 ThinkTech Hawaii, civil engagement lives here. Welcome back to ThinkTech, and this is Energy 808, the cutting-edge half-moon solar. And we're talking about Molokai today, and of course our regular guest, if not co-host, is Marco Mangelsdorf, the Provision Solar and Hilo. And our special guest today who joins us by Zoom from Chicago is the CEO of Half Moon Ventures. Half Moon Ventures is doing a project in Molokai. We are so happy to have both of you guys on the show. Welcome to ThinkTech. Thank you for having us again today. Yeah. Well, Mike, you were here about six months ago, and I thought it was great to talk with you and have an angle of view building an ambitious solar project on Molokai, because Molokai isn't easy. Molokai is not like the rest of the islands in its own way. Molokai has its own persona, and it's special. And I might add that Marco has done a lot of work as a Provision Installer on Molokai, and he's very familiar with the territory. And what I'd like to talk to you both about today is this project that Mike is doing for Half Moon Ventures on Molokai. It's a solar and battery installation. Very important to move the needle ahead in the state of Hawaii. So welcome to the show to you too, Marco. Say hi. Hi, Jay. Hi, Mike. Again, I'm really pleased to be back on with both of you and especially you, Mike, because as Jay was saying, Molokai is and has been for a very long time, very near and dear to my heart, and it's great to get an update from you being the principal there at Half Moon Ventures and the Molokai New Energy Partners to learn the good, great news and kind of where we go from here after the Hawaii Public Utilities Commission gave formal approval with some conditions back on July 30th for your company and for Maui Electric to go ahead and move forward. So I'm very much looking forward to what you have to share with us. So thank you so much for being on with us, Mike. Yeah, congratulations on the approval, Mike. So can you tell us the general nature of the project and you've been working on it for a couple of years now? Yeah, we inspired this project three years ago from another developer, Princeton out of California, who had been struggling to get the project moving forward but they secured some good foundations for us. But we really didn't expect that it was going to take over three years of additional development work to get this thing across the finish line. But as everyone's aware in Hawaii that there are some additional challenges that are posed by doing business in Molokai, just geographically being isolated and there's a lot of other factors that we had to take into consideration that we don't in some other project areas. So overall, I mean, three years of development to secure the land, to complete the interconnect studies with NICO, do the resource assessment, do the environmental impact assessment, start going through the PPA negotiation process. And so there's just a number of elements that we needed to do in this particular project that we haven't necessarily been exposed to in some other places. Yeah, well, why are you into this? I mean, are you into it to make big bucks, Mike? Or are you into it to do altruistic deeds for Hawaii State? Or are you one of those guys who just loves the technology? Or is it all three? Actually, it's interesting. My college roommate was George McGovern's grandson. And so I got familiar with the Sierra Club back in the early 90s. But I did a different course. I studied Chinese in college and I lived in Asia for well over 10 years. And we were taking, I was working in investment banking, and we were taking a lot of big dirty SOE companies, public coal companies, oil companies. And, you know, over the time I was there from 92 to 2003, the environment deteriorated rapidly. And you could just, you know, the health impacts were extreme on people. And my son was born in Hong Kong. And so I really became like a, I just realized the world can't sustain 8 billion people driving Cadillac SUVs. So we need to do something about this. And so I actually resigned from my position in Asia and came back and we started a renewable energy company called Half Moon Power that originally was focused on utility scale wind projects in the mainland. I'm from the Midwest, Wisconsin. And we developed our initial foray with a portfolio of 800 megawatts of wind projects in the Midwest. And so we continued to grow with the industry. We went from wind to solar and then now energy storage. And we've been very fortunate to have some interesting opportunities come across our lab here since we got into energy storage four years ago. And we've kind of just stuck with it. And to us, really the missing link right now to getting 200% renewable is going to be storage. And so that's how things kind of got started. And we're not fly by night Charlottes is trying to make a quick buck out of this stuff. It's something that is permanent in nature. What kind of issues have you been doing business in various places? It's not the only place you've done projects. I wonder how you would, excuse me, I just took a trip to Dallas on behalf of Think Tech. And yeah, that helps if you drink a little water. I just took a trip to Dallas and got on a couple of planes. And before you know it, I was this, a cold. Anyway, what I wanted to ask is you've done business in other places. And Mokai and Hawaii, they're different. How have you found them to be different? Have you found resistance to the project? Have you found a business environment that is as easy as other places? I mean, it's remarkable no matter where you go. I take the view that people are all the same, you know, particularly here in the Midwest. You know, I grew up in Wisconsin out on a farm, but it was, you know, I grew up in Milwaukee. And we did a lot of wind farm development in very rural communities. And the thing about small communities is that you've got different dynamics that you don't see in big cities. There's, you know, in big cities you have anonymity, but in small towns you get everybody knowing each other. And you got generations going back and you got stories that just follow along with different families. So I think Mokai is kind of similar to a lot of the places we did wind farm development in that, you know, it's just got, you know, generations of history there between different families and politics and so forth that, you know, make it a little more quirky, I guess, than doing something in a more anonymous place like New York City. But I, you know, honestly, I think our approach is a little bit different too. We just take time to get to know people and expect it's not going to happen overnight. So we try not to be impatient. Yeah, well, it sounds like China, you know, learning the community by developing guanxi with individuals one at a time. And after a while you, you know, you're accepted. So what have you done to try to gain acceptance in Mokai and how well has it worked? And if you could look back now, would you change anything in your MO on that score? I mean, I would always answer that by saying I wish we would have had been able to spend more time there. I probably have made a dozen visits over the past three years, and I've literally met, you know, hundreds of people there and not 100% support at all. There's definitely a few people who are concerned about this and us and anything else that's kind of new, I guess, for the community. But we've tried our best to listen as much as possible in different formats, whether it's one-on-one or big community meetings. So we've done as much as we can physically do to kind of really hear what they want to hear. Sorry, hear what they have to say. And then, you know, we try to tailor the project so it kind of fits with their needs. But at the end of the day, these projects are all the same, whether they're in New York or Molokai. You know, you're talking about solar and batteries and the different prices, different construction costs, but it's still fundamentally the same thing. Well, has there been resistance from the community? Have people raised objections in the course of your discussions, either publicly or privately? I mean, what do you feel is any pushback or is it all, you know, at least on the surface, an acceptance? Yeah. I mean, again, if I had to throw out numbers and then these are don't hold me to these, but I would say it's been well over 90% of the people that we've met would have been very supportive or indifferent to the project. But there's been a few people that, you know, that are a little more close to the industry that have raised some objections about, you know, could we have done this cheaper? Could we have done this with more community benefits? There's all kinds of different things that, you know, they think that are worth discussing. And we've had these conversations and they're ongoing. It's not like we're done with community. It's still going to continue to go on. So we're going to be there for the next 22 years. So there's going to be more opportunity for us to kind of win over some of these remaining people. It's ongoing, isn't it? It's not just a matter of getting their buy-in in the beginning. You have to keep on getting their buy-in going forward. You want to maintain the right relationship with not only the individuals who are close to you, but the larger community as well, no? Yeah, for sure. No, it's, well, again, it's going to be for the next 22 years. So I may not even get around when this thing is done. It might be my kids. Well, in 22 years, I feel certain that I'll get rid of this cold. Anyway, so now you've got approval on July 30, as Marco mentioned. And the question is, what does that entitle you to do? And why can't we just, you know, put a spade in the ground and build this thing right now today? Well, there's still remaining work to be done. We have to do a complete environmental impact assessment. We have to do some more cost estimates. We're going out for bid right now to get to really fine-tune the cost price right now, and that's going to take conditional work. But we expect to break ground here in the next maybe 90 days or so. That's pretty good. There's some additional, there's still some additional cleanup work we need to do with the Public Utilities Commission and the Consumer Advocate. But we, you know, there's some remaining, we have to go and file our building and electrical permits with Valley County and so forth. So there is some additional work to be done, but it's relatively low risk in nature. The big thing for us is getting, you know, not just the PPA approved, but the PUC to approve the project as well. Oh, okay. So once you get that approval that you had on July 31, then you need another approval. You have to negotiate the purchase power agreement right now with them. I suppose you're working on that right now with Maui Electric, no? No, that's already been negotiated. That's done. Okay. The power purchase agreement is complete. That's been, actually, it's published on the PUC website. Okay. All right. Okay. So where do you, where do you expect, you know, from where we are right now, plus 90 days to put a spade in the ground, plus the time of construction completion and turn on the switch, how far is it going to be? How much time? Oh man, we're trying to estimate that, honestly. The logistics are a little bit more challenging because of the restrictions on the port. You know, this, we can't really bring certain sizes of equipment in and so forth. And we're just trying to take an inventory of what's available locally. So there's a lot of work here to kind of just find out how we can do this the most economically. But if everything goes well and it never does, it could be done in as little as eight months. It's probably going to be like next summer, third quarter next year before its operational would be my guess. Yeah, I'd like to ask Mark to come in and ask you more to flesh out exactly, you know, what you, what you have achieved so far and what you still need to achieve to actually finish the project. So it's, you know, on the ground. Oh, thanks, Jay. First, I want to say my bias up front, which is that I believe that the Public Chillies Commission made the right decision two weeks ago. There is no such thing as an absolutely perfect power purchase agreement and seeking perfection should not be the enemy of the good. And I just want to state that, you know, being a contractor who has pursued projects over the past 15 years here in Hawaii and having done projects on Molokai for 11 now that I know something about the challenges of the process from start to finish in terms of proposing a project of that magnitude which you and your team are doing, Mike, and I really do salute your perseverance and your dedication, your commitment and not a trivial amount of money, time, resources that you all have spent to make this happen. And I do think that it's going to be overall a very positive thing for the friendly aisle once it goes online and for years and decades to come. And I'm not even buttering you up for anything in particular. I just want to recognize from one contractor, one developer to another. You guys are on a much larger scale than my small company here at Hilo, but I really do salute you. I know you feel the same way, Marco, but every time you see a solar panel get installed, you just think that's one less that we need to do. You know, it's going to be ongoing until we get to 100%. They say one small step for mankind. And we're going to take a small step too. We're going to take one minute break, Mike and Marco, and then we're going to come back and we're going to talk more about what needs to be done and what this project is going to look like at the end of the day, hopefully in eight months. This is ThinkTech and more specifically, it's Energy 808, the cutting edge, the half-moon solar battery project on Molokai. We'll be right back. Aloha, I am Howard Wigg. I am the proud host of Cold Green for ThinkTech Hawaii. I appear every other Monday at three, and I have really, really exciting guests on the exciting topic of energy efficiency. Hope to see you there. And Aloha, my name is Calvin Griffin, the host of Hawaiian Uniform. And every Friday at 11 o'clock here on ThinkTech Hawaii, we bring you the latest on what's happening within the military community. And we also invite your response to things that's happening here. For those of you who haven't seen the program before, again, we invite your participation. We're here to give information, not disinformation, and we always enjoy response from the public. But join us here at Hawaiian Uniform Fridays, 11 a.m. here on ThinkTech Hawaii. Aloha. Okay, we're studying Molokai today on Energy 808, the cutting edge. And we have Marco Mangostoff, who's a solar installer out of ProVision Solar and Helo. And we have Mike Hastings, who is doing half-moon, who is half-moon ventures, he's a CEO. And they're doing a solar and battery project on Molokai. Both of these guys have a familiarity with Molokai. So it's very interesting to talk about the one project within the view of the two business guys who do projects on Molokai. So as we left it, Marco, I think you were going to actually frame a question to Mike, and you were going to ask him about what the process has been, the experience it's been, and what the experience will be like going forward. Yeah, and I'm going to ask a little bit of a pointed question here, Mike, but not too pointed, I hope, which is I, along with you, I'm sure, read Commissioner Jenny Potter's concurring opinion on the decision that was announced two weeks ago. And she brought up a number of rather interesting and somewhat provocative points. And specifically, I'd like to hear your response to the criticism that has come from a number of parties that your company is, what you're charging in the power purchase agreement is, and this is my word, excessive or high compared to other utility skills, solar plus storage projects that have already been approved in the state, and specifically the last two that our friends at KIUC in Kauai approved with both Tesla and SolarCity and then AES. So how do you respond to that observation? In other words, why are you guys so high comparatively speaking? We've been negotiating price on equipment for several years. And during the, there's really three main reasons why it's more expensive. And a lot of it is the abundance of caution. So there's a lot of redundancy built into the system that you don't have in some other ones because this will be kind of like the base load generation for the entire island. This represents over 40% of the island's energy. So we've had to build in some extra caution. We're also being relied on for a lot of functionality in our energy storage system that's not being requested from the other projects. Most solar projects or solar and storage are just like time shifting to you. Charge a battery during the day and discharge it at night. That's all that's required of you. Those batteries are significantly cheaper. So it's the inverter system that makes it all work together. So we've been asked to provide help with ramp rate control, frequency regulation. We've got to, you know, we've got to have contingency reserved. So we've had, and we've got to build some redundant lines in case there's, you know, some weather event that causes an outage. So we've had to do a lot of extra things from the technology side that weren't required for some other projects in other islands. But the third part is, you know, just given the logistical challenge of building in a smaller island is, you know, there is some additional costs there. You know, we have a lot more planes to get, a lot more hotel rooms to bring in people and so forth that you don't have in some of the other islands. So between those three things, that is significantly increased the cost. But in general, this is a very competitive rate in my mind. So just last year, we built two solar-only projects in Rhode Island, and that PPA rate was 20 cents. And we're our blended average over 20 years is 17 cents. So even in the mainland, you're seeing rates that are significantly higher. And if you also consider that the average resident of Molokai pays close to 40, 50 cents per kilowatt hour, year over year, that this does represent a savings to people. So, you know, if you look at some of the recently approved projects, I think even in the latest RFP, I won't be surprised if some of these rates are in like the eight to nine cents area, or Oahu and Maui and maybe even the Big Island. But a lot of those are standalone solar. So it's really when you factor in the battery, which basically doubles the cost of the project, that's where that extra cost goes into. But 17 cents was kind of like the avoided cost target that we were trying to hit to be below what it cost them to do diesel ads. So, nonetheless, it may seem higher, but I still think it's competitive. And we made our case to the TUC and, you know, with reservation, Potter can approve this as well or vote in favor of this as well. You know, Mike, this raises a couple of questions in my mind. Number one is the you talked about the additional things you have to do because this would be, you know, the base generation of power for the island. Those are things that you've been required to do. That's what the implication of your comment was, right? That you've been told you have to build this with, you know, special backup and special resilience so that as the base load, you don't go down. Am I right? Correct. And that's nothing to add to it. He said it perfectly. Okay. So that's going to cost more. It's obvious it's going to cost more. The other thing is you mentioned 2022 years. Does it stay at 17 cents for the 22 years or other increments? That's the blended average, actually the initial rate. And man, I'm sorry, my mind is not recalling. But I think it's like 13, 14 cents in the start year. And then it ends at like 22 cents. So the average cost per kilowatt hour over the term, this is how Eco calculates, you know, this is the average kilowatt hour over the entire contract. Right. So that's 17 cents. So you take the risk as it goes forward to keep it in good shape, whatever happens, you still have to provide that power at that stated agreed rate, right? So the further you go out, the more risk you take. Yeah, there's also the degradation. So you're looking at a reduction of half percent per year in the solar output just because the degradation of the cells over 20 years, at least about 20% of your generation capacity, similar figures for the storage piece as well. There's a lot of wear and tear over that term. Yeah. So is this new high-tech equipment you're using? I mean, you alluded to, you know, that possibility. Is this going to be right at the cutting edge? Yeah. I mean, we've got a couple of these systems in the mainland. We're contracting with FNC Electric out of Chicago. They manufacture these converters to provide that additional ancillary services that NICO needed to help with the grade control. Yeah, it is high-tech. It is definitely high-tech, and these things are high maintenance as well. So it's, you know, compared to, you know, a plain vanilla solar array, that's very standard now. You can, you know, those are not as hard to do. But when you're providing, you know, kind of like microgrid controls, that is definitely in the realm of, in my mind at least, high-tech. You know, we went over to a Molokai and made a little movie there on energy in general about six months ago. And we talked with Amelia Vanderhoof. And one of the issues that came up in that discussion was some sort of notion she said that some people had where they wanted to be part of your project. They wanted to have either some percentage off the top or they wanted to have some ownership in it. Did those discussions go anywhere? What's the status of that? I mean, we continued to talk. I actually just talked with Amelia a couple weeks ago. And, you know, I consider us to be friends actually because we share the same vision of getting Molokai to 100% renewables. And, you know, we're happy to continue talking with the community about different ways to participate in the project. And, you know, whether it's financial or just having the benefits of better power quality. There are numerous ways that the community can get involved. You know, we, you know, those conversations are still ongoing. And, you know, we did have actually inserted into the PPA-specific language that enables, it facilitates the beginning. I don't know what that means. It facilitates the beginning of the conversation between the island of Molokai plus HIKO to talk about potentially having community ownership of the project. Well, that would be... We have, yeah. That would be a first. That would be a first where the community owns a piece of the project. Nope. Well, the KA you see is, isn't that too? That's kind of... Okay. Okay, Touche. Yeah. So... All right. You know, I only want to ask about the other community leader that you and I mentioned before the show. And that's Walter Ritty, who is a noticeable, a notable community leader in Molokai for many, many years. And I wonder what your discussions with him have been like and what kind of, you know, acceptance has he expressed of the project? Frankly, was scared to meet him because I've heard, you know, like, you know, that he could hurt me or something physically or some other way. But no, I'm kidding. He was a really nice guy and we had dinner together at Molokai Burger and with his wife and we had a really nice conversation. And he actually was somewhat supportive. I was... I didn't know what to expect honestly because I've heard so many great stories about how important he is in Hawaiian history. And, you know, he was... I really enjoyed our meeting. And I met him on one other occasion after that as well. And he... Again, I think he's just renewable energy minded too. And, you know, he wants to see all of Hawaii get 200% renewable and stop importing oil. Yeah. Oh, yeah, he said that for many years. And a shout out for Molokai Burger. I've been there. That's where I spent some time on my movie trip. And I got to say, it's a great place. Molokai Burger, yay, Molokai Burger. It is an awesome place. So, Marco, you wanted to ask some questions about the, you know, the... What will we see in this project when it is completed? Right? And that little time we have left, I just wanted to talk a little bit about battery storage. I mean, in the trenches here in Hawaii, as throughout much of the mainland, if you happen to be a Tesla dealer, which we are, or the other major supplier of residential storage is LG Chem, the reality is that it's scarce. There's product scarcity right now. And prices have actually gone up in the past six months. So, my question to you, Mike, is what kind of battery storage will you be using and how confident are you about both availability and pricing in the timeframe that we're talking about? So, what's interesting is you're probably aware one of the big bottlenecks is not just manufacturing capacity, but it's also an over-reliance on cobalt, which comes from pretty shaky places like the Congo. So, we've actually been using LG for our project, primarily because they're so committed to the space and they've got a very mature product and they have great logistics and they can deliver travel months when you're talking about utilities and stuff, but right now this year there's been an abundance of installations going on in Korea and their home market, but next year supply looks very good. And so, we've been circling back and forth with them about supplying the cells for this particular project, but again, there's a lot of good manufacturers out there, whether it's Samsung or LG or Panasonic or Toshiba, Tesla. I mean, there's definitely an abundance of choices and we're confident that because of this number of choices, the price of storage will continue to drop, but it is taking some time for these guys to ramp up manufacturing and I wouldn't blame Tesla for all their productions going into the Model 3 to help meet their demand and they've had to make a decision strategically that, hey, we're going to supply cars, not power walls, whatever has just been their choice, but no, we've been very happy with LG. Both their pre-purchase and post-purchase services have been fantastic. Okay, well, we're about out of time, Marco. I want to ask one more question. How critical is it for you, Mike, for tax credit purposes to get this project placed into service by the end of 2019? Well, that was another reason why we argued that it was important to get this thing done in an accelerated timeframe so that, as you know, the ITC starts phasing out at the end of next year. We are also fortunate to secure a new market tax credit allocation for this and that's not something that comes out every year, so we got significant subsidies which enabled us to drop our price to the point where we needed it, so it's really important that we have every commercial operation by the end of 2019. Well, Mike, you're not only a businessman, you're an environmentalist and you have broad horizons and I wonder if you could take a minute here at the close to tell the people of Molokai and to tell the people of Hawaii why they should want to support this project. Again, Hawaii to me has always been ground zero for renewables just because it's so need-based. You've got a fantastic resource, you have a bunch of small island grids that have historically not been able to function as well as some other places and so it's just an extraordinary opportunity to demonstrate to the world and be an inspiration for the rest of the world to get to 100% renewables and it starts in Hawaii and it's going to work its way eastward from there. I mean, I live in a state that's frankly kind of retarded when it comes to renewable energy policy and I admire Hawaii a lot, just put it that way, just because of the vision to promote 100% renewable standard. Well, Mark, on me, we admire you a lot, Mike, and we admire what you're doing and we support you and let me also add that this project is somehow iconic because it's the base load in Molokai because Molokai has waited a long time to have a project like this and it will be iconic and we wish you all the best. Marco, do you agree with me? No, absolutely and I hope that we can reconvene this self-mutual admiration trio in six months, Mike, and get an update about all the tremendous progress that hopefully will be made. Thank you, Mike. Great, thank you. Thank you, Marco. We'll see you next time. We'll see you on the topic again today. Take care. Thank you. Thanks for appearing. Aloha.