Dive Brief:

• Hawaii regulators are raising concerns about Hawaiian Electric's (HECO) plan to retire and replace a 36 MW oil-fired plant on Maui by 2024, echoing worries they've previously voiced about the utility's efforts to transition away from a coal plant on Oahu.
• HECO intends to replace the Kahului oil-fired plant with a combination of resources, including solar paired with storage, standalone storage projects, and the construction of a switchyard. But the Hawaii Public Utilities Commission (PUC) head regulator said delays to those projects could necessitate keeping the oil-fired plant online longer than planned.
• There's a possibility that a series of projects currently slated to come online in 2023 could experience delays, PUC Chair James Griffin said at a meeting Tuesday. "To me, this is just very much setting up a situation where higher probability than not to delay the retirement, which after all the years of planning, that's not our first contingency," he added.

Dive Insight:

Hawaiian regulators have for a while now been raising the alarm over delays to renewables projects, which are a critical component of HECO's plan to retire fossil fuel power plants. In February, the agency opened a docket to take a closer look at these transition plans and at a status conference in March, commissioners expressed concerns over how the utility will replace a 180 MW coal plant on Oahu that is scheduled to retire next year. 

Now, the commission is raising similar concerns about the Kahului oil-fired plant on Maui. 

The Kahului plant provides 14% of the energy consumed annually in Maui, said Colton Ching, HECO's senior vice president of planning and technology. The utility is aiming to retire the plant in 2024, although it intends to reduce operations at its four generating units before that officially happens. Permits for the plant currently extend to 2025, allowing the possibility of extending its lifespan if needed — although HECO has said that is not what it wants to do. 

HECO's plan to replace the Kahului plant includes 175 MW of solar, paired with four-hour battery storage, as well as another 40 MW of four-hour standalone battery storage, according to a recent filing. The utility is pursuing a multi-pronged approach to replace the plant's different attributes: the renewables projects, demand response and distributed energy resources will replace its capacity, two of the Kahului units will be repurposed as synchronous condensers to fill in for the voltage support services it currently provides, and a planned switchyard on Maui will step in to support the transmission system. 

HECO is looking at ways to accelerate the projects that can help it lower its use of the Kahului plant and ultimately retire it, Ching told regulators Tuesday. And while doing that, "we want to ensure that we're maintaining reliability before and after that transition," he added. 

Regulators, however, continue to have concerns over grid reliability. HECO's projections indicate a dip in reserve margins in the middle of this year, Griffin pointed out at the meeting — a gap that could have been filled by the planned Kuihelani solar and storage project, a 60 MW solar, 240 MWh storage facility in development in central Maui, which was initially supposed to come online in July. The project has now been delayed two years.

HECO maintains that although the Kuihelani project has been delayed, ratepayers will still see the same benefits over its 25-year lifespan. But Griffin is concerned over the savings that could have been realized in 2022 and 2023 if the project, being developed by AES Distributed Energy, had come online as scheduled. The project, expected to lead to almost $300 million in customer savings over its lifetime, is "one of the largest cost beneficial projects I've ever seen in my lifetime," he said.

Griffin outlined two proposals that the commission could consider to address concerns over HECO's transition plan. The first is to separate the physical and financial retirements of the Kahului plant — meaning the commission could select a date at which point the plant will be taken off the books, leaving shareholders to hold the risk if it stays online longer. 

The second option is to set up regulatory accounts to track savings lost due to delays to the projects, which would both provide greater transparency as well as provide a strong incentive for HECO to bring the projects online sooner, Griffin said.

HECO representatives, however, say the utility is trying to balance a variety of concerns. In the case of the Kuihelani project, for instance, delays were caused by changes to the project made in response to concerns from the local community, said HECO President and CEO Scott Seu — and as the state moves towards its 100% clean energy goals, "we're starting to see more pressures on the communities that are being asked to host these projects and infrastructure."

"As we are moving forward, we are faced with many decisions on a daily basis, including working with our developers. We are making decisions about balancing reliability, requirements to hook up new projects, balancing that with the cost of running our system," Seu said during Tuesday's meeting.