Amid the coronavirus pandemic, Hawaii’s efforts to reshape its energy economy stalled. Widespread supply chain issues hindered the development of large-scale solar projects, a key component of the state-mandated requirement to produce all electricity with renewable resources by 2045.
The problem was underscored by a series of gloomy announcements. Citing supply-chain challenges and rising costs, Longroad Energy, for instance, said it was delaying two solar and battery storage projects designed to power about 15,000 homes on Maui and 37,000 homes on Oahu.
The firm Innergex also said it was delaying its 15 megawatt Barbers Point Solar Project. Both companies said they would resubmit proposals to Hawaiian Electric Co. as part of a new bid process, which is underway with winners expected to be announced in August.
But there are signs things are turning around.
Last week, Clearway Energy announced the opening of a solar and battery storage facility in Waiawa in Central Oahu that it said will generate enough clean electricity to power more than 7,600 homes annually. That followed Clearway’s announcement that it had launched operations of a 39-megawatt solar and storage farm in Mililani over the summer.
Not to be outdone, AES Corp. in December said its Waikoloa Solar + Storage Project, which will produce electricity at 9 cents per kilowatt-hour, was undergoing tests at 85% of its capacity. According to AES and Hawaiian Electric, the project is expected to reduce typical residential bills on Hawaii island by about $2 a month when it’s operational.
Hawaiian Electric altogether has 20 big projects that have been approved by state utility regulators to move forward.
Perhaps the biggest benefit for consumers if the new projects come on line is the cost of the electricity the projects will generate. Hawaiian Electric customers in the past year have suffered from spiking electric bills because of the rising cost of oil used to fuel many of the state’s power plants.
That was stoked by the September closure of the state’s last remaining coal-burning power plant, a big source of less costly electricity, despite the dearth of renewable energy projects.
“Things are starting to move back in the positive direction,” said Rebecca Dayhuff Matsushima, Hawaiian Electric’s vice president of resource procurement.
The supply chain issues had been so severe, she said, that even when the worst of the public health crisis was over, there were continuing delays for solar companies.
“That just really created – even when things reopened – a huge backlog,” she said.
Sandra Larsen, Hawaii market business leader for AES, agreed.
“We kind of went through an unprecedented time there, not just in Hawaii but globally,” Larsen said.
Now the company has five large-scale renewable projects slated to come on line in the next 18 months, including an innovative solar plus storage and hydroelectric project on Kauai.
And that’s just AES. Twenty Hawaiian Electric projects have passed perhaps the biggest regulatory hurdle by getting long-term contracts to sell electricity at specified rates approved by the Public Utilities Commission, part of a public process that often spawns challenges akin to litigation.
The renewed momentum is good news for consumers.
The cost of oil-fired generation has been more than 22 cents per kilowatt-hour for the most recent 12-month period for which the Department of Business, Economic Development and Tourism has data, said Alan Yonan, a HECO spokesman. That compares to 16.5 cents on average since 2016, he said.
By contrast the average price for a dozen Hawaiian Electric projects on Oahu, Maui and the Big Island scheduled to come on line in the next few years is 11 cents per kilowatt-hour, Yonan said.
Dayhuff Matsushima said it’s important to realize those costs are fixed for the life of the contracts, which is generally 20 to 25 years. And the costs generally pass through directly to consumers, she said.
The projects also will increase the percentages of renewables used to produce electricity on each island, known as a “renewable portfolio standard.” In 2021, Hawaii island hit 60% RPS, and the new projects would boost that by another 1.9 percentage points,Hawaiian Electric said. They would add 4.5 percentage points to Maui County’s 50.2% RPS, and 6.65 percentage points to Oahu’s 32.8% RPS, Hawaiian Electric said.
As shown by this map published by the Hawaii State Energy Office, the state has more than two dozen utility-scale renewable energy projects that have ether recently come on line or that are scheduled to open in the next several years.
Perhaps the biggest risk for developers involves potential community opposition. Despite approvals from the PUC, projects still face potential challenges concerning other state and local government agencies, such as county planning departments and the Hawaii Department of Land and Natural Resources. Even if those agencies move quickly to approve projects, it's not unusual for nongovernmental organizations to challenge the approvals in court, which can delay the projects.
Lance Collins, a Maui lawyer who has represented NGOs opposing projects before the utility commission and in courts, says policymakers and agencies like the PUC and DLNR have begun to overlook the need to protect natural and cultural resources in their efforts to fast-track development of renewable energy projects.
He said he understands the impulse to protect future generations from damage caused by climate change, but he thinks the agencies have gone too far.
"What future are we saving if we're destroying all of our other values in the process?" he said.
Ryan Hurley, another lawyer who has worked on cases involving energy projects, said one potential solution is to require by law or statute that energy companies enter binding community benefits agreements negotiated with people affected by projects in order to be approved. Collins said the agreements could include terms to ensure projects pay prevailing wages and hire local workers, for instance.
"A community group shouldn't be the one that's ensuring that this happens," Collins said. "It should just be a requirement."
Hawaiian Electric's Dayhuff Matsushima acknowledged PUC approvals alone do not ensure projects will move forward without a glitch.
“With any project there can be risks,” she said.
Still, Dayhuff Matsushima said, the company is continually working to ensure renewable projects get meaningful input from the communities where they are located.
The bids the company is now assessing as part of its third phase of projects on Maui and Oahu are supposed to include community benefits packages, she said. And the company will give higher scores for companies promising to do things like pay prevailing wages and hire local workers. The agreements become part of the contracts between the companies and Hawaiian Electric, she said.
"We’re really working with the developers to help them understand the importance of community engagement," she said.