 This is Stink Tech, I'm Jay Fiedel and we have an online Marco Mangostoff approach to solar in Hilo to talk about energy today, the cutting edge, not only in Hawaii but maybe in the country and in the world as Marco follows it in many, many places. Welcome to the show, Marco. Well, in difficult times that we live in my French, it's good to be back with my brother Jay Fiedel here in the trenches as we seek to make sense out of the unsensible sometimes. Well, I'm glad you're back in the U.S. of A and I'm glad you're back in Hawaii and I'm glad you're back on the Big Oven, which doesn't have all that many cases then and I'm glad you're not no longer in Asia because that was risky and even more written is getting back. You managed to have your take and eat it too. So it takes courage to travel these days. Well, I remember my beloved Aunt Linda who, she was quite the person. She had a Ph.D. in clinical psychology. She lived down in Waipio Valley and then Hamakua Coast for over 20 years and had many wise things to say over the years. She told me was that she believed that so much of life is his timing, is based on timing and I returned from Southeast Asia about a month ago and I reflect pretty frequently that if my schedule had been such that I was trying to return two weeks ago or three weeks ago or a little one week ago I could be one of those still somewhere over 20,000 Americans somewhere overseas trying hard to get back home during these difficult times. So whether it was my lucky stars or my karma or the good Lord, one and all, I'm very appreciative to be back and not effectively stuck somewhere in Laos or Vietnam or Cambodia or Singapore who knows where. Yeah, but that's one of those things that maybe the press and particularly the TV media they don't cover that, maybe they can't cover it because they don't have the access to it but there are hundreds and thousands of Americans who are stranded overseas who would like to get back. I mean you wouldn't want to be in a developing country as and when, I guess when a coronavirus hits that country because they don't have any healthcare infrastructure and you're in much worse shape. The other thing that I think that the press doesn't cover enough is the international aspect of the crisis. I mean 170, 80, 90 countries in the world are infected already and it's going pretty fast in some of them, some of them. And it's a flat world so that whatever happens there is going to affect us. In 1918 with the Spanish flu it surfaced the patient zero was in Midwest here in the U.S. and in the war, first world war troops carried the virus to Europe where it got really bad and when they came back they brought it back with them so there were two waves of virus and you can never forget that virus these days doesn't care about borders and there are many countries that have it and if we don't watch it out, if we don't help them if they don't somehow deal with it it's going to come right back to us even if we solve it within the country here and I don't think the press really makes enough of that. There was a guy on, I guess it was MSNBC the other day who pointed that out, Ian Bremmer. I mentioned that to you and Bremmer was completely aware and telling us in very pointed terms that that was the case and we better watch out. We're aware of the international phenomenon here and we better try to help countries all over the world and unfortunately we're not doing that so we're just asking for it to come back so that's a great concern. Marco, you've been following this on economics and business basis and why don't you tell us how it's affecting the national economy and although I don't necessarily feel that the national economy and stock market are synchronized maybe you can tell us about the stock markets too. There are four levels of analysis that I can take, Jay. First is what's going on in the American economy at large when you look at various industries such as the Dow Jones Industrial Average and the Standards and Poor Average and NASDAQ and so forth and then the next level would be what's the utility sector, how is that fairing comparatively speaking and then next level would be what's going on in our very own state kind of on the state level as far as energy and then finally the fourth level is what's going on in the solar industry here in the state and of course that's near and dear to my heart because I'm a business owner of a solar contracting firm so I think one of the things that I've found interesting is that as the Dow Jones has reduced in value substantially over the past weeks you know oftentimes the utility electric utility or utility sector at large fares better in a storm is seen as somewhat of a safe haven in terms of investors going to the utility excuse me the utility sector when other sectors of the economy are in trouble and according to the data and if you look at the Dow Jones Industrial Average ending last Friday several days ago granted it went up again today it'll go up and down up and down as is its way but the Dow Jones was down 28% last Friday compared to its peak in February the utility average the Dow Jones Utilities Average which is a conglomeration of many major utility companies and stocks that went down 26% so you see that the safe haven in a storm notion of the utility sector doesn't hold true really yes it's a couple of percentage points better than the Dow Jones Industrial Average but at the same time it's taken a substantial hit and one of the observations can be made that the utility stocks were overvalued to begin with there had been reading kind of one of those investor bubbles and that it was due for a correction so again I guess kind of the big takeaway for me is that there are there's carnage across so much of the economy including the electric utility sector that varies anywhere from certain companies being down let's say 20% to others like PG&E and AES Corporation which are down 40 to 50 or more percent so and there's a whole bunch of companies kind of in between so I guess again the takeaway here Jay is that the utility sector is getting hammered just about as hard as the rest of the economy at large well let's talk about the utility group if you will I mean the first point that comes to my mind is that the health of the economy in many ways is linked to the health of the utility in other words if I'm able to generate a lot of electric power it means that the utility is healthy in fact it helps build the economy a good economy requires good electrical power and good electrical power helps build a good economy it is a linkage there somewhere and the other thing is I don't know if these declines in stock price mean that the utilities are not healthy in terms of their operational aspect but I imagine I'm taking a guess here like you thought on it I imagine that if a lot of businesses are closed and if a lot of people don't have money to pay the electric bill then the revenue to the utility is going to be less so when you look at return on investment you look at revenue, look at the ability of the utility to A, interface on bills and B raise debt funding to carry it over most of those are impacted and therefore an analyst in Wall Street would say oh utilities are not a good bet these days tell me your analysis about that well I think you did a good job Jay and I would just add to it that there's at least a double if not a triple whammy that the utilities are facing across the country as you mentioned the prospects for lower kilowatt hour megawatt hour sales I think are quite evident as industries close down the energy they would otherwise consume as they were humming if they were humming at full capacity the energy they're consuming goes down significantly as factories are shut down or factories are greatly reduced in terms of their output so that means less power is being sold therefore less money is coming in on a regular basis into the coffers of utility companies and the second whammy is that as business owners and consumers are faced with a cash crunch of their own they have to make critical decisions in terms of the available cash they do have what are they going to do with it they can't pay everything that they would otherwise pay if the cash flow is normal they have to pay for food they have to pay for essential services and asking themselves well if I'm going to if I have the choice between getting food for my family or paying my rent versus paying an electric bill maybe the electric bill is going to take a lower priority and therefore the default of people paying their bills on time to utility companies I think is inevitably going up and will stay up for a time and then the third whammy is you have utilities who typically aren't all that cash rich in terms of having a big war chest of available cash to be able to spend in a discretionary matter so if they don't have that type of cash sitting in the bank to be able to type them through difficult times then they have to tap into their credit lines which is effective it's essentially a loan and they have to pay it back and credit lines are not infinite usually never are infinite so it's a difficult time for utilities just like it is for so many other well what about the bailout that congress the two trillion dollar bailout that congress enacted I mean right now up to this point I would say that that bailout was aspirational because the bureaucracy it's a sad time to have this surface the bureaucracy is unable to cut the checks and it's also troubling that the trump administration with the airlines which are a big object that the bailout the trump administration would like to get stock from the airline company so it's again to the day they are owners or at least part owners of the airline companies the airline companies are not happy with that they're not going to agree so easily on that but it seems to me that any large capital concentration is in the line of fire on the administration's attempts to get stock in their company if I were any large company I'd be concerned about that and I would certainly not want that to happen as an observer either because that sounds like what happened in Germany in the 30's that sounds like what happened in fascism when government owns the large companies in any event that's been great trouble so what happened to the bailout that's yet I don't know if Mnuchin is actually giving money to large companies there's a bit of a squabble about the oversight everybody's worried about Trump kind of redirecting to his friends or his own companies and the bailout's not happening yet even though it's a month after they started working on it what about a bailout for the utilities the object of that bailout are they supposed to get money and when and how much money and how much will it help them that's a great question, Jane I have to admit that I haven't had to wherewithal to take as deep a dive into this massive piece of legislation as I probably should I've been much more selfishly focused on how it would affect my company what I wanted to do is this so-called payroll protection payroll protection program what is it called again I want to make sure I get it right payroll protection program or PPP for short which just has been rolling out in the past several days is designed for small companies small being defined as 500 or less most utilities obviously are the bigger ones they're going to be more than 500 employees and the payroll protection program is from what I can tell essentially quasi free money with certain limits obviously and certain specifications to allow small businesses like mine and others to be able to pay two months worth of payroll that is essentially funded by the government in an effort to keep small businesses solvent and I think I shared a piece with you from the Washington Post yesterday of small businesses by one of the groups in Washington and the estimate was that without emergency financial support 50 or more percent of small businesses will be at risk of closing their doors within the next two months and when I read stuff like that obviously gets my attention because I'm a small business owner as well so you know I get to answer your question I believe I was speaking to my bankers as well at First Hawaiian as just I'm sure Banko is speaking to their customers Central Pacific Bank and so forth in the American Savings Bank is that all the banks in Hawaii are keenly focused and have adequate, hopefully adequate staff who have taken the deep dive and who are submitting applications to the SBA, the Small Business Administration as you and I are speaking right now so that program the PPP program will undoubtedly become oversubscribed within a matter of days and now apparently there's talk in Washington and the president is on board as well with this hopefully that program, the PPP program would be more finances more money would be added to it if this current pot of hundreds of billions of dollars is tapped out relatively soon which I think seems pretty much inevitable so have checks started flowing from the SBA yet no, do I believe and hope that it's possible that companies like mine could be receiving them in the next two, three or four weeks? Yes, I think that is possible and I'm hopeful that that will be the case. Yeah but it might not be and every time you see an article about projections of when those funds are going to be actually distributed it's more than three or four weeks, sorry to say and that takes me to my next question what's the time dynamic on this? You know we don't know when we're going to reach the APEX nobody knows and everybody likes to think oh it's flattening out that's what one most said today, it's flattening out really? I don't know if that makes me feel better I'd like to see it go down the other side I'd like to see it reduce physically and I don't know about business, all that APEX business that's really about cases and deaths but about to the mom and pop business small and medium businesses and for that matter the big ones time is eroding them and fragmenting them and making it more and more difficult for them to come back online and we don't talk about the APEX there so it's very hard to say when this economy is going to come back and furthermore when it comes back as and when it comes back what it's going to look like and who's going to be left standing and who's not going to be left standing and what we do in order to achieve the same level of economic activity so do you have any thoughts about that can I ask everybody this question I'm sorry I want to ask you too when is it going to come back Marko well as I think I mentioned to you in our prelude to getting online or getting on the ERJ to me that's kind of akin to the question of hospital discharge planner coming into the room of somebody in the ICU or the intensive care unit with a bright face and a cheery smile saying how are you doing Mr. or Mrs. so and so the plan is to have you discharged by tomorrow or thereabouts while you are in the process of fighting for your very life so I kind of resist a little bit going too much into the forecast business as far as you know where we're going to be, when we're going to be after the APEX I mean our esteemed Lieutenant Governor was quoted as saying the past 24 hours that he's expecting maybe by the end of this month or early May, Caldwell, Kirk Caldwell Mayor of Honolulu saying the same thing so but like you said we won't know where we've hit the APEX until we're on the downside and you alluded to this earlier as well with the 2018-2019 pandemic if I understand correctly it first hit at the beginning of the year down during the midtime of the year and came back with a double or triple vengeance in the fall so you know it's difficult to prognosticate, I mean it's one of these to me I've come up with a metaphor of we're all on this monster wave because of course lots of people are in the surfing here in the ocean which is important we're surfing this monster, a turbulent, scary wave and we don't know how long it's going to take for us to take it to take us to the shore but I'm absolutely convinced it will take us to the shore and we will get over this at the same time loss of suffering in the meantime and those businesses that survive because many businesses will survive, many will not will be ones I believe who are relatively light in terms of get who aren't heavily leveraged who have been able to squirrel away some in terms of reserves to be able to make it through the times but that piece I sent you a while ago from the Wall Street Journal a week or so ago notes that most businesses most small businesses have about the same liquidity that most homes do or most families which is all of a week or two you know two or three is how to end the moment I'm sorry what about the moment I'm sorry what about the moment another hard question, not quite as hard though I have to say let's assume we're at the end of the tunnel the light is there and there's a sign of beyond the apex the cases are falling the shops are permitted to operate people and come out of their homes I know it's not going to be right away but whenever that happens what is the sound what is the process of an economy coming back together again what's the first thing and what's the last thing and what are all the processes in the middle where the economy begins to return to normal do you have a feeling about that well I mean the first thing comes to mind is that people are more comfortable spending money rather than hunkering down and spending it only on on essential items so there will be upticks on the graph in terms of people spending more money because they feel that the storm has passed they feel more secure about their present and their future and they start spending more I mean I think that's one of the key indicators and I've been around the states long enough like you have to know that whether you're a democrat governor or republican governor like Linda Lingle I mean every governor going back to state probably has said something along the lines of the state has to do more diversify away from being so heavily dependent on tourism because we rise and fall with the 1 million 2 million 10 million tourists who come to the state so maybe and I'm not the only one observing this I've read a piece from Henry Curtis earlier this morning as well that maybe this presents an opportunity here in our state to really take some substantive steps away from being so heavily dependent on tourism and have a more diversified economy which means of course many things to many people but I choose to look at it positively that in times of great stress and crises there are also opportunities to be had because the opposite of just doom and gloom and the sky is falling and the heating the words of Cassandra that we're all in for it is a place I can't afford to allow myself to go so we make the choice to see opportunities in crises and the reality is the state is still heavily dependent upon imported fuel to the tune of 80 plus percent despite decades of efforts and we all have to do more and my business has to do more my electric has to do more we all have to do more to reduce our dependence on these long supply lines of fossil fuels which is doing so much damage to our planet so I choose to see that there's still so much work to be done so much good things to accomplish to help our state and help our islands to be greater more resilient more robust more energy food self sufficient we've been talking about those things for 20 years actually 30 or 40 years and there's three of them I think one as you say we have to get off the fossil fuel and get it onto renewable be more self-reliant two in the same vein as agriculture we have to be more self-reliant in agriculture and three of course as you mentioned as we all know we can't have a monoeconomy built around such a fragile thing as tourism as we see again we saw it at 9-11 now we see that these are serious problems we've been talking about them lots of people in public office have talked about them all these years and there's a great risk that when we get through this and we develop the vaccine that's my opinion by the way it won't be over until it's the vaccine invented you know discovered and also deployed worldwide that's when it'll be over I hope that's soon but then you know after it's over there's a fair chance we'll go back to exactly the same conversation without action so you know I hope this is going to be the the message the changes things but I'm not optimistic about it because complacency is much easier from a political point of view you know not to have to change anything we really haven't changed anything we've let these factors you know work no matter what the conversation was and here we are completely exposed are you optimistic or pessimistic about that these those three issues have to be resolved who is going to do it is this serious enough to send the message I think we need a number of champions whether it's who follows Governor David E. Gay whether it's Josh Green or somebody else I think we need the elected leaders who truly feel that fire that passion and champion these particular sets of priorities I think that's a sine qua non for making real progress and yeah I mean necessity the mother of innovation right and there's a greater necessity than now than ever before but in terms of optimistic pessimistic I guess it's kind of easy to fall back into the yeah we'll go back to our complacent selves you know after this passes but somehow somehow now it has the feeling that there's this to me on a broader kind of philosophical spiritual scale maybe something of a cleansing going on I mean there's so many ways where we as homo sapiens or species is been fouling our nest to such a atrocious degree that I would like to believe that sometimes mother nature and mother earth remind us that we are a part of nature as opposed to being a part from nature I don't think there's any question we each of us are going through an experience in fear self examination that will change us going forward we come out of this vaccine or otherwise however many of us do come out of it will be different as people a lot of us will be different as people and our economy our society will be different whether we like it or not it will be different it could be that you know everybody leaves a ghost in a mainland who knows what it could be that we try to do the same things we've been doing before and not change anything and the stage simply fails you know it's hard to collect tax money if there's no business but finally I want to ask you about the energy industry especially you know the installers of solar on single family homes on condos, on community solar you know we had a pretty good head of steam going a few years ago even until recently and now I'd like to know from you how it's doing and how you think it's going to be changed in this pipeline well there is I'll answer that this way Jay there was a letter that was submitted to the public utilities commission by what I'll call the solar parties the solar energy parties just on Friday kind of addressing some of these particular issues as part of the distributed energy resources or DER docket and I'll just read you a little bit of what that particular letter of service indicates that many Hawaii solar companies have furloughed or laid off significant numbers of their employees nationally the solar energy industry association estimates a nearly 55% decline in new business for the residential sector alone so they're making the pitch essentially that Hawaiian Electric in this case needs to loosen up in terms of the various requirements that they have established that have been approved by the commission over time to allow rooftop solar essentially below 25 kilowatts in size to go in faster and become operational faster so that's something that the commission will be taking up in the days and weeks to come but what about the legislature which is completely non-funk now because they decided that the building wasn't safe and they were all going to do a recess an indefinite recess the legislature could take affirmative action to move the credits to somehow incentivize that's where legislatures are for to decide what industries should be supported and incentivized and whatnot but they're not doing anything they won't do my opinion they won't do anything until next year at the earliest next January so aren't we missing a huge opportunity to tweak not only energy but other critical industries in the state by doing incentives tax holidays filing dates tax credits deductions what have you you know to me that is a very obvious very obvious help to the industry but there's no prospect of it not a single not a single 1% prospect what do you think about that oh gosh I wish I could make a strong case in this view what you're saying Jay but I mean they seem to be I read that they're holding this hearing or that hearing maybe virtually or using proper social distancing but I mean they're a total of I'm not mistaken 76 total legislators in Hawaii on the state level 25 centers 51 house reps and where all we hear frequent stuff from likes of Mitch McConnell on the senate or Chuck Schumer or Nancy Pelosi taking up various calls a fraction in Washington it seems to be kind of missing in action in our own legislature as far as where's the big bold dramatic thinking so yeah I can't say I feel terribly emboldened or encouraged or supported by any type of progressive or helpful hand coming from our state government these days yeah you know the thing about it is that they have the power of the person and the most significant aspect of that is is tax changes, tax tweaks tax credits and so forth that's how you change business conduct that's how you change the way an industry is doing and if an industry isn't doing very well it's obvious the legislature has the power to fix that so I'm just sad that A they really haven't followed through on the targeted what is it 45% 100% by 2045 or 100% by 2040 they haven't really provided infrastructure to let that happen and to build it the way it should be built they've kind of taken their hands off the stick in recent years and now there is no stick so anyway I wanted to ask you how should we be feeling about all of this you know I believe we're in phase 2 with our psychological progression the first was it was interesting to talk about Zoom and you make phone calls to all your friends and you learn to live in a quarantine type you know stay at home mode and I think after a while it's going to settle in on people this isn't so great and the things are unraveling and they really have to dig deep to find the personal strength and for that matter the business strength to resume when time is right how do you feel the community is doing on business on personal and if you like on energy oh man if we had another 3 or 4 hours I think we still wouldn't really cover things but we don't have that much time so I'll give you my quick synopsis I mean here in the big island where I've been living now for going on 20 years you know we I think we seem to be doing okay and we have 22 known cases 7 of which have been released from isolation not a single hospitalization let alone death here on this island so there's a desire of course of everybody who lives here to keep it that way and the fact that we have less density of course than Oahu or parts of Maui I mean is tends to our favor on my perch on the big island this is where I definitely would like to be anywhere in the world practically to be able to ride this out so I don't know I just have to be focused day to day week to week doing the best decisions I can for my own health and safety for those people I care about for my employees and at the same time fully know which I do and really feel that life does go on beyond COVID-19 and there's a lot of a lot of good things yet to be done together so that's what I'll leave you with okay and I'll leave you with a story that I stole in 60 minutes about a young fellow we couldn't have been too much more than 30 in Brooklyn who had a an event a decoration business they make exhibits and design features for events and conferences and conventions and he had achieved some success but now he's out of business because there's no events so what does he do he's got all this plastic equipment he's got the inventory of plastic and he's got the cutting tools to cut it he decides he's going to start making those masks that you wear in hospitals the ones that were so short of I mean it's plastic and it's outside your regular breathing mask it's so that nothing splashes in your eyes those masks okay and he finds he can do them and he finds there's a huge market for them and he can sell them so he brings his staff back and they start doing this innovative design and selling all over New York City then he says my goodness this is bigger than I thought so he triples his staff and all they're doing right now is working on these plastic masks but say to myself you know there really is an opportunity for innovation I mean it's not everywhere it's not every time it's not every business but you know for the innovative entrepreneur this is the time to think about the guy in Brooklyn we need your stories like that yeah thank you very much Marco as always I look forward to our discussions and I look forward to the next one hopefully hopefully it won't be too dramatic but if you listen to Washington it might be I'll disclose with there's this surgeon apparently in New York who started being putting out his thoughts sometime mid-March and he's become somewhat of a poet celebrity now and I've read a little bit of his stuff I don't remember his name but you know he teaches there in New York City and he uses the we need to mush on mush on as in the sled dogs we just need to continue to mush on and that's what we will do so thank you for being there with me thank you Marco Aloha and stay safe