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Hawaii Public Utilities Commission approves Kapolei Energy Storage project, with conditions

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                                A rendering of an aerial view of Plus Power’s proposed Kapolei Energy Storage project.


    A rendering of an aerial view of Plus Power’s proposed Kapolei Energy Storage project.

The Hawaii Public Utilities Commission has approved a major energy storage project in Kapolei to ensure that the lights stay on when Oahu’s coal power plant retires in fall 2022.

Hawaiian Electric has touted the Kapolei Energy Storage project as key to providing backup electricity for Oahu when AES Hawaii, Oahu’s 180-megawatt coal plant, retires as required by state law in September 2022 and when energy reserves will be tight.

Due to yearlong delays in getting a number of large-scale solar-plus-storage projects online, however, the battery will have to be charged primarily by fossil fuel-based sources, which the commissioners said they had clearly relayed should be a “last resort” as early as two years ago, when these projects were first being sought.

“In summary, the Commission is approving this Project to provide further assurance that the ‘lights will stay on’ during the retirement of the AES coal plant in 2022 and future retirements of aging fossil-fuel plants in the next several years,” the PUC said in its order. “However, despite the Commission’s multiple admonitions to utilize standalone storage fueled by fossil fuels as a last resort, Hawaiian Electric appears to continue ignoring the high costs of this Project and attendant risks of further dependence on fossil fuel.”

So the PUC approval comes with nine conditions, which require Hawaiian Electric to ease grid constraints so more community-based and residential solar rooftop projects can go online, among other demands.

Hawaii Electric must also provide a detailed monthly report on the percentage of energy generated by renewable versus fossil fuels used by the Kapolei battery project, and there will be an automatic “prudence review” of fossil fuel costs if a minimum threshold of renewable energy is not met.

Hawaiian Electric said it was reviewing the PUC’s decision and order.

“While technically an approval, the order imposes such unprecedented conditions that the company and the developer may be prevented from moving forward with this innovative and cost-effective project,” said Hawaiian Electric in a statement. “We are also disappointed by some of the characterizations made by the commission and we disagree with them.”

The utility said the regulatory process allows it to raise these concerns, and that it planned to do so “to the fullest extent to achieve an outcome that’s in the best interest of customers.”

Kapolei Energy Storage is described as a lithium-ion battery project that will connect to a critical Hawaiian Electric substation and provide fast-frequency response services, help balance supply and demand, and improve grid reliability.

With 185 megawatts of power and 565 megawatt­-hours of battery energy storage, it would be the largest stand-alone battery storage system in the state upon its projected completion in the summer of 2022.

San Francisco-based Plus Power, which declined to give the project’s estimated cost, said members of its team have worked on previous, successful renewable­-energy projects for the Kauai Island Utility Cooperative and that this would be a “similar, path-paving project for Oahu.”

Hawaiian Electric selected the project as one of 16 last year following a competitive bidding process, and applied for the PUC’s approval of its power purchase agreement in September.

Plus Power says the project received unanimous support from the local neighborhood board.

State Sen. Glenn Wakai supports the project, along with the Land Use Research Foundation of Hawaii and the landowner, the James Campbell Co.

“As the state marches towards its goal of 100% renewable energy by 2045, I view the Kapolei Energy Storage project as a key contributor to achieving that goal, while maintaining reliability in a cost-effective manner,” wrote Wakai in a letter of support.

The PUC and consumer advocate previously raised concerns about the potentially higher costs of battery storage plus market-priced fuel next fall.

PUC Chairman James Griffin in mid-March expressed concerns about putting Hawaii ratepayers at the whims of the oil market, particularly before the holiday season.

Consumer advocate Dean Nishina said he too was concerned about increasing customers’ exposure to the volatility of fossil fuel pricing, especially during the ongoing pandemic, but ultimately supported the project’s approval to avoid rolling blackouts and other capacity issues.

Another condition for the approval includes Hawaiian Electric’s timely retirement of another six fossil fuel units at Waiau and Kahe, as planned in stages from 2023 to 2028, without delays, or else the utility will have to foot the potentially higher costs instead of consumers.

Hawaiian Electric has maintained that over its 20-year life span, Kapolei Energy Storage is actually estimated to lower the average residential customer’s bill by about 28 cents per month and that for most of that time, energy stored in the system will come from renewable sources, not fossil fuels.

Environmental group Earthjustice was pleased with the conditions imposed by the PUC.

“The PUC’s order prioritizes renewable energy projects, large and small, to avoid the financial and environmental disaster of filling a giant battery with oil power,” said Kylie Wager Cruz, Earthjustice attorney. “It removes outdated roadblocks to putting solar panels on houses, apartment buildings, and condos, and underscores the value of using less energy in the first place.”

“The utility has a long track record of delaying closure of our oldest and clunkiest power plants,” she added. “The PUC’s order gives the utility a reason to try harder by mandating that customers won’t pay a penny for fossil power produced after set retirement dates.”


Kapolei Energy Storage project

>> Size: 185 megawatts, with 565 megawatt-hours of storage

>> Developer: San Francisco-based Plus Power

>> Where: 8 acres of industrial land at Kapolei Harborside

>> When: Projected to be online by summer 2022, before AES Hawaii’s retirement in September 2022

>> Project life span: 2022-2042

Source: Plus Power

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