NextEra Energy and Hawaiian Electric to "merge"

The rollout of renewables and distributed generation is leading to rapid changes in the utility landscape. This week German giant E.ON announced plans to spin off its fossil fuel generating portfolio to concentrate on renewables, with the next in line for fundamental change is the major Hawaiian utility. NextEra will purchase Hawaiian Electric in a deal that will may have mixed blessings for the continued rollout of distributed generation in solar, according to observers.

The NextEra and Hawaiian Electric merger does not include the banking arm of the utility, ASB Hawaii – which will be spun off as an independent public company. The value of ASB Hawaii is estimated at $3.5 billion.

"We are proud that Hawaiian Electric has agreed to join our company in large part because of our shared vision to bring cleaner, renewable energy to Hawaii, while at the same time helping to reduce energy costs for Hawaiian Electric’s customers," said NextEra Chairman and CEO Jim Robo.

"Today, Hawaiian Electric is addressing a vast array of complex and interrelated issues associated with the company’s clean energy transformation. We believe our strengths are additive to Hawaiian Electric’s, creating an opportunity to enhance value for Hawaii’s strategically important energy industry."

Hawaii has emerged as a fascinating solar and storage market, with these and other distributed and renewable technologies competing strongly with diesel-based generation. Both NextEra and Hawaiian Electric have indicated that renewables and storage will play a key role in the island’s energy mix in the future.

“While our goals are among the most ambitious in the nation, including increasing renewables to 65 percent, tripling solar and lowering customer bills 20 percent by 2030, we are confident that by leveraging both NextEra Energy and Hawaiian Electric’s expertise and the additional financial resources that NextEra Energy brings, we can meet these targets even sooner,” said Hawaiian Electric president and CEO Connie Lau.

In reacting to the news, Forbes‘ energy and environment contributor William Pentland noted NextEra – through its subsidiary Florida Power & Light Company – has not been welcoming of an open distributed generation market or merchant power plants.

“If Florida’s approach to wholesale market competition is any indication of how the distributed generation market will evolve in Hawaii with NextEra running the show at the state’s largest regulated utility, NextEra’s expansion into Hawaii is likely a mixed blessing for the distributed generation business,” wrote Pentland. “Distributed generation companies like SolarCity may have reason to be concerned about their future ability to compete in the most promising market in the United States.”

SunEdison co-founder, cleantech investor and author Jigar Shah told pv magazine that the announcement is "huge news," noting that it leaves an American utility landscape with few competitors. "There will be six large electric utilities left by 2022," said Shah.

The Wall Street Journal reports that Hawaiian Electric supplies power to around 450,000 customers, totaling 95% of Hawaii’s population.