A feud between Hawaiian Electric and SunEdison could put in jeopardy three of the four large-scale solar power projects approved for O`ahu last year.
On February 12, Hawaiian Electric informed the Public Utilities Commission that it “exercised its termination rights” with respect to power-purchase agreements with SunEdison to develop three solar farms with a total installed capacity of around 114 megawatts.
Four days after HECO’s announcement, however, SunEdison informed the PUC that it “emphatically disagree[s]” with the analysis presented in HECO’s filings, as well as HECO’s conclusion that it has a right to terminate” the power-purchase agreements. It noted that the PUC had asked for a status update on the three facilities, with filings due by February 23. It asked that the PUC withhold making any ruling on the validity of the power-purchase agreements until after SunEdison had submitted its filing in response to that order.
Hawaiian Electric cited a number of factors in its decision to terminate the agreements, including the widely reported financial troubles of the developers, all of them limited liability companies that are subsidiaries of SunEdison.
SunEdison, writes Joseph Viola, HECO’s vice president for regulatory affairs, “had been in default under the PPAs [power purchase agreements] and had not cured important missed milestones. Hawaiian Electric made many accommodations in an effort to see the Waipio PV Project, Lanikuhana Solar Project, and Kawailoa Solar Project (the ‘Projects’) completed as promised… Despite these efforts, [SunEdison] continuously failed to meet guaranteed project milestones.
Viola also referred to recent news articles describing what he called SunEdison’s “financial distress.” These reports, he said, “caused Hawaiian Electric to re-evaluate all issues” and consider them “against the backdrop of a 94 percent decline in SunEdison’s stock price since July 0f 2015.
Viola’s letter outlining the reasons for termination ran to nine pages. Attachments, which add another 200-plus pages to the filing, include correspondence between HECO and SunEdison officers that chronicles a deteriorating relationship from the time the PUC approved the projects up to the present
SunEdison, for its part, says it has lined up a qualified buyer for all three facilities: the D.E. Shaw Group. The agreement between SunEdison and D.E. Shaw would allow SunEdison to make “over $10 million in immediate payments and other concessions to HECO in exchange for HECO’s cessation of threats to terminate the PPAs,” wrote Wren W. Wescoatt, senior director of development for SunEdison in Hawai`i. “However, at the beginning of this month, HECO suddenly rescinded its proposal to forebear its right to terminate the PPAs for a few more weeks until financing could be secured. While the Project Companies had been working to resume negotiations with HECO, HECO was apparently preparing termination notice letters and a lengthy status report to justify the terminations to the Commission.”
“HECO has not presented a complete and fully accurate account of the events” relating to the three solar farms, Wescoatt concluded. He urged the PUC to await SunEdison’s formal response to the status update order “before forming any judgments on the matter, as the filing will contain information and perspectives that the Project Companies believe are essential to forming a complete view of the important issues facing the commission.
If the SunEdison projects are cancelled, that would leave just one solar farm under development on O`ahu: the 28-megawatt Waianae Solar farm, a project of Eurus Energy Holdings, a joint project of Toyota Tsusho Corp. and Tokyo Electric Power Co.
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