Improved geothermal plant to offer more power at lower cost, PGV says

A Hawaii island geothermal power plant knocked offline in 2018 by lava from Kilauea aims to produce more electricity and at a lower cost under a new agreement subject to regulatory approval.

Puna Geothermal Venture has agreed to sell electricity from a restored and enlarged plant to Hawaiian Electric at a reduced price that would save a typical residential customer $7.50 to $13 a month a few years from now, according to Hawaiian Electric.

The proposed new power purchase contract was submitted to the state Public Utilities Commission on Dec. 31. Commissioners are tasked with deciding whether to approve the contract as is or with possible changes following a public hearing and input from the state Consumer Advocate.

Under the proposed new contract, PGV would increase its electricity production capacity to 46 megawatts from 38 megawatts. This increase would mean that 68% of electricity on Hawaii island would come from renewable energy sources. That compares with 31% currently and 63% right before PGV was knocked offline.

After the loss of electricity from PGV in May 2018, Hawaiian Electric turned to more production from oil.

PGV has had a contract with Hawaiian Electric since it began operating in 1992, and the geothermal plant in Puna owned by Nevada- based Ormat Technologies Inc. is paid the same price for power that oil-based producers receive. This contract doesn’t expire until 2027, and exists in contrast with renewable-energy producers including solar and wind farms that have been developed in recent years with contracts to sell power at fixed prices typically below the cost of oil-based production.

Last year the PUC suggested to Hawaiian Electric in a letter that an amended power purchase contract competitive with current renewable-energy prices should be part of any resumed PGV operations.

“If PGV does come back online, it should be under circumstances that take advantage of this opportunity to benefit (Hawaii island) ratepayers by lowering the costs of the (power purchase agreement),” the commission’s May 9 letter said.

Ormat had been seeking to expand PGV before the 2018 eruption, and as part of that effort was discussing an amended power purchase contract. But the PUC had some leverage to encourage an amended contract because rebuilding transmission lines to the PGV plant was necessary for PGV to resume energy production, and new transmission lines are subject to a public hearing and PUC approval.

The geothermal plant has long been controversial and opposed by many nearby residents, but PGV anticipates that it can get PUC approval and rebuild its destroyed infrastructure to resume energy production later this year.

As proposed, the amended power purchase contract would take effect in 2022, when upgrades to the plant are done, and run until 2052.

Hawaiian Electric said a typical residential bill should drop by about $7.50 a month starting in 2022 and by almost $13 a month in 2023 under the proposed contract amendment compared with current electricity rates.

Currently, a monthly bill for a typical Hawaii island customer using 500 kilowatt-hours of electricity is about $182. Hawaiian Electric has to pay PGV about 16 cents per kilowatt-hour of electricity under its current contract, and this would drop to between 11 and 13 cents depending on volume under the proposed new contract.

“We thank our regulators for the opportunity to revisit the agreement and find solutions that will reduce customer bills,” Sharon Suzuki, president of Hawaiian Electric’s Hawaii island utility subsidiary, said in a statement. “The pricing of renewables has dropped significantly in recent years. The owners of PGV recognize that and we appreciate their willingness to sit down and work with us on an amended contract that benefits customers and accelerates our transition to 100 percent renewable energy.”

Isaac Angel, chief executive of Ormat, said in a statement that the company is proud to partner with Hawaiian Electric and further clean energy production that reduces greenhouse gas emissions.

Hawaiian Electric said the additional 8 megawatts of power proposed by PGV would reduce the need to burn about 160 million gallons of oil over the life of the amended contract.