Hawaii’s Only Coal-fired Power Plant May Switch to Biomass

- by Duane Shim­gawa, August  28, 2014,  Pacif­ic Busi­ness News

The only coal-fired pow­er plant in Hawaii, which is the sin­gle largest gen­er­at­ing plant on Oahu, is under finan­cial stress because there is no finan­cial reserve, accord­ing to the Hawai­ian Elec­tric Co.‘s new ener­gy plan released this week.

Hawai­ian Elec­tric is also ask­ing AES Hawaiito con­vert some of the ener­gy being pro­duced at the plant in Camp­bell Indus­tri­al Park to bio­mass from coal

Giv­en the poten­tial finan­cial impact of an inter­rup­tion of ser­vice asso­ci­at­ed with a finan­cial default of AES Hawaii, HECO said it has been nego­ti­at­ing in good faith with the com­pa­ny to explore the pos­si­bil­i­ty of an amend­ment to the pow­er pur­chase agree­ment that would make finan­cial sense to AES Hawaii and ratepayers.

As part of the ongo­ing nego­ti­a­tions for the change in the pow­er pur­chase agree­ment, the state’s largest elec­tric util­i­ty has asked AES Hawaii to con­vert some or all of the ener­gy pro­duced at the facil­i­ty from coal to bio­mass, pos­si­bly from black pel­lets made from wood.

“Hawai­ian Elec­tric believes that AES [Hawaii] could pro­vide supe­ri­or option­al­i­ty for the Oahu pow­er sys­tem to opti­mize between cost and Renew­able Port­fo­lio Stan­dard should AES [Hawaii] have the capa­bil­i­ty to oper­ate on coal and bio­mass,” the util­i­ty said.

To date, HECO has not received a spe­cif­ic pro­pos­al from AES Hawaii regard­ing this.

The West Oahu plant, which has a year-round capac­i­ty of 180 megawatts, about 11 per­cent of Oahu’s com­mer­cial ener­gy sup­ply, has giv­en its prof­its to its par­ent company.

Ener­gy pay­ments made to AES Hawaii under the exist­ing pow­er pur­chase agree­ment with Hawai­ian Elec­tric, which expires in Sep­tem­ber 2022, may not ful­ly cov­er its cost of coal “under con­di­tions of high annu­al capac­i­ty factors.”

“It would be in our cus­tomers’ finan­cial inter­est to keep AES [Hawaii] oper­at­ing on the sys­tem with­out inter­rup­tion under the terms of the exist­ing [pow­er pur­chase agree­ment],” HECO said.

Nei­ther AES Hawaii, nor its Vir­ginia-based par­ent AES, a For­tune 200 glob­al pow­er firm, imme­di­ate­ly respond­ed to mes­sages left by PBN on Thursday.

HECO rea­soned that, for the past two decades, AES Hawaii has oper­at­ed with high avail­abil­i­ty and has been sched­uled for oper­a­tion when­ev­er it was avail­able, but as more vari­able renew­ables, such as wind and solar, are added to the grid, AES Hawaii “presents oper­a­tional chal­lenges due to its rel­a­tive­ly large capac­i­ty and lack of oper­a­tional maneuverability.”