Kauai Island Utility Cooperative signed a contract yesterday with Poipu Solar LLC to build what would be the island’s largest solar farm.

The 3-megawatt photovoltaic project and battery storage system will be built in Koloa on the southern side of the island, according to a news release from KIUC.

Pending Public Utilities Commission approval, construction of the solar farm on land owned by the Knudsen Trust will begin next year, KIUC said.

The solar farm will be owned and operated by Poipu Solar, an affiliate of AES Solar Power LLC. Poipu Solar will sell the electricity at a fixed price to KIUC, which in turn will distribute electricity to Kauai homes and businesses through the KIUC grid.

"This project will provide clean, renewable energy to power more than 850 homes for the next 20 years at a fixed price not tied to oil and nearly double Kauai’s solar electric power penetration," said David Bissell, KIUC acting president and chief executive officer.

The project will be more than double the size of the 1.2-megawatt La Ola Solar farm built by Castle & Cooke on Lanai, currently the state’s largest solar farm. However, it would be significantly smaller than a 20-megawatt solar farm planned by Castle & Cooke in Central Oahu.

The Kauai solar farm will include a battery energy storage system installed by KIUC at the point where it connects to the grid.

The battery system will help smooth out the fluctuations in electrical output that occur when clouds pass over the photovoltaic panels, said Mike Yamane, KIUC engineering manager. Minimizing those fluctuations provides stability needed for the grid, he said.

AES Solar is a joint venture between publicly traded AES Corp. and Riverstone Holdings LLC. The venture, formed in 2008, is developing utility-scale solar photovoltaic projects around the world.