NextEra's Hawaii deal faces big concerns from solar players

By Nichola Groom

(Reuters) - NextEra Energy Inc's (NEE.N) $4.3 billion plan to buy Hawaiian Electric Industries Inc (HE.N) has made solar companies uneasy, worried that the deal would reverse the island state's push to decentralise its power grid.

In documents filed with Hawaii's utility regulator, SunPower Corp (SPWR.O), SunEdison Inc (SUNE.N) and a group backed by SolarCity (SCTY.O) say they are worried the acquisition would be bad for their businesses, many of which have grown dramatically in the Aloha State in just a few years. The deal, announced in December, needs Public Utilities Commission approval.

Hawaii, with its sunny weather and sky-high electricity rates, is one of the world's best markets for solar power. Residents see solar as a solution to weaning the state off its reliance on pricey imported fuel oil.

The percentage of rooftop solar installations on homes in Hawaii far surpasses that of any other state, so it is widely considered the Petri dish for integrating large amounts of so-called distributed generation.

"A decision on this merger could be a signal of what utility 2.0 looks like," Robert Harris, a Hawaii-based spokesman for The Alliance for Solar Choice, said in an interview. The group represents rooftop solar companies SolarCity, SunRun, Demeter Power, Solar Universe and Verengo Solar.

In the filings, the companies express concern about NextEra's track record of favouring large centralized renewable energy plants over rooftop solar and worry that the deal will hurt competition.

"It raises the question of whether NextEra plans to have all the renewable energy provided by its subsidiary NextEra Resources," Sunpower said in its Feb. 18 filing, adding that it believed this would deny "other renewable energy companies a fair opportunity to compete in the Hawaii market." The company said it had spent millions of dollars on building its business in Hawaii over the last 16 years. SunPower is majority owned by France's Total (TOTF.PA).

NextEra, which owns about 850 megawatts of solar and 11,500 MW of wind in the United States and Canada, said the concerns are unwarranted. The company's regulated utility, Florida Power & Light, has just a few thousand rooftop solar systems because the state's very low electricity prices make it more difficult for solar to compete with power from the grid.

"We absolutely share Hawaiian Electric’s vision of, among other things, tripling the amount of distributed solar, and in particular, integrating more rooftop solar,” NextEra spokesman Rob Gould said.

(Reporting By Nichola Groom; Editing by David Gregorio)