(Corrects JPMorgan company name in fourth paragraph.)
Hawaiian Electric Co. will use locally grown and processed biofuel from Aina Koa Pono LLC to generate power.
The Honolulu-based utility said today in a statement that it will initially use the fuel at its 80-megawatt Keahole Power Plant on the island of Hawaii, and may also use it at other facilities there and on Oahu and Maui.
Aina will spend $320 million to develop a farm for energy crops and a processing facility to turn the plants into biofuel, Char Chang, a company spokesman, said today in an e-mail. The 13,000-acre farm will grow mainly sweet sorghum and eucalyptus, and the company will also use Christmas berry and guinea grass, Chang said.
Aina has raised $4 million in seed money to date and anticipates receiving $5 million “in coming weeks,” Chang said. The company is in talks with investment banks including Goldman Sachs Group Inc., Morgan Stanley, and JPMorgan Chase & Co., he said.
Aina has obtained exclusive rights in Hawaii from Tekgar LLC and Bionics Fuel Technologies AG for a technology called “microwave depolymerization” that uses heat and pressure to convert organic material into synthetic diesel, Chang said.
Hawaiian Electric said the contract would add $1.55 to $1.86 per month to the bill of typical residential customers who use between 500 kilowatt-hours and 600 kilowatt-hours of power each month.
Terms of the utility’s fixed-price, 20-year contract with Aina were not disclosed. Aina will provide 14 million gallons of biofuel per year beginning in 2014, increasing to 16 million gallons per year in 2015, Hawaiian Electric said.
Construction on the processing facility is expected to begin in the first quarter of 2012, Aina said in a statement.
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