PUC OKs deal aiding Hawaii in energy goal 

The Public Utilities Commission has approved a power purchase agreement that will allow Sempra Generation to begin selling wind-generated power to Maui Electric Co. perhaps as soon as early 2013.

MECO will initially pay 20 cents per kilowatt hour for as-available electricity from the 21-megawatt plant on Ulupalakua Ranch land. That would be enough to power 10,000 typical Maui homes, and the price would not be tied to the peaks and valleys of fossil fuel prices, according to an announcement.

“We welcome approval of Sempra’s Auwahi project,” said Maui Electric President Ed Reinhardt on Thursday. “It will help us reach Hawaii’s aggressive renewable energy goals and help keep historic Ulupalakua Ranch as a vital and successful partner in the Maui community.”

Sempra has not completed the environmental impact statement but said that it expected to do so by late this year.

Other state and county permits will be applied for late this year or early next year, and construction could begin early next year.

It would be Maui’s second wind farm (the first being the Kaheawa Wind Farm above Maalaea) and would help MECO meet state-imposed renewable portfolio goals.

Although approved for as-available sales based on the vagaries of the wind, the design includes battery storage, which would both avoid fluctuations that could disturb MECO’s distribution grid and, perhaps, make the delivery “firmer,” or more reliable on demand.

Fossil-fuel electricity is more reliable and, therefore, more valuable. So is renewable energy from sources like bagasse, but the unpredictability of wind and solar power has slowed their adoption as public utility sources.

The PUC order, filed late Wednesday, says the design is not expected to disturb the grid.

The commission also ordered that the project’s two 69-kilovolt transmission lines be built above ground.

At the Maui Planning Commission, there were appeals to bury at least a part of the lines, to preserve views.

The PUC, with duties that include keeping consumer costs under control, said that buried lines would cost MECO $523,000, while lines on poles will cost only $174,000.

The state consumer advocate had no objection to the power purchase agreement.

The agreement is a key step for developers because it will help them find investors. Sempra said it might build the project itself or bring in partners.

It expects to get a 30 percent tax credit on construction costs under available federal incentives.

The cost of the project was not provided. Sempra has not decided which turbines to buy or which battery storage system to use.

Maui Electric has agreed to use of one of three brands of turbine, of 1-megawatt, 2.5-megawatt or 3-megawatt capacity.

The bigger the turbine, the fewer towers to hold them up.

Jeffrey Martin, president of Sempra Generation, said: “Approval of this contract with Maui Electric Company is a major milestone for Sempra Generation as we continue working with local communities to develop Auwahi Wind.”

Sempra, a company that grew out of a core of Southern California utilities including San Diego Gas & Electric, is a worldwide energy company with revenues of $9 billion in 2010.

Last year, it took over the Maui wind project begun by ShellWind in 2006.

The 21-megawatt project compares with the 30-megawatt maximum output of Kaheawa Wind Farm, owned by First Wind. It is about the same size as First Wind’s proposed Kaheawa II expansion project.

All three would provide Maui Electric with access to, at peak, 70 megawatts of wind power. By comparison, MECO’s largest generators at Maalaea, combined-cycle, turbine-steam generators, supply 58 megawatts of firm power, powered by diesel.

The company is experimenting with replacing petroleum diesel with biodiesel.

By 2030, MECO will be required to get 40 percent of its juice from renewables.

Reinhardt said: “This new wind farm will join existing wind power, biomass and biofuel, customer sited solar, hydro, and in the future, we hope ocean energy to supply Maui with one of the highest percentages of renewable energy in Hawaii and the world.”

Maui island peak power demand has passed 200 megawatts, so 70 megawatts of wind, if only it were firm, would come close to meeting its portfolio requirements today.

By 2030, however, demand is expected to be considerably higher.

The purchase power agreement, with a 20-year term, allows a 1.5 percent per year escalation in price, so that at the end of 20 years, Sempra will be getting 35 percent more per unit of energy supplied. (The prices apply to a base amount. There are variations if the project produces more than the base amount.)

Renewable energy advocates are predicting that power from fossil sources – for Hawaii, oil – will see prices grow even faster than that.

Even before Sempra and Maui Electric had announced their PUC approval, Henry Curtis of Life of the Land had criticized the action as premature.

Curtis said the environmental impact statement “is a disclosure document. It tells you what the impacts are and how to mitigate them.

“Therefore the document must be accepted prior to any regulatory approvals and prior to any funds being expended to implement the project,” he said.

He warned that getting out of sequence could cause Sempra and Maui Electric the kinds of problems that affected other high-profile projects that required PUC review, like the Superferry, Hawaii island geothermal generation and the Honolulu commuter rail project.

Maui Electric said: “Approval of the contract by the PUC advances the project, enabling Sempra Generation to move forward on financing and planning. No inappropriate work will be done before all necessary approvals are received.”