Wood-powered plant on Kauai gets financial green light

A renewable-energy developer building a wood-fired power plant on Kauai has finalized its financing plans and is scheduled to begin construction early next year on the facility that will provide an estimated 11 percent of the island’s electricity needs.

Green Energy Team LLC received a $72.9 million loan guarantee from the U.S. Department of Agriculture’s Rural Utilities Service for the 6.7-megawatt plant to be built near Koloa, officials from the Kauai Island Utility Cooperative announced Wednesday.

The facility, which will burn local wood chips harvested from invasive albizia trees, will provide enough firm power to serve about 8,500 homes and replace roughly 3.7 million gallons of imported oil annually.

KIUC will buy the electricity from Green Energy Team under a 20-year power purchase agreement at a price below the current cost for generating power by burning oil. The utility did not disclose the exact price it will pay for the electricity, but the state office of the Consumer Advocate estimated the project would result in an annual savings of $70 to $190 for KIUC customers consuming 500 kilowatt-hours of electricity a month.

The state Public Utilities Commission approved the plan in October 2011.

The $90 million plant will be built on 5.5 acres of former sugar cane land and generate more than 200 construction jobs, according to the KIUC. An additional 39 workers will be hired to operate the plant.

Construction is expected to begin in early 2013 and be completed by 2014. Construction financing is being provided by Deutsche Bank. The facility will be designed by Standardkessel Baumgarte Contracting GmbH of Germany, an international leader in high-efficiency boiler technology. Standardkessel is an equity partner in the project.

The Koloa power plant is the latest project being under­taken by KIUC as part of its goal to generate 50 percent of its electricity from renewable sources by 2023.