LIHU‘E — A portion of Kaua‘i’s energy needs will soon be met from burning woodchips.
Green Energy of Kaua‘i received this week a $72.9 million loan guarantee to build a $90 million state-of-the-art facility to burn woodchips from trees grown and harvested on Kaua‘i.
The commitment from the U.S. Department of Agriculture’s Rural Utilities Service will enable Green Energy to begin construction of a previously announced 6.7-megawatt biomass-to-energy facility near Koloa, according to Green Energy Team LLC of Kaua‘i and Kaua‘i Island Utility Cooperative.
With construction scheduled to begin early 2013, the plant expects to be operational by 2014, in an effort to provide more than 11 percent of Kaua‘i’s energy needs, contributing significantly to KIUC’s efforts to generate 50 percent of its power from renewable resources by 2023.
“This is great news for Kaua‘i! The project will undoubtedly provide a boost to our economy with job creation and result in a sizeable savings for many residents,” Mayor Bernard Carvalho Jr. said in an email. “Additionally, it will enable us to take a giant step toward achieving 100 percent local energy sustainability by 2030, which is a major goal of the Kaua‘i Energy Sustainability Plan. I commend Green Energy Team and KIUC for partnering on a sustainable project that will benefit our island well into the future.”
The facility will be built near Knudsen Gap and expects to provide enough electricity to power 8,500 households, replacing about 3.7 million gallons annually of imported oil.
Eric Knutzen, co-founder of Green Energy, said that once the plant is operational, households on Kaua‘i would see an annual reduction in electric bills of $70 to $90 annually.
“It’s one way to help reduce upward power pricing,” he said, noting that the facility will be “truly sustainable, producing power by Kauaians, on Kaua‘i for Kauaians,” as opposed to fossil fuel energy sources that send money off-island.
“This will be the first closed-loop, biomass-to-energy plant in the United States, relying completely on the supply of its own sources of Kaua‘i biomass wood chips, with no off-island dependence and completely renewable,” Knutzen said.
“An efficient boiler will make it economically feasible,” Knutzen said of the plan to start off harvesting invasive Albizia trees up to where the land has a 15 percent grade and it is no longer economically feasible to remove the trees.
The facility will then plant non-invasive trees — such as eucalyptus — approved by the state’s Department of Land and Natural Resources that will later be used for woodchips.
“Organic tree harvesting is not forestry,” Knutzen said. “It’s considered to be diversified ag.”
Power will be sold to KIUC under a contract approved by the Hawai‘i Public Utilities Commission in October 2011.
Pricing of energy from the plant is below that of the current costs for generating power by burning fossil fuels and will not be subject to the volatility of oil prices over the 20-year term of the agreement.
Construction financing for the project will be provided by Deutsche Bank. The plant will be designed by Standardkessel Baumgarte Contracting GmbH of Germany, an international leader in high-efficiency boiler technology. Standardkessel is an equity partner in the project.
“We want to thank KIUC and its board of directors. Without their extraordinary support over the last six years this project would not have been possible,” Knutzen said.
The project will help invigorate Kaua‘i’s diversified agricultural economy, creating more than 200 construction jobs, 39 permanent operating jobs and significant work for subcontractors and local service providers.
“This is especially important for Kaua‘i because this plant will provide firm power from a renewable source,” KIUC President and CEO David Bissell said. “This means the power is available when we need it and will allow KIUC to avoid spending money on additional fossil fuel-based generating capacity and instead invest in renewables such as solar and hydropower.
“We project that $200 million will be invested in renewable energy projects on Kaua‘i over the next two years by KIUC and private developers such as Green Energy. By the end 2014, Kaua‘i should be receiving more than 35 percent of its electricity from renewable sources.”
Green Energy Team was founded on Kaua‘i in 2005 to develop a biomass-to-energy project.
“The idea behind the project was that it would help accomplish three objectives: To lower Kaua‘i energy costs, to keep more money in the local economy and create jobs, and to contribute to sustainability efforts,” Knutzen said.
“Operationally, our agricultural management plan includes removing Albizia trees from state lands, and replacing them with DLNR Forestry-approved plantation trees, for sustainable forest growth, a renewable, long-term biomass supply.”