 Think Tech Away. Civil engagement lives here. Okay, we're back on a given Monday with energy. This is Think Tech, and this is Mena, Marco, and me on Monday, except Mena is missing. So it's Mena, Marco, me, Mena missing on Monday. And Marco is here. Hi, Marco. And now we're actually post-Mary Monarch, so Mary Monarch Monday aloha to you, Jay. That's Marco Mangostoff. He's the president of ProVision Solar and Helo. He joins us every two weeks for a show updating us on events in energy, especially clean energy. So it's great to talk with you, Marco, and I would like to cover some of the things that are happening these days. One of them is the appointment, and ultimately, soon enough, the consent of the Senate to Jennifer Potter as the third commissioner on the PUC. What do you know? So Jenny Potter was nominated a number of weeks ago by Governor David E. Gay. She comes with a very strong both academic and utility background, spending some time with the Sacramento Municipal Utility District, also known as SMUD. She moved to Hawaii, I believe it was 2015-ish, and she goes for a vote. And Senator Ross Baker's Consumer Protection and Health Committee in the Senate on Thursday, this Thursday. I expect six to nothing, I believe there are six members, five or six members of that committee, and then I believe that they'll vote unanimously to send her nomination to the entire Senate. And that would leave a final vote, which I believe will be, I'll go on a limb here, 25 to nothing, 25 in favor and none opposed. That will take place either next week or the following week, because we have all but three weeks, including this one left for our legislative session before our legislature comes to a close. I think the governor made an excellent choice with Ms. Potter, and I think she'll be a great addition not to diss Lorena Keeb at all. I think we're highly of Lorena as well. But her term comes to an end on June 30th, and the governor elected to put his own pick there, since Lorena was an appointee from, he gets predecessor, Neil Abercrombie, so I think it was a great choice, and I think she will bring a great perspective to the commission, and I'm pleased that there will be two walks. There are the commission, both Dr. Jay Griffin, who I think very highly of, and now Jenny Potter, she gets through the Senate, which I'm sure she will be, and then Randy O'Waase, who's a lawyer by training and former legislator, who will continue to be chair. Yeah, yeah, I agree with all of that, and I ran into Jennifer Potter last week in the legislature, and she was nice to meet her. She's very vivacious and energetic and smart and relatable, so I think she's a good addition with her credentials to the PUC. It'll be, now it'll be two walks and one government guide. It'll be interesting. I think the secret is to have the walks. We need policy. We need a long-term policy, carefully figured out, but we also need for them to listen to business, listen to the utility, and listen to government, listen to the people, because those are factors that have to be taken into account. No matter how many walks there are on the PUC, they have to listen to business, to the utility. The university I'm not concerned about because they are both wonks from the university, and government in general, the people. So I think it'll work out fine. I think Jay and Jennifer are terrific additions, both of them. And it's a new dawning, a new dimension, a new generation, if you will, on the PUC right now, and it speaks of good things. And I think another thing that's kind of perhaps worth noting, Jay, is that there was a fair amount of brouhaha with the departure, the unwilling departure of Mike Champley a couple of years ago, right prior to the announcement of the commission turning down a next year's bid to acquire HCI, and then the interim appointment of Tom Gorak, which caused our colleague, Meena Marita, to file a lawsuit, which is still pending before the Hawaii Supreme Court. So the commission was kind of embroiled in politics, has been embroiled in politics to a degree that I think has been unhelpful for the overall process and for the state, and that is coming to an end. I think it's becoming more in the rearview mirror that the stuff with Champley went down and Tom Gorak went down, and now we're hopefully in a period of greater stability with the appointments of Jay Griffin and now the appointment and hopeful confirmation of Jenny Potter. Yeah, and since both these new additions are policy-oriented people, hopefully they won't be distracted by politics, and hopefully politics will not distract them, because I totally agree with you, Marco. The more politics you have around an organization like the PUC, the more difficult it is for the PUC to operate, and that means reach good decisions in a reasonable amount of time, and we can't afford a lot of delay, and we can't afford distraction, not in the PUC or anything else in government. So this is a forward step, and happy to see it, and I think the Senate should confirm without any issue at all. And so when would she take her seat immediately? Do you know, Marco? Well, as far as I know, Commissioner Akiba, she has not telegraphed from what I've heard any desire to step down before her term ends, and her term formally comes to an end the last day would be June 30th, so we're a little more than two months away from that. So if she continues through to the end of her term, then Jenny Potter would take her seat in the triumvirate of Randy Wassey and Jay Griffin and Jenny Potter as of July 1st of this year. Well, you know, going forward, we're at a place where we're still kind of making distance with what happened with Nick Stara and the politics you mentioned, and rolling up our sleeves because we're getting closer to 20, 20, 40, 20, 45. Everybody recognizes that you have to get into the weeds about those things. You have to arrange the details, and I think this PUC with the three of them, that is Randy and Jay and Jennifer, will address that. We need to do that. We need to move with all alacrity, so I think we're in a good place. Moreover, you know, I've noticed, and I'm sure you have too, that Randy has been willing to come down and talk to us and answer questions, unscripted conversations. Likewise, Jay has been very willing to come down, and he's been a great guest on Think Tech with you and me, and I suspect that Jennifer is exactly the same way, willing to discuss it, willing to engage with the public, willing to engage with the industry, and I think that kind of openness is the best possible thing for the PUC going forward, especially in a time when it's going to take a lot of collaboration to move the needle. Well, and to put in a plug for having Jenny on, she has tentatively agreed to be on our show on the 7th of May. So four weeks from today, Ms. Potter hopefully will be on the show and we will learn all kinds of interesting things from her and get a chance to introduce her to the Think Tech Hawaii audience. Yeah, by that time, presumably, she'll be confirmed. Yes, because the legislature formally ends the end of this month. That's when the session wraps up. Okay, all good. Let's talk about some of the bills that are pending in the legislature. I guess the one that comes to mind first is, what is it, HB 2100, or is it SB 2100? That's SB 2100. And that's all about tax credits. Finally, a bill looks like it's going to pass around tax credits. You want to summarize the provisions, the salient provisions, Marco? Sure, so just as I mentioned before, the renewable energy tax credits, which we've had here in Hawaii for, get this now, Jay, more than 40 years, more than 40 years, the state of Hawaii has supported through direct and tangible efforts, has supported renewable energy for four decades, and right now, the renewable energy tax credit has no sunset date. In other words, it's not scheduled to go away, which is somewhat unusual for tax credits because they usually have a sunset date, just like the federal investment tax credit that we can take advantage of from the Fed has, say, a ramp down that's now scheduled and will sunset for residential use in the next handful of years. The same thing with Act 221 back a few years ago. That had a sunset on it. What's interesting there is that legislature killed it before the sunset date. But I agree, a lot of tax credit bills have sunsets. That's the normal course. So this particular bill is at least the third attempt over the past three years, two years actually, the third attempt to establish a ramp down for the renewable energy tax credit, which, by the way, I'll just continue to remind people that as far as the, what I'll describe as the hit on the state general fund, this tax credit has had the largest hit over the past years than any other state tax credit available in the most recent years. The data that we have, 2013, 2014, 2015, it's almost half a billion, as in B, half a billion dollars that effectively did not go into the state's general fund because of the renewable energy tax credit, which I have argued consistently, I think it's worth it in terms of the overall economic proposition for the state getting off, getting off in port of fossil fuels and so forth. But clearly when you start hitting half a billion dollars in several years, you're not talking about chump change, you're talking about real money. So HB, sorry, Senate Bill 2100 was passed by the last House Committee that needed to clear last week, which was the Sylvia Luke's Finance Committee or the Numbers Committee, and I compared the HD House Draft Version 2, which came out of Luke's Committee, compared to the Senate Draft 2 or SD2 that came out of the Senate, and they're very, very, very close. The big difference is, interestingly, Che, the big difference is that the House Draft HD2 didn't put any maximum monetary caps for any of the tax credits, whether it's solar thermal, solar electric, solar with storage or storage alone or wind. What do you mean monetary caps, Marco? What is that? Well, for example, 35%, the current state tax credit for a solar PV residential is 35%, or $5,000, whichever is less. However, the system, in quotation marks, is defined. So what the House Draft 2 version removed was 35%. They kept the 35% or the 25% or the 30%, depending on which tax credit it was, but they removed the maximum dollar's cap. So it's 35%, and then they left it blank in terms of what the max cap is, or 25%. They left it blank, what the max monetary cap is. So I find it rather odd that you had the numbers committee in the House that decided to take out some of the most important numbers. So why did they do this? Well, all I can do is surmise that they decided to essentially punt this particular question of are they going to allow $5,000 per system, $2,000 per system, $3,000, $8,000, pick the number. Did they're punching that particular question to the conference committee, which will, assuming that the bill passes the entire House, which I expected it will next week, it'll be referred to a conference committee where you'll most likely have Chris Lee on the House side and Senator Lorraine Inouye on the Senate side and a handful of others who will be trying to work out a compromise between the HD version and the SD version. And apparently that's where hopefully there will be consensus on what those maximum monetary caps will be. Apparently there isn't consensus yet. I guess the House wouldn't agree exactly with what the Senate put in that bill as it crossed over. But why didn't they put anything, Jay? That's what I find is puzzling. This is the numbers committee and the numbers committee check out the numbers. That's a good point. And regrettably, the public won't have a hearing. They won't see this happen. It'll be essentially in the quiet of a committee meeting in which the public is not necessarily present in the hearing capacity. So we'll see what we'll see, huh? I'm sure you're going to follow that because it's a very meaningful part of the bill. The ceilings are, gee, they affect everybody who gets the benefit of the bill. Maybe they have to work out the math and see what's it's going to cost and they won't know exactly until they hit the ceiling. So I agree with your characterization is that it's a punt. And I, for now, you know, Marco, I'm going to punt also. I'm going to punt. I knew you were coming up with the segue, Jay. I'm going to punt right into a break here. So that's Marco Manglestor, Provision Solar, joins us from Hilo by Zoom and VoIP. And we'll be right back after this short break for more about what's happening in the legislature and in the country on clean energy right now. Hey, Aloha, Standard Energyman here on Think Tech, Hawaii, where community matters. This is the place to come to think about all things energy. We talk about energy for the grid, energy for vehicles, energy and transportation, energy and maritime, energy and aviation. We have all kinds of things on our show, but we always focus on hydrogen here in Hawaii. This is my favorite thing. That's what I like to do. But we talk about things that make a difference here in Hawaii, things that should be a big changer for Hawaii. And we hope that you'll join us every Friday at noon on Standard Energyman and take a look with us at new technologies and new thoughts on how we can get clean and green in Hawaii. Aloha. Good afternoon. My name is Howard Wigg. I am the proud host of Code Green, a program on Think Tech, Hawaii. We show at three o'clock in the afternoon every other Monday. My guests are specialists both from here and the mainland on energy efficiency, which means you do more for less electricity and you're generally safer and more comfortable while you're keeping dollars in your pocket. Okay, we're back. We're live. We're here with Marco Mangelsdorf and me and Meena Merida, but not today. Here on a given Monday talking about energy, current developments in energy, and especially in the legislature, which is meeting right now. So there were other points about SB 2100. What were they, Marco? I simply wanted to note to me kind of the two big takeaways are from the current, both the House and the Senate versions of SB 2100. One is that it would ramp down the state tax credits for solar over time, which is a negative for the solar business and also a negative for homeowners, consumers, business owners who would be moving forward in the years to come. In other words, they would get a smaller tax credit. But the positive takeaway, which I think more than offsets the negative one of the tax credits ramping down, is that there would be a separate state tax credit established for adding battery storage to existing renewable energy generating facilities. And I'm not absolutely sure, Jay, but I believe that we would be the first in the country to actually establish a separate state tax credit to support the retrofit of storage to existing solar electric, in this case solar electric system. So under that provision, then I already have solar. I want to add batteries, which I suppose most people with solar would like to do that. Now this will incentivize them to add batteries in a retrospective way. And they'll have another separate new tax credit to incentivize them to add battery, add storage to their existing solar system. Am I right? Correct. And just to play the numbers a little bit, let's say that Jay Fidel decided, you know, I really would feel better if I had some battery storage because that would provide a level of peace of mind security in case the grid were to go down. And let's just make the numbers really easy. Let's say you're considering a $10,000 battery addition to your existing PV system. Well, I think, again, not being the tax attorney nor a CPA, I'll caveat anything and everything I say in terms of for you being able to accrue the tax credits. So that's up to you, your conscience, and consulting with your own tax advisor. But there's enough information out there for me to say that you should, which may be able to qualify for the 30% of investment tax credit, which is 30% of $10,000. Well, that's easy to do. That's $3,000, right? And if the state tax credit is enacted into law, the figure that has been used in both the House and the Senate versions of this bill would be 25% of the cost of adding storage to your system with a max cap of, let's say, $3,000 or $5,000. So 25% of $10,000 is $2,500, right? So you've got 30% ITC, $2,500 from the state. That brings down your $10,000 initial purchase down to $4,500. So you are in effect getting a 55% discount or buy down through the federal and state tax credit, which to me is quite the incentive. And I think it may take a little bit of time for that to disseminate amongst the buying public. But I believe that type of incentive where the state and the feds are going to effectively pay for more than half of the cost of the battery addition, I think, is truly just a matter of time before word gets out. First adopters like you and me and some of these other customers I have who are going this route will talk to their friends and they talk to their friends and they talk to their friends and will have a, hopefully, something of a boom, a mini-boom when it comes to adding battery storage to existing PV systems. Yeah, two points on that, though. One is, and I'm playing the devil's advocate here, why should I, who doesn't have a PV installation and who won't, therefore, I won't have an issue about storage, I won't do storage, and I won't get any tax credit, why should I pay into the general fund, pay my tax payments so that the guy down the block gets that kind of benefit? Is it really necessary for me to pay him to get his system up and running with batteries when I don't benefit at all by what he does? What's your answer to that? Well, my answer is that you must be channeling Mina in her absence, because that's more or less Mina's position, and it's certainly a reasonable one. And my, not so much counter to that, but my response to that would simply be that it really comes down to the degree to which the grid in terms of greater resiliency and Hawaii in terms of the greater economic well-being of Hawaii, being able to further reduce our consumption of fossil fuels, what level of public benefit, writ large, is accrued by more and more and more homeowners and business owners, of which we have more than 80,000, Jay, more than 80,000 rooftop solar systems across the state, highest per capita in the whole damn country? Well, let me ask you the second question that flows out of this. Why don't we give the utility this kind of tax break? I don't know if it qualifies under this bill, but this kind of tax break, a tax credit, a tax incentive of some kind, so the utility builds more batteries around more solar, because if you build solar at the utility scale with batteries at the utility scale, that benefits everybody, then everybody's tax money is going to benefit the entire community. Wouldn't that be a better approach? Well, in fact, in SB 2100, there are provisions for commercial scale storage in the Senate version, SC2, that was with a max cap of 500,000. So when you're talking about utility scale, you're talking about considerably more than that. So I guess to answer your point, Jay, the bill is not just for, wouldn't it be just for residential storage? It would also be for larger scale storage, to incentivize larger scale storage to go in as well. What about utility scale storage? That is unknown at this time. And obviously, you know, the folks at HECO and KIUC are very interested in seeing how it's going to play out in terms of how it will affect the deployment of utility scale storage, which the folks, our friends at KIUC have been, as you know, very aggressive, very proactive in doing with the couple, one that's already on the ground that was installed by SolarCity in the past year or so, and then another one that's going to be put in by AES in Virginia using SunPower solar modules and Samsung battery storage. So this is of big importance to both HECO and KIUC, to what extent this tax credit is going to be accruing for utility scale storage. So I don't have a specific answer for you at this pending. You know, I was telling you during the break that it's my view that if you want to change the way a community works, you can't just ask them nicely. You know, government has to give incentives, change the way people conduct themselves. And if we want to reach, you know, 100% by 2045, we're going to have to give incentives to change the way people conduct themselves. That includes electric cars, by the way. They're not going to do it for love. They're going to do it because it's a better deal. If I can buy an electric car cheaper or batteries cheaper or a photovoltaic cheaper, then I'm more likely to do that. And over a macro analysis, that's what you've got to do. That's the way it works in our society. But let me ask you, suppose that, you know, this bill passes and we have lots of new tax credit type incentives for storage and for sort of, you know, photovoltaic as well. How does that affect things? Do you have a sense of, does that take us closer to 100%? How fast? At what sort of expense? How is it going to change the landscape? You said, and I agree, there might be a run on this sort of thing. You know, a tremendous expansion. People have been waiting to see what happens. And a lot of people, they like the good old days when they can get a double credit. Now, this is going to give them, you know, not only that, but credit on storage. How is this going to affect the society? You got any ideas? Well, it's going to lead to a greater, more rapid deployment of storage. To what extent is it going to be kind of incremental growth versus more J-curve growth? It's too early to say. I mean, one of the challenges is being able to get a hold of adequate supplies of battery storage products. And the fact, I don't think I'm giving away any trade secrets, but the folks from the Tesla Gigafactory outside of Reno have had a challenge keeping up with the demand. And the demand for the power wall is 13.5 kilowatt hour residential size battery storage, which I have on my house as well. And I've been testing it very successfully for the past 10 full months. There was kind of a giant sucking sound to use. Roth, Peroi in language, giant sucking sound in Puerto Rico, of Puerto Rico based on the devastation that Island suffered, drawing a lot of product, a lot of battery storage product. So we're not at a point yet where there is a plethora or overabundance of battery storage right now, Jay. So, you know, there's the, undoubtedly the price of storage is going to go down over time because there's going to be more and more Gigafactory scale product, or projects coming online, South Korea, and people's Republic of China. But right now, there's not an overabundance of product. Therefore, you know, for my business selling, Tesla batteries were to take off for my competitors selling some other product. I mean, that's all well and good. But if we're telling people, gee, thanks so much for the sale, we can get to you in about seven months. I mean, that doesn't float too many boats. That discourages people. Yeah, and they may not follow through on that. They want to do it right now. So let me ask you, too, though, what about China? I mean, it's great that Tesla is manufacturing these batteries in the country, the power wall. And it's great that, you know, we can buy them without tariff problems from South Korea. And they make some pretty good technology in South Korea. But China, don't we have a problem with the administration that's trying to stop China from exporting to the United States? I don't know if it is on their list right now, but batteries in solar would be an obvious target for tariffs, wouldn't it? Yeah, you make a good point. Since the battery storage industry globally is still in its infancy, it's still in the crib, so to speak. It hasn't jumped out of the crib and started to walk, let alone sprint. So it would be premature for the Trump administration to say we want to keep Chinese batteries out of the country because there ain't many coming into the country to begin with. But I'm looking at a chart right now from Bloomberg a couple months ago, Jay, that lists the planned battery cell manufacturing facilities that are on the drawing board are actually being constructed. And the Tesla Gigafactory is the largest on the planet. In fact, it's the biggest building by footprint on the entire planet. I heard that, yeah. But the next nine projects are, excuse me, the next eight projects. No, the next nine projects are five of them or six of them are from China or would be in China. So, and the other three being from South Korea. So what that means simply is that there's a tremendous amount, there's going to be tremendous increase in volume of battery storage that will be hitting the global markets within the next handful of years. And that's when things are really going to get interesting. So will the Chinese dominate in battery storage as they have in solar PV? I think there's a strong case that could be made for that, especially when you look at the fact that some of the key components going into lithium ion, including something called cobalt, guess where the two biggest sources of cobalt are in the world? One of them is the People's Republic of China. The other is the Democratic Republic of Congo, which is smack in the middle of Africa and that's not known for being a terribly stable or safe part of the world. Well, you know, it strikes me that this House Bill 2100 and the whole idea about incentivizing storage is really the beginning of a brand new and tremendous chapter, not only for us, but it reflects a chapter happening in other places as well along the same lines. This is the next leg of the journey to 100% for sure and I really appreciate that people are paying attention to it now. Next thing we've got to do is transportation, though. Anyway, Marco, great to talk to you. We're out of time. I'm sorry we didn't cover two or three things, but you know, there's always two weeks from hence and we can cover a lot of additional things then, right? Well, as my dear beloved grandmother Celeste Alice, who lived for decades and decades in beautiful Manoa Valley, said she always have to save stuff for the next time. Okay, that's what we'll do. We're saving stuff for the next time with Marco Mangosdorff, Provision Solar, joining us from Hilo, Hawaii. Thank you so much, Marco.