The state has set out to have as many as 3.4 million square feet of solar power panels on the rooftops of state buildings across Hawai'i, generating up to 34 megawatts of electrical power in what would be one of the largest state-backed photovoltaic projects in the country.

Switching to solar power in state facilities on six islands would guard against the rising cost of electricity while reducing reliance on imported crude oil. However, there would be no up-front investment by the state because bids are being solicited from businesses that would buy and install the system. The company that gets the contract would provide the state with power under a 20-year power purchase agreement.

One megawatt of photovoltaic panels could reduce crude oil consumption by about 3,800 barrels per year, according to Hawaiian Electric Co. One megawatt of power also could supply the power needs of about 1,000 homes. However, solar power panels usually produce about 20 percent of their rated power output because the panels don't always receive sunlight.

The state Department of Transportation started soliciting bids in December and final bids are due late this month. The system, which encompasses a dozen locations including major airports, could be running within two years. DOT spokesman Scott Ishikawa said about 20 entities are registered to bid on the project.

MAJOR POWER SYSTEM

Richard Rocheleau, director for the Hawaii Natural Energy Institute, estimated the solar power system could cost $50 million or more, depending on how much of the state's 3.4 million square feet of roof area is usable.

"If that was covered by (photovoltaic panels) that would be a huge amount," he said. "If someone did that entire area, it would certainly be one of the larger (projects) I've heard of."

The cost of the proposed project to the winning bidder could be offset by as much as 65 percent by using available state and federal tax credits.

Currently the largest photovoltaic power system on O'ahu is located on the rooftop of Hangar 54 on Ford Island. That system generates about one-third of a megawatt of power, or enough electricity to power 300 homes.

Previously the largest announced photovoltaic project in Hawai'i was planned by Castle & Cooke Inc. — a 1.5-megawatt solar farm on a 10-acre site in south Lana'i. The project would cost an estimated $13 million to $18 million.

Castle & Cooke hopes to begin construction in April or May if it can acquire the needed construction permits, said Tim Hill, Castle & Cooke's executive vice president for renewable energy projects. The company wants to complete the project before a 30 percent federal tax credit expires at the end of this year.

Other local projects include a 167-kilowatt O'ahu solar power system being built by Hoku Scientific Inc. for HECO. The system at Ward Avenue is expected to be in service early this year, pending approval by the Public Utilities Commission.

STATE INITIATIVE PRAISED

Kapolei-based Hoku would not comment on whether it was bidding on the DOT project. However, Scott Paul, vice president for business development, agreed that the proposed state solar power project could be one of the largest planned by any government agency in the United States.

"We think it's fantastic that the state is taking the initiative," he said. "It is a really good way for (photovoltaic technology) to gain visibility as a viable solution to reduce overall energy costs for business or in this case a government agency."

According to the state's request for proposal, power generated at each state location would be used internally. The state would have the option to purchase these photovoltaic systems after 20 years or to renegotiate a new power purchase agreement.

The increased use of solar power panels is spurred by the availability of state and federal tax credits and rising energy prices, Rocheleau said.

"For us on this island it's probably a bit of a longer pay back for the typical homeowner," he said. But "it's something that for a state entity probably is getting to the point when it makes sense. It certainly isn't out of the question at all."

Last year about 80 HECO customers signed so-called net energy metering agreements with the utility, said spokesman Peter Rosegg. Such agreements allow owners of solar power systems to sell excess electricity back to the utility.

Prior to 2007 there were only 23 net energy metering agreements in place, Rosegg said.

"We've had a record number of people applying for those," he said. "We encourage customers to consider whether a renewable energy system is right for them."

Reach Sean Hao at shao@honoluluadvertiser.com.