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UPDATED 10/13 6 p.m.

State regulators have approved a contract between Hawaiian Electric Co. and SunPower, a San Jose-based solar company, for a 5 megawatt solar installation in west Oahu.

The project is the first of several large-scale solar projects in the works for the island. A 20-megawatt solar farm is being planned for Mililani and Barber’s Point, and San Diego-based Sempra Generation is planning a massive 300-megawatt plant in Pearl Harbor. On Kauai, the electric utility announced last week that it was moving forward with a 10-megawatt solar project.

SunPower plans to break ground on the project in Kalaeloa this year and expects to finish work in five months. The land is being leased from the Department of Hawaiian Homelands.

The cost to Oahu customers, who pay the highest electricity rates in the country, would be about 32 cents per kilowatt hour if purchased today. Currently, residents are paying 33 cents per kilowatt hour for electricity, and on the neighbor islands even more.¹

The state’s solar sector has taken off in the past few years, aided by aggressive tax credits on the federal and state levels. Between 2009 and 2010, installations more than doubled, according to data from Hawaiian Electric. Last year, nearly 4,000 solar systems were connected to the electric grid, and solar companies have told Civil Beat that this year sales are significantly higher. Most of the solar projects are rooftop solar installations.

Despite the success of the local solar industry, the utility and solar companies have been arguing over how much solar can be permitted on the electric grid without causing problems in service to customers. Hawaiian Electric says more studies are needed while solar companies say the utility could accommodate a lot more. The state Public Utilities Commission is currently reviewing the issue.

DISCUSSION: Do you believe solar power is a good option for Hawaii?*