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Hawaiian Electric to terminate solar contract on Molokai

Developer misses deadlines, blames utility for delays

Hawaiian Electric intends to terminate its power purchase agreement with Moloka’i New Energy Partners, effective July 10, for missing contractual deadlines in developing a 2.7-megawatt industrial-scale solar project with 3-MW battery storage on Molokai, according to filings with the Public Utilities Commission.

The project by the subsidiary of Seattle-based Half Moon Ventures LLC was supposed to be operational Jan. 30, according to the utility’s filings Tuesday with the PUC. A 22-year agreement, approved by the PUC, called for the utility to pay 17 cents a kilowatt hour for power generated from the project on Molokai Ranch land near Hawaiian Electric’s Palaau Power Plant.

Moloka’i New Energy Partners, which has filed a complaint against the utility in U.S. District Court on Oahu, blames the company’s inability to meet deadlines on Hawaiian Electric.

The problems arose in 2018 when the developers needed to find a new vendor for a critical piece of equipment, Moloka’i New Energy Partners said in its complaint in U.S. District Court.

The original vendor “demonstrated that it was unable to meet the requirement of the project,” the complaint says. The developer found another vendor, Tesla, to supply the equipment and informed the utility in November 2018.

The utility said in its PUC filings that the changes “necessitated the company to perform an additional restudy of the interconnection requirements for the project” and attributed the delays and the missed project timelines to the change in the equipment.

Moloka’i New Energy Partners in its court complaint blamed the utility for unjustified delays and lack of timely action on the request for the equipment change. The developers cited testing requirements by the utility and delays in performing those tests and “numerous and confusing and inconsistent communications.”

The developers said that the utility was acting in bad faith and was seeking to scuttle the project. The delays have jeopardized the power purchase agreement and financing for the project and risked possible loss of the developer’s investment, the court filing said.

By missing the deadlines, the developer also was facing daily penalty costs.

Last month, Hawaiian Electric told the PUC that it still was hoping to work out a resolution to the dispute. But on Tuesday, the utility sent its termination letter to Moloka’i New Energy Partners.

The utility in the letter cited the missing of three deadlines, including the completion of interconnection facilities for testing by Dec. 25, setting in motion a 90-day grace period that expired Monday.

Hawaiian Electric said that the developer “has not taken any action to cure its failure to achieve” its January operational deadline “and has demonstrated no intent or present ability to do so” within another delay period that ends July 28 triggered by the payment of daily delay damages.

The utility notes that the developer “has confirmed in its last progress report that it has halted purchasing equipment necessary to meet such milestones.”

Mike Luo, spokesman for Moloka’i New Energy Partners, said Thursday that “we view this as yet another example of HECO’s ongoing bad faith towards this project, and it is unfortunately reflective of a pattern of their behavior” as noted in their complaint.

Moloka’i New Energy Partners is seeking damages, including interest and attorney fees and costs, in its complaint. A hearing is set for next month.

Hawaiian Electric said that a settlement offer made in April remains on the table until the July 10 termination date.

“We’re disappointed the developer didn’t respond to our settlement efforts to salvage the project and follow through on its commitments to the island’s residents and our company,” Hawaiian Electric spokeswoman Shayna Decker said Thursday.

The utility has said that the project could provide 40 percent of the island’s peak load and that the power was cheaper than the diesel oil being used to generate electricity on the island.

Looking ahead, Hawaiian Electric is in the process of formulating its next round of request for proposals for renewable energy on Molokai with more information expected later this summer, Decker said.

The current request for proposals calls for 4 MW of solar or 3.6 MW of small wind, with turbines of 100 kilowatts or less, and paired with storage. A portion of Hawaiian Electric-owned land on Molokai at Palaau is being offered as a potential development site, said Decker.

* Lee Imada can be reached at leeimada@mauinews.com.

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