Maui Electric discloses additional details about recent PPA price increase for paired Kama'ole Solar project

In December, the Hawaii Public Utilities Commission (PUC) approved a nearly 66% price increase on the power purchase agreement (PPA) between Maui Electric and Kamaole Solar, LLC (Kamaole), which is a joint venture between Potentia Renewables and Peg Gen Holdings.

Kamaole is developing Kama’ole Solar Project, a 40 MW solar photovoltaic energy project paired with a 40 MW/160 MWh battery energy storage (BESS) on Maui.

The PUC approved the PPA price increase on December 2, the request having been made back in February 2021. The request sought to increase the unit price from USD 81.50 per MWh to USD 135.52 per MWh, and to extend the Guaranteed Commercial Operations Date (GCOD) to December 31, 2024 from April 30, 2023.

The amendment also requires Kamaole to pursue tax credits under the 2022 Inflation Reduction Act (IRA) and precludes Kamaole from “seeking future price increases based on force majeure events associated with current market conditions,” according to the PUC resolution approving the request.

The amendment also allows Kamaole a “clawback mechanism” that the new unit price could be decreased if the total actual costs for certain equipment are less than estimated costs.

Maui Electric, a subsidiary of Hawaiian Electric, told NPM that the while the price increase is significant and would not typically be considered, the utility has to be “realistic about how much the economics of major projects have changed since this contract was first approved in 2020.”

Shayna Decker, spokesperson for Maui Electric, explained that the challenges stem from the global supply chain crisis, inflation, and the availability of renewable energy components. Combined, these were all contributing factors to the amendment.

“Even though the amended price is higher, it’s still half the current cost of generating electricity with imported fossil fuels,” Decker said, adding that the Kamaole is responsible for helping reduce Maui’s carbon emissions and moving Hawaii toward its goal of net zero carbon emissions by 2045.

Decker stated that Hawaiian Electric is focused on working closely with the developer to ensure that the project stays on track.

“Before we can retire our fossil-fuel generating units at our Kahului Power Plant in 2027, securing replacement renewable energy generation from new projects like Kamaole is urgent and critical,” Decker said.

The current economic market conditions were cited in the resolution as also impacting all Stage 1 and Stage 2 projects, which include one on Maui that was “declared null and void,” as well as limited options to add dispatchable power to the Maui grid ensuring generation reliability in preparations to retire the Kahului Power Plant.

In the document, the PUC stated that it is concerned about the increased unit price being done “long after the competitive bidding process that set the unit price concluded,” but added that the project is “important to ensuring reliability on Maui’s electric system.”

Potentia did not return calls seeking comment.

*This story was originally published exclusively for NPM subscribers last month.


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