Lloyds of London Lawsuit Reveals Story Behind Kahuku Windfarm Fires

by Andrew Walden

Allegations in a lawsuit brought by a Lloyds of London Insurance underwriter raise questions about the competence of First Wind management personnel.  In a November 13, 2013 civil suit filed at Oahu's First Circuit Court, Certain Underwriters at Lloyd’s London identifies Dynapower Company LLC of Michigan and Electronic Concepts Inc of Delaware as suppliers of allegedly defective electronic components blamed for three fires at the Kahuku site.

A fire described as ‘small’ lit up the Kahuku battery warehouse just seven weeks after the facility went into operation.  The lawsuit states that a second fire—also previously described by First Wind management as ‘small’--resulted in $2,000,000 in damages being paid out on the policy.  The suit also details the findings of an investigation into the first and second fires.

In spite of the substantial losses caused by the second ‘small’ fire and the investigation allegedly identifying the defective parts at faulty, First Wind apparently failed to take sufficient action to correct the problem.  A third fire broke out in August, 2012 spewing toxic lead smoke into the air for three days as the First Wind battery warehouse burned to the ground.

Kahuku was backed by $117M in federal loans and a $35M federal grant.  First Wind is closely tied to the Obama administration and the national Democratic Party.

First Wind’s failure to prevent the third fire should give Kahuku residents additional cause to be concerned about First Wind’s recently announced plan to install new batteries based on a never-before-used molten magnesium technology.  Theses batters are expected to operate at temperatures in excess of 1202 F.

From the text of the lawsuit, here are the details:

7. In 2011, First Wind contracted with Xtreme Power Solutions LLC ("Xtreme"), a designer and manufacturer of energy storage and power management systems for power producers, utilities, and commercial end uses, for the manufacture of ten Dynamic Power Modules ("DPMs") for use at the Kahuku Wind Farm. The DPMs are critical components of First Wind's energy storage system, absorbing excess power or providing supplemental power, depending on the strength of wind gusts supplying the farm.

8. To complete the DPMs for First Wind, Xtreme purchased ten specially- designed inverters from Dynapower that contained capacitors manufactured by ECI. The ten inverters were installed in ten DPMs, which were housed in a building specially constructed by First Wind for the DPMs.

9. On March 1, 2011, the Kahuku wind farm went online. On April 22, 2011, one of the inverters caught fire, destroying one of the DPMs and damaging nearby equipment and fixtures.

10. On May 23, 2011, a second inverter caught fire. This fire destroyed a second DPM. First Wind suffered lost energy due to outages and derates following the May 23, 2011 fire.

11. Following the May 23, 2011 fire, First Wind submitted a claim to UNDERWRITERS under Section 5 (Operational Business Interruption) for business interruption losses that it suffered as a result of the May 23, 2011 fire.

12. UNDERWRITERS have made payments in excess of $2,000,000 to First Wind under Section 5, reimbursing First Wind for its losses that it sustained following the May 23, 2011 fire.

13. An investigation of the April 22, 2011 and May 23, 2011 fires identified the ECI capacitors contained in Dynapower's inverters to be the cause of the fires. The investigation determined, inter alia, the following:

• the fire patterns in the DPMs show that the fire started in the capacitor area of the cabinets;
• the materials used in the capacitors supplied by ECI were combustible;
• new capacitors manufactured by ECI were shown to have had manufacturing defects;
• the capacitors supplied by ECI were operating with a large spread in their operating temperatures;
• there were observable defects in the capacitors manufactured by ECI;
• the design of the Dynapower inverters was not "sufficiently robust" to operate in the environment and certain design steps should have been implemented; and
• the ECI capacitors used by Dynapower were not properly rated for this application.

LINK >>> FULL TEXT OF LAWSUIT

VIDEO: Battery Blues

Background:

• Playing with Fire: Kahuku Windfarm to Install Molten Magnesium Batteries
• Lawsuit: Kahuku Windfarm May Never Get its Turbines Repaired
• Xtreme Power: A Pig-in-a-poke For Hawaii Wind Farm
• Kahuku Windfarm Loan Timed to Boost IPO, Avoid Jail