Hawaiian Electric renegotiated three renewable energy contracts for long-term savings
After renegotiating three of its four renewable energy contracts on Hawaii Island at fixed rates, Hawaiian Electric reported this week that the results will be stabilized bills and long-term savings for customers.
The amounts aren’t small, either. Based on today’s rates, the average residential customers using 500 kW could see savings of between $9-13 per month, although this will depend on when certain outputs are expanded – likely in 2026. In filings with the Public Utilities Commission (PUC), Hawaiian Electric supplied amended contracts with Puna Geothermal Venture (PGV), Hawi Renewable Development (HRD) and Wailuku River Hydroelectric (WRH).
Currently, these long-term avoided cost contracts have adjustable rates tied to oil prices, resulting in monthly fluctuations. Fixed rates would avoid that. In particular, the majority of savings would come from changes to the PGV contract, according to Hawaiian Electric, and that amended contract/expansion would also lead to at least 65 percent of the island’s energy being generated by renewable resources by 2026.
“We’ve been working hard with our independent power producers to amend these contracts to provide substantial benefits to our customers on Hawaii Island,” Rebecca Dayhuff Matsushima, Hawaiian Electric’s vice president of resource procurement, said. “Benefits include bill savings, stabilized energy rates, more renewable energy and reliability, and decreased fossil fuel consumption and greenhouse gas emissions. This is significant because more than half the island’s energy is generated by independent power producers and more than half the electric rate covers fuel and purchased power.”
Avoided cost contracts were at one time seen as an incentive to get developers to build renewable energy projects, as it allowed renewable energy producers to avoid use of oil but linked pay to the same rate. The market has changed significantly since then, given that the original contracts were negotiated in the 1990s and early 2000s.
If approved, the amended PGV effort would see a facility repowered with more efficient generating equipment to provide up to 46 MW.
An amended contract with Hawi Renewable Development, which produces electricity from wind, was filed in December 2021. A first amendment to the 20-year contract was filed in January 2023 and includes modifications to upgrade and to repower the facility which will continue to provide up to 10.56 megawatts to the grid.
