San Francisco, California-headquartered Clearway Energy has withdrawn three hybrid solar and storage projects from Hawaiian Electric Co’s (HECO’s) latest renewable energy procurement, citing the investor-owned utility’s (IOU’s) “ongoing financial uncertainty”.
Negotiations between the two parties were underway after the three projects, with a cumulative 195MW of solar generation and 195MW/940MWh of energy storage capacity, were selected by Hawaiian Electric in December 2023 as part of the final award group for its Stage 3 RFP for Renewable Dispatchable Generation and Energy Storage.
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In a filing lodged with the regulatory Hawaii Public Utilities Commission (PUC) on 29 October 2024, Clearway stated that although it believes both parties made “every reasonable effort to find a solution”, an agreement was unable to be reached.
940MWh of energy storage capacity
Details of the three withdrawn Clearway projects are as follows:
- Makana La Solar – 80MW of solar generation paired with a 80MW/480MWh BESS located on the island of Oahu.
- Kaiwiki Solar – 55MW of solar generation co-located with a 55MW/220MWh BESS located on Hawaii Island.
- Puako Solar – 60MW of solar generation paired with a 60MW/240MWh BESS also located on Hawaii Island.
Clearway and HECO envisioned the three projects providing energy to the local grid for a period of 20 years for a fixed annual price, however, contract negotiations between the two parties have now ended.
US$1.9 billion settlement coupled with reduced credit ratings
Clearway’s withdrawal comes in the wake of the devastating wildfires on the Hawaiian island of Maui, which claimed the lives of 102 people and caused an estimated US$5.5 billion in damages, according to a preliminary report from the US Fire Administration.
In the months after the disaster, several credit rating agencies, including S&P Global and Moody’s, reduced HECO’s credit rating to below investment grade, after a class action lawsuit filed with Hawaii’s First Circuit Court alleged the utility’s downed power lines contributed to the fires.
In order to settle all claims arising from the disaster, HECO, and its parent company Hawaiian Electric Industries (HEI), agreed in August 2024 to pay US$1.9 billion as part of a wider US$4 billion settlement package. It’s worth noting that the agreement did not include any admission of liability.
As part of HEI’s second quarter financial results, also announced in August this year, the company admitted that it didn’t have a financing plan in place to address the future payments resulting from the settlement. In light of this, HEI issued a “going concern” risk within its financial statement – an accounting term used to identify companies at risk of running out of money within the next year.
However, during the following month, HEI successfully raised US$557.7 million in net proceeds through the offering of newly issued shares of common stock. Following this capital raise, which HEI intends to put towards the first settlement instalment, it lifted the “going concern” risk.
Issues went beyond addressing HECO’s financial situation
Despite HECO and its parent company forming somewhat of a path forward, contract negotiations for the three projects still fell through. According to recent documents filed with the Hawaii PUC, Clearway remained concerned about HECO’s financial situation, making reference to the utility’s inability to finance the three projects.
In its response, HECO said that although it was committed to finding a workable solution, “Clearway’s issues went beyond addressing [HECO’s] current financial situation”. The utility didn’t publicly elaborate on this point further.
On a dedicated website for the three projects, Clearway states that although work has been halted for now, it hopes to “restart these efforts and bring these projects online in the near future”.
Four projects now withdrawn from Hawaiian Electric RFP
Clearway isn’t the first developer to have withdrawn projects incorporating batteries from this RFP, after AES Corporation withdrew its 20MW Puu Hao Solar and Storage from the procurement in May of this year, as reported by Energy-Storage.news.
In filings lodged with the Hawaii PUC, AES stated it was unable to move forward with the project after it had failed to secure the land required to interconnect the project to HECO’s electricity grid.
Following the recent Clearway withdrawal, HECO remains in negotiations with the developers of 12 projects, after AES’ Puu Hao development was replaced with a 40MW biofuel-powered generator proposal from Ameresco according to the utility’s renewable project status board.
Of the 12 remaining projects, half are projected to incorporate BESS facilities.
