Hu Honua Bioenergy (HHB) filed its response with the Hawaii Public Utilities Commission (PUC) to provide a project update as well as address incomplete and misleading information in Hawaii Electric Light Company’s (HELCO) Status Report.
The Status Report was required by the PUC in light of missed milestone schedule dates in the HHB power purchase agreement (PPA) approved by the PUC in December 2013.
In its filing, Hu Honua expressed disappointment with HELCO over not processing its milestone date extension request submitted more than 12 months ago. HHB requested the extension following a variety of disputes with its former contractor that disrupted the project’s construction schedule, and to provide the replacement contractor sufficient time to complete the biomass-fueled, renewable energy facility in Pepeepeko on Hawaii Island.
At HELCO’s urging, Hu Honua submitted a proposal to reduce the energy price in its PPA to 14 cents for energy purchased above the 10-megawatt (MW) minimum level for economic dispatch. Even with the price reduction, HELCO did not process Hu Honua’s milestone date extension requests, despite the fact Hu Honua’s pricing is delinked from the cost of fossil fuel, making it a natural hedge against future increases in oil prices.
HHB has invested $100 million to date in the biomass-to-energy project, which is approximately 50 percent complete. HHB has arranged full financing from its investor base and the plant can be operational in approximately 12-16 months.
At completion, the plant will be able to supply Big Island residents with firm, baseload, dispatchable renewable power at reasonable pricing, complementing intermittent resources such as wind and solar, and helping the state meet mandated clean energy goals.
In its filing, HHB asserts the value of the plant today to Hawaii Island’s electricity system is as great or greater than December 2013 when the PUC approved the HHB PPA.
HELCO’s threat to terminate Hu Honua’s PPA as a result of missed milestones was announced just days before parts of Hawaii Island experienced blackouts due to insufficient firm generating capacity; firm, reliable power is what Hu Honua’s bioenergy plant would provide.
Hu Honua’s filing to the PUC addressed incomplete and misleading statements in HELCO’s Status Report, including:
“Hu Honua does not have the ability to achieve commercial operation in the near future.”
Hu Honua has fully committed financing up to $125 million to complete the project, with $20 million having been invested since November 2015.
“Hu Honua failed to meet PPA obligations.”
- HELCO’s statement appears to refer to the boiler hydro test date. Unlike solar and wind projects, Hawaii law requires high pressure/high temperature steam boiler projects to follow rigorous inspection, approval and documentation protocol throughout construction before successive work can begin. As a result of disputes with its former contractor, HHB did not have ready access to prior documentation needed to perform successive work, which resulted in disruption and delays to schedule.
“Hu Honua failed to justify a milestones extension.”
As early as October 2014, HHB alerted HELCO that its milestone dates could be delayed because of certain factors beyond its control, including the circumstances underlying the dispute with its former contractor.
In January 2015, well in advance of project milestone dates, HHB approached HELCO to proactively discuss revised milestones dates in light of circumstances. Throughout discussions over revised milestones, HELCO reported a need for pricing reductions as an exchange for milestone date relief. HHB revised pricing arrangements on three separate occasions—February, April and May 2015.
Hu Honua looks forward to working with HELCO and the PUC to resolve its milestone date extension request, along with HHB’s proposal to reduce the energy price in its PPA to 14 cents for amounts purchased above the 10-MW minimum threshold for economic dispatch.
A completed Hu Honua power plant will provide a modern, renewable, biomass fueled source of electricity that will complement Hawaii Island’s electrical system as well as provide between 100-150 jobs for the local community.
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