Renewable energy powerhouse NextEra Energy Inc. has agreed to buy Hawaii’s biggest electricity utility, the companies announced this week. The deal, valued at around $4.3 billion, will help accelerate rooftop solar development across Hawaii and is expected to inspire other utilities as they transition away from fossil fuels and toward cleaner supplies.
“You can think about Hawaii as a postcard from the future of what’s going to happen in the electric industry in the United States,” James Robo, NextEra’s chairman and chief executive, told Bloomberg News. “As renewable generation gets cheaper, as electric storage becomes more efficient and possible, all electric utilities are going to have to face this.”
Juno Beach, Florida-based NextEra is the largest wind and solar power producer in North America. Its wind projects equal one-sixth of total U.S. installed capacity, and it has solar projects in four states and Ontario, Canada. Hawaiian Electric Industries Inc. says it wants to triple solar installations in the state and increase its renewables portfolio by 65 percent in the next two decades.
The Honolulu-based utility saw its shares rise 17 percent, to $33.00, after trading closed in New York. NextEra was largely unchanged, with shares trading at $102.89 early Thursday.
Hawaiian Electric, which serves 95 percent of the state’s population, has struggled so far to grapple with the state's transition to clean energy. Its customers are increasingly drawn to rooftop solar systems due to the state’s expensive electricity rates, which are three times higher than the national average because power plants run on imported fuel oil. With solar panels dropping by more than 75 percent in recent years, many Hawaiians are opting to produce their own power instead of buying costly grid electricity. About 11 percent of Hawaiian Electric’s customers have installed panels on their homes -- the highest penetration of any U.S. state.
Around four years ago, Hawaiian Electric proposed to ban new solar installations on Hawaii’s most populous islands over concerns that flooding the grid with too much sun power would cause problems with grid safety and reliability, including voltage spikes and equipment damage. Environmental groups swiftly shot down the ban, but the utility has since enacted a virtual moratorium by blocking connections in oversaturated areas. Critics complain that utility companies are exaggerating safety concerns in order to protect their sales of conventional electricity.
Hawaiian Electric says it is committed to developing renewables throughout the state. “In NextEra Energy, Hawaiian Electric is gaining a trusted partner that can help the company accelerate its plans to achieve the clean energy future we all want for Hawaii,” Connie Lau, the utility's president and chief executive, said in a statement.