IEEE Electrification - September 2022 - 9

specified performance characteristics
coupled with demonstrated (and
policed) proof that the equipment is
able to provide specific functions
when called upon. In these PPAs, the
plants are obligated to be capable of
providing a variety of frequency control
and support services, voltage
control and support services, a gridforming
capability, and a variety of
dispatch responses. In the words of
the solicitation, " the lump sum payment
is made in exchange for the
right to dispatch the [project's] energy
production, " so that the project
avoids " complicated pricing mechanisms
to guarantee financial recovery. "
The request for proposals " was
specifically designed to include the
following characteristics: technology
agnostic, not specifying a maximum
size requirement, allowing
projects to be sited at developerdefined
sites, and allowing for variations
with proposals. " The details of
one PPA that is representative of this
new arrangement is included in
Docket No. 2018-0434 (see the " For
Further Reading " section).
Market competition is introduced
at the procurement planning stage,
with independent participants competitively
bidding on specific tenders
for new resources under the watchful
gaze of the state regulator (e.g., the
public utilities commission). The interests
of stakeholders in managing
cost while maintaining reliability
depend on the host system receiving
attractive bids.
Properly Assigned Risk
Saves Money
With this structure, the economic
line of sight becomes clear and simple:
the developer knows its upfront
capital costs and has good information
on which to estimate ongoing
costs to maintain the facility at a
level that meets its contractual obligations.
The developer can accept a
lower revenue stream than a traditional
PPA because the risks are
reduced and under its control. The
TABLE 1. Risk control for project developers and owners.
Under Control of Project
(Owner/Investor)
Quality: Buy good equipment; design and
install properly
Suitability/compliance: Buy, design, and
install equipment that can do what the
PPA requires it be capable of doing
Maintenance: Take care of the project so
that it is capable of delivering power and
other required services when it is possible
and needed
Capital and fixed operating costs: Buy
cost-effective equipment; train and invest
in service staff and equipment to manage
costs
developer/owner is obligated and
policed to make sure that it builds a
plant that meets all of the specifications
provided by the host utility and
that it maintains the plant and
equipment so that it can always provide
the services for which it is contracted.
Thus, essentially, the plant
must be able to provide the power
that the sun (or wind) makes possible,
the battery must have the capacity
and performance specified, and
the overall system must respond to
commands from the grid operator
within the bounds specified. Failure
to do so results in an economic penalty,
i.e., reduced payments. But, if it
is not sunny, or if the grid doesn't
want to accept the plant's megawatts,
there is no penalty. The grid
operator can use the entire facility to
the holistic benefit of the system.
This arrangement allows for the grid
to grow and change; allows for operations
to evolve, becoming smarter,
cheaper, and cleaner; and enables
the facility to be used differently
over its life for the benefit of the
ratepayers. Innovation by the host
grid operator and planners is
rewarded as they have the latitude to
use the resource differently as circumstances,
priorities, and understanding
evolve.
Not Under Control of Project
Insolation or wind: Some years are more
sunny or windy than others
Curtailment: The grid may or may not be
able to accept the project's power at any
given time
Dispatch: When and if the grid operator
wants the available power from the
project; dispatch constrained to provide
other essential reliability services, like
primary frequency response
Variable costs with dispatch and commitment:
Losses, loss of life associated
with project producing energy and
supplying grid services
The Hawai'i Projects
The projects discussed here are on
islands that already have a substantial
amount of wind and solar PV
generation in operation as of the initiation
of this phase, circa 2017. In
particular, and as familiar to many
systems with high solar growth, they
saw a growing urgency to have
resources that could help meet their
version of the evening " duck curve. "
Consequently, new tenders included
energy storage that could be discharged
during the postsunset evening
peak. The commission approved
six projects totaling 247 MW of solar
PV power and 988 MWh of energy
storage, with costs that range from
US$0.08 to US$0.10/kWh. The projects
are expected to result in rate
savings for Hawaiian Electric ratepayers.
Over its 20-year life it is anticipated
to save more than 1 million
barrels of ultralow sulfur diesel. More
than 500 tons of coal and 11,000 barrels
of diesel will be saved. Greenhouse
gas reductions are anticipated
to be about 400,000 metric tons.
Conclusions
Hawai'i's innovative PPAs demonstrate
advancements in renewable
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IEEE Electrification Magazine / SEPTEMBER 2022
9
IEEE Electrification - September 2022

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