 We're back. We're live. This is Think Tech here on Think Tech Hawaii.com. I'm Jay Fidel and it's Wednesday and Wednesday has a lot of energy for us. This show is Energy in America and we have Jeff Kissell on the line by Skype from New York. He's a senior fellow at E-Pring, which is an energy think tank out of Washington, D.C. Welcome to the show, Jeff. Thanks, Jay. It's a pleasure to be here this evening and it's nice to talk to you from across 6,000 miles of open ocean and continent. Wonderful technology and technology is really what we're talking about tonight. We're going to call this discussion lifelong to renewables in Hawaii and that means the intersection of regulation and technology, I suppose. And you've been writing a paper and doing a lot of thinking about that as a senior fellow at E-Pring and I wonder what your conclusions are. Well, it's a little bit deep and I want to lay a little bit of foundation if you'll excuse me for a moment. Hawaii over the last half century has really undergone a lot of changes. Our agriculture industry has changed. It's essentially gone. Our fashion industry has moved offshore to the Orient and other places. We've had a lot of concentration of effort on cheap immediate gratification in terms of our economic economy. And that is a great result. Jeff, can we stop for a minute? Can we stop for a minute and call you back? We have a degrading line, Jeff. We're going to call you back in one minute, okay? Aloha, Howard Wigg. I am the proud host of Code Green Think Tech Hawaii. I appear every other Monday at three in the afternoon. Do not tune in in the morning. My topic is energy efficiency. It sounds dry as heck, but it's not. We're paying five billion dollars a year for imported oil. My job is to shave that, shave that, shave that down in homes and buildings while delivering better comfort, better light, better air conditioning, better everything. So if you're interested in your future, you'd better tune in to me three o'clock every other Monday Code Green Aloha and thank you very much. Okay. Okay, we're back. We're live with Jeff Kissel. He's the former CEO of Hawaii Gas, and he's a senior fellow at E-prink, which is an energy think tank out of Washington, D.C. He joins us by Skype from New York. He run Energy in America. We're talking about lifeline to renewables in Hawaii because Jeff has been working on that issue for E-prink. So tell us the background of your research then. Hawaii has had a lot of experience with infrastructure coming and going, you know, in the 17th century, we had a self-sufficient economy. Later on, as agriculture blossomed and in the full extent, the economy developed, it was independent from the continental U.S., from Asia, and from many other places. Now, because we've lost our agriculture industry, we've lost a lot of the things that made us independent. We are dependent on food and the spare parts that the world economy delivers to us, and we're about to dismantle a very important piece of energy infrastructure in Hawaii that we need to pay attention to. It's the renewable energy. Well, I thought we were doing very well on renewable energy. I thought we had some great things going on. But all kinds of renewable energy activity has declined by more than 50% in the last two years, and it's because it was a diversified small business industry. And now, because of the sudden and uncalled-for abolition of net metering and the other things that allowed homeowners to install renewable energy systems in their homes, small businesses to install renewable energy systems in their businesses, and developers to put it in place in their new developments, essentially renewables have come to a standstill and started to regress. If we don't do something about that, within a year or two, there will be no renewable energy left, a new renewable energy industry left in Hawaii. And of course, the consequences of that are very severe. It puts us back on the dependency on foreign oil, and it's a real tragedy if we let this continue. And it's going to be as big a tragedy as it was when we lost sugarcane, pineapple, and the other major industries that supported the Hawaii economy, so that we are now dependent almost entirely on tourism and government largesse. Yeah, interesting that you see energy as an industry that measures up to those standards. But I guess the reality is we had and still do some have, we still have some solar installers. We have a huge solar installer industry and every so often we read now about those companies going out of business and in any event, the number of installations dropping precipitously. But my question is, didn't the regulators and the utility have at least what they thought was a good reason to get off net energy metering and to move on into, what do you want to call it, the new net energy metering now, which is what self supply, that's supposed to replace it. Jay, that is complete and utter nonsense. The issue is not that at all. The issue is the most convenient and expedient solution to a short-term political problem, not the investment that it takes to develop a sustaining, sustainable, renewable energy industry. The evidence is very, very clear. Thousands of companies, hundreds of people and lots and lots of unnecessary economic dislocation is going on because people took the easiest way out. It's going to put us back on a track to dependency on oil. And that is going to be the worst of all possible outcomes for us. Well, let me drill down a little bit on that. You can still have solar installed. I think we're talking primarily about solar and rooftop here. You can still have solar installed, but you don't have the same benefit of being able to sell it back to the utility under net energy metering. But if I don't care about selling it back, and frankly, if I had solar, I wouldn't care that much, then you can still have it. You can buy it. It's just that the spreadsheet is different. You don't do as well financially. You don't retire your investment as quickly under the arrangements that have succeeded net energy metering. But you'll have to explain to me why this change from net energy metering to self-supply. And now they have time of use. They have a big pilot project over time of use, which I think in the end is probably going to roll out around the state within the next couple, three years. Why do those things lead to the demise of renewables in Hawaii? Time of use is nothing more than a hidden tax. It's a way to get people to pay more for less. It increases our dependence on fossil fuels. That is the wrong strategy. The fact of the matter is, and it is inescapable, it is sure as the sun rising if I can draw the analogy. We are losing solar companies daily. We are losing solar jobs daily. And not to make this personal with you because I respect you, and I think you're a great journalist doing a wonderful service for this economy. However, people do not live on spreadsheets. They live on budgets. They need to pay $8 a gallon for milk at the grocery store in Hawaii when they could buy it for $4 in the continental U.S. And the reason in part is because the ultra-high energy costs of Hawaii make it necessary to pass those costs along in every product we buy and everything we do, not just the cost to pay our electric bill every single day. And so if we can say to people, oh, don't worry about it, spend $60,000 and put your solar panels on the roof. And when you don't need the power, it'll charge your batteries. And oh, by the way, when your batteries are fully charged, you can't get anything more out of it because you can't share your power with your neighbor, which is what net metering does. Then in fact, what you've done is cut the heart out of an industry. You know that businesses make 90% of their profit seasonally at the peak times. They're staying business all the time so that they can be there when it's time to make money. Retail makes it a Christmas time. There are other industries that the hotel industry make it during the winter. There are other industries that make it in other seasons. Well, the renewable energy industry makes it when the sun shines. And if you're telling me that I can't share my power with my neighbor when the sun shines, you're destroying the incentive that I have to spend the money, make the investment and become an independent business person. Yeah, well, you know that. And join the benefits of serving my community with renewable energy. Well, where do you place that against the solar farms that are coming online? You know, Hawaiian Electric is out there having RFPs and, you know, contracts and projects to build large-scale solar farms where that would, it's provided by a contractor, but ultimately it serves the utility to have the solar farm. And I think what's coming down the pike, if it's not already here, a large-scale battery configurations again on the utility side of the line, why can't those things, you know, save our pipeline of renewables? In the Energy Policy Research Foundation that I work for, we deal in facts, not fantasy. The solar industry was installing more than one megawatt of power a month on small businesses, on homeowners, in apartments, everywhere. You're talking about solar farms that may be five or ten megawatts. That's less than a year's supply of what was happening on the rooftop. Forget everything else. And they cut it off. And they cut it off without understanding the economic consequences. Today, there is less than a 30-day supply of energy in the state of Hawaii with a shutdown of the coal plant and the sugar plantation on Maui. Maui is in a crisis and doesn't even know it. The hold is filling with water, the ship is sinking, and just because everything looks great on the deck, nobody is paying attention to what is about to happen. You get one big storm on Maui and heaven help you. You have big troubles. So what will happen here? Let's assume that energy metering results in a reduction of the number of installers, the number of installations of solar on rooftop, and it makes it less attractive for owners to, you know, install solar on rooftop. How will that work? So now there are fewer installers, fewer installations, but the installations that exist will continue to exist. And to the extent the utility does something at its side, you know, that'll ameliorate the problem. But can't, show me that this is going to evolve into a disaster. The facts are very, very clear. 25, 35 years ago, we had a six month supply of oil in the Hawaiian Islands, coal, and food. Today we have a 30 day supply or less. We have 10% of the spare parts we once had. So we are dependent on an airplane lifeline to keep us going day by day. What on earth would we want to do that same damage to an industry that's done nothing but contribute positively to the economic value in Hawaii? I'm dealing in facts. I'm not dealing in speculation. I'm not telling you we should be, you know, we should all drive electric cars or we should all do one thing or another. And in fact what's happening is that the regulators well intentioned and the industry well intentioned have utterly undermined our governor's courageous plan to move Hawaii to a fundamentally renewable energy base in its economy. And because they cut the heart out of it unnecessarily and untimely. Now I'm not suggesting we should have net metering forever. I'm not suggesting any single solution is the right solution. What I am suggesting is that the right solution is to move in a very measured way toward a renewable energy economy. And anytime you see a big dislocation like the number of people in the renewable energy falling by 50, 60, 70% you need to step back and say what have we done wrong because clearly we've done something wrong. So from the point of view of the regulators and the point of view of the utilities, you know what do you recommend at this point? What can they, should they do to go back to sort of a moderate growth instead of this kind of trauma? I think the most important thing that they can do today is to take a step back from the precipice, restore net metering, encourage renewables and if necessary, which it is, invest public money in upgrading the grid so it can take the variability that solar energy will put on it and let that industry grow. The evidence is just abundantly clear. 10 years ago when we were internet metering and we were building out our solar grid, both of those refineries were about to shut down and go away. Guess what? Both of those refineries have new owners, new capital and they're invigorating themselves because Hawaii is going to continue its addiction to oil in a big way that you wouldn't get that cap. Look, I'm not talking about whether it's right or wrong. It may be the right thing for Hawaii. It may be that oil prices are going to decline to the point where it's the best solution for Hawaii. Certainly Hawaii doesn't have to worry about air pollution or anything else. Obviously it's got to worry a little bit about sea level rise. But the fact of the matter is you've got a healthy oil industry and dying. Well, let me ask this. I hope our connection is good. Energy industry, isn't that the reverse of what this... Going back to a solution on this, so you think we ought to go back to net energy metering. Would you modify net energy metering now if you resumed it or created another kind of net... How would it differ? Would it differ at all? Would you improve it in some way from the way it was before? We were right. It was working. It wasn't broken. What we need to do is not stop the installation of renewable energy devices. We need to invest in the grid, give the electric company a proper return so that we can handle more renewable energy on that grid. That's the solution. It's not difficult to see. One of the points about net energy metering before was that the utility was paying retail to buy power back from the owners of rooftop solar. That was really too high because the utility had its expenses. It really wasn't good business to pay retail back, especially it wasn't clear that they were going to be able to use all what they had to buy. So would you change that? Would you change the rate at which the utility buys power back from the people under this program, this reconstituted net energy metering program? I am advocating a step back to the point where we were successful and then sorting out the real problems. You've identified one. The utility needs a return on their investment. No one should deny that. You can't tax the shareholders of a private company to support the public policy. Give them the proper return, but you've got to have an industry that can install the renewable energy devices so that we can put that renewable energy online and then figure out how to properly allocate its cost. Don't stop the installation. I'm just being a gadfly here, Jeff, but suppose I said why don't we increase the installation? Why don't we do tons of solar but do it on the utility side where we can best control it and where you don't have the argument that it's inequitable with the disparity of income and property ownership. That way everybody enjoys it in the same way, in the same degree. Why don't we take those installers and those installer companies and give them work, lots of work installing solar farms, you know, scaled up solar farms for the utility or for utility contractor? Why don't we do that? The utility does not control the real estate. The homeowners control the real estate. It's the rooftop and they don't need to have permits and public hearings and all kinds of issues resolved to get their solar installed on their rooftops. They need to be able to call a local installation company and arrange for the installation. The utility simply can't do it. We don't have the economy that allows that. We don't have the regulatory environment that allows that. Well, let me change the facts on you then for a minute. Let's have in my model, you know, my hypothetical I'm asking you, we're going to have a better regulatory environment. We're going to have an environment that really wants to move down the track on solar and renewables and we're going to stop taking, you know, years to approve, you know, permitting and RFP arrangements. We're going to do it much faster. Would you change your answer? It took me six months to get a building permit to remodel my bathroom. What makes you think that I'm going to believe that you're going to be able to expedite a solar farm in the middle of a piece of land that somebody else wants to grow agricultural crops on? Yeah, okay. I got your meaning. So what about the tax credits? Would you change the tax credits in this return to net energy metering? Would you do anything to incentivize one way or the other? I think that's got to be on the table for consideration. The people at the public utilities commission, the people who run the utility and the people in the solar industry should be called upon as responsible participants in this community to come up with the solutions that will work long term. Our governor has got staff that is capable of coordinating this and it ought to be done. Well, I think one point, you know, inherent in what you're saying is if we want to move down the pike, we have to move quickly and we can't be deterred by, you know, whatever regulatory changes or impediments exist, we have to move, we have to move more quickly. And my view is anything and everything we can do to move more quickly, we should do it. And for the life of me, I don't understand why it takes so long to do anything, including the, you know, the 19 months on next era, that was too long. But let me ask you about the mainland, you know. This is called, this show is Energy in America. And so while, of course, you have plenty of experience looking at it from the point of view of a Hawaii, a Hawaii file, Hawaii resident, former CEO of an energy company here. What about the mainland? What is happening on the mainland? What is happening in terms of net energy metering? What is happening in terms of rooftop solar and, you know, scaled up solar farms and batteries and all that? What are the trends you see happening there? I'll answer that question, but I want to address one issue that you raised earlier in your commentary. We are about to lose the last sugar plantation in Hawaii. Once you lose the last of anything, it is very difficult to bring it back. I want to say the mainland is building out its renewable energy infrastructure. Hawaii is shrinking its renewable energy infrastructure. The mainland is, is reducing its energy demand overall for electricity in different regions by one half of 1% to 4% a year. That is falling demand. Falling demand, and it is replacing coal and other forms of conventional energy supply with renewable energy. It's even actually reducing hydroelectric energy, which, although it's clean, has other environmental consequences. And so we are replacing the equivalent and, you know, anybody can look at these statistics stuff and that's the business I'm in is to show the numbers. We are replacing energy consumption on the continental US and Alaska by the equivalent of 200,000 barrels a year. That means in 10 years, 2 million barrels a year of energy demand that were, were previously fossil fuel natural gas base will be gone. That is a really, really important statistic because the demand is falling and the supply is being replaced by renewables. Hawaii is actually changing that trend for the worse. We're going back to the past, not forward to the future. That's a wake-up call for Hawaii, isn't it? Because the longest time we were ahead of the curve, weren't we? We were the model, we were the postage child for renewables and especially for rooftop solar. And now you're saying that we're falling behind and other places are moving faster than we are. You know, one thing I would say that people here don't follow this, they don't know this, they don't realize that, you know, our speed of moving toward renewables is, seems to be slowing and we're not keeping up with the speed at which people are moving toward renewables on the mainland, am I right? You're right because we have this big installed base. So the fact that it isn't expanding is not noticeable now. It will be when that base ages and the only thing to replace it is the oil and then oil changes from a relatively inexpensive fuel as it is today to a much more expensive fuel as likely to be in the future. And we get, we get hit with kind of the compound impact of high local energy prices with high jet fuel and we end up where we were in 2006, seven, eight, nine, where we have high energy prices, high flight prices to Hawaii and a tourism industry that essentially collapses overnight. Well, that's pretty, that's pretty threatening. I'd like to talk with you further about that. But let me ask this, I mean, you mentioned it's, it's, we should look at the facts, we should look at the stats. You're writing about this. If I wanted to read, you know, you're writing your report, where would I find it? If it's not out, when is it coming out? We, well, we are writing all the time on our website, which is epric.gov, E-P-R-I-C, sorry, epric.org, O-R-G, E-P-R-I-C dot O-R-G. And you can see the statistics on a nationwide basis. We are doing a series of articles on the overall impact of renewable price economics and the choices that we want to make in terms of miles per gallon in our vehicles, renewable components to our electricity, and the other essential items that every citizen should know to make good judgments. So you will find us writing about that all the time. And you'll, you'll also have an idea of what the, the energy balance in the United States and the world is likely to be. And when we can expect changes in fossil fuel prices, what's renewable energy prices? Thank you, Jeff Kissel. It's been great to talk to you. I want to do it some more. We'll look at the website, epric.org, and we'll come back to you. We want to continue this discussion. It's important for policymakers to know about this. Thank you, Jay. It's a pleasure being with you tonight.