A 20-megawatt facility will proceed without competitive bidding
POSTED: 01:30 a.m. HST, Dec 28, 2010
State regulators have granted Castle & Cooke Inc. a waiver allowing it to develop the state's largest solar farm on 120 acres of agriculture land near Mililani without facing competition from other bidders.
Hawaiian Electric Co., which would buy power produced by the 20-megawatt farm, says Castle & Cooke's plan could result in lower electricity costs for consumers.
The Public Utilities Commission granted Castle & Cooke a waiver last week from PUC regulations requiring that energy projects larger than 5 megawatts be subject to competitive bidding. The PUC approved the "Competitive Bidding Framework" in 2006 to ensure that the state's electrical utilities get the best price possible when building large-scale generation facilities.
In its application with the PUC, Castle & Cooke argued that it should be exempt from the regulation because it planned to divide the 20-megawatt farm into four separate 5-megawatt projects, each built and owned by individual companies.
Although the PUC rejected Castle & Cooke's request for an exemption from the regulation, it did give the company a waiver to proceed with the project. The PUC said the waiver allows it to impose conditions on the project and avoid setting a precedent. PUC commissioners said this decision should not "open the door" for others to seek the waiver as a way to avoid the 5-megawatt rule.
The ruling includes several caveats aimed at ensuring the four companies operating within the park develop their projects independently of each other to the greatest extent possible. The companies should be allowed to share costs for only those parts of the project in which the work would be duplicative for each.
For example, the companies could share costs for an "interconnection requirements study" required by HECO, according to the decision.
In all other facets of engineering, procurement, construction, operation and maintenance, the 5-megawatt photovoltaic (PV) generating resources should be separate and distinct entities operating independently of each other, according to the decision.
One of the companies will be a Castle & Cooke subsidiary, but the developer did not name the other three firms.
The Mililani facility would be about 17 times bigger than Hawaii's largest existing solar farm, a 1.2-megawatt farm on Lanai that began operating last year and was also developed by Castle & Cooke.
"We're very pleased to get the go-ahead to begin negotiations on agreements with the individual solar developers, and we look forward to adding significant additional solar energy onto the Oahu grid, along with the PV already being added through other programs like net metering," said HECO spokeswoman Lynne Unemori.
The Public Utilities Commission, seeking to encourage a "wholesale market" for power generation, in 2006 required any developer planning to build a large generating facility, which could be tied into the electric grid, to go through a competitive bidding process before selecting a builder.
The PUC said competitive bidding would increase the level of wholesale competition for electric power resources; place bidders under the same guidelines, rules and requirements; and potentially lower electricity prices and offer more choices to electricity consumers.
The PUC exempted energy projects with generating capacity of 5 megawatts or less in a move designed to encourage the development of smaller projects that might not otherwise be built given the time and expense involved with the competitive bidding process.
Castle & Cooke said it divided the solar farm project into four smaller projects to take advantage of the exemption—a move that will likely reduce expenses and allow development of the farm to move ahead more quickly.