HECO to install Hoku solar power system
The Ward Avenue installation will be Oahu's second-largest solar-power system
Hawaiian Electric Co. took a small but significant step forward in commercializing solar power in Hawaii yesterday, announcing formal negotiations with Kapolei-based Hoku Solar Inc. to install a photovoltaic power system at the utility's Ward Avenue substation.
The solar power system, which will generate 167 kilowatts of power, will be the second-largest installation of its type on Oahu, and will be HECO's first utility-sited, large-scale commercial photovoltaic project. Final approval is required by the state Public Utilities Commission.
HECO said the system will give the utility some hands-on experience with this type of installation and enable it to help customers who have converted to solar.
Hawaiian Electric Co., the largest utility in the state, said yesterday it has begun formal energy purchase negotiations with startup Hoku Solar Inc. of Kapolei to provide a photovoltaic power system at HECO's Ward Avenue facility.
The installation will be Oahu's second-largest individual solar-power system, and will be HECO's first utility-sited, large-scale commercial photovoltaic project. Final approval is required by the state Public Utilities Commission.
HECO spokesman Peter Rosegg said the installation of the 167-kilowatt system on the roof of Archer Substation at the Ward facility is "well beyond" a pilot project or research and development.
"It is to give us some hands-on experience with this type of installation to be able to help our customers," he said. "A lot of customers, especially on the neighbor islands where energy prices are higher, are moving toward PV (photovoltaic). This (deal with Hoku) is partly in response to public desire to see us move more quickly in that area."
Oahu's largest individual solar system -- generating 309 kilowatts -- was installed for the Navy in 2005 by PowerLight Corp. on top of Ford Island's Building 54 at Pearl Harbor.
Last year, Actus Lend Lease LLC began building the first of several thousand new homes it is developing in partnership with the Army that include solar panels built into the rooftops, which will have a combined capacity of 6 megawatts.
Rosegg said the HECO system, which is expected to be in service early next year, will represent a very small part of HECO's generating capacity and will provide the power equivalent to what is used by 150 to 200 homes.
Still, HECO said the installation is an important step in the move toward renewable energy.
"There is a tremendous upsurge in photovoltaic energy worldwide, including in Hawaii," said Dave Waller, HECO vice president for customer solutions. "HECO has demonstration projects and continues to promote Sun Power for Schools (with small PV panels on the roofs of up to 25 public schools). With increased concern about Hawaii's energy prices and security, PV and other renewables can reduce HawaII's dependence on imported oil and help protect our environment."
HECO, an early investor in parent company Hoku Scientific Inc., said Hoku Solar will own and operate the system and charge HECO for the power generated at a fixed rate over a 20-year period.
HECO, which will have an option to purchase the system from Hoku after five years, said the long-term, fixed energy pricing is a new approach for HECO to obtain renewable energy and is available since photovoltaic technology has no uncertain future fuel costs.
No other financial terms were disclosed.
Rosegg said it's difficult to forecast what the cost savings will be from the PV system because "you don't know what the future price of energy will be."
However, he said HECO encourages any individuals or businesses that have a large flat roof in an area that gets a lot of sun to look at moving to solar. HECO offers a net energy-meter program that gives people a credit if they install a renewable energy system, meet certain requirements and return the excess energy to the grid.
The selection of Hoku Solar through a bidding process represents a major coup for the parent company, which began six years ago as a developer of fuel-cell technology and then last year announced it was expanding into polysilicon and solar. Hoku is in the process of building a $260 million polysilicon plant in Pocatello, Idaho.
"The fact that Hoku was chosen in a competitive bidding process by Hawaii's largest utility reinforces the value of our products and services," said Dustin Shindo, chairman, president and chief executive of Hoku Scientific.
Karl Stahlkopf, chief technology officer for HECO and a member of Hoku's board of directors, recused himself from the selection process.
HEI ceased being an investor in Hoku as of January of this year.
Hoku, which will be able to receive federal tax credits for the HECO system, has been focusing its new solar business solely on Hawaii. Shindo said HECO is Hoku Solar's second customer, after an earlier agreement reached with Hardware Hawaii.
"We've very excited to be working with HECO and certainly feel this is yet another validation of our business model and our progress," Shindo said. "We are certainly looking to build the solar business in Hawaii."
Hoku announced separately yesterday that it was on track to complete construction of its polysilicon plant in the second half of 2008 and begin deliveries of polysilicon, which is used for making solar panels, in the first half of 2009.
The company also said it has drawn on its $13 million credit facility with Bank of Hawaii to pay the 15 percent initial deposit under its hydrogen reduction reactor purchase contract with GEC Graeber Engineering Consultants GMbH, and MSA Apparatus Construction for reactors capable of producing 2,000 metric tons of polysilicon per year.
In addition, Hoku said it has extended several financing deadlines "to reduce the immediate pressure to finance the (polysilicon plan) project."