Column: Hu Honua’s benefits must be recognized

Hu Honua Bioenergy, LLC management appreciates the Star-Advertiser editorial’s effort to provide a thoughtful and balanced analysis of the issues surrounding the recent decision by the Public Utilities Commission (PUC) to dismiss Hu Honua’s power purchase agreement (PPA) and the waiver from competitive bidding (“Hu Honua suffers regulatory setback,” Our View, July 27).

However, we would like to emphasize a few additional points. First, it is important to note that in July 2017 the PUC ordered Hu Honua to “make all reasonable attempts to complete the project” within a set time. Hu Honua then spent hundreds of millions of dollars to comply with the PUC’s direction.

Further, this order was never rescinded by the PUC and continued in effect during the two-year appeal to Hawaii’s Supreme Court. In fact, the court rejected an effort by project opponents to halt construction. Approximately $474 million, by the latest count, had been spent to bring the facility to 99% completion by the time the PUC issued its July 9, 2020, order revoking the project’s rights to proceed.

Second, the federal tax incentives mentioned in the editorial were created to encourage the development of renewable energy projects and were agreed to by the PUC. Contrary to the PUC’s recent contention that these tax credits would no longer be available, tax guidance has confirmed that the project remains eligible.

The PUC, under a different set of commissioners, recognized in its decision-making the need for firm renewable energy projects to replace existing fossil fuel plants and to meet the state’s mandate for 100% renewable energy. Hu Honua was the most viable opportunity to add firm, dispatchable, renewable generation at that time, and this was the basis for the waiver from competitive bidding. This remains true today.

In fact, there have been no competitive bidding RFPs available for firm renewable energy and Hawaiian Electric indicated that it has no plans to issue such an RFP. Thus, the PUC has left Hu Honua stranded without any reasonable pathway to become operational.

Importantly, we must disagree with the PUC’s main argument that solar projects are much lower in cost than Hu Honua. In reality, the PUC is comparing apples and oranges; solar plus 4-hour battery storage (projects touted as costing 8 to 9 cents per kwh) are not reliable, firm energy sources. Like other intermittent solar, they are subject to cloudy and rainy weather and can only operate at full capacity for four hours. Therefore, they must be supplemented by firm renewable energy sources to ensure reliable energy and to avoid possible blackouts.

There are limited options for replacing fossil-fuel plants with firm renewable energy:

>> Adding more battery capacity to solar plus four-hour battery projects. While this is an option, when enough battery capacity to last 22.5 hours is added, the cost increases to 29 to 32 cents/kwh, and if enough is added to sustain power during a two-day rainstorm, the cost increases to 50 to 54 cent/kwh.

>> Biofuels. Another option is converting existing fossil fuel plants to biofuels, but estimates of the cost hover around 42 to 43 cents/kwh.

>> Hu Honua. Our plant is the least expensive of the firm options at as low as 22 cents/kwh and brings the additional benefit of adding 200-plus permanent jobs to the community, compared to one or two permanent jobs for a solar project (1%). Ensuring there are reliable nontourism-related jobs on Hawaii island has been touted as a goal of state leaders and cannot be underestimated when we are currently suffering from historically high unemployment rates.

Lastly, Hu Honua has committed the project to achieving a carbon neutral or negative status. Biomass is deemed carbon-neutral by the EPA if the feedstock (here, eucalyptus crops) comes from a commercially managed forest, like those Hu Honua will use. The planting and growing of more trees than harvested will absorb more carbon than emitted in order to deliver a carbon neutral or negative operation. These forests are non-native trees planted as crops intended to be harvested and used for commercial purposes.

We hope the PUC will consider all of these benefits and give them more weight as it deliberates the motion to reconsider its recent decision.

Warren Lee is president of Hu Honua Bioenergy.