The Hawai`i Public Utilities Commission issued Order No. 37205 on July 9, 2020, denying Hawai`i Electric Light Company`s Request for a Waiver from Competitive Bidding for the Hu Honua Biomass Project. As a result, the HELCO-Hu Honua Power Purchase Agreement is not considered and dismissed without prejudice, that is, Hu Honua may compete in the next request for proposal for renewable energy projects.


Upon reviewing the record and considering recent developments, the Commission is not persuaded that these considerations sufficiently justify waiver from the Competitive Bidding Framework. in particular, the Commission takes note of the following recent developments.


On December 31, 2018, as result of the RFP process in Docket No. 2017-0352, the Hawaiian Electric Companies submitted applications requesting Commission approval for seven PPAs for grid-scale, solar-plus-storage projects on the islands of Oahu, Maui, and Hawaii. These renewable dispatchable generation PPAs ("RDG-PPA") featured contractual provisions that represented significant improvements over previous renewable energy PPAs, including lower unit pricing, ranging between $0.08/kWh to $0.12/kWh, and commitment to provide fixed amount of dispatchable energy to the utility at the utility's discretion (i.e., available capacity), thereby eliminating number of undesirable contractual provisions, such as seniority curtailment, "evergreen" renewal, and risk-adjusted pricing. In addition, the RDG-PPAs, with their firm dispatchability, provide increased reliability and grid stability, as well as the operational flexibility to  allow [the utility] to 'best meet the needs of the Company`s system.

 

To date, the Commission has approved six of the RDG-PPAs, including two on Hawaii Island, both 30 MW renewable facilities paired with battery energy storage system ("BESS") of 120 MW-hours ("MWh"), and which feature unit pricing of $0.08/kWh and $0.09/kWh, respectively

 

In addition, in Docket No. 2017-0352, the Hawaiian Electric Companies have recently completed their second round of competitively bid RFPs for RDG-PPAs, which have resulted in the selection of sixteen new solar-plus-storage or stand-alone storage projects for PPA negotiations, including three new projects on Hawaii Island (Keahole Battery Energy Storage, Puako Solar PV Battery Storage, and Waikoloa Village Solar Storage).

 

These RDG-PPA projects have transformed the renewable energy procurement market in Hawaii by demonstrating that competitive bidding can result in PPAs that provide firm, dispatchable renewable energy and ancillary grid services at increasingly lower prices. Pertinently, the approved RDG-PPA projects for Hawaii Island, AES Waikoloa Solar, LLC {Docket No. 2018-0430) and Hale Kuawehi Solar LLC (Docket No. 2018-0432) are 30 MW in size, which is slightly larger than the 21.5 MW for the Hu Honua Project, and, at $0.08/kWh and $0.09/kWh, respectively, are significantly less expensive than the Hu Honua Project's estimated pricing of $0.221/kWh

 

Furthermore, it appears that there is uncertainty as to whether the Hu Honua Project will receive the federal ITC. As result of "unanticipated delays beyond 2018 which were outside of its control," Hu Honua failed to meet the safe harbor requirements for the federal ITC by placing the Project in service by the end of 2018. As a result, "obtaining the ITC is no longer guarantee under applicable safe harbor provisions This affects one of Applicants' core arguments for granting waiver, which was that the delay associated with competitive bidding risked loss of the federal ITC which helped make the Project cost effective.
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