HONOLULU (AP) - A Texas energy company has started preliminary discussions with Hawaiian Electric Co. to supply compressed wood pellets to the utility.
The Honolulu Star-Advertiser reported Friday that Zilkha Biomass Energy signed a "letter of intent" with Hawaiian Electric. But a HECO spokesman described the discussions as preliminary. As with other new fuel sources, extensive testing would be needed before HECO could sign a contract to buy the fuel pellets.
Zilkha estimates Hawaiian Electric could save 30 percent or more on its fuel costs by burning the wood pellets instead of fuel oil to generate electricity.
The company manufactures pellets from harvested trees at a plant in Texas, Zilkha Chief Executive Officer John Holmes said in a filing with the Public Utilities Commission.
HECO officials said that they were limited in what they could say about their work with Zilkha due to a nondisclosure agreement. "We have met with representatives of Zilkha Biomass. No commitments have been made at this time. It is a promising technology but further study and evaluation are needed to determine whether this option provides a cost benefit to our customers," HECO spokesman Peter Rosegg said in an email.
Zilkha's Black Pellets are a form of biomass, which is an attractive energy source for HECO because it counts toward the utility's renewable-energy mandate. HECO has committed to using renewable sources to generate 40 percent of the electricity it sells by 2030.
The cost of generating electricity with Zilkha's Black Pellets would even be less than burning liquefied natural gas, another option being considered by HECO, Holmes said. Black Pellets would be an estimated 16 percent cheaper than liquified natural gas at the Waiau power plant and 20 percent cheaper at the Kahe plant, Holmes said.
The Blue Planet Foundation, which opposes efforts to bring liquified natural gas to Hawaii for power generation, welcomed Zilkha's plan.
"This is exciting to us because much of the conversation to date has been about how renewables are great, but we need LNG (liquified natural gas) to lower prices long term. To some it is almost fait accompli that LNG is our logical future fuel," Blue Planet Foundation Executive Director Jeff Mikulina said in an email.