Dive Brief:
- Hawaiian Electric Companies (HECO) cancelled three power purchase agreements (PPA) totalling some 112 MW of solar capacity from leading utility-scale solar developer SunEdison in a rare move propelled by the company's precarious financial position.
- SunEdison's stock fell 92% this past year, and subsquent delays and "missed milestones" in projects for HECO also factored into the utility's decision to pull out.
- SunEdison vowed to fight HECO's decision with Hawaii's Public Utilities Commission Chairman Randy Iwase saying the decision to cancel "disappointed" him, casting doubt on HECO's ability to meet Hawaii's renewables needs.
Dive Insight:
HECO's decision to cancel the projects comes as its parent company, Hawaiian Electric Industries, faces intense scrutiny during ongoing proceedings about its proposed merger with NextEra Energy.
The preciptious slump in stock paired with the delay in projects also lead to HECO's decision, but the decision now spurs more doubts the utility could fulfill Hawaii's ambitious renewables mandate (100% by 2045).
HECO defended its move to cancel the projects to Bloomberg.
“SunEdison missed multiple deadlines throughout the process, did not provide adequate assurances that it could secure financing to develop these projects, and did not propose viable options to address the significant risks to our customers,” HECO Spokesperson Darren Pai said.
The three cancelled contracts, representing a $42 million investment by SunEdison, included the 45.9 MW Waipio solar PV project, the 14.7 MW Lanikuhana project, and the 49 MW Kawailoa solar project, according to Pai.
After recieving prior warnings from HECO about the setbacks, SunEdison planned to sell the projects, valued at $350 million, to a group of creditors including DE Shaw & Co to shed some $336 million of debt, but the utility canceled before it could do so.
“These solar projects were a great opportunity for HECO to demonstrate that they want renewable energy,” Wren Wescoatt, director of development for SunEdison’s Hawaii office, told Pacific Business News. “They’ll bring cheap prices to residents, they support HECO’s plans and they help Hawaii get to 100 percent. Everybody wins.”
Meanwhile, Iwase is leading the regulatory effort to set policy in support of the state’s renewables mandate.
“I am extremely disappointed,” he told the Honolulu Star-Advertiser. “That is not momentum toward achieving renewable energy goals on this island.” HECO is unlikely to find a better deal than “100 megawatts of renewable energy online ready to go, at less than 14 cents per kilowatt-hour, by December 2016," Iwase added.
