CIVIL BEAT: Energy Giant AES Has A Big — And Growing — Footprint In Hawaii

The Kahuku wind farm developer opposed a proposed ban on coal in Hawaii.By Stewart Yerton  

When Sen. Gil Riviere tried to visit a constituent at the Kahuku Agricultural Park last month, he was surprised to find the road blocked — but not by police or officials of the Hawaii Department of Agriculture, which owns the park.

Instead, controlling the road were employees of AES Corp., the energy giant developing a controversial wind farm in Kahuku.

Although relatively unknown in Hawaii outside of energy circles, AES is a major player in the state’s economy — a Fortune 500 behemoth powerful enough to defy an elected representative like Riviere and the agriculture officials who say they had already told AES to let Riviere pass.

And AES’s power and influence in Hawaii is growing. The company will have an outsized role in whether the state will meet its goal of weaning itself from fossil fuels to generate electricity by 2045.

AES Corp. has a major presence in Hawaii, including this coal-burning plant in Kalaeloa, which produces 20% of Oahu’s electricity.

The Virginia-based energy multinational provides a fifth of Oahu’s power from its coal-burning plant at Campbell Industrial Park. It also operates a new massive solar and storage project on Kauai, a facility often cited as a model for the type of utility-scale solar that’s part of Hawaii’s power supply plan.

In the works are other renewables projects: a 60-megawatt Kuihelani solar farm on Maui, a 30-megawatt Waikoloa project on the Big Island, and a 30-megawatt West Oahu solar project.

It’s likely the company is considering even more projects.

Earlier this month, Hawaiian Electric Co. announced it received more than 75 proposals in response to a request for proposals to build about 900 megawatts of new renewables or renewables paired with storage. HECO is now in the process of evaluating the bids.

AES would not say whether it has proposed more projects. But HECO’s goals dovetail with AES’s stated mission of “improving lives by accelerating a safer and greener energy future.”

Amy Ackerman, a spokeswoman based at AES’s Virginia headquarters, did not return calls for comment. Pono Suganuma, a Hawaii-based AES spokeswoman, wouldn’t say whether the company has submitted proposals for additional projects.

Mark Miller, chief operating officer for AES’s US generation businesses, also didn’t answer the question.

“AES has been a proud partner with the State of Hawai‘i for nearly 30 years, providing reliable, low-cost energy to the islands,” Miller said in a statement. “Together, we are transforming the generation and delivery of electricity, deploying technologies that offer renewable, affordable power to the community.”

AES, a global firm with thousands of employees and billions of dollars in revenue, says it is  accelerating “a greener energy future.” But AES uses fossil fuels for more than two-thirds of the energy it produces.

AES Corp. 10-K

Despite AES’s dominant role in Hawaii, the islands play a small role in AES’s global businesses.

Consider, for instance, one of its recently announced projects.

Last week Reuters reported AES had signed a memorandum of understanding with the Vietnamese government to build a $1.7 billion natural gas-fired power plant in Vietnam. The deal was so important that it was signed in Hanoi in the presence of U.S. Secretary of Commerce Wilbur Ross.

AES’s empire includes assets worth more than $32 billion that generated $10.7 billion in revenue in 2018, the company said in its annual securities filing for 2018.

The company runs coal plants in Puerto Rico, Maryland and Oklahoma, wind farms in California, Texas and West Virginia, and solar and storage projects in various locales, alone and through a joint venture partnership called sPower.

It has even bigger investments outside the U.S.; in fact, the company says 68% of its revenue comes from international projects, including large operations in South America. Its power plants in Argentina, for instance, represent 11% of the nation’s generating capacity.

Despite talk of embracing renewables, only 29% of the power AES generates at this point comes from renewables. Nearly a third is generated from coal, including major operations in places like Chile.

Sen. Gil Riviere, standing at Haleiwa Alii Beach Park with windmills above Waimea Bay, has said the area already has more than its fair share of wind farms.

Cory Lum/Civil Beat

Despite its size, AES has failed to impress some members of the community. Riviere is a case in point.

It was late October, during the height of protests against AES’s proposed Na Pua Makani wind farm in Kahuku, and Riviere and two other state senators, Kurt Fevella of Ewa Beach and Kai Kahele of Hilo, went to visit a farmer who lived in the area.

Riviere’s staff had cleared the visit with the Hawaii Department of Agriculture, which owns the agriculture park where the farmer lives. But when the senators got to the park, Riviere said, AES security officers stopped them and said the senators couldn’t pass.

“They were really, really bullies about it,” Riviere said. “Under what authority are they bringing guards to the state ag park?”

Not the state’s. Morris Atta, deputy director of the Hawaii Department of Agriculture, said the agency told AES that the agriculture park road blocked by AES security was supposed to be open to tenants, such as the farmers, and their invitees.

“We had told AES not to do what they basically did,” Atta said.

AES’s proposed wind farm in Kahuku has sparked protests, but the company’s influence in Hawaii goes far beyond the controversial North Shore project.

Cory Lum/Civil Beat

The protests against the Kahuku wind farm, which have led to 160 arrests, come at a time when community support is vital to helping Hawaii achieve its goals to wean itself from fossil fuels by 2045.

HECO’s latest wave of projects will have a big physical presence. On Oahu alone, HECO expects some 3,000 acres of new solar farms, roughly the size of 29 Aloha Stadiums. HECO officials have expressed worry that the projects could be delayed because of resident opposition.

To head off delays proactively, HECO has made community engagement a criterion on which it will choose projects.

But if HECO is sincere about community engagement, something will need to change if AES expects to be seriously considered for any future projects, says Lance Collins, an attorney representing two groups fighting the Kahuku wind farm — one in state court and one before the Hawaii Public Utilities Commission.

“In the brief experience I’ve had with them, they basically feel entitled to do whatever they want,” Collins said of AES. “They’ll just do whatever they want as long as nobody stops them.”

Opposed ‘Coal-Free Hawaii’ Bill

HECO’s recent request for proposals is closely intertwined with AES’s future on Oahu. That’s because AES’s 180-megawatt coal-burning plant is scheduled to shut down in late 2022, and the plan is to replace the electricity the plant produces with power from new renewables projects submitted in response to the RFP.

HECO officials are emphatic that the company will not buy power produced using coal from the AES plant after the contract expires in 2022.

However, both AES and HECO opposed a bill that would have put that into law. Their reason: they want to leave open the option to keep using coal after 2022.

AES Hawaii has testified it wants the option to keep open this coal-burning power plant on Oahu, which is slated to close in 2022.

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Titled the “Coal-Free Hawaii” bill, the measure simply said that utilities regulators could not approve or renew a contract to burn coal to produce electricity after Dec. 31, 2022.

But testifying against the bill for HECO, Lisa Giang, HECO’s director for advanced planning, warned of serious problems if HECO couldn’t get its planned projects and grid modifications on line before the coal plant was scheduled to shut down. HECO needs options in case the project can’t come online, Giang said in written testimony.

“The consequences of not having this option could be grave,” Giang said.

Steven Barnoski, AES Hawaii’s business manager, echoed Giang.

“There are numerous factors that could delay progress toward meeting Hawaii’s environmental goals and it is important to keep a full range of generation options open to adequately address a potential shortfall,” Barnoski wrote in testimony. “Because the future is unpredictable, it is important to have contingency plans in place.”

HECO officials have acknowledged the coal plant contract contains a provision allowing the contract to be extended, but the officials pledged the company will not exercise it.

AES Director Wants New Hawaiian Electric CEO

Despite its fight against the coal-free bill, AES has made a highly public push against fossil fuels, at least in Hawaii.

The same day AES was signing the memorandum of understanding for its mammoth fossil fuel-powered plant in Vietnam, an AES director was sending out letters criticizing HECO’s parent, Hawaiian Electric Industries, for not giving up fossil fuels fast enough.

“By embracing inertia, Hawaiian Electric has failed to lead the transition away from oil-fired generation to renewable energy,” wrote Jeffrey Ubben, an AES director who is also chief executive of ValueAct Capital Management, an investment firm with $15 billion in assets, which has invested heavily in HEI.

Ubben expressed doubt HECO could reach a 2022 goal of generating 50% of the electricity it sells with renewables.

“This is a very ambitious goal for the company, and we are not confident about management’s ability to execute given their historical track record,” Ubben wrote. He suggested HEI pick someone from outside the company to succeed HEI’s longtime chief executive, Constance Lau, when Lau steps down.

Ubben’s letter prompted HEI’s board chairman, Jeff Watanabe, to accuse Ubben of spreading misinformation.

“They don’t seem interested in the facts but rather seem intent on pursuing their own agenda – specifically, handpicking a CEO for HEI,” Watanabe wrote in a Nov. 12 letter posted on HEI’s website.

Watanabe went on to point out the connections between ValueAct and AES, and AES’s prominent role in Hawaii doing business under contracts with HECO.

“ValueAct’s activities should be viewed in the context of its substantial conflicts of interests in Hawaii,” Watanabe wrote.

As the protests in Kahuku continue, the Kahuku wind farm still faces legal fights from both a residents’ group, Keep the North Shore Country, and Life of the Land, an environmental organization.

Henry Curtis, who runs Life of the Land, and his lawyers are on a winning streak lately with some major cases fighting renewable projects they said took short cuts getting approvals. A key hearing on Life of the Land’s motion before the PUC is scheduled for Friday.

But even if AES wins its cases before the commission and court, it’s lost considerable community goodwill, Riviere said.

Ultimately, Riviere said, he and his fellow senators were able to get past the AES sentry and meet with the farmer, Chai Yoshimura.

But Riviere still expresses dismay at what he had to go through simply to meet with a constituent leasing land from the state.

“It’s not right that the public has to work so hard to do something that should just be automatic,” he said.