The developer of a proposed biofuel production facility on Hawaii island said Thursday the company will proceed with its plans despite being told by regulators that Hawaii Electric Light Co. will not be allowed to buy its fuel for power generation.
The state Public Utilities Commission on Monday for the second time in two years rejected a plan by HELCO to buy 16 million gallons of liquid biofuel a year from Aina Koa Pono, saying the alternative fuel was too expensive when compared with the fossil fuel that it would replace.
Neither Aina Koa Pono nor HELCO would disclose the proposed price of the biofuel, but the utility did provide an estimate of the surcharge it would have to levy on ratepayers to cover the higher cost of the biofuel. HELCO and its parent Hawaiian Electric Co. proposed a surcharge that would have added 90 cents a month to a typical residential bill on Hawaii island and $1.08 a month for a typical residential bill on Oahu.
The proposed biofuel contract is part of HECO’s strategy to generate 40 percent of its systemwide electricity sales from renewable sources by 2030.
The PUC’s three commissioners, in a unanimous decision, said their ruling was supported by several conclusions, including "the contract price for the AKP-produced biofuel is excessive and not cost-effective at present and for the foreseeable future, and thus, is unreasonable and inconsistent with the public interest."
The commissioners wrote that the biofuel contract with Aina Koa Pono would have potentially displaced "more economical, existing renewable energy resources or restrict the addition of other new low-cost, fixed-price renewable energy projects."
The commissioners did not mention specific projects, but Hawaii island is home to a major geothermal energy plant, and HELCO is close to awarding new contracts for more geothermal development.
Kenton Eldridge, co-founder and chairman of AKP, said the company will press ahead with the planned $450 million biofuel facility without a contract with HELCO. The plan calls for using a technology called "microwave catalytic depolymerization" to produce biodiesel from wild plants and trees on 12,000 acres of land in the Kau district. Once the wild plants are exhausted, AKP’s plans call for cultivating plants to be used as feedstock in the process.
"AKP is very disappointed with the PUC’s decision but will continue to pursue our plan to produce both biofuels as well biochar," Eldridge said in an email. Biochar is a byproduct from making biofuel that can be used as a soil conditioner.
AKP still has an active contract with Georgia-based Mansfield Oil to produce up to 24 million gallons of biofuel to be used for transportation, Eldridge said.
The PUC’s rejection of the proposed AKP contract comes on the heels of a separate ruling last week in which the commission approved HELCO’s request to buy electricity from a company called Hu Honua which plans to generate power by burning eucalyptus trees in a refurbished boiler at a former sugar cane plantation on the Hamakua Coast.
HELCO President Jay Ignacio said the Hu Honua contract shows that the PUC supports the utility’s mission to reduce its dependence on fossil fuels.
"We respect the commission’s decision and our companies will continue to focus on alternatives to meet Hawaii’s clean energy goals and lower the cost of electricity for our customers," Ignacio said in an email.
Mark Glick, the state’s energy administrator, said the PUC decision "reflects the state’s energy policy of balancing technical, economic, environmental and cultural considerations on energy projects to ensure making the best use of land and resources."
