Posted on: Friday, April 23, 2004

Deal reported for Big Island geothermal power plant

By Kevin Dayton
Advertiser Big Island Bureau

HILO, Hawai'i — Owners of the 30-megawatt geothermal power plant in Pohoiki have signed a deal to sell the plant to a former investor in the project for an undisclosed price.

The current owner, Fortune 500 company Constellation Energy, will sell the Puna Geothermal Venture plant to a subsidiary of Ormat Nevada Inc. in a deal expected to close in 90 days. The sale still needs the approval of federal regulators.

PGV has a contract to provide 30 megawatts to Hawai'i Electric Light Co., and the plant had revenue of $18 million to $19 million last year, according to Barry Mizuno, spokesman for the PGV operation.

The plant, about 22 miles southeast of Hilo, harnesses underground steam produced by volcanic activity to generate about 20 percent of the Big Island's electricity.

Ormat was part owner of Ormat Energy Systems Inc., which developed the plant for about $100 million. The Ormat family of companies also supplied equipment for the plant, which went online in 1993. Ormat sold its interest in OESI in the early 1990s, Mizuno said.

More recently Ormat has been "actively looking" to expand its geothermal base in the United States, according to a statement announcing the sale.

Lucien Y. Bronicki, chairman of the Ormat group of companies, called the Pohoiki site "one of the best geothermal resources in the world."

"I think that (geothermal power) is the wave of the future," added Mizuno.

PGV has planned for some time to add a heat exchange system to the plant to expand its capacity by another eight megawatts, but those efforts have been delayed because of problems at the plant.

Most recently, one of the plant's 10 generators was damaged in a fire in January, and Mizuno said the replacement generator will not be in operation until June. As of yesterday, the plant was generating 27 to 28 megawatts, somewhat less than the 30 megawatts it is contracted to supply to HELCO.

A megawatt is enough electricity to power about 1,000 homes.

PGV's contract with HELCO ties the price of power it sells to the "avoided cost," or the cost that HELCO would incur if HELCO produced the same power. When the price of oil goes up, the avoided cost also increases, which means PGV is paid more for the electricity it produces.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or (808) 935-3916.