This article is Part 1 of a two-part series discussing what the NextEra Energy & Hawaiin Electric merger means for the nation’s innovation landscape before diving into the past and future of Hawaii’s energy system.
On Wednesday, December 3, Hawaiian Electric and NextEra Energy announced they will combine in an agreement worth $4.3 billion (full press release here). The two organizations are commonly aligned toward creating a clean energy future for the communities they serve and the rest of the nation.
NextEra Energy acquires Hawaiian Electric and its 450,000 customers in one of the best test beds for new energy technologies in the world. For NextEra Energy, this means on-the-ground access to a place with isolated island grids, year-round sunshine and growing seasons, and high energy costs that make new technologies cost-competitive. As one of the nation’s largest utilities, NextEra would be able to test the viability of new solutions in Hawaii first, before scaling it to their other markets.
For Hawaii, this means more commercial potential for startups and companies that successfully pilot innovative energy solutions. “This partnership has the potential to take Hawaii to the next level as the world’s best test bed for energy innovation. There is, pending approval, a direct link to second and third markets for companies that prove their technology and business model in Hawaii,” says Dawn Lippert, Director of the Energy Excelerator, a startup program that supports pilot projects in Hawaii with funding and partnerships using a non-profit structure. “We’re excited to see the commercial potential of this partnership and the additional entrepreneurial activity it can stimulate.”
In December 2013, Hawaiian Electric Industries became the Energy Excelerator’s first corporate sponsor. As part of the corporate sponsorship, Hawaiian Electric supported a new innovation center in downtown Honolulu, where the Energy Excelerator designed a co-working space for the organization and its portfolio companies. Hawaiian Electric has been and continues to be a key partner for Energy Excelerator portfolio companies in testing new and innovative technologies on Hawaii’s grid.
Stem, one of the Energy Excelerator’s demonstration track companies, just announced a partnership with Hawaiian Electric in September to deploy 1 MW of energy storage in commercial buildings. The objective of the pilot project is to test the potential of responsive energy storage and analytics platform on a grid with high solar penetration. “Stem is optimistic about what this transition will bring to the people and the power system of Hawaii. We hope to see continued sharing of best practices in both directions between NextEra and the Hawaii’s electric utilities for renewables integration, in particular around some of the projects here focused on combining solar with storage,” says Tad Glauthier, VP of Hawaii Operations for Stem. “Additionally, NextEra provides a solid pathway to broad commercialization on the mainland for technologies that have had successful demonstrations here on the islands.”
Pending approval from the Hawaii Public Utilities Commission, this is what the new utility landscape in Hawaii will look like:
NextEra also has two other subsidiaries, NextEra Energy Resources and Florida Power and Light Company. NextEra Energy Resources manages renewable energy projects across the nation, totalling nearly 25 GW. Florida Power and Light Company is one of the largest rate-regulated utilities in the nation, serving over 4.7 million customers in Florida.
Hawaiian Electric will keep its name and headquarters in Honolulu. The company will report to the CEO of NextEra Energy just like its other subsidiaries, NextEra Energy Resources and Florida Light & Power Company.