Hawaii’s Largest Wind Project Online as State Struggles to Integrate Renewables

On Monday, as First Wind announced its 69-MW Kawailoa Wind Project had gone into commercial operations on Oahu, other news underscored the difficulty the island state faces in trying to substitute renewables for expensive, imported fossil fuels.
The Kawailoa Wind Project is the single largest wind project in Hawaii’s history, and independent developer First Wind claims it has the potential to meet 5% to 10% of Oahu’s annual electrical demand. The project, developed in coordination with Kamehameha Schools and sited on the schools’ Kawailoa Plantation lands on Oahu’s North Shore, will sell its output to Hawaiian Electric Co. (HECO) under a power purchase agreement.

RMT Inc. oversaw installation of 30 Siemens turbines on the Kawailoa Wind project site. Work started in December 2011 and created an average of 108 construction-related jobs while generating significant revenue for the surrounding community, First Wind said.

Unlike some wind power projects that have met with opposition, this one seems to have been designed to partner well with its host locale. Kamehameha Schools Senior Asset Manager Kapu Smith, who oversees all agricultural activities on Kamehameha’s 6,000 acres of Kawailoa farm lands, said that Kawailoa Wind provides important support to agriculture on the North Shore. “Lease rent from this project will help offset the cost of ongoing infrastructure improvements and maintenance—like water systems, roadways, fences and so forth—and enable the continuation of reasonable agricultural rent levels for existing and future tenants. These things are critical to keeping these lands available for farming.”

Another First Wind project on Oahu, the Kahuku Wind Farm, has faced major setbacks, including two fires—one in April 2011 and another, more devastating, in August 2012. Last week, HECO said the interconnection facility, which sits inside the battery storage system building that was destroyed in the August fire, will cost at least $8 million to rebuild and could take a year to complete. Meanwhile, all 12 turbines at the 30-MW project are offline.

Hawaii state law mandates 70% clean energy for electricity and surface transportation by 2030, with 40% coming from local renewable sources. The state has a goal of 40% renewable power by 2030; to date, it has 1.3% hydropower and 10.2% wind and solar (before this latest wind project came online). Hawaii also has a solar state tax credit and renewables feed-in tariff. 

Those policies help to make the state an attractive site for investment in renewable projects both large and small. For example, an Ernst & Young ranking of top states for long-term solar investment that was released last week ranked Hawaii third (after California and Nevada), though it was not in the top five on the “All-Renewables Index.”

It should be noted that at least one solar advocate—Jigar Shah, president of the Coalition for Affordable Solar Energy and founder of SunEdison—argues the state should end its solar tax credit because it’s now cheaper to install solar than to buy grid power, and the credit is hurting the taxation department. As Civil Beat reported, “The incentives are projected to cost Hawaii $174 million in 2012, according to state permitting data, up from $35 million in 2010. The estimate recently prompted the Council on Revenues to downgrade the state’s revenue forecast from 5.3 percent to 4.9 percent.” The flip side to lower incentives could be fewer installations and fewer installation jobs.

The strongest motivation for adding local renewable power to Hawaii’s supply portfolio is its isolation and lack of fossil fuel resources. As a result, solar and wind have been seen as natural alternatives, though wave energy also holds promise. The state has even set some renewable records, including the largest residential rooftop PV project in the world.

The downside to accumulating smaller, variable-output generation sources—grid balancing—is becoming an increasing concern, as a Los Angeles Times story noted on Monday. Microgrids are one at least partial way of addressing the challenge, and several military facilities are engaged in testing and piloting technologies to that end.

And then there are cost issues. Most recently, HECO has faced difficulties in trying to displace diesel with biofuels—a renewable energy source that can provide baseload power—at its 81-MW Keahole power plant. Even under a revised plan, the biofuel would cost more than diesel and would require a surcharge that the public utility commission has said is not in the public interest. Because it lacks local fossil fuel resources, Hawaii’s electricity rates have been historically high. The Honolulu Star Advertiser reported that Hawaiian Electric Light Co. residential customers paid 40.4 cents/kWh in October, second only to the 44.9 cents/kWh paid on Kauai.

Despite the challenges, the state has notable plans in the works, including one proposal from the Department of Education to install solar panels on all public schools in the state over the next five years. And on November 9, HECO released a draft request for up to 50 MW of geothermal energy for the island of Hawaii. HECO noted that “More than 40 percent of electricity on Hawaii Island is already generated from renewable resources, including hydro, wind, distributed solar and geothermal.”

Sources: POWERnews, First Wind, Ernst & Young, Los Angeles Times, Star Advertiser, Civil Beat, Biz Journals, HECO, Hawaii News Now. This story was first published online Nov. 19.

—Gail Reitenbach, PhD, Managing Editor (@POWERmagazine)

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