 Okay, we're back. We're live. It's 10 a.m. I'm Jay Fidel here on a given Thursday, and we're talking about Amoresco today. Amoresco's new project projects. We'll get further detail on that in a minute. Okay, here on a given Wednesday. Tomorrow is the event, however, and we'll talk about the event tomorrow at Pacific Guardian Center. Okay, let me introduce. We have two executives from Amoresco, which is a national company, Ron Haxton, and also Ron Haxton and Wyeth Crawford. Will you guys say hello? Hi. Hello. Good morning. So we want to talk about Amoresco. We want to talk about the deal with Chelsea Group and our friend George Benda. We want to talk about what you're doing at Pacific Guardian Center, and in general, we want to talk about the way you fit into the future of energy efficiency in Hawaii and the present also. So, Ron, what's your situation with Amoresco? Okay, so I've been with Amoresco about six years. I'm the Northwest Region Vice President, so I'm responsible for our business in, besides Hawaii, Oregon, Idaho, Washington, and Alaska. I reside in... You didn't mention California. No. We treat California in a different region, so I'm from the Northwest and lived in that area most of my life. Amoresco has been around since about 2000, started in Boston, and specifically focused around energy efficiency projects. And then in the time since then has grown to also include distributed generation microgrids or some of the latest technologies. So it goes beyond just classical energy efficiency. You're into energy technology really. Yeah. And of course, the start of the business was around performance contracting projects that pay for themselves with their utility savings. But that has... It's been around and it's been very popular, and it's been very successful in most of the country. But we see the ability to help our clients and help our customers just as much, if not more, by helping them provide distributed generation. PV is what people usually think about, but there's also other avenues and other ways to help them address their energy needs. You're taking my interest. Okay. I want to know more. What about you, Wyatt? What do you do? I was the former vice president of Chelsea Group and I took over as the director of the Hawaii office of Amoresco. So essentially I'm a mechanical engineer by training and education. And now I'm running the local office with all the same people and a lot of the same sort of work with new resources. And so we're looking at some new types of projects and some of the things that Ron has talked about. We're trying to expand our offerings here. So Ron, Amoresco is a national company. Correct. Tell us about the size and scope. Sure. Tell us about its national characteristics. Sure. Amoresco headquartered in Boston area, about 1,100 employees, mostly in the United States, also in Canada, England and some other countries here and there. We have grown mostly through various acquisitions. The group that I work for specifically, the Northwest, grew out of a company that was acquired in 2010. And so we have, then we look for opportunities of existing businesses that might be a good fit for what we do to either expand our business through already established customers and clientele or to expand our capabilities through skill sets that we might not have. So you're in an acquisition model. You've acquired over the past few years. And now most recently, at least here, you've acquired Chelsea Group. Why Chelsea Group? What interested you about Chelsea Group? Sure. When I sat down with George earlier this year and we were originally just talking about using Chelsea as a consulting engineer, Amoresco is independent in that we don't make widgets. We don't have a whole bunch of engineers on staff to do engineering. We usually hire that out. And so when we met, it was to talk about that potential. George talked about everything that Chelsea does and their process and it was a mirror to almost everything that Amoresco does. Amoresco does more in that we are also a general contractor. So we will build the project. We can find financing. Say build a project. You mean build a building or build energy systems within the building? Energy systems within the building. Our projects are usually around retrofits to make buildings more efficient. So we'll do the work that we develop, the projects that we develop. We saw a very strong alignment in what Chelsea offered. George would tell me what he does and I would say, wow, that's the way we do things. And that went on and he finally said, we're for sale. Do you want to buy this? So we saw a great moment. Yeah, I mean, it was a good fit. It was, you know, I could literally plug everybody into what we do with very little difficulty. But we also saw the options to enhance what the Chelsea group had done down here because they had some, you know, some guidelines that they work within and we could then, if a customer had some difficulty, whether it was financing or having someone to do the work, we could offer that and help them get more done. We just saw a good fit. Established business. People that are passionate and care about the direction that Hawaii is going. And we saw an easier way for us to help Hawaii get where it wants to be. Yeah, yeah. Did you know at the time that George studied philosophy in college? No, he kept that from me. True philosopher. Among other things. Okay, so your position, well, let me, let me go and look at it from the side of Chelsea group. How was the deal to you? It was actually really exciting because one of the things that like Chelsea group has offered, you know, design and commissioning and construction management and assessments and that kind of stuff. But we don't ever, we didn't ever have the opportunity to really get fully hands on and control a project as the true prime. We oftentimes acted as prime as more on the owner's rep side. But having the general contractor's license opens up a bunch of doors. Having the financial backing of somebody that can help get those performance contracts and things like that actually financed. It's a way to move forward projects that are on a scale really unlike anything that Chelsea group by itself could handle. Performance contracts is a contract where your compensation is based on your success. It's essentially a guaranteed savings where we do an assessment. We look through your building systems and say, well, we can save you say $100,000 a year. You pay us say $70,000 a year and then you can actually set up a situation where from the very first day of the project, it's net positive for the building. So there's no out of pocket money. Just kind of a, it's an interesting vehicle that's been around since I think the 80s or maybe late 80s or early 90s sometimes in there. But it's something that you kind of have to have both the smarts to set up the project and then the financial backing to be able to front all that money. Yeah. And so that kind of stuff we couldn't really, we couldn't really handle as well. And then additionally, the Chelsea group is a relatively small company. We're 12 people in the office right now. And as opposed to 1100, as opposed to 1100. So there's this this vast wealth of knowledge of experts that we can actually pull from. And so it's really opened up a lot of a lot of avenues for us a lot of assistance. Another thing, George used to work in the government. And so he refused to do government projects. So yeah. So now Amoresco already has the logistics and everything set up so we can actually bid on the government to administrative issues. Yeah, it's it's all just you know, which which problems you really want to deal with. He wasn't wasn't a big fan. Am I right to say that when you do this kind of what performance contract, the estimator is really important. For sure. He's got to be able to see or she how this building is operating, what it needs, and what it costs to get there, and crank all that in through the proposal. Yeah, and that'd be an engineer most of the time. Yeah. So I actually had my previous work, former life, I did build a performance contract that so yeah, I've had all that experience of going through and it's it's pretty. It's a little scary at times because it's just you're making these guesses and then the you're promising on putting money on educated guesses. I don't want to just say everything but but you're stating a promise that has to still be true in 10 years or 30 years. So you have to really do your homework, you have to really understand the systems. And it just takes a lot of effort on the front end to build these that type of 10 years or 30 years of these contracts that long. They absolutely are. Oh, no, I always saw this area, especially with the high rise buildings downtown. And my law firm represented a lot of them over the course of my career as a ripe pomegranate. What I mean is these buildings were built at a time when maybe the technology wasn't so mature as it is now. And you need somebody to come in and look and apply the new science, apply the new technology. When you do that, lo and behold, you find tremendous savings. How do you see this market run? Well, just exactly like you said, it's aging infrastructure. We see it every day. Equipment has even if it was the best equipment at the time that they put it in, there are much better options that we can find. So it and you're exactly right. I think the the market is ripe for a lot of turnover and equipment, we can help them select the correct equipment. As in many cases, when they originally built it was usually low first cost. So maybe not the value engineer. Yeah, the best, maybe not the best material selection for longevity and in a salt air atmosphere. So those are some of the things we can address. And just the sheer improvement in performance on equipment over the past 20 to 30 years makes it prime opportunity for these self financing projects. Now, what about looking at it from the building owners and managers point of view? Are they are they willing to go this step? Because you know, they've existed sometimes 20, 30 years on, you know, Band-Aids. And you guys come around and say, we can we can fix this and we can give you a guarantee and a promise and all that. Are they agreeable to that? Are they are they likely to agree to have you come and make a make a proposal? I'm talking about the managers and I'm talking about the owners two separate questions. Now, we see a wide range of reaction from everyone top to bottom. There are some owners that have always been very forward thinking and always look for the best alternatives. They're obviously more likely to go that direction. Other ones are are more complacent to go with the cheap fix or a cheap solution and are less likely to look for the best way to go. So we try to convince everyone and show them the reasons why they should go. At the end of the day, it still is a financial decision that they have to make. So often it's, it's on us, our developers, our engineers to show them it's not just the right thing to do for Hawaii, but it's the right thing to do for your long term financial outlook. Also, we talked about the pass through for a minute. Sure. So in these tall buildings right around here, we'll ask about what other buildings you might want to do. But it's all passed through on operating expense. You know, the cost of operating the building is all passed through, including electrical, you know, usage of electrical rates, what have you. So if if you can save me a dollar on electrical, my electrical bill for the building, it goes to the benefit of the of the tenant sure, because the pass through was less. And I suppose that's a marketing point to get my next tenant. But it may not be that much of a marketing point. On the other hand, if I stay with the old and I don't change anything, the tenant doesn't he doesn't have a reaction to that. He doesn't know the difference that I did not reduce it. I just left it the same. How does that play? Because I think a lot of managers would say, we'll just leave it because the tenants not complaining. Sure. Sure. Now, and we do encounter that. So we will see various reactions. And it usually depends on the building type. If it's high end commercial real estate, then the building owners will recognize there's value to them and value to their clients in having that better quality and better performing building and something that they can advertise. So he presents it, isn't it to to the tenants? Yes, yes, they market that. They should market it. And they can also, if you have someone that is in the mode of development and construction, then they will market what is coming. And that will help them pre sell the building so that they're operating more on cash than on the loans. And it shows when when the landlord markets that it shows the tenant, the landlord is progressive, the landlord believes in technology, progress, efficiency. It's a statement of the state of mind. As far as that capital concentration is concerned, we're going to take a short break, you guys. Okay, we're going to come back. We're going to ask Wyeth about the technology. We'll ask you both about the technology. There'll be the big payload here. Okay, we'll be right back. This is Think Tech Hawaii, raising public awareness. When I was growing up, I was among the one in six American kids who struggle with hunger. But with the power of breakfast, the kids in your neighborhood can think big and be more. Go to hungarees.org to make breakfast happen for kids in your neighborhood. If you're not in control of how you see yourself, then who is live above the influence? Welcome to Sister Power. I'm your host Sharon Thomas Yarbrough, where we motivate, educate and power and inspire all women. We are live here every other Thursday at 4pm. And we welcome you to join us here at Sister Power. Aloha and thank you. I told you we'd come back, but I also didn't talk about the engineering, but we're going to hold up on the engineering when we talk about one thing came up during the break. And it's the tenant attitude about green, right? Yeah, so one of the things that we've seen a pretty remarkable shift in the past, you know, just, just eight years or so of how much affect the the pressure to be environmentally sound and sustainable has had on the whole industry. People care. It really is something that people care about and people in Hawaii really care about it with the 2045 100% renewable energy goal. So that pressure in itself has actually caused a number of buildings to make make movements that they wouldn't otherwise do simply because it's it's very desirable for buildings to be highly energy efficient. And people like seeing those lead plaques. They like seeing the Hawaii energy project of the year plaques and the things like that. I can just see that letter that goes to the tenants in January or February, which talks about operating expense and reconciliation in the end of the year. And it says, you know, we have Amoresco now. And we're going to save money on energy. It's all worked out. But more than that, we're going to be green. You want to be green. We want to be green. The state has to be green. We're realizing the destiny of the state to be green. And I think most tenants 99% of tenants really like that really like that tremendous selling point, because it means that, you know, the Northland will intend on participating. You know, it is the aggressive thing. So let's talk about engineering. Let's talk about the equipment. So I'm a building. Okay. And you come to me and you say, we're going to, we're going to deploy new technology in your building. What are you going to deploy my building? So the first thing we've got to look at is where are you using energy? Because from the most efficient standpoint is just turn everything off, right? That's, that's what we care about. Because the efficiency we're talking about is largely economically driven. So it's, I want to lower my monthly bills. Your lowest monthly bill is zero, turn everything off, everybody goes home. But we can't do that. So we've got to look at your lighting, we've got to look at your process loads, we've got to look at your air conditioning. And those are kind of the main things that a building has actually plug load is something that used to be a very pretty significant portion of a building, especially an office building. And it's come down quite a lot because of, you know, LEDs and the efficient equipment, new TVs and just the things that people wanted, those got changed out really fast for other reasons. You don't see CRT televisions anymore because not not because they're inefficient. It's because nobody wants them. So with a light bulb, you know, as long as it's putting out light, nobody really cares what it's using. So first, we have to make things visible to people that where their energy is going where this cost is. And then we look at the usually they start off with a low hanging fruit, which for the past few years has been lighting. Going LEDs are now cheap. They're very efficient. They're very high quality light. And they're just a no brainer. Beyond that, the next like the biggest single chunk for a building like this would be your AC load. And that's probably anywhere from 40 to 50% of total energy usage in the building. And there we'd look at new chillers, we'd look at new cooling towers, we'd look at seawater air conditioning, seawater air conditioning is something that you could look into. There's like the technology is is great. But it's hands down the most efficient way that we know of to produce enter produce cooling. The the only issue is the economics of it have to work as well get to connect it. Yeah, so so it's it's the cost benefit of getting the plant installed and everything up there to your building. So it's it's not a one of those things where it's just, you know, a no brainer where everybody should do it. You got to look at the at the you got to look at the financials. Otherwise, you might end up being that other type of efficient where, you know, you run out of money and everybody does go home and it does happen. Yeah. So one last question about that is, you talked about gathering data. That's really what you've been talking about. And I mean, some buildings, I suppose would have that data ready for you. Herewise, we got it all right here, we get here's a thumb drive with all the data that you ever want to know about what the buildings are going to have that. And so you probably have to bring in a little black box over time to get what do you do. So that's happened to me about once in my career that somebody actually was able to just hand over all the files. A couple other times I've been able they've had a comp a competent BAS building automation system that has good trend logs and whatnot. But for the most part, data that I gather in the field is largely suspect. And the only thing is worse. Yeah. The only thing worse than no data is bad data because then you think you have something being deceived. Yes. And it's just it's just all lies. So what we do on that side, especially for performance contracting, where it's really important, we have to know what they're using so that we can prove that what they what they save. We put in temporary data monitoring, or we will actually upgrade their building automation system to a continuous flow of data. Yeah. So you always know. Yeah. In fact, you can look at it remotely, can't you? Yep. Yeah. Yeah. There are a number of plants that I can log into online cell phone. Yeah. Well, that's the modern way. So we get the data. And now we understand this building, we understand, you know, how well or not so well it's doing with its existing equipment. And now you have to crank that into a business model somehow. You have to take this data and put it on a spreadsheet and and compare it with other data, you know, that's in the model. How do you handle that, Ron? Where does it go from the time the tenant, the landlord gives it here? And one of the things we do before we do our investigation into the building is we'll sit down with the owner and ask them what are their parameters that's going to make a project work for them so that we know what their targets are for payback in various investments. So we'll always have that in mind when we're developing the project. But what we'll usually do is come up with a longer list of things that we can do than they want to do. But then we'll sit down and we'll plug in different numbers into our model, show them what the financial outcomes are and arrive at the best overall solution for them. I can see this working kind of like a modeling basis, an if then basis. If you want to save X dollars, you take one from column B, column C, column D. If you want to save two X dollars, take more columns and so forth. And if you really want to go the whole route, take all the columns. Do nothing, we'll see you later. Yeah, yeah, essentially. Another thing that it enables people to do is a lot of buildings have what's called deferred maintenance. It's stuff that they were supposed to fix long ago, but they bandated it together. And there's not really any energy savings in replacing it, but it's just something that needs to go. Like, like boilers are a common one because they're they're a large energy user and they're not actually that like when they degrade in efficiency, they don't go that far from new. They're not very efficient to begin with and they're not very much worse. So it's hard to replace on a on a energy efficiency standpoint. But if you have a great big energy efficiency contract, then you can pay for that by actually wrapping in a bunch of your deferred maintenance and just you end up spending a little bit more than you would, but it's still, you know, updated on everything. Yeah, so you can have the notion and this just occurs to me. What about the notion of putting solar on a rooftop and using that to generate electricity and using that to run a chiller? Is that being done? The biggest problem with that is simply the energy density. So in general, buildings like this one has a very small roof footprint compared to the the cooling load. This one being finer. Yeah, so yeah, essentially if you put all the solar that you want that you can fit on the roof, just even even built out to where you're 100% of the square footage up there, you would not have enough energy to run your chiller and you still need to be tied into the grid because you still need that cooling when you're off peak load. Sure, you've got to have the backup. Yeah, so in general, while we're big proponents of solar and installing it, the idea of isolating your systems and tying them into like this solar panel is tied to this piece of equipment is generally it's not as advantageous as going to just tying that solar panel through the whole into the whole building and treating it all as one one thing and looking at how the whole thing ever do that. Yes. And you use batteries when you do that? We haven't had any battery installations yet but we're really trying. It's right there. Yeah, and Amoresco has done some projects where we look at PV generation. We combine it with battery storage and microgrid technology to control the consumption of the electricity and the distribution of the resources. Yeah, I wanted to ask you mentioned earlier there's a list there somewhere. There's a list of goodies, technology goodies that you can discuss with a client or a prospective client. By the way, footnote to that is my guess is that when you have a new technology, you come around and say hey, we got a new technology. Let's update your system with a new technology because we can save you more money and you get a rider on this performance contract that way. Anyway, so my question to you is what else is on that list? We talked a little bit about PV. We talked about monitoring devices. We talked about, you know, the classical large building devices but what else is on the list that you would propose? The things that we're looking at these days with clients are how can we generate electricity and again PV is a typical but there are other ways whether it's a renewable gas which could be gas that's captured off of a landfill or some sort of wastewater plant. You can use that gas to whether you're running it through a generator or some sort of gasification to generate but also additional ways to store energy whether it's pump storage using water, whether it's batteries or flywheel technology and then the next level is really what is commonly called microgrid which involves multiple layer of monitoring and controls and really actively monitoring every single bit of your consumption and adjusting what's turned on and what's turned off and even modulating levels up and down so things are running slower than they might always run. Seems so clear, I mean like it's the old European hotel thing when you leave the lights go off and you come back and put your card in the lights go off. And you know it goes far beyond that, typically the challenge is implementing the level of controls and the programming and being able to write the programming so that the intelligence exists automatically to modulate the systems up and down and it can. Amoresco is going to use its experience in other places when it designs a system say here right and does Amoresco actually I'm sure you're looking at best practices and best connections for deployment all the time but you actually design equipment, do you design algorithms, do you design you know grid adaptation which you use in this city then that city then the city? Yes, what we typically do is we stay on top of the available technologies as the people develop them we don't we don't make anything but we always have our eyes out for what is working best so as better technologies are developed and people come to us because they know that we're going to connect them with customers. You're a good market. Yeah and we'll evaluate them and help them maybe improve their performance and we will write the preferred sequence that we want things to operate so that the people that are providing that equipment whether it's a high efficiency chiller or a system that's going to control those loads they know how to write the programs and the algorithms to control it the way we need it to to provide the savings and the ultimate performance. Now why if you're a guy who undoubtedly as I would if I were in your shoes I look at every technology out there you know get all the trade journals all the popular mechanics for big buildings journals but what's coming down the pike that excites you that maybe Amoresco will use in the future. Honestly this micro grid stuff gets pretty cool once you like it it's not so much about the specific technology that's exciting because it's largely the same thing that we've used for a long time it's good chellers it's efficient pumps but it's better good controls better this and better that right well it's it's not even so much that it's the whole control of the whole system and playing with your loading and unloading and and storage and and discharge and all these different technologies you can actually use a whole bunch of them to accomplish one common goal and that's one thing that it kind of reflects the whole you know what is the the answer to energy as a whole problem and the answer is there is no magic bullet there is no single solution that works for everything we can't just sit down and say all right we've got this widget and that will solve all of our problems it turns out it's got to be smarter than that it's the software yeah it's it's the the thought this is software where you have adaptable software you're sitting in the Amoresco office the buildings over here you're getting the data and you make some changes or the program makes some changes to adapt it better and better to achieve better performance standards yep we're almost out of time so Ron let me ask you this where are you going where are you going in terms of the kind of properties the the location of the properties the kind of installations you want to do on those properties here in Hawaii yeah that was one of the thing that attracted us in Chelsea's client base predominantly private owned like what I said George stayed away from from government our typical core work is in government so we want to expand the work that that the Chelsea group had done with their private and and talk to them about doing micro grids and distributed generation but we also see opportunity to help whether it's the utilities on the islands or the the building owners in in looking at their buildings from a holistic perspective and really considering what their options are there is many opportunities for us to help people and I don't necessarily see a limit other than the number of bodies and the time in the day far as I'm concerned you're here at exactly the right time because that people are more and more aware I tell you I sit on the Hawaii energy policy forum people are more and more aware of the 2045 goals and the the community is more of one mind these days they're not so much arguing as finding collaborative solutions and so it's a great time to be here I agree thank you Ron thanks for coming down really appreciate it well I thank you for coming down I'll see you guys at your future of future of existing buildings event tomorrow at the Pacific Guardians Center thanks so much thank you thanks Jay