The U.S. Department of Energy yesterday announced it will provide up to $7 million over three years to develop new electricity distribution technologies in Hawai'i.

The new system will take advantage of renewable energy sources and will help address concerns such as excess demand on the electricity grid and intermittent power supplies, Gov. Linda Lingle's office said.

The system, which will be deployed at the Maui Lani substation in Maui, is expected to reduce peak load electricity demand by at least 15 percent, the governor's office said.

The Hawai'i project is one of nine around the country selected by the energy department as part of a $50 million project over the next five years to modernize the nation's electricity grid, the department said.

"With its diverse, indigenous energy resources, the state of Hawai'i serves as an ideal candidate to partner with the federal government to test and deploy an array of renewable sources of generation and interconnection technologies to keep reliable supplies of electricity flowing to the American people," said Kevin Kolevar, Energy Department assistant secretary for electricity delivery and energy reliability.

In addition to the $7 million in federal funding, the project will receive another $8 million from groups including General Electric, Hawaiian Electric Co., Maui Electric Co., Columbus Electric Cooperative, the New Mexico Institute of Mining and Technology, Sentech and UPC Wind, the governor's office said.

"This is a groundbreaking project that again highlights Hawai'i as a national center for new energy development," Lingle said. "This project will help set the foundation to improve the reliability and efficiency of Hawai'i's electric grid system while allowing greater utilization of renewable energy sources."

The announcement comes months after Lingle's administration joined with the U.S. Department of Energy in the Hawai'i Clean Energy Initiative partnership, setting a goal of getting at least 70 percent of the state's power from clean energy sources by 2030.

Lingle has said Hawai'i is the most oil-dependent state in the country, with about 90 percent of its energy sources being imported.