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

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

[[{"type":"media","view_mode":"media_large","fid":"254","attributes":{"alt":"","class":"media-image","style":"line-height: 20.6719989776611px; width: 211px; height: 142px; margin: 3px 10px; float: left;","title":"Photo: Cleanislands.com"}}]]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.”