According to a MECO application filed Tuesday with the state Public Utilities Commission, HC&S’ pending closure late this year and the ending of its purchase power agreement with the utility will reduce the island’s reserve power capacity. Now, the burning of bagasse, coal and oil at the Puunene Mill provides up to 4 megawatts of “firm” power and an additional 12 megawatts of emergency power, according to the utility.

“With this reduction to the system, the company is in need of additional firm generation sooner than anticipated to maintain reliability as customer demand increases,” MECO’s filing says.

(“Firm power” refers to electricity that a supplier guarantees will be available when needed. Wind and solar power are variable, or “as available,” sources of power. “Reserve capacity” is extra power-generating capacity available to meet unanticipated demands for electricity, if needed, such as if a generator were to break down.)

The utility says the temporary power generation project is “a key component of a larger portfolio of measures that are needed to help mitigate increasing reserve capacity shortfalls that are anticipated to arise on the company’s Maui island system as early as March 2017 . . . and continue until the installation of the next dispatchable firm capacity resource in 2022.”

The highest reserve capacity shortfall is expected in April and May of next year, when MECO’s largest power generators at Maalaea are taken offline for scheduled maintenance.

Earlier this year, the PUC approved MECO’s request to build a new, $13 million substation in a sugar cane field adjacent to the intersection of Kuihelani Highway and Maui Lani Parkway. Construction is targeted for completion as early as June. The diesel generators would be installed at the same time and location as the Kuihelani substation.

MECO already has identified a 4-megawatt shortfall of power generation capacity as of April, as well as additional, ongoing near-term reserve capacity shortfalls for 2018 to 2022.

The three temporary generators would burn “ultra-low sulfur diesel” – with each rated at being able to deliver 1.65 megawatts, for a total of 4.95 megawatts of firm power generation for the utility’s reserve-capacity use, according to the filing.

“The pending land acquisition of approximately 2.6 acres for the Kuihelani substation will provide sufficient space to allow for the placement of the temporary distributed generation units,” the utility says. “The temporary distributed generation units will provide customer benefits through increased service reliability, improved operational flexibility and support of the projected reserve capacity shortfall beginning in March 2017.”

The generators are expected to operate only during peak-load hours, typically between 5 and 9 p.m., according to the utility.

The power-generation units are expected to be removed and sold for nearly $1.7 million after about five years when the reserve capacity shortfall is anticipated to be eliminated by the installation of new firm power generation.

According to MECO, other reserve capacity shortfall mitigation measures include:

* Repurposing the company’s existing battery energy storage system.

* Relying on as-available wind resources.

* Pursuing company- or customer-owned, utility-dispatched distributed generation projects.

* Requesting voluntary customer power cutbacks.

* Accelerating the installation of the next firm generating unit or energy storage systems.

* Expanding the company’s fast-demand-response program from 0.2 megawatts to 5 megawatts.

(The fast-demand-response program allows eligible commercial customers to reduce power consumption proactively during times when electricity demand exceeds generation capacity. Customers enrolled in the program are rewarded with financial incentives.)

So far, MECO has four customers in the fast-demand-response program, which helps the utility maintain a stable power grid and prevent unplanned outages. MECO is seeking PUC approval to expand the program.

MECO noted that, of its options, the Kuihelani temporary distributed generation units, the expanded fast-demand-response program and improved battery energy storage system “are uniquely able to help reliably address the near-term reserve capacity shortfall beginning in 2017.”

When the PUC approved the Kuihelani substation project, state regulators conceded that the substation would be needed as early as June of next year, but they reminded MECO officials that they need to do a better job of planning for a transition to renewable energy.

The commission has established a blueprint for Hawaiian Electric companies to move out of the power-generation business and toward managing and dispatching electricity from dispersed independent operators and from consumers, including those with rooftop solar panels.

In early January, HC&S’ parent company Alexander & Baldwin announced the closure of Hawaii’s last sugar plantation at the end of this year. Layoffs have been coming in waves, but the closure will result in lost jobs for more than 600 workers.

The company has that said it plans to turn to diversified agriculture, including bioenergy crops and cattle grazing, for some of its 36,000 acres in Central Maui.

* Brian Perry can be reached at bperry@mauinews.com.