Why Is Hawaiian Electric Canceling So Many Of Its Renewable Energy Projects?

Feb. 21, 2016 8:10 AM ETSunEdison, Inc. (SUNE)HE114 Comments
Aurelien Windenberger profile picture
Aurelien Windenberger


  • Last week, Hawaiian Electric announced that they had terminated agreements for three utility scale solar projects being developed by SunEdison, citing delays and concerns over SunEdison's financial situation.
  • It turns out that Hawaiian Electric is also planning to cancel another renewable energy project, while at the same time asking to increase the use of a coal-fired plant.
  • These moves have drawn the concern of the chair of the Hawaii Public Utilities Board, who released a statement questioning the moves.

Earlier this week, I published an article reviewing the latest piece of bad news to hit SunEdison (SUNE); Hawaiian Electric's (HE) decision to terminate three utility scale power plants totaling 112MW on Oahu. In a long explanation filed with the Hawaii Public Utilities Commission (HPUC), HECO argued that they had worked hard with SUNE, making every effort to avoid the termination notices. On its own, it seemed that the utility was being forthright, but additional information that has emerged over the last couple days indicates otherwise.

In a statement released on February 18, HPUC Chair Randell Iwase chastised HECO for their recent moves, which he noted seem to be working against Hawaii's goals of lowering electric rates for customers and using 100% renewable energy by 2045. It turns out that HECO has done all of the following recently:

  • The HECO Companies' decisions to terminate power-purchase agreements for three solar projects on Oahu;
  • The HECO Companies' stated intention to terminate the agreement for a biomass project on Hawaii Island;
  • The closing of a prolonged and unsuccessful solicitation by Hawaii Electric Light Company, Inc. for new geothermal generation on Hawaii Island;
  • The continued delay by Maui Electric Company, Ltd. to approve and connect new rooftop solar on Molokai; and
  • The slow progress by the HECO Companies to approve and connect customers that have signed up for new rooftop solar under the grid-supply option.

In addition, a recent Honolulu Star Advertiser article highlighted the fact that HECO recently announced that they want to replace some older oil fired steam generator units, and increase the amount of electricity supplied by Oahu's only coal powered plant from 180MW to 189MW. In short, the utility seems to want to continue using fossil fuels which need to be shipped to the island at great cost, versus working through the delays with the new renewable power sources that are in the process of being completed.

These actions would be more understandable in places like West Virginia, which doesn't get a lot of sun and has fossil fuels under every rock. But in a state where electricity from the grid costs over $.30/kWh, these new projects that HECO wants to terminate will substantially decrease the cost to consumers once completed. A few months of delays are a small price to pay, versus another 2-3 year new bidding process.


The letter from Chair Iwase is good news for renewable developers, and SUNE in particular, as it indicates that the HPUC is looking out for Hawaii consumers and understand that project terminations are not in their best interests. I expect HECO to be required to undo their termination request and work with SUNE to allow the company to complete the sale of the projects to DE Shaw, so that work can once again begin on them.

This article was written by

Aurelien Windenberger profile picture
Focused mainly on the energy industry and willing to invest into any energy stock (renewable or fossil fuel) at the right price. I'm excited to be watching the transition to renewable energy and EVs, but also realistic about the challenges and likely time frame.I have been researching and investing in stocks and options in my own accounts for 15 years. I currently develop solar and battery projects for utility and commercial customers at Ideal Energy, one of Iowa's oldest solar developers and EPCs.I've found that my skill lies in taking the time to read 10-K and 10-Q reports carefully and being able to then create realistic future projections. As a value investor I tend to look at cash flow as much as if not more than earnings and revenues.My investment horizon is typically at least 5-10 years, and ideally I place my money into investments which I could see myself holding through retirement. That said, I do also enjoy allocating a small portion of my account to short term options plays.In our free time, my wife and I used to fly around the world (then we had kids). We've each been to over 45 countries and relish the opportunity to see how people live all around the world. Now we enjoy seeing our young sons grow day by day.

Disclosure: I am/we are long SUNE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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