ormat/PGV, 21.5 megawatts of biomass from Hu Honua and 10 million gallons of biofuels from Hawaii BioEnergy BioRefinery.
Ulupono Initiative managing partner Murray Clay, at the Maui Energy Conference on Thursday, said he could conceive of no reason why Hawaiian Electric wouldn’t revive the SunEdison solar deal with D.E. Shaw’s involvement.
In February, Hawaiian Electric Co. canceled the power purchase agreements for SunEdison’s three planned solar farms on Oahu, a project with an overall value estimated at $350 million. The three solar farms — in Mililani, Waipio and Kalaeloa — collectively would have produced 112 megawatts of power capacity, enough to move the renewable energy dial up 2 to 3 percent.
HECO said it canceled the projects because of SunEdison’s financial struggles and uncertainty over whether it could see the project to completion. The California-based company’s money woes are no secret, and officials have said selling the solar farm projects on Oahu would help with its cash-flow problem. A buyer is already lined up, too.
Bryan Martin, managing director at the D.E. Shaw group, sent HECO Chief Executive Officer Alan Oshima a letter Wednesday saying the global investment and technology development firm would seek to buy the projects from SunEdison within seven business days of HECO reinstating the power purchase agreements and providing the appropriate waiver or consent.
Martin said construction financing would be in place within 12 weeks of the closing of the acquisitions or the projects would agree to forfeit $5 million of the interconnection deposit.
HECO has yet to respond, but Clay said he couldn’t think of a reason why the utility would turn down the offer.
Clay told Civil Beat the one issue HECO may have concerns about is SunEdison going bankrupt and invalidating the sale. But he said as long as D.E. Shaw pays SunEdison a fair-market price for the projects, that’s not a problem.
“There’s literally no conceivable reason why this project should not be done,” Clay said. “The deck has been set for this to be fixed.”
This chart by Ulupono Initiative shows how Hawaii compares to California in terms of renewable energy project timelines.
Courtesy: Ulupono Initiative
HECO spokesman Darren Pai said Thursday that the company has not yet completed its review of the letter from D.E. Shaw, so he couldn’t address it.
“It is important to note that D.E. Shaw is a creditor of SunEdison and is trying to acquire the solar contracts to help settle that debt,” Pai said in an email. “Should SunEdison later go into bankruptcy, as many financial media outlets are speculating, those projects could be tied upin a fight amongst creditors for a long time.”
D.E. Shaw’s renewable investments arm owns and operates two projects on Oahu, Kawailoa wind farm and Kalaeloa solar farm. The company told Oshima that it has more than $37 billion of investment capital.
If HECO lets the project fall apart, Clay said it hampers Hawaii’s efforts to become 100 percent renewable, a policy that Gov. David Ige signed into law last year.
The SunEdison project is two years in the making, with more than $40 million already spent.
“We wanted these projects to succeed but had to make a decision that was in the best interest of our customers,” Pai said. “We need to ensure that capacity on the grid is preserved for viable projects that will help our state reach our renewable energy goals.”
During his panel discussion, Clay compared Hawaii to California in terms of how rapidly projects are approved.
When factoring in requests for proposals, negotiations with the utility, approval by regulators and entitlements, Clay said a renewable energy project in Hawaii can take 14 months to more than 12 years. California, by his estimation, takes 11 to 14 months.
Hawaii Public Utilities Commissioner Lorraine Akiba cited examples of timely approvals of renewable energy projects at the Maui Energy Conference.
Conference panelist and PUC member Lorraine Akiba acknowledged that there are regulatory delays at times, but said the final work product is better as a result of careful deliberations.
She noted that two recently approved Maui projects were green-lighted in less than seven months. She said the commission also recently approved a renewable energy project on Kauai within six months.
Josh Teigiser, senior project developer for renewables at California-based Sempra U.S. Gas & Power, took issue with Clay’s timeline. He said outside of Hawaii, California is the most difficult place to get a project approved, and projects can take as long there as in the islands.
Despite Hawaii’s issues, Tesgiser said the state remains an attractive place to invest. Sempra has 2,000 megawatts of renewables across the country, including eight wind turbines on Maui.
He said Hawaii’s regulatory environment should be analyzed from the standpoint of what might attract more investors.
“Competition is a good thing for Hawaii,” he said. “The more people you can get to the table the better.”
Luis Salaveria, head of the state Department of Business, Economic Development and Tourism, moderated the panel discussion. He closed by saying, “Hawaii is open for business when it comes to renewable energy.”
Disclosure: The Ulupono Initiative was founded by Pierre and Pam Omidyar. Pierre Omidyar is the CEO and publisher of Civil Beat.
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