 Okay, we're back. It's four o'clock. Well, roughly four o'clock here on Hawaii, the State of Clean Energy, our flagship energy program on Wednesday afternoon, and of course, we are joined by Sharon Moriwaki, my co-host and the co-chair of the Hawaii Energy Policy Forum. Hello. Hi, Sharon. Hello. You ready for a good show? Great show. We have Ted here. We have Ted here. Oh, Ted who? Ted. Ted Peck. We know Ted Peck for a long time. Say hello, Ted. Hello, Ted. And we are joined also by Chris Swartley from Progression Energy. He's a founding partner there by Skype. Say hello to Chris. Hello, Chris. You guys must be relieved. I needed to call Ted. Today, we're going to talk about wind, wind on the waves in Hawaii. All right? So I'm not sure exactly what the scope of our discussion is going to be. I'm going to leave it to Ted. Ted Peck of Hulu Energy to tell us what the scope of this discussion about wind is going to be today. Well, I think, well, first of all, Chris and I have been working together for the last almost five years on this project. We want to talk a little bit about the project, talk a little bit about the technology, a little bit about if we are serious about our 100% clean energy target, we will end up in a project like this simply because this is the resource that is the cheapest and available. And then talk a little bit about the process and where we are in the process and how we're driving. Chris, did you think that that works? Sure. Yeah. Talk a little history. Talk where we are now. Let's talk about history. Talk about what kind of value this has for Hawaii. Yeah, I think it's really important. Good discussion. Important that we cover those points. Let's talk about history first. I remember first wind did an initial installation on the top of the mountains there in West Maui. Very successful. The community liked it. Sharon and I went up there. We saw the devices they had to save the birds and all of them. And we talked to Kecoa. The Nainies. Now deputy director? Yeah, now deputy and DLNR. And we learned about wind and we were very impressed with the way that first wind set that up. But that's a long time ago. And it seems to me that all the focus in the interim has been on solar. And I personally like wind. I consider wind kind of a music of the soul, if you will. Well, I think it's important. And when I was the energy administrator, I would get frustrated by this when the proponents of the different renewable resources would beat on each other and say that they were better. Actually, wind and solar are very complementary. You know, wind comes through the whole 24-hour cycle but is especially strong in the darkness. And of course, as we know, solar is during the solar day. So they're just very complementary resources. Yeah, but why haven't they been as popular, occupied the front page as much as solar? Yeah, and that actually, Chris was one of the, I think you were appointing number six at first wind when it was UPC wind. I think you could just say I was part of the founding team. So he's been, I got the t-shirt. Chris has been in wind for a long time. And we started doing this project. And when Chris and I had, we were with different companies actually about five years ago. And we really started very low-key and started by doing, I don't want to call it a listening tour, but really going into members of the community and saying, hey, here's what we're thinking. Well, you know, what do you think? So how do you feel public opinion is going right now on this subject? I mean, there's a lot of resistance on the birds and on the sound, right? I don't think either one of them were legitimate opposition, but you heard noise about that. You hear that noise? I would say over the past five years that we've been talking with the range of stakeholders, I think that, you know, people have brought up real legitimate concerns, fishing birds, visuals, and we've been addressing those with folks. But, you know, we've now had about 150 meetings over the past five years. And I think, you know, even though there are legitimate concerns, we feel like there's an important amount of support for this project because of what it does offer. And also because, you know, as a data point, we started out with five sites, and after doing about 120 meetings, we narrowed that down to one site because that was the site with the most support. And it was only when we had done a significant amount of stakeholder engagement did we even put a lease into the Bureau of Ocean Energy Management. And so, you know, while there are, you know, genuine concerns that we need to address throughout the permitting process, I feel like we really started this project in the right way by listening and having that stakeholder feedback guide are citing. So Chris, of those concerns, what have you addressed? You know, what specifically were they concerned about and how have you overcome them or somehow work past that? Or are you still working on it? Well, one big concern was visuals. And so we've cited our project. It's about 14 miles southwest of Honolulu. You know, most of the project will be over the horizon. You know, there will be from the preliminary visual simulations we've done. You know, you will be able to see some of the project, but it'll be pretty small. You really have to look for it, you know, beyond the sailboats. You know, beyond the oil tankers, beyond the paragliders. Right. You might mistake these turbines, these wind floats for a sailboat. You won't mistake them for an oil tanker. And this project actually alone will probably eliminate about four oil tankers a year. Well, why don't you, Chris, why don't you talk about your project? Exactly. How many turbines? What do you expect to output? What's the project? Well, we're looking at 40 to 50 turbines, and some of that is driven by what the size of the turbine, the offshore turbine will be. We're planning on a fourth quarter of 2020 construction start date. Right now you can buy an eight megawatt turbine, offshore wind turbine. And we're looking at a 400 megawatt project. So that would be 50 units. You know, if by that time it's a 10 megawatt turbine, that would be 40 units. And we would be able to produce about a quarter of a watt whose electricity. We'd be able to do it at a price that is comparative to solar. But then the other pieces, and what Ted mentioned before, is the good complement that wind and solar make for each other. You know, wind can produce at night. It has slow ramping up and down. It's grid friendly for an intermittent resource. So there are those values as well. The other thing is that, you know, the one last thing that I think is really critical is that Oahu just doesn't have the land to meet its energy needs. And while the ocean is a very important resource, and we're working hard with folks to make sure to minimize any impacts on the ocean, we actually only use about five acres of land on Oahu for interconnection with some of these. Some questions about it. You know, we talked about, you know, the siting issue, and we talked about the birds and all that. But what about the ocean traffic, you know? What about the shipping lanes? What about small boats, fishermen, what have you? 14 miles south of Honolulu. Are there issues? Has anybody expressed concern about that? One of the first things we looked at was commercial shipping traffic. And what's nice is that that's widely available on the web, on GIS data platforms. So we chose an area that had low commercial traffic. The next is fishing. And we've been working with various members of the fishing communities in Oahu now for about three or four years. And, you know, they have very, very legitimate questions. You know, can we fish in and among the wind floats, you know, are there any things we need to watch out about? And that's, you know, that's part of the many conversations that we have with them. What about connectivity? You know, there you are out there. I guess the devices these days, are they planted with, you know, on the ocean bottom? They're anchored. These are vessels. And they float. They're vessels that float. They have, like, three or four just drag anchors. So it's just like... They stay in pretty much of the... So the question I have is how do you deliver the energy these turbines are generating back to shore? And what's the landing point like and all that? Give me a handle on that. There's going to be two transmission lines, AAC transmission lines, that will come, you know, under the reef area and they'll come after a short distance and connect to available substations. So it's a pretty low impact and pretty short distance. How do you get under the reef without damaging the reef? Horizontal drilling. That is very mature technology. You know, the data cables that are being placed under this island now, actually, there's one that just had an EIS completed and that's what they're going to do. They just horizontal drill. It is very mature technology doing that. So this is just, it's an undersea cable using slant drilling? I wasn't going to use that word. I know. We've heard that word before, you know. It is very low impact environmentally. Very low impact environmentally. So how large, how large is, because when you talk history, when we saw those turbines, they're huge in Maui. So are they that big? The nacelles, the nacelles are like 400 feet above the ocean. The tip of the blades about another 200 feet, 170, 200 feet above that. So they are larger. And is that stable enough like when the wind and the waves come and go? So the technology that we're planning to deploy is called wind float. Can I straighten one thing out, Tim? Yes, sir. You're two different projects, two different companies. Is that right? Or are you collaborating on the same project? Yeah, same project. Okay, okay. So it's a joint venture between your respective companies? Well, the progressions in the lead were under contract. Okay, working together. Absolutely. All right, good. Wow. Well, I'm glad you got that straight now. Okay, I thought we were actually talking about two projects with two sets of turbines. But you have two projects, right? There's another gentleman who's developing another project in the same, Yeah, he's doing a, yeah. Okay, sorry, interrupt. Go ahead. The principle power wind float has been operating off the coast of Portugal for about five years. How far? It's about five kilometers offshore. It's closer than this one. It is, about one-third of the distance. And if you look, if you go, you can Google, there's a video about it. And it's hard to see, actually. And it's about 10 miles. Remember, what was the gentleman's name, Marshall? Is that right, Chris? The guy that surfed the 100-foot wave off Portugal? That's about 10 miles away. And so that wind float has been through three 50-year storms in the time that it's been in place, which is always funny to say. Well, I do want to ask you about that. I mean, imagine, you know, climate change. Imagine, see, imagine violent storms. How confident are you that you'll be able to beat those storms? Very confident. This technology has ridden through some very high seas, very tumultuous storms, and not only did it right through without any mechanical problems, but the production was though it was on land. So it is very mature. It's actually a marriage of two decades-old technologies, offshore wind. You know, there's gigawatts of offshore wind, bottom-mounted offshore wind off northern Europe. So that's not new technology. Oh, yeah, it's been there for a long time. Yeah. And then the semi-submersible is the same like the X-band radar. It's the same technology. It's from the oil and gas industry. It's been in use for years. So what principle power has done is marry those two in a very robust way. When we come back from this break, we're going to find out exactly where we are in the timeline, what has to happen, and gee, I'm very excited about this. You know, I feel that wind has got a poetry to it. And I like it. Wind on the waves even more so. I'm on your side for sure. So anyway, let's take a short break, come back, and you can give us the practical fact of what's going to happen from this point forward. You're watching Think Tech Hawaii, meeting people we may not have otherwise met, helping us understand and appreciate the good things about Hawaii. Great content for Hawaii from Think Tech. 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 $5 billion 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. 3 o'clock every other Monday, Code Green, Aloha, and thank you very much. Okay, we're back. We're live with Ted Peck and Chris Swatley, and Chris is with Progression Energy, and Ted is with Hulu, and they are collaborating in a big project off the southern coast of Oahu, 14 miles out for wind, day and night. It always is day and night, isn't it? It is. Okay, and so we're going to get a handle on where you are now in the timeline, what has happened, what needs to happen. How are you going to complete this project by 2020? Is that what you said, Chris, 2020? Yeah, actually, start construction in 2020. Start construction. Construction is the easiest part, am I right? I think you're right. Yeah, we've been at this project for about five years. It's been a lot of stakeholder engagement. We put in a lease application to Bureau of Ocean Energy Management last October. It's in federal waters, and the agency that oversees federal waters is BOA, Bureau of Ocean Energy Management. Yeah, so it's outside the 12-mile limit, yeah? So how much jurisdiction does the state have out there at 14 miles? Go ahead, Chris. Sorry, can you repeat the question? How much jurisdictions does the state have out there at 14 miles? Well, we'll be in federal, state, and local jurisdictions because the wind floats will be in federal waters. Our cables will be going through the coastal management zone, so that'll be DNLR, and then on landfall will be in the city and county of Honolulu. So we'll be working with regulators from federal, state, and local, and generally, the regulators know how to align their various processes so that we can, you know, there will be a lead agency. The studies, the many studies that we do will be used for a number of permits at the federal, state, and local level. But really, that's the main thing that will be happening over the next three to four years, is, you know, once we achieve a lease with the Bureau of Ocean Energy Management, we'll be spending three to four years of permitting. The other big piece is selling the energy to Hawaiian Electric Company, and we've been in discussion with them for the past couple of years and those discussions continue. They're generally positive, you know, and a lot of that is because we offer a, you know, renewable energy at a competitive price and it is grid-friendly for an inridden resource. Well, this does raise the question of curtailment, as we have seen on the neighbor islands anyway, where the utility has said, okay, we don't need it right now, so we're going to curtail you. How can you get around that problem? Because if you've invested a fair amount of money in building these turbines and installing these turbines and the cable, and then you have to curtail, you're not making much of a return during the curtailment period. How are you going to deal with that? Well, curtailment is a negotiated term and in a renewable world, at 100% renewable, there will be curtailment and in the future, curtailment will offer opportunity for storage. So we haven't really crossed that bridge when the OIT study was done, the Oahu Wind Integration Tactical Study, back in 2009, I believe, bringing in 400 megawatts of wind from Maui County had 2% to 3% curtailment, if I remember correctly, associated with it, so that's not that much. Yeah, but I think your point really is that if you have a battery system, either on your side of the line or on the utility side of the line, curtailment's not a problem. Well, it's cost, it's a great opportunity. It's just management of costs, and what's the, you know, your loss of curtailed energy compared to your ability to store it and then deliver it at a different time. So, and that is, you know, we are in the beginning of the storage age. We're in a fairly mature place in solar. Storage is coming along. It's an exciting time, and I think that that's a TBD, a TB determined. Yeah, did you see that speech about graphene? That's pretty exciting, but I actually don't think we're going to have mature technology on graphene in the next four years. I think that there are a lot, it is an area filled with innovation. And the question is, what's going to be commercialized? What's going to be warranted? You're going to be able to warranty. You know, what are technologies you can warranty? We install technology, I've just went through that nut roll of what does a warranty look like for storage on a 20-year PPA, and it's not an insignificant process to kind of figure out. So, that's, we're just going to, as I said, that's going to be an area for development. And I think as we get closer to implementation, we get closer to understanding where we are and the utility feels a little more comfortable. You know, depending on which side of the meter it's going to be on, we can, we can sort that out. Yeah, so, I mean, in terms of the timeline, Chris, does this mean that you want to have your deal negotiated and settled with the utility before you start construction? I guess it does. Otherwise, you're really barking up a tree, you know what I mean? Or a windmill, as the case may be. Yeah, this isn't, if we build it, they will come. That's not how that works. This is a $1.8 billion project. So, Chris, have you had any experience or know of any place else? You know, we're talking about a long process. Anywhere else that has done this and gone through the permitting and the whole process and how, and which comes first, you know, chicken and egg kind of thing, what kinds of things do you have to put together for that to happen and happen more quickly than, you know, did not? Yeah, well, project financing is a pretty tried and true process. It's been going on for as long as capital markets have been around, and for, you know, for large infrastructure, which renewable energy is a part, you know, you need a credit-worthy power purchase agreement, you need your permits in place, you need underwriters, and then the market does its very efficient good job of bringing debt and equity to a project. So, and as far as, you know, as far as specifically floating offshore projects, principal power, which is the owner of the windflow technology, they have projects planned in Europe and Asia for 2017, 2018, 2019. So, this project, you know, Hawaii will not be the first project for this. It may be the largest, but it won't be the first. There will be bank finance, project finance, projects before that. But what about funding? I mean, how much money do you need to raise and what is the status of raising it? Well, it's really, you know, having been involved with project financing over the past 15 years, the real challenge is getting through the permitting process, you know, negotiating a PPA that you can then finance. Once you have all your paperwork in order, you know, it's really, that's where you kind of get to the tried and true process, where the banks check all their boxes, you know, large commercial banks or even insurance companies, you know, institutional equity providers, you know, pension funds, things like that. You know, they really just need to check the box and then you, you know, it's usually a six to nine month process. But the real, you know, the real challenge is getting to that point. How much do you think you'll have to raise? Well, the project's about $1.8 billion. So we're looking at, you know, probably 60 to 65% of that being debt and the balance being equity. And one of the things that I didn't understand when I was working for the state is, which I learned when I went to that little venture in Kuala is that there is tons of capital available on the sidelines looking for the right projects. So our job, and our job working with the community, is to drive out as much risk as possible so we get the lowest cost of capital possible so we can deliver the lowest price to the ratepayers. That's it. And so really this process that we're in now is all about driving out risk. And once we drive out the risk and it's at the right time, that money comes in at the right time, if you secure a larger amount of money early in the process, that's expensive money. The most expensive money is earliest in the project. The cheapest money is late in the project and so you want to stage it so you get as much of the cheap money as possible and as little of the expensive money as possible. And so that's the process that we're involved in now. So I know it's early to ask this, but it's just one... But you've just got to go ahead and ask it. I'm going to ask it anyway. Ted made me do this. Is this the first increment among other increments? Is this the first project among other projects? I mean, you think we should look forward to seeing a number of projects like this going off the southern coast of Oahu? I think what I would look to is the PSIP process. HECO put a wedge of 800 megawatts in their PSIP, but that's not a done deal. It's not completed. So they're clearly thinking about offshore wind, whether it's sourced in the waters off of Oahu or sourced on another island. We believe this is the lowest cost opportunity and as you know, I've kind of walked the dog talking about from Maui County. And once you get to those kind of distances, you take yourself out of AC Connected and you move to DC Connected with a quarter billion dollar converter stations on either end of it. And so your costs start to go up significantly. What's the difference? I mean, what are the impacts of AC versus DC? Your losses. Once you get past somewhere in like 50 to 70 miles, your losses from AC Connection really become significant so that converting to DC is cost effective to do it. So DC for any significant length. Yes, yes. So this is of such a short distance that AC makes sense. Well, very exciting project. Gee whiz, you guys. I'm very excited. I hope this goes well for you. I'm looking forward to seeing it develop. This is going to be a great statement. Not only is it a statement of renewable energy, it's a statement that Hawaii has the, what do you want to call it, the moxie to do what they do in the North Sea, to do what they do in so many other places in the world that we can put deals like this together. It's a great statement and wish you well on it. Thank you. Yes, we're excited. And we're excited about Hawaii's leadership putting in 100% RPS to really drive this kind of innovation. Yeah. So Chris, you want to make a final closing statement or you want to leave that to Ted? Oh. You both want to make a final closing statement. Don't worry, Ted. Where, you know, I like Winston Churchill. He was very pithy and he said, after, I think it was after Dunkirk, he said, this isn't the end. It's not quite the beginning. It's more like the end of the beginning. And so we are really, I think, with the Bowman process starting up, I think we're at the end of the beginning. And so we've got a lot to do. We, you know, site control and an off-taker are the two critical pieces. So that's where we're working on. And we have a lot of work to do with the community and understanding how to do this in as least of an impactful way. And but I agree with you. It is exciting. And I mean, if we built this wind farm on Oahu, it would go from the H1, H2 interchange to Mokalea. Okay. We just don't have the room on Oahu. Yeah. Right. So this is a great way to handle the fact of a limited space on a limited island. Right. So Sharon, do you think it's okay if we ask them for first rights to go out with our cameras when they start putting these platforms together? A little bit of excitement. We want to be there, man. We'll be able to be there. That's fair. Okay, Sharon, close. Okay. I think this is exciting. We looked at all kinds of variable resources and what can we do about it in storage. But if we don't start looking at what we have right in our backyard like wind and finding ways to do it, and it's exciting because we're on the way to doing that. Just that. So thank you, Ted. Thank you, Chris. We're on the wave. Ted Beck and Chris Swatley doing this fabulous project of Oahu. Love to see it happen. Here in Hawaii, the state of clean energy. Wind on the waves in Hawaii. Aloha. Aloha. Thanks for having us. Thank you.