HILO, Hawai'i — Three companies are advancing plans to produce power in East Hawai'i by burning biomass such as eucalyptus trees in ambitious projects that — if completed — would generate enough electricity to power more than 50,000 homes and businesses.

The projects would be able to generate more than a quarter of the Big Island's peak electric demand today, but it isn't clear whether there will be enough locally grown trees or other fuels available to feed all three plants.

It is also uncertain whether two of the proposed facilities will be able to strike deals anytime soon to sell their renewable power to Hawai'i Electric Light Co., which has plenty of extra power capacity today. Tradewinds Forest Products, which is the smallest of the three projects, already has reached an agreement with HELCO to sell power to the utility.

The problem is HELCO now has 265 megawatts of firm generating capacity on an island with peak power demand of only about 200 megawatts. HELCO also can draw on up to 60 megawatts more wind and hydroelectric power available to the utility when conditions are right.

Given that production capacity, HELCO had not planned to develop a major new power source until 2021, said Curtis Beck, manager of HELCO's energy services department. It isn't clear that the utility needs the electricity from the two larger biomass projects, which together want to produce 54 megawatts of power.

"I think it would be very, very difficult for us to incorporate both," Beck said. However, the utility is under state pressure to shift to renewable sources, and Beck said HELCO has received clearance from the Public Utilities Commission to open negotiations for a power purchase agreement with Hamakua Biomass Energy.

Hamakua Biomass is proposing a 30-megawatt plant in Pa'auilo that would be fed by about 14,000 acres of eucalyptus the company just bought from Hancock Timber Resource Group. The trees are on Kamehameha Schools property, and Hamakua Biomass bought the leasehold interest on the land until 2020.

Hamakua Biomass is a partnership between Chief Executive Officer Guy Gilliland and Kent Smith and Hilton Unemori, who are investors in Maui's Kaheawa Wind Power project. Gilliland was an asset manager for Kamehameha Schools until 2003, but said his former employment has no bearing on the Hamakua Biomass project.

The company has not said specifically where it plans to put the proposed biomass plant, but Gilliland said it will be on a 30-acre site between 'O'okala and Pa'auilo on land that is part of the existing eucalyptus plantation.

He said the relative isolation of the site surrounded by trees should reduce the possibility of friction with any area residents.

The plant will chip and burn the eucalyptus at a rate of up to 38 tons per hour, consuming about 1,500 acres of trees a year. Higher-grade logs would be used by the developing Hawai'i forest industry, and the company plans to plant new trees in an eight- to 10-year rotation to provide fuel for the future, Gilliland said.

PEPE'EKEO CONNECTION

In Pepe'ekeo, a company called Hu Honua Bioenergy is proposing a 24-megawatt biomass power plant at the former Hilo Coast Processing Co. mill, a site where C. Brewer & Co. originally burned bagasse. The plant was later converted to burn coal to produce power for the HELCO grid, but closed in 2004.

Now Hu Honua plans to spend $30 million to $40 million to reconfigure the operation from a coal-fired plant to a biofuels plant, and to seek an amendment to the federal emissions permit to allow it to burn biomass instead of coal. Hu Honua is financed, operated and majority-owned by MMA Renewable Ventures of San Francisco, a subsidiary of Municipal Mortgage & Equity LLC.

The company aims to begin producing electricity in late 2010, and would burn 200,000 green tons of biofuels a year. It would produce 24 megawatts of firm power in the daytime, cutting back to as little as half that electricity production when demand drops at night, said Tim Lasocki, executive vice president and treasurer of Hu Honua.

Land around the mill site north of Hilo has been subdivided and sold off for upscale home development in recent years, and the project is encountering resistance from some area residents. Some opponents want the mill site downzoned from industrial to prevent it from ever reopening.

Tradewinds has encountered similar objections from neighbors to its plans for a veneer plant at the 'O'okala mill.

"We do not want that plant in a residential area," said Elaine Munro, a Pepe'ekeo resident and spokeswoman for the opponents of Hu Honua. "Too much has happened since they had a sugar plantation there."

Munro also questioned where Hu Honua could possibly get the fuel it will need to run the plant.

Lasocki said he cannot discuss the specifics of the fuel for the plant, but said the company has studied the issue, and is confident it can obtain enough biomass. The plant will be fed by green waste from the local timber industry, land clearing and invasive species eradication operations, and the company also is considering planting new trees, he said.

He would not say what would be planted, other than acknowledging that fast-growing eucalyptus is one candidate.

"We get this question a lot about exactly what and where," Lasocki said. "The challenge is we're in the middle of negotiations, and some information is confidential as well as sensitive."

The company estimates the biomass project would replace 225,000 to 250,000 barrels of imported oil per year.

CONSUMER SAVINGS

The biomass projects also offer the potential for cheaper power for consumers, depending on the details of the final contracts. For example, the agreement between Helco and Tradewinds sets a fixed price for the power generated from the plant based on the "avoided cost" for HELCO, meaning the cost to HELCO to generate the same power from an oil-fired plant.

Since that 20-year contract with Tradewinds was finalized, the price of producing power from oil increased significantly as the price of oil escalated, which means buying power from Tradewinds at the fixed rate is a good deal, Beck said.

However, Beck said the companies will have to prove they have the fuel they need to be reliable power producers.

"It's something they will have to prove not only to HELCO but to the community, that they've got a valid resource there," Beck said.

Hu Honua and Tradewinds both have received strong support from the ILWU, which hopes the biomass projects will generate jobs for area residents.

Others wonder about the need for all three projects, and particularly for the two largest, Hu Honua and Hamakua Biomass facilities.

"I certainly do not see having two plants on the Hamakua Coast," said County Councilman Dominic Yagong, who represents the area. "I don't think two plants can coexist."