Donald Trump campaigned in 2016 pledging to save the coal industry. The problem is that coal and biomass have high unchangeable price points. Not so for solar energy.
The Levelized Cost of Energy (LCOE) is a term which describes the wholesale cost of the power produced by solar and sold to HELCO over a contract term. The wholesale cost is about 50-60 percent of the retail price that HELCO sells electricity to customers.
The Hawai`i Public Utilities Commission approved the HELCO-Hu Honua Power Purchase Agreement in December 2013. Hu Honua failed to meet contractual deadlines and HELCO canceled the contract.
The Commission approved the Amended and Revised HELCO- Hu Honua Power Purchase Agreement in July 2017.
The Consumer Advocate noted that the LCOE for the Hu Honua project in 2013 was consistent with other contracts: Hu Honua (25.3 cents/kWh), Kahuku Wind (22.5 cents/kWh), H-Power (22.4 cents/kWh), Interisland Wind (22.0 cents/kWh), and Kalaeloa Solar (21.8 cents/kWh)
The Public Utilities Commission described how the LCOE had changed between 2013 and 2017.
The LCOE for the Hu Honua biomass project in 2013 was 25.3 cents per kilowatt-hour over the 20-year contract.
If this same contract was signed in 2017, then in 2017 dollars the cost would be 28.6 cents per kilowatt-hour over the 20-year contract.
But HELCO and Hu Honua agreed to extend the contract from 20 to 30 years, thereby spreading out the fixed costs. With the extended contract, the price fell to 22.1 cents per kilowatt-hour over the 30-year contract.
The price of Hawai`i solar electricity in 2010 exceeded 20 cents per kilowatt-hour. By the end of the decade, the price of solar combined with a battery energy storage system was below 10 cents per kilowatt-hour.
The International Renewable Energy Agency (IRENA) recently documented how the price of various types of renewable energy changed from 2010 to 2020.
Over the period from 2010 to 2020, the price of solar fell from 37.8 cents to 4.5 cents per kilowatt-hour.
The price of on-shore and off-shore wind both fell, but not as dramatically. They had started the decade much cheaper than solar, but by the end of the decade, they were competitive.
Because wind turbines take longer to install, future projections are easier to estimate. The cost of contracted offshore wind scheduled to become operational in 2023 is 8.2 cents per kilowatt-hour.
The 2010-20 decade also saw the price of batteries fall by almost 90%. The prices are expected to drop dramatically in the 2020s as battery energy storage systems increase exponentially to meet electric grid and transportation needs.
International Renewable Energy Agency (IRENA) published the Future of Solar PV report. “The price of solar electricity is expected to fall further from an average $0.085/kWh last year to $0.02-0.08/kWh by the end of the next decade and $0.01-0.05 by mid-century.”
Throughout this period, Hu Honua will have a locked-in price exceeding 20 cents per kilowatt-hour.
Hu Honua points out that they add diversity to the renewable mix on the Big Island: wind, solar, geothermal, hydro, and biomass. Hu Honua also points out that a portfolio of higher and lower-priced renewables are cost-competitive today.
The price of electricity on the Big Island is three times higher than the national average.
If all fossil fuel and biomass plants on the Big Island was replaced with solar, wind, and batteries, prices would fall sharply, except for the fact that ratepayers are still contractually obligated to pay for the outdated generation currently being used.
The Public Utilities Commission is wrapping up its two-plus year investigation of Performance-Based Regulation, seeking ways to incentivize Hawaiian Electric Company to reduce its costs. The current PUC has put the public interest and ratepayers ahead of utility inefficiencies and shareholder profits, a welcome change.