 The State of Clean Energy. This show is sponsored by the Hawaii Energy Policy Forum, and I have to put in a plug for my organization with funding from the Hawaii Natural Energy Institute, so I got the plug in there. Today, we're delighted to welcome two guests, Will Gies, Executive Director of the Hawaii Solar Energy Association, and Peter Rosig from the Hawaiian Electric Company. So today we'll be discussing the critical potential role of the solar industry in our topic today entitled Solar, A Renewable Path to Recovery. So I'd like to start with you, Will, and please give us an overview of your association and who you are, your membership, how long you've been around, and more importantly, not more importantly, but what is your role? How do you interface with the rest of Hawaii? Sure. Thanks. Well, thanks for having me on, and this is an interesting format. I've not done a Zoom interview before, so it seems to be working so far. Yeah. So I'm Will Giesi, I'm the Executive Director for the Hawaii Solar Energy Association. We are a non-profit trade organization, a 501C6, that's been around since 1977. We are primarily a solar hot water trade association, but we've since recently branched out into demand response technology, DER aggregation, EV, mostly behind the meter resources, advocacy around that. Our advocacy kind of goes into four different sections. The first is membership. So for the last couple of years, for instance, we've held a trade show in November. We also hold membership events and trainings, trying to keep all of the solar industry up on the most latest trends and codes and standards. We have advocacy at the legislative levels, so community or county levels, state levels, and we also coordinate with federal affiliates on a variety of different renewable energy policies. We advocate at the regulatory level, which is probably a huge portion of our organization's work, and it's probably the most impactful piece. So we intervene in dockets at the state level for the Hawaii PEC, as what's called a stakeholder party. Sometimes we have attorneys, sometimes we intervene just as an organization, and then the fourth kind of umbrella is the community aspect. So we go out to the community, sometimes we go to neighborhood boards, we go to places like the HBOR or the building industry alliance and talk about solar energy, and our organization right now has 105 member companies, so that's the most we've ever had. We represent about 95% of the behind the meter solar industry in Hawaii. 70% of the membership is locally owned and operated here in Hawaii. So how are you funded? Are you all self-funded or do you also get any kind of grants from any of the foundations in town and other people who have similar interests? So as a C6, we don't really do a lot of grant funding. Our primary funding source comes from membership dues, so like any trade organization, we have companies that pay dues usually every year at the beginning of the year. And that makes up a majority of our revenue, but then we also hold events. So we have a general membership meeting and a trade show, which has lately made up a bigger portion of our revenue over the last few years that we've been holding it. Roger that. So you have some, you brought some slides around and Peter, I don't want to come out and I'm not cutting you out, but I just like Will to go through this slide deck and then go ahead and have a discussion based on and as we go along, we can just interrupt you or we can talk over you, try not to be rude, but kind of ask you questions to kind of elucidate some of the conversation. So yeah, so pull up the first slide that please Eric. Thank you. So. Yeah. So I can go ahead if you're ready. Yeah. Just jump right in. So yeah, well, you know, thank you for asking me to be on this and I think the catalyst for this was an op-ed that we wrote myself and our intern at the time, Allison Hilliard, who unfortunately can't join us. We wrote an op-ed and it was published in Civil Beat I think in late April about kind of the Hawaii Solar Energy Association and the industry's position on what a renewable path to recovery looks like during and after the COVID-19 health crisis. So you can go to the next slide if you'd like. So this is kind of, it's a little bit hard to see this slide maybe, but this is a little bit of data around the industry as to the end of last year. So the top slide there or the top picture there is just dollars per watt, average dollar per watt of residential installed solar systems in Hawaii. So these are installed solar system costs. So in use solar system costs at the end of 2019, the cost of the solar system with energy storage was hovering around $4.85 a watt. And then at the bottom piece of that slide, a bottom picture is estimated solar employment in the state. So you see the big spike in 2012 when there was a solar boom and then it's been pretty steady after 2014. So there was a kind of larger drop as the amount of solar permits dropped off and then it's been relatively steady. You want to go to the next slide please. So these are some statistics that we cited in a study that we did that we are recent press release we put out about the industry related to COVID-19. And this kind of was leading into why we decided to write an op-ed about the renewable industry. Obviously, our industry is not the only one that's suffering impacts. I think every single industry, everybody on this Zoom conference call and everybody is reeling from COVID-19. But we did put out a business impact survey and we're going to run a few of them as long as this crisis goes on. What we found was that between March 17 and April 15, the companies that we surveyed, which made up about 65 to 75% of total industry activity, lost about $6.7 million in revenue just in that distinct time period. And the average monthly revenue in Oahu is around 20 to 25 million for the solar industry. So that's a big chunk of revenue that they've lost. They also lost a good percentage of their workforce just in that beginning time point. And so that kind of led us into thinking within our board and our organization about well, what are things that we can do to help stimulate the industry and keep us going because we were noted as an essential business like my colleague Peter in Hawaiian Electric. The solar industry, the construction industry are essential businesses that can operate during COVID-19. And so we kind of started to talk about what are the benefits to solar and what does a recovery look like? I can pause here if you want to talk a little bit about that or I can keep going. Yeah, just keep going towards the end of the slide. And then I have some questions to ask about some of the ideas in there. Yeah, of course. So this next slide here is a little bit of national data just to give everybody some context. So this data, it comes from a variety of sources, but I think I pulled the most recent data from the Solar Energy Industries Association, which is our national affiliate. Some of these points in here, the industry will employ about 188,000 workers in June of 2020 rather than the projected 302,000 across the nation, which is a 38% decline. So what the solar industry is seeing nationally is that we're basically going backwards five years in industry growth because of the impacts of this. And that also means that installation will be down too. So SIA is looking at the end of Q2 and that there was only about three gigawatts total of solar capacity installed in Q2 of 2020, which was a 37% decline from three COVID installation forecasts. Question? Yeah, so part of the reason for the decline I'm assuming is the fact that we have these social distancing in place and all this kind of stuff. So kind of a lot of the activities stop. But how quickly could this recover? I mean, presumably you have a lot of projects in the pipeline. You already have products sitting in warehouses that was going to be installed during these months when the business stopped. I mean, it just didn't stop dead. I mean, the installation part slowed. So once they blow the whistle and say, hey guys, go for it, how quickly can that bounce back? And yeah, so I think one point of clarification too. In Hawaii, we still we are slowing down, but that's mostly new business that's slowing down. So at the end of last year, because the investment tax credit dropped, we had lots of booked out jobs that went all the way to like the end of May or early June of this year. So a lot of the work that we're seeing right now. So we haven't really seen a huge decline in permits up to the end of April, residentially, and the reason for that is that almost all of those jobs were backlogged from last year. Nationally, I think kind of to your point about, you know, solar deployment and how quickly can it come back. Some of the reason that the deployment has dropped off has been logistical reasons, so supply. You know, not all of those solar panels are here ready to go. Some of them get shipped and most often they get shipped from foreign ports, so Singapore, Taiwan, Vietnam, China. And a lot of those places, a lot of those factories that were developing solar modules and shipping them to the US paused operations for a while. And so they just didn't have as many materials. Now, I think the social distancing aspect is a big part of it, but it's less so for utility and commercial scale than it is for residential. So there's a lot more social interaction that happens at the residential level than there is a commercial utility. So a lot of that deployment loss that you see is really more residential stuff. And also, there's a financing piece to this as well, where it's a little bit, some of the projects where the larger projects were pretty well financed going into COVID-19 and they were locked down for financing because they've got a lot longer development tail. Residential stuff, on the other hand, is pretty quick turnover. So the financing happens quicker, the tail's a lot shorter, and it's a client panic, I think, is a bigger factor on that side of the market. So we can go a little bit into how recovery bounces back, but I think that's kind of a bigger discussion that you probably want to have later. Okay, so let's carry on to the next slide then. Sure. So our op-ed kind of highlighted three areas that we saw that were appropriate for economic recovery, a quote-unquote renewable path to recovery, and then we're job creation. So how do we get back the jobs that we lost and how do we build even more jobs for the people who are out of work that might need a job? Africanomic effectiveness, so if we're spending money on something or we're spending stimulus money on, or if we have these policy triggers, how effective is solar energy for economic recovery? So we looked at that. And then the third one was, can we still continue to meet our renewable goals? As Peter will probably attest to rooftop or behind the meter solar is a huge part of the renewable portfolio standard for 2045. And so how do we continue operating? What kind of policies can we put in place to not only get us back to where we were, but maybe make it even bigger than it was, right? So if you want to go to the next slide. Some of the statistics that we highlighted, some of these are pulled from national research organizations like the Solar Foundation or CIA, some of it's from our own data here at the Hawaii Solar Energy Association. But some of the ones I pulled out for this were, you know, if you look at the total amount of jobs per megawatt installed, the Solar Foundation estimates that about 38.7 jobs are created per megawatt installed for residential, 21.9 for commercial and then 3.34 utility scale solar. So to give you kind of some context or to give you kind of a view of what this looks like in Hawaii, we have about over 850 megawatts of behind the meter residential and commercial solar installed. So through the map, that's quite a few jobs. And later on in this presentation, I have kind of the total amount of megawatts that HECO has projected that will be in behind the meter installation. And if you use these numbers or even if you're very conservative in the amount of it, you can see that there could be potentially a lot of job creation. And then we looked at kind of, how much does the average beginning level solar job pay? Well, in Hawaii, it actually pays about $21, $22 an hour starting and these jobs are jobs that you can get if you have, you know, a high school education and little to no construction experience at all. These are entry level jobs in the solar industry, similar to a solar sales person or a permit runner or an administrative person. There's lots of different jobs and there's lots of growth too, right? So if you're a solar installer starting out, you kind of work your way up to project manager. You can work your way up to different types of licenses or certificates like an electrical contractor license that then you can then take to other places. You can learn project management and project development. So we kind of highlighted that and that $21 amount is booked from our data and from the Bureau of Labor Statistics, which is a federal agency. We just pulled another point about how much, how many megawatts Kiko is estimating is gonna be deployed behind the meter. So between 1,226 and 2,537 megawatts by 2045 just behind the meter solar, that's huge deployment from their power supply improvement plan. And if you do the math, like we said, that's 47,000 to 98,000 jobs created from this. So Will, what kind of an economic multiplier is there involved? I mean, from the point of view of the government, they wanna stimulate and goose the economy. How fast does that money get injected into the economy? And then what's the economic multiplier associated with where that money goes? I mean, a lot of it goes, some of it goes obviously to pay for the equipment so it goes offshore. But how much of that sticks in the local economy and then gets squished around and supports other industries? Do you have any kind of a feel for that? Yeah, so there's actually a couple of studies, one that we cited on the next slide. This is kind of about the investment tax credit in Hawaii and how much money is made on every dollar spent. So this gentleman named Thomas Laudat and another individual created a couple of different studies. This one was from the most recent one where he looked at the economic effectiveness of that tax credit. And he found that between for every dollar the state of Hawaii spends on a solar tax credit, the state makes back $1.97 to $2.67 over the life of a system which is on average 20 years. That's not to mention the federal tax credit which I think is essentially the federal government in investing one out of every $4 in the state of Hawaii's economy. That's also not to mention things like how much taxable revenue is created from people being employed, how much taxable revenue is actually created from development. For instance, in 2012, there was about $868 million worth of a Wabu permit in solar systems done. So if you imagine about six to 10% of that goes back into taxes at the state. That's a huge chunk of tax revenue that the city and the state collect. So we're still kind of crunching the numbers on what that would look like but the reality is construction development generates taxable revenue. And we have proven over the years that a big chunk of it, we can make a big chunk of it here. Right. Does that answer your question? Yeah, it does. Yeah, it does. Thank you. So let's go to your last slide and then we can have a more free-wheeling discussion. Yeah, of course. So our last slide just kind of pulls some data and Peter is very familiar, I'm sure, with this amount here. This is pulled from the power supply and permit plan that was filed, I think in April of 2015, whichever one was approved. The one that HIKO says, this is how many megawatts of behind the meter PV systems we have installed and this is how many we still need to install. So the yellow is what we've already installed across HIKO's three service areas, O'ahu, the Maui service area and the Big Island and then the gray is the amount that we still have yet to install by 2045. You know, these projections haven't changed since they were published back when that power supply and permit plan was approved by HIKO or by the PUC, but I think that slide itself or the graph speaks for itself on how much potential that there actually is. And so for us, it's, you know, what do we look at for keeping this industry going? How do we streamline certain things like permitting and interconnection to make the system cheaper and faster interconnected and get people's savings faster? How do we get money in people's hands or make it an easier investment for them to do things? And how do we make more development so that we can create more jobs, right? Ironically, you know, residential as far as like job creation efficiency is actually, if you talk to an economist, it's probably not that efficient, right? Because it creates 38 jobs per megawatt installed as opposed to the utility scale, which is three jobs per megawatt installed. But in a kind of economic recession or depression, you actually want more jobs, right? Because there's quite a few people that are unemployed but might be needing one. So I think we'd be forgiven for a little while to be more inefficient. And plus those people are gonna get a ton of different kinds of job skills that they can take with them wherever they go. That's important. So this whole, you know, evolution we're going through the situation is forced everybody to kind of rethink their business model. Like for example, working at home, except for dogs barking and aircraft flying low. I mean, I find this is pretty good. I mean, I can look at my computer with a nice view and everything else is opposed in my windowless office at H&E I wouldn't get the same type of computer and doing the same stuff. So, you know, I don't have to travel a 45 minutes each way. And... Mitch, your colleagues all took a boat and they want you to stay home too. Right, they probably do. Just kidding. So I'm coming up to a question here is like, so when you really look at the business model and how things are, I mean, people start challenging everything. Like how can I become more efficient? How can we be more effective? Yeah, how do we get more solar systems out there? So what are some of the speed bumps or barriers? And Peter, then I'd like you to kind of jump in and talk about how, you know, Hawaiian Electric is supporting these kinds of changes now so that we can move faster, smarter, and get this economy actually recovered. So you jump off first, Will, and tell us what some of the challenges are. And some of that came up in your article that you wrote for a civil beat. And then Peter, you can talk about how you guys are addressing it. Sure, thanks. So, you know, there's a three different kind of things. There's interconnection permitting and client financing or client panic, which are kind of one together. I think the interconnection and permitting stuff are, some of the problems are things that we've been discussing, you know, with HECO folks and the PUC for many years. And so back in March, the Public Utilities Commission filed a letter, just like an open letter in an undocumented format that said, you know, all the stakeholders that are involved or just the public, you know, we want your best ideas to how do we speed things up in the short term and in the long term. From our perspective, we filed a letter within the Distributed Energy Resources docket with a couple of other renewable energy parties, the Distributed Energy Resources Council of Hawaii and Hawaii PD Coalition, asking for a couple of distinct interconnection changes that we hope would make interconnection a little bit more efficient and also lower the total cost of a system. So one of the things that I didn't have in here was a study by the National Renewable Energy Laboratory that looked at soft costs. So in 2019, 67% of a system's costs nationally was just soft costs, which are things like interconnection, permitting and engineering. So how do we reduce that big chunk of it? Well, one of them is doing things like interconnection streamlining. And the other thing that we looked at, we submitted a letter to all the counties on their permitting, some suggestions that we've had to streamline and make more efficient permitting. And we suggested things like, you know, letting certain systems under a certain size of a certain design in a certain area be permitted immediately to all the way to like saying, let's have six months of a permitting hiatus where a company could go and install a system and they could basically put their contractor license up as collateral and say, I'm gonna install the system really well. I'm gonna self permit and then create a backlog for a permitting department to come in later when they want to and check those systems. But at least those systems will get up and running, you know, ASAP. And so those are kind of two distinct areas. And I'll let Peter talk a little bit about the interconnection line because I saw that you guys said, you know, we've been working with HECO within the DER docket and the PC. We've got a lot done in the last three weeks. And so I know that Peter and his team too have been working pretty hard on a lot of these things. So I'll give it to you. Over to you, Peter. Well, just to follow up directly, as Will said, the PUC basically brought everybody to the table literally and not literally, since it was all virtual in my letter, but you know, right over together and said exactly what we're talking about now, this is gonna be each to be part of the economic recovery. What can we do to make this happen? And so we've had a series of meetings and then we've gone back to the drawing board, so to speak. And we've come up with a number of things that we hope will speed the process along. And you know, without getting down into the weeds too much, you know, just moving things along more quickly. We had up, if I may say, a pretty good average for how long our interconnection process took. There were always some outliers and took a lot longer, but on average across the company, the average is pretty good, but we can definitely speed it up. And at the same time right now, we're going through an internal reorganization process, which I think will also help to speed things up by getting the right people in the right departments. But anyway, coming out of that series of meetings and their ongoing discussions, we committed to doing a number of things that should reduce by about 40% the amount of time on average that it takes to get a system approved, get it interconnected, get it going for the customer who all of these customers are our customers and we want them to have those savings as soon as possible at the same time that we want to support the industry. So, you know, there are always asks that we can't necessarily accommodate. And whenever you do something as a utility, we have an obligation to serve everybody equally. If, for example, if you said, well, why don't you just give a priority to solar installations for your, you know, your current, your process? Well, that means somebody else gets disadvantaged potentially somebody who's building a new home or somebody who needs to have some other kind of utility work done. So we have to balance that at all times. But there's no question that first of all, we have a long-term commitment to more rooftop solar, especially more behind the meter, all kinds of stuff as well mentioned, not just solar but storage and what we used to call the man response stuff. So we're eager to see what we can do within the limits of the fact that we have to maintain our reliability and our safety and our equal hand and even handedness for all kinds of customers. But, you know, whenever you get into a time like this where you really have to look very carefully at what you're doing, I think you'll find processes. It's like editing somebody else's writing, you know, I can go through and say 10%, 20%, 30% of the words that anybody wrote, including myself. So, you know, we're working on that now. We have Lani Shinsato at the head of that effort for us and she's a very conscientious and a very good leader for that. So I don't have any argument with the basic thing. We're gonna have to have two and a half to three times more rooftop solar than we do now if we're gonna get to 100% by 2045. We have a situation right now where we have an industry that could, that needs to be revived and can help as Will has said with the economic recovery locally. And we have a lot of customers who are gonna be looking at their householding, household budgets in the near future and saying, gee, over the next 20 years, if I can scrape together the money to build a solar on the roof, I'm gonna save money in the long term. And we have an obligation to help them do that and do it quickly. If they're starting down the road of installing rooftop solar, we wanna, to the extent we possibly can, get out of the way so that the sooner they can activate that system and start getting the benefits, the better. Which is not to say that people will not say, well, why can't you do it faster than that? No matter how fast you do it, people are gonna understandably say, well, why can't you do it faster? But I think our intentions are good and our good will is good. And as Will said, we've had a very, very active last few weeks. And we're gonna, we've installed a number of changes. We're gonna look at them again more closely in six months. Hopefully by then the COVID crisis will be over or calm down considerably. We're gonna look at it again in six months and see if those worked. If they did great, can we make them work better? If they didn't, well, let's look for something else that's gonna be more effective. So we're just about at the end of our time. Will, do you have any comments based on what Peter just said? I mean, are you happy with the way, kind of the way it's going now? And what about gems financing? I mean, is there an opportunity here? You know, we talked about permitting. It's not a lot of things that the electric company has control of the permitting. I've always been advocating having a third party come in and do all the grunt work as it were the engineering work so that the permitting guys just have to do like a final QA check rather than have their monster in basket full. So that may be something you guys can look at working with the city and county of the various counties like to get a third party to come in here and do the engineering assessment, whatever the plans are, and then presenting that. So it was kind of a trusted, approved, like almost like having a ULS or a ETL kind of an organization come in and validate the plans and say, yeah, this meets to your codes and standards and it's good to go. And I have to say stamp drawings and go install it. So I asked two things about financing. I mean, here's a good opportunity for the government to once again invest in the solar industry to A, get jobs going, but also meet our renewable energy standards. So like, let's get going. Comment. Yeah, just a couple of closing comments. One, you know, I appreciate Peter and especially Lani Shinsato who we mentioned, she is just an outstanding leader to their customer energy resources team. And I've worked with her for many years. So I appreciate her leadership in that area. On the financing piece, I mean, I've highlighted it too, but some of it is what happens within the industry. How can we get people better rates on financing from the private side? How can we get better financing to give to folks? How can we utilize things like gems and get them more money? But also, what are some levers that state and federal and counties can pull to put financing in people's pockets so they can spend money on things? You know, I saw over the last weekend that Italy, the entire country is putting $56 billion in a 110% solar rebate program where you get 110% of the cost back on a solar system if you install it. I mean, why is Italy better than us? You know, like we really, at the end of the day, you know, if you look at how countries get out of depressions and things like that, you have to spend money, and most of that money is gonna come from state and federal sources. But right now, even if we didn't spend any of that, the existing levers that we have, you know, we could make a pretty big dent by just cleaning up some of the inefficiencies that we have that will lower costs. To your point about third-party inspection, that was something that we definitely asked for in our letter and something we've always been a proponent of. All the third-party inspectors, there's only like 10 of them, but some of the biggest ones are HSEA members. So I'm a huge fan of that program. And then, you know, it's just two, giving some of our policy makers and folks the best ideas and the best available evidence that we have and hoping that they show some leadership and initiative and make good decisions. I mean, I think, I don't know if it's so much of the biting the bullet and spending money as the reality is, is that you have to spend some money because there's no other money coming in from things like tourism tax revenue or whatever. But we have a homegrown solar construction industry here that has proven to provide tax revenue and it can boost the economy even more, not to mention any other kind of, you know, construction industries that are out there. And how can we simultaneously support that and build a better Hawaii? You know, I truly believe that solar energy makes Hawaii better. And so we need to kind of put our money where our mouth is right now to build that recovery and get people back to work. And I'm gonna keep advocating for that. And I'm sure that Peter is too. Well, what I also recommend is you take the copy of this show, you'll get a link to it and blast it out to your blast list, particularly all the legislators because I think we've raised some good points here. We've had both the electric company and yourself on the same screen together and worked through all the problems. So if you think that this has been valuable to help promote your cause, please, you know, use it and exploit it. So with that, I'm gonna wrap it up. Thank you, Will. Thank you, Peter. And that's it for us for this show. And we'll see you next week at Hawaii, the state of clean energy, aloha.