Hawaiian Electric's $1.8B–$2.4B CapEx Plan: A Post-Disaster Resilience Play with Regulatory Tailwinds

Hawaiian Electric Industries Inc. (HEI) is navigating a pivotal phase in its corporate and operational trajectory. The company's $1.8–$2.4 billion capital expenditure (CapEx) plan through 2028, aimed at wildfire risk reduction and grid reliability, represents a strategic pivot toward post-disaster resilience and regulatory alignment. This plan, announced against the backdrop of the devastating 2023 Maui wildfires, underscores HEI's commitment to rebuilding infrastructure while securing long-term financial and regulatory support. For investors, the interplay between capital allocation, regulatory approvals, and disaster recovery mechanisms presents both risks and opportunities.

A Resilience-Driven Capital Plan

HEI's 2026–2028 CapEx plan is anchored in post-disaster resilience, with a focus on hardening infrastructure against climate-related threats. According to a report by Hawaiian Electric's investor relations division, the company plans to invest heavily in strengthening transmission lines, bolstering distribution systems for critical facilities, and deploying advanced technologies like grid-protection devices and vegetation management tools, as noted in a HEI investor relations report. These measures align with the Hawaii Emergency Management Agency's designation of wildfires as the state's top hazard, emphasizing the urgency of proactive mitigation, as noted in the same report.

The plan also includes a $190 million Climate Adaptation Transmission and Distribution (T&D) Resilience Program, supported by $95 million in federal funds from the U.S. Department of Energy, as detailed in the investor relations report. This funding, approved in August 2023, is earmarked for grid hardening across all five islands served by HEI, as detailed in the investor relations report. Such federal backing not only reduces the company's financial burden but also signals broader policy support for climate adaptation in critical infrastructure.

Regulatory Rebasement and Financial Flexibility

HEI's ability to execute its CapEx plan hinges on regulatory approvals and financial flexibility. In late September 2025, the Hawaii Public Utilities Commission (PUC) granted approval for an alternative rate rebasing process, allowing HEI to rebase rates ahead of the next multi-year rate period beginning in 2027 without a traditional rate case, as noted in an earnings call transcript. This streamlined approach, part of the company's performance-based regulation (PBR) framework, aims to expedite rate adjustments and align them with the capital-intensive projects outlined in the 2026–2028 plan.

However, the final regulatory status of the CapEx resilience projects remains pending as of November 2025, as noted in the earnings call transcript. Investors must monitor the PUC's ongoing review, as delays could strain HEI's liquidity. To mitigate this risk, HEI has already taken steps to strengthen its balance sheet. In 2024, the company sold 90% of its stake in American Savings Bank for $405 million, a move explicitly tied to funding wildfire-related obligations and key utility initiatives, as reported in a Hawai'i Business article. This transaction, coupled with a $400 million senior unsecured note offering in 2025, provides HEI with the liquidity needed to sustain its capital program while addressing immediate liabilities, as noted in a HEI 8-K filing.

Strategic Asset Sales and Core Focus

HEI's strategy extends beyond capital spending to include the divestiture of non-core assets. The company has sold solar and Battery Energy Storage System (BESS) facilities to streamline operations and refocus on its core utility services, as reported in the Hawai'i Business article. While these sales may reduce short-term revenue, they align with HEI's long-term goal of maintaining a resilient, cost-effective grid. For investors, this shift signals a prioritization of operational stability over diversification-a critical consideration in a sector where regulatory scrutiny and climate risks are escalating.

Risk and Reward for Investors

The 2026–2028 CapEx plan is not without risks. HEI's 2024 loss of $1.42 billion-driven by its share of a $4.04 billion wildfire settlement-highlights the financial volatility inherent in disaster recovery, as reported in the Hawai'i Business article. However, the company's proactive approach to securing federal funds, regulatory approvals, and asset sales demonstrates a capacity to navigate these challenges. For investors, the key question is whether HEI can translate its resilience investments into sustainable returns.

The PUC's endorsement of the alternative rate rebasing process suggests confidence in HEI's ability to balance cost recovery with public interest. If successful, this framework could enable HEI to pass on a portion of its CapEx costs to ratepayers, thereby insulating its margins from the volatility of capital-intensive projects. Conversely, regulatory pushback or delays could erode investor confidence.

Conclusion

Hawaiian Electric's $1.8–$2.4 billion CapEx plan through 2028 is a bold bet on post-disaster resilience and regulatory alignment. By leveraging federal funds, securing PUC approvals, and optimizing its balance sheet, HEI is positioning itself to rebuild a more robust grid while managing financial risks. For investors, the plan's success will depend on HEI's ability to execute its projects efficiently and secure timely regulatory support. In a world where climate-related disasters are becoming the new normal, HEI's approach offers a compelling case study in utility resilience-and a potential long-term value proposition.