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The clean-energy giant SunEdison, which owns a trio of incomplete renewable energy projects on Oahu, filed for bankruptcy Thursday.
The company’s debt-fueled investment strategy led it to spend $3.1 billion on acquisitions in the last two years. As SunEdison investors lost faith in the company, they sold, spurring the company’s stock to plummet.
HECO issued a statement on Thursday in response to the bankruptcy filing:
“This is unfortunate, however, this was a risk we anticipated for some time now. It is the reason we were reluctant to agree to a deal transferring three of SunEdison’s utility solar projects in Hawaii to one of its creditors, DE Shaw.”
The Chapter 11 process could facilitate progress on those solar projects after the bankruptcy court clarifies what should happen with SunEdison assets on Oahu.
HECO canceled the deals with SunEdison in February for solar farms in Kalaeloa, Mililani and Waipio that were supposed to generate up to 112 megawatts of power, citing, among other things, concerns about SunEdison’s ability to complete them.
Since then, D.E. Shaw, a global investment and technology development firm that is also a creditor of SunEdison, has been seeking to take over the projects, but it needs help from HECO to make that happen.
HECO has expressed concerns about getting sucked into SunEdison’s problems — which are both legal and debt-related.
D.E. Shaw and HECO have agreed to meet to discuss the solar projects in the coming weeks.
But the utility says D.E. Shaw must provide a written proposal about how the deal could go forward while addressing HECO’s concerns. Only then can a meeting take place.
Randy Iwase, the head of the Public Utilities Commission, has repeatedly expressed consternation about HECO’s decision to nix the deals amid efforts to ramp up renewable energy-generation capacity.
A recently released internal report by PUC staff, which investigated why HECO canceled the SunEdison deals, concluded that the utility’s actions did not serve the best interests of the state. It didn’t address the utility’s possible motives.
But HECO says it extricated itself from deals with a collapsing company in good faith. “We will be watching to see how SunEdison’s bankruptcy case proceeds. … Whether with DE Shaw or another party, we want to find the best way to get utility-scale renewable projects that can use this space on the grid as quickly as possible,” the utility’s statement said.
It goes on to cite Johnathan C. Bolton, Hawaiian Electric’s bankruptcy counsel, as saying: “All recent transactions between SunEdison and its creditors will be scrutinized to determine whether they were appropriate or should be challenged.”
While SunEdison appears to have been unique in the extent of its debt-fueled renewable investments, the company’s decline highlights the pressure that the sharp fall in oil prices has inflicted on petroleum’s de facto competitors in the renewable energy sector.
Despite the fall in prices, the solar and wind sectors continue to grow.
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