Hawaii PUC rejects PPA for biomass power plant

By Erin Voegele | May 24, 2022

The Hawaii Public Utilities Commission on May 23 rejected an amended power purchase agreement (PPA) between Hawaii Electric Light Co. Inc. (HELCO) and Hu Honua Bioenergy LLC, the developer of nearly complete 30 megawatt (MW) biomass power plant.

In its order denying approval of the amended PPA, the PUC claims that the project would results in significant greenhouse gas (GHG) emissions and said that Hu Honua’s proposed commitment to sequester more GHG emissions than are produced at the plant “relies on speculative assumptions and unsupported assertions.” The order goes on to say that the PUC is not convinced that the project will reduce GHG emission and has concerns about the potentially significant long-term environmental and public health impacts of the project if the amended PPA is approved. The PUC also raised concerns related to costs for ratepayers.

Work to develop the biomass-fired power project has been ongoing for more than a decade, with development of the project nearly complete since at least mid-2020.

The facility is located at the site of the former Hilo Coast Power Co. in Pepeekeo, Hawaii, which is located near the eastern coastline of Hawaii’s big island. A sugar mill was developed at the site in 1857. A power facility was added to the site in 1972 and was fired with sugarcane bagasse until sugar production ended in 1994. The power facility continued to operate through 2004 but was fired with coal rather than bagasse. Hu Honau began work to refurbish the plant to produce biomass-based energy more than a decade ago, with plans to fuel the facility with locally grown biomass, including eucalyptus.

The PUC approved a PPA between HELCO and Hu Honua in late 2013. The project however faced development delays and legal challenges. HELCO announced plans to terminate that PPA in 2016 as a result of those delays. Hu Honua in 2017 announced that it had reached an agreement with HELCO for an amended PPA, which was approved by the PUC later that year. The PPA was soon challenged by an environmental group. The legal challenge reached the Hawaii Supreme Court, and the court in 2019 rejected the PPA, ruling that the PUC was required to expressly consider the reduction of GHG emissions in its decision making. In June 2019, the PUC re-opened a docket related to the PPA. In mid-2022 the PUC issued an order determining that HELCO had not sufficiently supported its request for a waiver of the competitive bidding process for the Hu Honua facility. Such a waiver had previously been approved for the project, but the PUC concluded that that approval had been voided by the Supreme Court ruling. Legal and regulatory wrangling over the PPA continued through the spring of 2022, with the PUC handing down its decision to deny the amended PPA on May 23.

Commissioner Leodoloff R. Asuncion, Jr., filed a dissent of the PUC’s decision, arguing that “the evidence clearly establishes that the applicants have met their burden in showing that the project will result in a significant reduction in GHG emissions over the course of the 30-year amended PPA term, and consequently, that the costs of the amended PPA are reasonable in light of the potential for GHG emissions.”

A full copy of the PUC’s decision and Leodoloff’s dissent is available on the PUC website