 Okay we're back we're live I'm Jay Fidel it's Tuesday the day after Christmas celebrated and we're doing Mina Marco and me on a Tuesday surprise and Mina's not with us but Marco is Marco joins us by Skype Audio from Hilo at Provision Solar welcome back as always we'd love to have you on the show Marco. Well a belated meli-kili-ki Marco to you and yours Jay I hope the Santa was very good to you and that you were a good boy and got all sorts of wonderful goodies in your stocking. I worked on Think Tech on Christmas that's what I do. Did you say meli-kili-ki Marco? I thought you said I did yeah all right then you're a happy guy so we're talking about looking looking into energy for 2017 today Marco and I'd like to review for a moment 2016 and if I miss any of the important events that happened in energy catch me first of all we had next era which occupied our attention for the first seven months of the year and as a result you know cast a shadow on everything else and then finally in July it was behind us one way or the other and then there was a quiet after the storm meanwhile we were having a decline in solar installations which is notable and we can talk more about that and then we had after after the storm was over we had self-supply which is very interesting and I personally wondered why you know it it took so long but maybe that was because the next era thing was taking all the oxygen and self-supply also you know also means storage at the homeowner's side of things and that would be in lieu of net energy meeting replacement for net energy meeting I suppose and that's worth talking about too exactly where that goes and then the big one only a couple days ago the power supply improvement plan by the utility we've had some drafts were circulated months ago and finally I guess I guess they came out now subject to the PUC's approval with the PSIP powers private improvement improvement plan I don't know how long it'll take to approve or disapprove it but it's it's the big one on the docket right now and it's got some interesting features to it for one thing and I'll just give the big ones but I'd like to talk to you about the the immediate term also one is that the utility is seems to be backing away from LNG it's just not part of their program right now they say they'll have to study it further and I'm not sure what that means and then they changed their own view of the 2045 deadline for a hundred percent to 2040 which you know that's really really interesting and good for them for doing that I you know I don't know where we got 2045 maybe in the PSIP they say how they got 2040 but here we go on a what might be a faster track which is good so what are your thoughts about the PSIP and what are your thoughts about the you know the initial five years of it how is that going to play out what are your thoughts well I first wanted to just respond to kind of your view of 2016 and I was at Yogi Berra amongst the many interesting and poignant types of things that he said when you see it when you come to a fork in the road you take it well I mean we came to the fork in the road regarding having a much bigger company from Florida come in essentially take over the the show here at least for the majority of the state select your fertility service and that that road was not taken with the Commission deciding like you said in July 15th the decision was made to dismiss the proposed acquisition and the following Monday next year decided it wasn't going to appeal or try again and they went home so I think that was a major decision and you know you can't play out a different reality and pretend that next year I had had won the keys to kingdom or king keys to the kingdom because I just you can't do that in life you don't have alternate scenarios that you can play out so you know lo and behold we're working with the companies that have been here now for for decades going back over a hundred years the line lecture companies and like you said the power supply improvement plan is a major card a major game that's being played right now in that the only lecture companies have had now several years and several attempts to come up with a comprehensive analysis and comprehensive plan subject to public public utilities Commission approval to give their their the roadmap in terms of how to proceed and the way I take literally and figuratively power supply improvement plan is the kind of two parts of that one is the more technical part that deals with the reliability design engineering redoing the grid is necessary infrastructure upgrades and so forth and then second is how to integrate more renewable energy cost effective renewable energy and and also of course try to lower costs if it all possible so there's a lot to chew on from the power supply improvement plans that were submitted to the Commission on Friday probably somewhere over 2,000 pages although I haven't added them all up and I haven't had a chance to take the deep dive into all 2,000 some odd pages but nobody has Marco your company on that one those those people perhaps without family on Christmas and had nothing better to do and really wanted to be the first out of the gate to grind through all that stuff maybe they did but certainly doesn't include present company right those are the real day motifs what I was encouraged to see is that they state this explicitly in their executive summary which is that their focus is placing the greatest emphasis on on the near-term their near-term actions that allowed them to make as they put it strong progress on achieving our clean energy goals so I'm very pleased to see that the greatest emphasis is on near-term actions and that's really where I've focused my attention on my analysis so far specifically looking at two islands that are near and dear to me of course the big island where I live and where I've been active now for 17 or so years and also the island of Molokai where I've spent quite a bit of time over over the years as well so if you want to get into that level of detail now or whatever well I mean in general what I take from the fact that they they're shooting for 2040 instead of 2045 and that they're focusing on the first five years it means they're not kicking the can down the road and I think we have kicked the can down the road in many ways you know in the clean energy initiative but maybe this is a change a change we should welcome where we get we get we get busy we start taking affirmative action and we start doing things right now instead of putting everything off that's what I get out of this so what what are they what are they planning can you give us any any granularity on that sure I mean for example there they're most bold and audacious when it comes to believing and stating here that they expect or hope to see Molokai achieve 100% renewable by 2020 and that's the scant you know four years away in terms of the end of 2020 so I think that's about the boldest proposal or assertion that they're making and when you drill deeper into how they plan to get there they are relying on five megawatts five megawatts or five thousand kilowatts of grid scale wind and having spent a fair amount of time at island over the years anybody who spends time there can't help but notice the signs around the island that say essentially no to big wind and big wind meaning that there would be you know 400 foot wind towers on the west end of Molokai dotting dotting the land there that is largely owned by the Molokai Ranch folks and I would be beyond astonished if when all is said and done that the residents of 7,000 somewhat relative residents of Molokai would be supportive of having 400 foot wind turbines dotting the west end of the island so I think that's a big challenge in and of itself and second and this kind of undergirds a lot of the assumptions that Hawaiian Electric is making in their near term projections in terms of reaching unprecedented levels of renewable energy penetration is that they are assuming that both residential and utility scale battery energy storage is going to be reliable is going to be available the technology will be proven and just as importantly it's going to be affordable and there's a lot of buzz a lot of spin a lot of hype and a lot of hope that we are entering into the the battery age so to speak even though batteries of course has been around for a long long time as a technology that we're entering the battery age where it's really going to change the the grid fundamentally from one of being centralized generation and distribution to micro generation with with battery storage and that's it's a bold hope it's a bold assumption but there isn't a whole lot of data supporting how just how successful and how timely this is going to be but it's clear to me at least in my analysis that as the Hawaiian Electric is projecting substantially more renewable energy across their service territories is that they are implicitly assuming that battery storage is ready battery storage is here and now battery storage will be affordable and it'll work as designed as it's designed to work well but but you know there have been developments and improvements in batteries in the last few years and everybody is focused on making better batteries so maybe it's a calculated guess rather than you know an unsupported guess I mean I my sense of it is that you can go out and buy batteries now that will do the job whether they are cheap enough you know to meet to meet the the calculations on Molyke I don't know but you can do this now and that's that's better than it was say five or ten years ago for sure no absolutely Jay absolutely but the we don't have the data yet we don't have the track record of enough systems that are actually been installed that are providing dispatchable power what I mean by dispatchable power as opposed to batteries which have been around for utility power plants and for wind farms for a number of years now to smooth out the the the rise and fall of the of the wind production because wind speed of course does not stay constant but dispatchable power is where you have battery storage that takes power that is produced during the sunny part of the day if it's solar or the windy part of the day when it's wind and stores it for at a minimum a handful of hours if not longer so that it can be used when the sun don't shine when the wind don't blow when people need power the most that's where we are entering into the brave new frontier of battery energy storage I mean Ki you see is actually installing one of the first utility scale dispatchable battery plants in the entire country yeah that's not in yet so we don't have the data in terms of how does it work in the real world now we're all super hopeful of course it's going to work just fine but I've been at this long enough to take a lot of these claims with these new technologies with you know a lot of Molokai sea salt it's just something I'm you know wait and see how is it going to play out well a couple of thoughts on that you know you know five years ago they didn't have the software and the black boxes you know to adapt the system to changes in the renewable sources that's one thought now they do you know for example that stem company out of California I think they're one of the energy accelerator companies and they're doing good things and they're they have technology they have software that ostensibly can do this going in the right direction and they're not the only ones who can do it Tad Glothier if you know him is involved in that the other the other thing it comes to mind is that if you want to smooth out the curve you know between the time the renewable sources is is generating power and the time it isn't generating power well wind is a better bet I mean although you have to you have ups and downs with when fact is when works at night solar doesn't work at night at all and you know if if you wanted to approach the whole idea of having an integrated system wind would be a better bet because it puts less reliance on the battery system since it's still generating even in the middle of the night the other thought I wanted to throw at you Marco is that you know when we had the Robin Kay objections to wind at the Garden of the Gods in in Lenai there was a strong nexus between the opposition group that existed on Lenai and and the people in Molokai they were talking to each other they were part of the same protest group so I think your point about you know the people on Lenai not necessarily warming to this idea is valid on the other hand perhaps Hawaiian Electric has some way of showing them it would be better for them and indeed you know in in the in the historical process that went on in Lenai Hawaiian Electric made a proposal to the people of Lenai to give them bargain rates and otherwise make it sweeter and the protest group didn't take any of that they they didn't they didn't cotton to that at all but fact is that maybe a proposal can be made along similar lines now that would be more persuasive more useful to the people in Molokai you know and it's going to be a dollars and cents kind of thing they may find that their rates come way down this way and that that may be attractive so I wouldn't I wouldn't write it off just yet even though historically Molokai has been protesting right along with Lenai so I'm certainly not writing it off Jay and I do give Hawaiian Electric credit for they have come up with what they called their seven renewable energy planning principles which is again a part of the executive summary and number seven is quote there's no perfect choice no single energy source or technology can achieve our clean energy goals and every choice has an impact whether it's physical or financial so and I couldn't agree more I mean it's the same in principle with the with the big island is we have more geothermal capacity certainly than we're harvesting right now but it's a it's a very very hot subject pun intended in more ways than one in terms of getting us to where we want to go which is 100% renewable in a short in a relatively short period of time it's choices will have to be made I mean the choices between continuing a higher level of dependence on imported fossil fuels versus having solar farms versus having big wind turbines and speaking of wind now to kind of shift over to the big island they are projecting again we're talking near term jade near terms 2017 to the end of 2021 so that's a that's that's very near term that's a very short-term time horizon and their proposal is to go from 30 plus megawatts worth of wind here on the big island which is already in place and two wind farms one south point the other and in north koala they're planning to add another 20 20 plus megawatts of wind for the the big island 22 exactly 22 megawatts so when you look at 30 existing megawatts or so I mean that's not that's a 70% increase so you know it begs the question of course where's it gonna go what kind of procurement processes are going to be what kind of pushback are going to be and it has to it has to it has to have dispatchable battery storage because our grids on across the state can only have can handle about as much as they can handle right now in terms of renewable non-firm power that does not have storage yeah so to my knowledge Jay I don't know of any wind farm that's an operation in the U.S. or the world for that matter but again I'm not an expert per se and wind but I know of no wind farms that have battery storage dispatchable battery storage to be able to store energy for X number of hours and have it be released when when the peak is you know taking place six seven or longer hours so if that in fact is true my assumption is correct then once again you know we're blazing new new territory here in terms of having megawatts and megawatts worth of wind and trying to to marry it with megawatt hours and megawatt hours of the dispatchable storage yeah well you know there's a fairly big big maybe a relative term in Ulapalacua and the ranch there and I was there when they broke ground for that and unfortunately there was some problem with one of the one of the wind one of the wind turbines a couple months ago I don't know if that's been fixed but that kind of that kind of farm taken together you know it's in a remote location taken together with the possibility of storage would really be a great thing for Hawaii I don't you know we've done a lot with solar and we have solar all over the place and we've done you know remarkable and we can talk about that in the next part of our show remarkable development of solar but we have not done remarkable development and wind and maybe it's time to get off the protest bandwagon and start doing wind and as I said I think it's probably less of a less of a demand on on on batteries with wind because it works at night and maybe that's a new model we should follow and I certainly agree I think we all agree we have to have multiple sources here and one of one of the sources for the Big Island I wonder if it's in the PSIP is geothermal because geothermal is is operating in a fraction of what it could be operating at and I think the you know the cap on that the glass ceiling on that is it's a cultural glass ceiling and it goes way back to the 90s and it is not you know we should not have that ceiling we should use geothermal it could right now it's operating at 38 megawatts it could operate at many times that and I wonder if a Hawaiian electric is thinking of using it you run into the problem of how much can the Big Island really take and you know right now the Big Island has the highest percentage of renewables of any island in the chain so you wonder how much can we put on from these various sources but did you notice anything on geothermal not a peep Jay not a peep you look at their executive summary for the Big Island for again the near term 2017 to 2021 there is no mention about more geothermal I think they can maybe tweak some more a little bit more out of Puna geothermal here in Puna but in terms of a new geothermal development whether it's in Puna whether it's along Saddle Road whether it's in the slopes of of the other mountain on the Oula lie on the west side I mean there's not a peep so they've clearly made the conscious decision helco has and the P CIP smart dudes and dudettes on a wahoo that they were not going to assume additional geothermal generation coming online in the next five years you know you can you think of a reason why they made that decision oh it's too hot I mean it is too it is too controversial it is to I mean they've already had years worth of doing an RFP and going through that contested rigmarole with folks associated with Mililani Trask and an arrival geothermal group that their their proposal was rejected and they went to the PUC and they appealed that and the PUC just recently ruled against them so I mean it's fraught politically it's fraught environmentally and it's just it's kind of a mess actually helco put a lot of time and effort into putting out a request for proposals went through a bidding process chose the winner the winner was PGV the same company that is operating there now and ultimately PGV said you know what yeah we got the bit we you know we won the bid for additional to forget how much it was 20 with 60 60 megawatts I think of additional generation yeah yeah they pulled out PGV said we can't do it too much trouble well it did no I mean it was it's got to be financial they they bid you know X number of cents per kilowatt hour they were going to sell the helco over a long-term power purchase agreement and from what I understand I mean they decided we can't make the numbers work I mean I'm sure there were other reasons involved but fundamentally I think it was a financial decision interesting let's take a short break Marco we'll come back and we'll talk about you know one really significant thing that that should play may play in the legislature in 2017 and it could change solar a lot that is the tax credits would be right back after this short break hi I'm Ethan Allen host of likeable science on think tech Hawaii I hope you'll join me every Friday at 2 p.m. to discover what is likeable about science we bring on scientists of all ilk astronomers physicists chemists biologists ecologists and they talk about their work and more importantly they talk about why you should talk about their work why you should think about their work why you should like their work I help them bring out why their work is understandable why it's meaningful why people should care about it why people should support science we have a good time we talk about current events in interest we talk about historical events sometimes we dig deep into their research why they do what the joys and delights and frustrations of their work are and in all we show a real world of science a real world of likeable science I hope you'll join us every Friday at 2 p.m. we're back we're live we're here with Marco Mangelsdorf or provision solar and Hilo on Nino Marco and me on a Tuesday now looking into energy in 2017 yeah one comment on what we've been talking about that is you know I'm encouraged as I was saying during the break Marco that we have we've resolved some issues that have just been hanging and you know it's not good to have hanging issues you know you make a decision and sounds like well we certainly we made a decision on next era that might have been a bad decision but we made a decision and we didn't treat him well and that may affect future suitors down the road too bad and offshore investment down the road that's too bad but we made a decision likewise it seems that everybody is on David Igay's bandwagon about not doing LNG although I suppose the Hawaii gas could try to move forward and we made a decision it seems like in the PSIP to try to make it shorter 40 2045 that's interesting so there's a certain vitality don't you think well it's a very shall we say fermenting time right now and I think when the legislature comes back in a session and just several weeks now it will be interesting to kind of see where their priorities that are at regarding energy and where kind of bills are introduced and where the chair of the House Energy and Environment Committee Chris Lee where he's at and where my friend Lorraine Inouye chair of the Senate Energy and Transportation Committee kind of what their priorities are for this year and there's there's just a lot going on keep in mind Marco that we're having a Hawaii Energy Policy Forum is having a legislative briefing it's annual legislative briefing to the legislature on January 12th just before the opening and that will be in the afternoon of January 12th so there'll be a number of speakers looking into what the legislature might consider doing or not doing this year but let's talk about tax credits you had some thoughts about that and I'm very interested in that I followed the tech tax credit in the first 10 years of after 2000 and that was pretty much a disaster because the legislature wouldn't leave it alone and Linda Lingle wouldn't leave it alone and at the end they they pulled the wings off it and it died a horrible death in in 2010 even prematurely and it did not you know have any significant effect not any lasting effect on developing a tech industry here so you have to treat tech tech make that tax credits carefully you have to look into the future about them you have to try to figure out what their effect is going to be you know their incentives or disincentives what are your thoughts about energy tax credits now well I've been following tax credits as far as especially in the state level for the past handful of years because what you may or may not remember Jay is that there has been a solar tax credit here in the state of Hawaii for 40 plus years it's been around since 1976 which is the year I graduated from high school so we can't we can't honestly observe the state has not been supportive of renewable energy especially solar it's been very supportive over the years so I don't have a growth number in terms of all the tax credits which have been claimed over 40 years but the State Department of Taxation just recently released numbers for the tax year calendar year 2014 because it takes a while to to tabulate all the the returns so that's the most recent year we have data for and they noted do tax noted that approximately hundred and twelve hundred and twelve million dollars of credit either credit or refundable dollars were claimed for tax year 2014 that came after 2013 which was a hundred and eighteen million so by my math that's 130 million in 2014 2013 and 2012 was the record of 164 million so when you add those three years 2012 2013 2014 you come up with almost four hundred million dollars worth of tax credits which takes the price by far I'm sure compared to any other tax credit probably in state history and you also add to that the credits that were likely claimed for 2015 and then for this year 2016 and I think easily it's going to be somewhere in the 500 plus million dollar range for five years and once you start getting hundreds of millions after hundreds of millions you start talking about real money right and the legislation gets real sensitive about that well it then I mean the juicier the juicy question after that is what have been the benefits of the tax credit and of course that's it can be very charged discussion right because they can be qualitative they can be quantitative there are costs as well I mean the cost being to the money that went out of the general fund what else could have been done with that money well you know I think on the whole I would argue that there are more benefits and costs from that renewable energy technology tax credit and other people brighter than I come load out amongst others have essentially found multiplier effects that for every dollar that the state general fund lost so to speak because the tax credit they got two or three or more times that in terms of benefits and I'm not enough of an economist to make a judgment but of course I have a vested interest because I own a solar company and reviewing the history on this five years ago the solar energy association was looking to negotiate with Mike Gabbard mostly I think a ramp down of the credits thinking that they they they had run their course and needed to be ramped down Mark Duda was I think he was the president of the solar energy association at the time was involved in those negotiations all of a sudden the negotiations I guess stopped they failed solar energy association wasn't too interested anymore they wanted to let it continue the way it was and it has for the past five years it's continued in the same you know the same statutory framework as as before and that leads to all these tax credit expenses we've had so where where do we go now do we look to ramp down do we look to ramp up what would you expect the legislature to consider what are the options for them well remains to be seen whether the relationship between key members of our legislature in terms of the energy sphere will will be a productive one compared to the kind of quasi meltdown which take took place and during conference committee for various energy bills in May so that that's an open question I would not expect there to be a whole lot of support to sunset the the state to renewable energy tax credit I think having it ramped down over time probably makes sense but in light of the fact that one Donald J. Trump is scheduled to take office January 20th and he you know by all by all measures he seems to be more pro-conventional energy than than renewables he's taken some shots at wind especially that I think there's going to be a reluctance to on the state level to to ramp down tax credits for renewable energy here in the state because because the Fed is not going to be sympathetic and provide its own credits well we have the investment tax credit 30% of investment tax credit which is good for another several years or so but there is concern that perhaps he might go after his allies in the Congress might go after the ITC's investment tax credit and try to bring that to an end sooner than it's currently scheduled to to and I mean that would be a worst-case scenario but I mean that the reality of course is that Mr. Trump has written his own playbook and been thrown the dogman orthodoxy of decades worth political campaigns out the window so I think one thing is absolutely certain with that with that gentleman is that there are more surprises coming down the pike that we could possibly imagine or as Donald Rumsfeld opined years ago we're entering into much more unknown of the unknown okay well if the federal government stops the credits and then it falls on the state to continue them but let me ask you this and we talked about it earlier we only have a minute left but I wanted to ask you what what about wrapping the credit wrapping storage you know batteries into the credit can we should we isn't appropriate now given the change in technology and the and the change you know in our direction with the PSIP and all that to change the law around solar tax credits to have them include to a great degree the the credits for credits for batteries and storage I have no doubt that there will be bills introduced on both the house and the Senate side that would have a specific tax credit for batteries I have no doubt no whether it's going to get through to the very end I don't know I think our friend Mina marita is in principle against those tax credits so be interested or that proposed tax credit for battery stores so be interested to get her take next time the three of us are together but I mean any type of help to to increase the mass adoption and rapid adoption of battery storage I think it's probably it's worth discussing for sure it's worth discussing but at the same time I mean again I mean they're they're always vested interest in the political realm who will claim that their cause and their their projects are worthy of support but of course you know we have a limited government and all the causes can't be supported equally so so that's the whole part of the political process right is making choices between this path versus that path so no we shall see yeah now I understand some of the stuff that you teach when you teach your course on the politics of energy Marco it shows well just make sure when you come to a pork on the road jay that you take it thank you okay well happy new year man and we'll we'll continue this following the new energy and energy that's that's what I get the new energy and energy 2017 let's be optimistic let's look forward let's see more action in 2017 thank you so much Marco I look forward to a great year with you Jay and Marco and Mina will rock in 2017 thank you my friend aloha and happy thank you