Major solar project falls through

A 40-megawatt solar power project has fallen through after the contractor failed to meet an important benchmark, leaving the Guam Power Authority short of meeting a 100-megawatt solar power requirement in its consent decree with the federal government and the U.S. Environmental Protection Agency.

While GPA will be speaking with federal authorities on how that requirement can be satisfied, GPA General Manager John Benavente said Thursday that he is hoping the issue can be made to “go away” in consideration of the power utility’s other ongoing renewable energy initiatives. 

GPA entered into a consent decree with the U.S. EPA years ago to avoid paying hundreds of millions of dollars in fines for violating federal emissions regulations. The power utility has to complete various projects under the agreement, including the construction of the new power plant in Ukudu, Dededo.

But another significant undertaking in the consent decree is GPA’s mandate to contract for at least 100 megawatts of additional solar power.

GPA had contracted with two entities for solar power projects even before the consent decree was finalized, as part of the utility’s Phase 2 renewable energy acquisition. 

One of the entities was a consortium involving the Korea Electric Power Corp., or KEPCO, which was contracted to deliver 60 megawatts of solar power. This project resulted in the solar power plant near Marbo Cave now operated by KEPCO Mangilao Solar LLC.

The other entity was Hanwha Energy Corp., which was supposed to deliver another 60 megawatts of solar power. But the company ran into various issues, including significant increases in interconnection costs and construction issues resulting from the COVID-19 pandemic. 

GPA proposed major changes to its agreement with Hanwha in late 2023 to save the project, with one consideration at that time being that GPA would fall short of the 100 MW requirement in the consent decree without it.

Proposed changes included scaling the project down to abut 41 megawatts to resolve interconnection issues while still meeting the 100 MW solar power consent decree requirement. Hanwha also would provide at least 22 MW of energy storage capability that could run for three hours under the proposed changes. 

The amendments were ultimately greenlit by the Consolidated Commission on Utilities, GPA’s governing board, and the rate-setting Public Utilities Commission. 

However, Hanwha had to reach certain milestones under the amended agreement, and Benavente reported to the CCU on Thursday that the company failed to realize a Feb. 28 module ordering date to ensure the timely completion of the project and its commissioning by April 2026. 

A notice of default and opportunity to cure the issue was sent to Hanwha on March 1, but the cure date passed without results.

GPA is now in the process of effectuating garnishment of a $4.6 million performance bond from Hanwha, according to Benavente. 

Meanwhile, the 100 MW solar energy consent decree requirement still looms over the power utility. Benavente’s presentation stated that other options to comply with the remaining 40 MW of the requirement will be discussed with U.S. EPA. GPA is also in the process of informing the federal agency of actions taken against Hanwha. The power utility is otherwise on track to comply with other consent decree requirements no later than March 2026, Benavente said in his presentation.

“I hope we could just let this go away with U.S. EPA because, again, I will show that we have a lot of renewables going on the line. We’re really cutting our annual (fuel) imports,” Benavente said Thursday, adding that the island also moved to more expensive but cleaner-burning fuel in December 2022.

“So, we’re really compliant with the ambient air quality standards as of December 2022. So, therefore, we really have done a lot, and this is something we’ll achieve anyway as part of our renewables goals. So hopefully, this may be something that will go away,” Benavente said. 

GPA attempted another renewable energy acquisition phase after contracting with KEPCO and Hanwha, but that fell through due to delays caused by a procurement protest. 

However, GPA proceeded with a subsequent acquisition — Phase 4 — and that resulted in another contract with another KEPCO consortium. This is for 132 megawatts of solar power to be operational by Feb. 28, 2028. This project also includes 67 megawatts of energy storage that GPA can leverage during peak power usage hours at night. 

GPA is in negotiations, reviews or other discussions with other solar power entities, including a company affiliated with Core Tech International Corp.

The Guam Daily Post also is affiliated with Core Tech. 

It’s unclear when GPA needs to meet the 100 MW solar power requirement now. The consent decree initially set the deadline at Dec. 31, 2021, but that was later amended to Dec. 31, 2023. 

However, when the Hanwha contract changes were under consideration in 2023, Benavente was aware GPA would not meet the solar power threshold that year and indicated that he would need to speak to U.S. EPA and provide a solution. 

The Guam Daily Post asked GPA to clarify the deadline for the construction of the 100 megawatts of solar power, and is awaiting an answer.