LIHU‘E — Kaua‘i Island Utility Cooperative on Wednesday announced its intent to pursue the development of a 10-megawatt solar farm, which would be the largest of its kind in the state.
“KIUC would have more solar PV concentration (per capita) than any utility in the U.S., if this project can be successfully developed,” KIUC CEO David Bissell said in a press release.
The co-op intends to construct the integrated PV and Battery Energy Storage System project by reallocating a $68 million previously approved loan from Rural Utility Service. RUS had approved the funding for a 10-MW “Gen X” or “CT2” combustion turbine generator.
The co-op also plans to create a new for-profit subsidiary to qualify the solar project for state and federal tax credits. KIUC’s Board of Directors last week approved the formation of KIUC Renewable Solutions One, LLC.
KIUC anticipates that up to 50 percent of the cost of the PV portion of the facility will be paid for by taxpayers through the American Recovery and Reinvestment Act. The LLC will be fully owned and controlled by the cooperative, KIUC said.
“KIUC is following a model employed by other electric cooperatives, to use a subsidiary to qualify for tax incentives only available to for-profit companies,” Bissell said. “We will combine the tax credits, our own low cost financing, and the declining cost of solar photovoltaic systems to produce energy at significantly less than the cost of power generated from oil. The cost for a KIUC-owned PV facility will also be lower than the recently signed Power Purchase Agreement contracts due to our lower overall cost of capital.”
A Request for Proposal to contractors to build the PV facility was released this week.
“We are on a very short timeline to qualify for the federal incentives,” Brad Rockwell, KIUC manager of production, said in the release. “With this facility we would have about 20 megawatts of solar PV on our system, and that is why we are integrating the Battery Energy Storage System to handle that level of intermittent resource and still have excellent reliability.”
KIUC Board Chair Phil Tacbian said there would be “significant” benefits.
“By using the RUS approved funds for solar development, the cooperative effectively shelves the combustion turbine plant and moves closer to giving our members the clean, renewable energy they have asked for,” he said.
KIUC says the combustion turbine was originally hoped to be fueled by renewable bio-diesel, but that technology has not developed quickly enough to realistically use the RUS funds in the approved timeframe.
When asked about the location and acres for the proposed project, KIUC spokeswoman Anne Barnes said a few locations are being considered.
“I will let you know when a decision is made,” she added.
KIUC engineer Steve Rymsha said in an email that the site should be up to 54 acres for PV and a “land lease is under negotiation.”
A KIUC engineering analysis earlier this year concluded that a biomass-fired boiler at the Port Allen Generating Station would be more costly than a solar PV facility, the release states.
Solar prices in free fall
Manufacturers have been slashing the prices of solar panels as supply vastly outweighs demand. The average wholesale price of solar panels fell 37 percent to reach $2.4 per watt from 2008 to 2010, according to a Lawrence Berkeley National Laboratory report released last month. Prices have declined by approximately 25 percent since the beginning of this year alone.
A significant trigger of the demand-supply imbalance was the end of government subsidies for solar projects in European countries, such as Italy and Germany.
The news of KIUC’s project comes one week after an Alexander & Baldwin community outreach meeting to discuss its plans for what would have been the largest solar farm on the island — a 6-MW facility on 20 acres of A&B land near KIUC’s Port Allen power generation plant. The A&B plan, estimated to cost $25 million, received positive community feedback at the meeting, which was also attended by KIUC staff.
Second highest rates in
The lowest effective KIUC electric rate for October is 42 cents per kWh, the second highest in the country after Lanai at 43 cents.
Of Hawai‘i’s $63 billion GDP, 7.5 percent is spent on fuel and 10 percent is spent on food, according to a July report by energy analyst David Fessler. Some 90 percent of the state’s energy comes from generators fired by oil imported from the Mainland. The average price of electricity in the Aloha State is 36 cents per kWh, the highest average in the country.
KIUC is actively trying to expand its portfolio of renewable technologies. It has signed Power Purchase Agreements for pending solar and biomass-fired projects totaling 17 MW.
“Approximately 35 megawatts of low-impact hydropower projects are being studied, but KIUC has not determined whether additional clean, renewable hydropower can be feasibly developed on Kaua‘i,” a KIUC press release states.
The state has mandated the islands transition to 40 percent renewable energy by 2030. KIUC’s goal is 50 percent renewable by 2023.
“If we are able to develop additional low-impact, clean hydropower later this decade, we will get there ahead of schedule,” Tacbian said.
PUC approves KIUC smart grid project
In other KIUC news, the Public Utilities Commission has approved KIUC’s request to commit $11.9 million in funds to participate in a national smart grid demonstration project. The project includes the installation of 33,000 smart meters across the island.
Half of the project’s cost will be taxpayer-paid through American Recovery and Reinvestment Act stimulus funding.
KIUC will begin installing smart meters at every home and business early next year, as well as related infrastructure. The installation-phase of the project is expected to take two years to complete.
The co-op plans to hold informational meetings from 6 to 7 p.m. on Oct. 26 and Dec. 8 at KIUC’s main conference room at the Hana Kukui building, 4463 Pahe‘e St., Lihu‘e.
• Vanessa Van Voorhis, staff writer, can be reached at 245-3681 (ext. 251) or by emailing vvanvoorhis@ thegardenisland.com.