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Hawaii Electric Light Signs Contract to Buy Hamakua Energy Partners Generating Plant

Hawaii Electric Light Company has signed an agreement to purchase the 60-megawatt Hamakua Energy Partners (HEP) generating plant currently owned by an affiliate of the Boston-based private equity firm, ArcLight Capital Partners, LLC. The $84.5-million purchase agreement, which requires approval by the Hawaii Public Utilities Commission (PUC), 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.

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“We’re pleased to reach an agreement that can benefit our customers in many ways,” said Jay Ignacio, president of Hawaii 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 Hawaii’s 100 percent renewable portfolio standard goal and having the flexibility to operate this plant will help.”

Ignacio noted that ArcLight officials approached Hawaii Electric Light about the potential purchase of the plant.

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. A typical Hawaii 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 Hawaii Electric Light generating station, leveraging operational expertise and allowing better procurement and utilization of equipment parts.

Hawaii 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, Hawaii 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 Hawaii 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.

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

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