Honolulu Star-Advertiser Hawaiian Electric Co. President and CEO Alan Oshima said the electric utility will meet with the company looking to buy three canceled solar farms on Oahu.
WASHINGTON, D.C. – (RealEstateRama) — HECO backed out of contracts with SunEdison Inc. for three solar projects in February because of SunEdison’s financial situation and failure to meet project milestones. Since HECO’s cancellation, D.E. Shaw group, a global investment and technology development firm, said it is committed to purchasing the projects so construction can continue and the 112 megawatts of solar energy can be online before the end of the year.
In a letter to Oshima last week, D.E. Shaw & Co. Managing Director Bryan Martin said D.E. Shaw would seek to buy the SunEdison projects within seven business days of HECO reinstating the contract, construction would begin within 12 weeks of the purchase closing and D.E. Shaw would offer concessions of $10.9 million to HECO. Martin said he can travel to Hawaii within 10 days of the letter to work to finalize an agreement with Oshima.
Oshima said, in a letter filed with the Public Utilities Commission on Tuesday, that HECO is willing to learn more about the details of D.E. Shaw’s proposal following a hearing with the PUC and the state Consumer Advocate last week.
PUC Chairman Randy Iwase has been outspoken about his disappointment that the projects were cancelled. Iwase said HECO canceling the projects is a hit to the state’s 100 percent renewable energy goal and customers are missing out on low-cost renewable energy. The projects totaled roughly 112 megawatts — which at their peak could power about 18,040 homes. The facilities would have sold solar power to HECO for approximately 14 cents a kilowatt-hour for the duration of their 22-year life spans.
In the letter, Oshima said HECO wants a formal proposal from D.E. Shaw addressing the possibility of SunEdison filing for bankruptcy and containing enhanced terms and conditions. If D.E. Shaw sends the letter by April 1, HECO is willing to schedule a meeting to discuss details, Oshima said. The meeting would take place the week of April 4.
Oshima said HECO is concerned that the solar facilities would be impacted, despite D.E. Shaw buying the projects, if SunEdison’s “unfortunate financial situation” led to the company filing for bankruptcy.
“We remain acutely concerned about the risk of the projects being pulled into a bankruptcy proceeding and the unacceptable uncertainty that this situation would present to both Hawaiian Electric and our customers,” Oshima said. “If that occurs, Hawaiian Electric and the Commission would be hampered in being able to effectively manage the limited available generation capacity of the grid.”
Bankruptcy attorney David Farmer said, generally speaking, the solar projects would not be at risk by a SunEdison bankruptcy if they were sold to D.E. Shaw before the bankruptcy at a fair price.
“In this instance, if the buyer completes the sale prior to the bankruptcy, it’s a done deal… as long as these are not collusive, they are not back room deals,” Farmer said. “Generally speaking, when the title passes there is no 90-day or one-year look back.”
SunEdison has been facing financial difficulties. The Maryland Heights, Mo.-based solar and wind power provider lost 95 percent of its market value in the last year.
Nearly 130 construction workers were laid off after HECO cancelled the three projects — a 47-megawatt solar project in Waipio, a 50-megawatt project called Kawailoa Solar to be built in Haleiwa and 15-megawatt project called Lanikuhana Solar to be built southwest of Mililani.
“We had just over 100 people at the Waipio project alone,” said Aaron Pedigo, SunEdison Inc.’s project manager for all three projects. “We tried to place employees in other positions but a significant number of those 100 people were laid off as a result of this.”
At the Waipio site, workers had already installed 11,000 metal structural posts on 150 acres, placed nearly 68,000 feet of underground wiring and mounted 1,240 solar panels. Outside of the 100 workers at Waipio, approximately 30 workers were hired to work at the other two sites.
After news of the termination, the workers had to take down the already installed panels and back track over the majority of their work, Pedigo said. SunEdison said it had invested $42 million in the projects to date.
“These unfortunate events stemmed from the fact that SunEdison didn’t live up to the terms of its contract,” said Darren Pai, HECO spokesman. “We sincerely regret the impact that has had on workers involved in the project. We do plan to seek replacement projects and hope that this will offer other opportunities for many of them.”
Pedigo said he is hopeful the projects will open up again.
For now, the solar panels sit in storage and the subcontractors are shipping back materials.
Matt Heahlke, regional manager for a SunEdison subcontractor called Goodfellow Bros Inc., said he is not optimistic that the projects will be online in 2016.
“A lot of people are out of work because of this cancellation,” Heahlke said. “We put a lot of work into these. To lose the three projects has had a tremendous effect on the community. It’s very disappointing… We ended up having five layoffs because of the termination of that job and would have hired 15 additional people. “
More than 400 workers would have been hired to help build all three solar facilities, Pedigo said.
http://www.staradvertiser.com/business/heco-may-restart-3-solar-farms/ HECO may restart 3 solar farms 3/24/16 Kathryn Mykleseth
Source: Hawaii Clean Energy Initiative