 Welcome back to Think Tech. I'm Jay Fiedel. This is Hawaii, the state of clean energy. Today our show is going to deal with opportunities to sell energy to the utility, comparative bidding for system resources. I'm reflecting a change in the paradigm where instead of generating all the electricity all by itself, in fact, wine electric is is put out RFPs to get electricity from others. Our guest today is Greg Shimakawa, and in a moment we're going to hear exactly what he has to say about that. Welcome to the show, Greg. Nice to have you here and nice to be able to talk to you about this because it really is, in a larger sense, very important. Welcome to the show. Thank you, Jay. Morning. Thanks for having me and happy to talk about our renewable energy efforts at Hawaii Electric. So you issued a press release a week ago. Can you talk about, you know, generally what is in there of note, and why did you issue that press release? Sure. So I think bigger picture, you know, we have our 100% renewable energy target by 2045. You know, we have interim targets. The next one is 40% by 2030. You know, Hawaii Electric, we as a company have made a commitment to have a 70% reduction in carbon emissions from 2005 levels by 2030. So lots of drivers to move forward with this renewable energy portion, you know, for customers, it's to stabilize bills. It's to get off of fossil fuel to be, you know, more self-sufficient here in Hawaii. So lots of good reasons for moving forward with this. So this effort and with the press release, I think that that's been out recently. This is really our third stage of large renewable energy procurements that we've been doing at Hawaiian Electric across all the islands in our territory. So Hawaii Island, this in particular the larger islands, Hawaii Island, Maui and Oahu, this is our third round of doing these RFPs. So starting, you know, back in 2017, when we first started really to move towards this third-party-owned, you know, paradigm for generation. I can read more about it on your website. What is it? HawaiianElectric.com? Yep, HawaiianElectric.com and HawaiianElectric.com slash competitive bidding is, you know, all the information for these RFPs, you know, for the ones that we've done in the past, you know, archived on that page. That's a good place for folks who are interested in participating to get all the information that they need about requirements, deadlines, you know, RFP documents. Those are all there. Hey, and you are the director of renewable acquisitions of Hawaiian Electric. What is that? Sure. So my team at Hawaiian Electric and across, you know, all islands, we really managed that relationship with third-party, you know, independent power producers from really cradle to grave. So from the front end where we are, you know, with these RFPs, scoping them, putting them together, you know, taking feedback, getting them approved by the Public Utilities Commission and then ultimately running them, you know, where we are today with this stage. We'll put the RFPs out, we'll take the bids in, you know, evaluate them with our, you know, our large team of subject matter experts at the company and then ultimately we'll make awards. And then, you know, other parts of my team, you know, we'll negotiate those contracts, you know, hopefully get those agreed to and then submit it back to the Public Utilities Commission for their approval. And then once that's done, you know, we'll shepherd them through construction and, you know, into service and then for the life of those contracts, you know, usually 25 years of contract. So we are involved from the beginning all the way to the end of those processes. So how long does it take between the time, you know, you go to the PUC in the first place, get permission to issue the RFPs, fill the time that the PUC will ultimately approve the proposals that come in and authorize the work? Is that a matter of months or years? It really depends. And I think both the PUC and Hawaiian Electric, we want to make sure that what we're doing reflects, you know, the broader will of, and then the needs of our communities. And so what we've done, you know, and we've gotten better at this every time we do it is really going out and meaning in a meaningful way, getting stakeholder input and stakeholder feedback to how we do our RFPs. You know, one good example in this most recent round is we've included for the first time, you know, a requirement for developers to include a community benefits package, you know, with some surreal parameters in there for the, you know, the host communities for projects. And so really spilling that out is a new thing. And that's something that we heard in our many meetings with the community and discussions with different folks is that they want to make sure that there's some give back to the communities that are hosting these facilities because there is impact. Well, yeah, that's a great idea in this sense too. Because ultimately, the community is going to want to have a package and developers are going to want to satisfy the community. And it's going to cost the developers some money. So developer and what electric ought to know what that's about beforehand, so the developer can build it into his proposal. See, that's that's my reaction. Do you agree? That's correct. And so I mean, there's always a cost for that. And I think by putting out there and putting in a floor, you know, minimum requirement, requirement amount, that at least start to level the playing field for for developers that they all know that there's some level that they need to do if nothing ever stopped them from from doing that before. I mean, the good developers would be very proactive about doing that and about finding out really what what the host community needs are. But now we're making that a stated requirement that that's that there's some parameters on what that that would look like. So suppose I'm a developer break. And I and I watch this show and I say, Gee, I want to do that. I want to supply energy to the utility. I want to be part of this paradigm shift. I want to be part of the renewable energy initiative. What do I do? And what do I have to be in order to do it? Sure. So we have quite an extensive RFP process. And so all of those requirements and documents, those are that those are on our website. Like you mentioned, Hawaiian metric dot com slash competitive bidding. So for which particular islands RFP, you know, develop might be interested in those those requirements, those documents, those timelines are all listed there. We do have dedicated email addresses for questions, specific questions and answers about RFPs in general, or about certain more detailed aspects that we we answer questions that way. And that's that's part of just the competitive process and being fair with the information that we're talking to, and we're sharing with with different interests and parties. So that's that's also on our website for each particular RFP. And we'll do our best to respond to questions as quickly as we can. Can you give me an example of what a developer would be, you know, the the size of the company, the mission of the company, the experience of the company? I mean, for example, Greg, could I say, look, I want to be a developer. I've never developed anything. I don't know anything about it. But I want to I want to write the Hawaiian electric and and tell them that I'll do whatever is necessary. What would be necessary? Sure. So that's a good question. And I think our answer and our requirements are that we want we want to pick developers or development teams. So you know, you could definitely who you with with a bunch of different organizations. We want developers that have experience in this space, experience developing, you know, renewable energy projects at this kind of large scale. So I mean, that's sometimes the difference to one. And that's really just to give the greatest assurance that, you know, what gets proposed actually gets built. And so having someone or at least having partners that have done it before, you know, ideally, if someone has done it before here in Hawaii, I would know the land the best. But if it's been on the main or otherwise, just putting together a team of experienced people is important. And then that that's actually a requirement and something that we evaluate in the RFP. So ultimately, you're looking at whether it's likely that I will be able to follow through on my proposal to you. If it doesn't look like I could do it, you know, it's I'm not a good choice, right? That's correct. So in addition to experience, you know, with putting projects in, you know, we have to demonstrate financial capability, you know, with the organization, though you're your backers, those are things that we look for, you know, in our evaluation process. So I get a really important question, I suppose, is you're seeking a certain amount of power in this this stage of RFPs. How much are you seeking? And how sure are you that you will get what you what you're seeking? How sure can you be that you will get what you're seeking in the way of these proposals? Sure. I think it's really hard ever to to be sure that we'll get what we're seeking. I mean, I think we've identified planning needs and there's certain things that we, you know, we need, you know, most urgently, I think some of our firm power replacement for our own aging units on different islands. You know, we've got some needs there. So speaking just for Oahu, you know, we're looking at in the 2029 timeframe, you know, in the order of five to 700 megawatts of capacity. So, you know, a really large amount of firm renewable capacity. And that'll allow us, you know, we've already retired the coal plant, but that'll start to allow us to retire, you know, more fossil fuel units that that we have in a part of our Hawaiian electric fleet. So that's that's a need on Maui 40 megawatts. That's that would be to to replace eventually our KakaLui power plant that could sound, you know, also getting up there in age. So that's those are some of the the urgent, you know, specific generation. And then we've got really large energy targets. And those would be met, you know, primarily by, you know, what you think of as renewable energy. So PV or PV with the storage wind projects. But really, we're open to any any mature, you know, proven technologies, you know, we're not limited to, you know, we most likely see wind and solar, but we're open to any renewable technology has to be renewable though, right? Correct. So renewable under under HRS under the RPS. So when you talk about renewable acquisitions, but inherent in your comment just a minute ago is that as these proposals come online, you're going to you're going to terminate other other generating facilities. I know that may not be within the the scope of the director of renewable acquisitions. But can you talk about, you know, the plan to retire other non renewable generating facilities as these new ones come online? I mean, and I can only speak at a relatively high level about, you know, retirement plan, then, you know, decommissioning plans. But, you know, in general, as we start to get more viable renewable energy sources on our different systems, that'll allow us to start to use our existing fossil fuel units less and less. You know, we imagine that it's not only good for RPS and good for renewable energy decisions, but those should also in most cases be, you know, cost savings, you know, realized by by running, you know, more renewable and less fossil fuel. So that's part of the reason why we're doing these competitive RFPs. We're trying to get low prices for customers that, you know, that will really both stabilize and hopefully, you know, reduce those if that's, you know, if we're able to do that as well. Yeah, competitive prices, a big part of your press release. And I guess you want to achieve a competitive environment. So when these proposals come in, you want them, you're going to be most interested in the ones that are at the lowest price, right? Is that if I have two of them, and they're one of them is, you know, more advantageous, the lower price than the other, is that the sole standard? Or could it be that you will take the higher price because you like the company with the higher price more? Sure. And that's a really good question. So the way the RFPs are set up is that the evaluations are set up is that in our initial screening, we'll be priced at 60% of our of the weight and the other 40% are the number of non-price criteria. So for these RFPs, we have 11 different non-price criteria. So including, you know, financial strength, their experience of the developer, community outreach, you know, those are those that's a really important one. You're going to make sure that they've not only done their groundwork, but they have, you know, a fleshed out viable community outreach plan. And that's something that, you know, our community relationship experts will evaluate and give feedback on, you know, what's the project selected. We want to make sure that that's done. And that's been thought about. We're going to make sure that, you know, cultural resource impacts are considered that, you know, that due diligence is done on that part and that there's a plan, you know, to address any issues that may come up during development. We even are looking at urban emissions that we there's a questionnaire that we have now. And this is a new category that there's some consideration given for, you know, life cycle greenhouse gas emissions. And then that we even have now another new category that we brought in. And this is in response to stakeholder feedback is that we will give some extra credit for land use decision. So if you're going to site a project on, you know, lower grade agricultural land, or not zone agricultural land or brownfield type of situation, that has higher value. We'll give a little bit of extra credit to that. I mean, recognize that there's a balance, right? With our limited amount of land available or for energy, energy is only one one aspect of what we need to use our lands for. That's the way it should be. I mean, there should be a formula out there where you are taking appropriate cognizance of everything that affects the state and the community and the environment and so forth. We have a lot of considerations. That's right. We have, you know, a small part or a part to play in all of that, but we're definitely not not alone in those decisions and those policy things are happening. So if I take all of it together under this stage of the RFP process, you know, there's a lot of energy here 500 megawatts for Oahu. That's a lot. How much of the total bait usage am I going to have in renewables? It sounds like, you know, this will make significant progress towards 100%. Yep, that's correct. So, you know, the next milestone here is it's 40% by 2030. And that's with the, you know, the change in definition in the law for how the RPS is calculated. So it's a little bit of a higher bar than it was when the law was first passed. I mean, right now we're in the high 30s in terms of our RPS. So we're well on our way to meeting that target. If we were to get everything that we're seeking, so both those firm capacity numbers as well as the energy numbers that we're looking for, there's something like 965 gigawatt hours of annual energy on Oahu. So really large amounts of energy. If we're able to get everything that we're looking for, that RPS numbers can be up around 60%. So when you get a proposal, you evaluate it in terms of community response, but do you actually have community response on the agreement that you negotiate? There is. There's certain things that are included in the agreement. There's some obligations that are included there for a developer to do. And so we, those are things that we hold them to mostly on the front end of that process. Once they're, you know, we make sure that they have their plan and they're working with the right people. And when it goes in front of the PUC, when each proposal would go in front of the PUC or each agreement based on a proposal, go to the PUC, does the public have a right to weigh in there when the PUC is considering that proposal, whether, you know, approve it or not? Yes. So in a public comment, I think the PUC will always take public comments on a particular proceeding, on a particular contract that's up for their approval. But that's definitely an avenue. And then, you know, also for the different government approvals that are required for a project, just like any other project, not limited just the energy, there are different opportunities for public participation, depending what kind of permits and approvals are required. So let me say director of the renewable acquisitions, you're going to be involved in all of those steps along the way. That is the RFPs, the proposals, the approvals, and ultimately the construction. That's a big job. You're going to be busy for years on this one. Sure. We've got parts of our company that are, you know, our energy delivery areas and our engineers and our construction folks that are, you know, more closely involved. But all of that will be under the contracts, the power purchase agreements that we're going to agree to with these developers and RFPs. Ultimately, you know, those contracts are managed by our team here. So, you know, the proposals you get are going to be somewhat technical in nature in there. And they're going to, you know, by requirement, they're going to have to tell you how they expect to do it and what kind of technology they're going to use. And you mentioned that technology is a factor. But technology changes. Every time you look, inverters are changing, the technology of solar cells changing. It could be, you know, dramatic, disrupted, even disruptive changes. In fact, I think I read about something in solar cells that's really a remarkable improvement in terms of efficiency, you know, and productivity and all that. So, query, two parts to this. One is, are you asking for the most modern technology? Does modern technology, is that a factor in your approval of the proposal? Yeah, that's the first part of my question. Sure. So, we've got, you know, very detailed and specific performance requirements for these projects. And that's mainly so that it can interact appropriately with our grid. And it needs to play nicely with everything, with our system and our operations and everything else that's happening there. So, we've got specific requirements. And those requirements are different from the mainland, you know, oftentimes how our system works is really different from large, you know, more broadly interconnected mainland systems. So, we've got different, you know, voltage and other kinds of requirements that projects need to meet. So, every project is subject to a detailed, you know, interconnection requirement study. And that's, you know, we'll model or we'll have models, the different equipment that gets selected by a project. So, inverters, for example, to make sure that what, that how they're going to run and the capabilities that they have are, you know, appropriate and will fit in with our system. And as a result of that, there may be other requirements, mitigations or things that have to happen. So, those are all results of the further study that gets done once we have projects selected. Well, suppose a developer comes to you with a proposal that has a brand new technology, a technology that is not in place yet in Hawaii, that hasn't been involved in, you know, previous development. But, you know, it's promising. It's new, it's high tech, it's been developed as some very smart guys. And he says to you, Greg, I want to use this because I think I can get a, you know, a better throughput or whatever it is. If I'm using this brand new technology, where does this play? Because, as you said a minute ago, you may have to have, you know, other accommodations to be sure that it plays well with your existing system. How do you handle a brand new technology? And is it good? Sure. So, I think for brand new technologies, I think we want to see, there are thresholds for accepting those or selecting those in these RFPs, at least, is that it can be brand new. It needs to be proven, you know, not necessarily in Hawaii, but proven at a relative similar scale. So, utility scale. So, they need to show that the technology works. It's not in a R and D stage or not in a pilot kind of stage. It's actually working and it's commercial. And that's really for the effort and the investment that's going to be made in these projects that, you know, the highest likelihood of success. So, we're definitely going to need new technology and, you know, cutting edge technology to get us all the way to 100%, but for the purposes of these RFPs or for the timelines that we're looking for. And, you know, 2027 or 2030 seems like a long ways away, but in project development time, you know, those dates are really just around the corner. You bet. We should all live so long too. The other thing is, okay, it's a few years before we hit the target or we have the target. And it's also a few years before, you know, that 25-year period you talked about in the agreement, you know, will expire. The agreement, namely, will expire. And in that period, you can bet your bottom dollar that there will be new technology, perhaps very disruptive technologies that really take the whole thing to a new level for the utility company and for the developer. What kind of flexibility do you have and do they have to introduce new technology within that period? So, there are a couple of ways that I think we can address and accommodate new technology. You know, one is that we're not changing our system, you know, 100% overnight. So, not only do we have our own, you know, traditional units on the system that are still going to need to be, you know, retired and moved on from, we've got, you know, early generation renewable energy, right? We've got, you know, PV and other things from, you know, that are wind that are 10 plus years old. So, those contracts are starting to come to sort of the end of their term and we can either extend those or we can, you know, look for new technologies that replace that. So, at the end of this next 20 or 25 years for these, you know, these three stages of RFP products that come along, you know, we're hoping and we're expecting that there'll be, you know, improvements, that we're not, you know, to technology or improvements to, I think so, there's major disruptors, you know, that will be, you know, well situated to adopt those things. Yeah, well, we're all happy to see that happen. Because at the end, it's, it probably means, you know, more efficiency, more reliability and maybe a better price. And that's where I want to talk to you about now, the better price. So, if I have to build an energy development facility that costs money, and that money has to be folded in somehow, to the price I get in the negotiation of the proposal. And it has to, you know, fold it in also to the rates that are charged. So, every time I spend, say, a million dollars on a given project, somebody's got to pay for that, not necessarily immediately, but over time. And so, that raises the question of whether shifting to renewables under an RFP process like this is going to result in higher rates for consumers, ratepayers or not. The price is very important. And so, the price, I mean, the cost of development gets folded into the contract pricing. And so, what we'll pay, you know, on a annual or on a monthly basis to the project. And so, that pricing gets analyzed. That's part of what the application to the PUC is, is going to cover. And so, that approval will be an approval for a Hawaiian Electric too, to pay those, that agreed upon contract price and then, you know, get recovery for those payments. So, we're making the case that as best as we can project those, you know, those are reasonable rates to pass along to customers. Well, I pay more or less. It's, I mean, it's really hard to say. It depends on, you know, the benchmark now is the cost of fossil fuel, cost of oil. And so, in 2022-23 rates, you know, those cost of oil is very high. But, you know, it's much harder to predict down the road. So, we make projections, you know, we've got forecasts. And so, you know, the projects that we pick, you know, we want them to show benefits to customers. So, that's the way that we analyze and that's the way that we'll present it for approval. What about expansion of the system in general, you know, expansion of the capacity of the system? There's been so many articles recently in the paper about how people are boating with their feet. That is, they're leaving town and there's not as many kids in school and the population is actually declining. And so, of course, you know, if you're making this kind of analysis about how much to acquire and how to deploy it and all that, you have to consider, you know, the future population of the state. What does that look like, at least from your point of view, and how does it affect your planning? Sure. I mean, we're getting into the more planning-centric topics, but I think those are things that we look at definitely. And it's really more than just opulation-based, because, you know, as we've seen energy efficiency, even things like that, that they've reduced, you know, demand, reduced load for things. But as we started to electrify more segments of the economy and transportation and EVs, that's a big one. But as more, depending on how quickly and how much electrification gets adopted, you know, that'll really drive the need. Yeah, okay. Well, this is actually a happy time to see you move so quickly like this. Three stages already in the last few years, that's impressive. And I can only think that that's good for all of us. It's good for the community. And after all, Hawaii Electric is our utility company. We are wedded to you. We are bound to you. We are married to you now for 100 years, and it will stay that way. Any comments on that? Yeah, we've got lots and lots of hard-working Hawaii people here working on these very issues and to do right by our state and our islands. And so we're working hard and working quickly to bring these renewable energy projects on as quickly and as successfully as we can. Yeah, but it is a completely moving target, that thing. Yeah. I mean, to say nothing about all the governmental changes and, you know, the officials involved and so forth, they change too. It's a completely moving target. So what would you want consumers to think, great payers to think about this stage of the renewable acquisition program? How would you like them? What would you like them to take away from this discussion? Yeah, this effort really is the continuation of our march to create energy security, greater, less reliance on fossil fuels, better for the environment, and then more stable rates for customers. And so this is, you know, we're making progress to a clean energy future, decarbonized future, that's in line with not only Hawaiian electric schools, but our state schools as a whole. It strikes me that, you know, we also want them, I say we, I mean, everyone wants them not to complain about things that are not really worthy complaints. You know, so many times we've seen, and I'm saying this from my own experience, so many times we've seen situations where neighborhoods have said, okay, you can build that renewable project. And then a couple years later, they changed their minds. And then everybody's in the soup over it. And I would say to them, I don't see if you agree, I would say to them, hey, come on, but this is a collaborative effort. We're all in this and we all want to work together. And we don't want to move backward, we want to move forward. So how about some collaboration, some cooperation with these plans and arrangements and programs that Hawaiian Electric comes up with? Let's do it together. What would you say to that? We're definitely all in this together, I think, from beginning to end. And I think that's really why there's a lot of focus and lots of iteration on our community outreach efforts. And so, you know, the places that are, you know, these things are not no impact, you know, we definitely recognize that. But being open and upfront and communicative about, you know, with our neighbors and our communities about, you know, what these projects are going to look like, what it's going to take to reach our goals and just be very upfront and proactive about letting people know what's happening and what the plans are and giving them an opportunity, giving our relatives, our neighbors the opportunity to let their voices be heard and to give feedback in a meaningful way. And so that's why, you know, we're doing our part, we're doing our best to be proactive with that. We encourage, require our developers to understand that when they come into a community and they want to participate in our RFPs, need everything that are very important to us. Yeah. We're all in this together and we've got to move forward and we've got to protect ourselves and be resilient in the case of climate change and all those things. Well, thank you, Greg. I mean, part of that, part of this is that you talk to us. That's a nice part of it. And the, and the, and the down line is you will talk to us again, because we'll be back to you and we'll want to check the status and the progress of this project and other acquisition projects in which you're involved. Thank you so much for coming on Think Tech, Greg. Thank you. Thanks for having us. Aloha. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, and LinkedIn, and donate to us at thinktechhawaii.com. Mahalo.