 Welcome back to Think Tech, I'm Jay Feidell. This is Energy 808, The Cutting Edge with Marco Mangostrof. We haven't been together in a while, so it's like a reunion. Hi, Marco. Hey there, Jay. Great to see you again, my friend. Let's take a look at what's going on in energy, of course, that'd be appropriate for this show. There are two kinds of articles that have appeared recently, two kinds of news threads that we ought to approach. One is that it seems like green energy is on the move nationally, and there's more activity in green energy now than there was right here in the middle of COVID, and the other one there's plenty of installation going on, solar systems here in Hawai'inei. So this is interesting, and I'd like to explore with you exactly what the metrics are for that, and why, okay? So let's talk about Hawai'i first, because you follow it very closely in Hawai'i. Sure. I mean, it's riding the solar coaster, Jay, the solar coaster that I've been on for more than 40 years overall, but especially more than 20 here in the 808, and just kind of as a little bit of background. If you look at the numbers from the mainland, it looks to be that we've got three quarters in our bell now of 2020, and the numbers are down for rooftop solar, because I make a differentiation between rooftop solar and then big, kind, scale, utility scale solar. So for rooftop solar, depending on the region, but overall, it looks to be down 20 or 30 plus percent across the U.S. mainland, and California is the big, is the gold rush state, so to speak, in terms of solar, and their numbers have taken a big, big hit. So they're seeing the COVID effect, because of course solar electric systems are not trivial purchases, they're big ticket items, even if you finance it or you do a lease, it's still a substantial commitment. So switch back to the middle of the Pacific where we are blessed to be, and I just crunched the numbers for first three quarters of this year, and across the state our rooftop solar PV numbers are up 22 percent first nine months of this year compared to first nine months of last year, which of course causes me to be relieved to some degree, and major players on Oahu are also having very strong years, and we're also seeing a record amount of storage, energy storage in the form of batteries, typically Tesla Powerwalls and products from LG Chem. So compared to what's going on in the rest of the United States, we are an outlier, a good outlier in this regard, as far as more PV going in by 22 percent, or at least in terms of permits, which is one of the more easy to measure and kind of real-time metrics in terms of how we're doing, and we're still going strong. So last year was an improvement over the past several years, and this year is an improvement over last year. What next year is going to be, who knows? We got a tax credit scheduled to go down further, federal tax credit as of January 1st, but that's a ways away. So so far, so good. We're having overall a good year in the solar industry here this year, in the state. So you say 22 percent? That's 22 percent of the number of permits year over year, or nine months over nine months. Across the state, right? If you aggregate the PV permit numbers for the four, there are actually five counties in Hawaii. Most people think there are four. And I'll bet you could you name the fifth county, my friend? OK, there's Honolulu, Maui, Big Island, that's three. There's Molkite part of Maui, no. Correct. OK, there's Kauai, Niihau, could it be Niihau? No, no. OK, I'll spare you. It is Kalawao, which is the Kaolapapa Peninsula on Maui, excuse me, what am I saying, the island of Molokai. So that is from what I was surprised to learn a number of years ago, they are a county in and of themselves. But they're somehow subsumed under Maui County, but they're officially our county. Wow, very interesting piece. Anyway, so now if I took 22% of the actual money contract that is spent for these projects, would it be the same breakdown of 22%? What I mean is people spending more or less on a given project. That's a great question. It's actually about the same, because for example, last year, there were a handful, four projects that were utility scale on the island of Oahu that skewed the overall project values number up by more than $100 million, more than $100 million. As far as I can tell this year so far, there are no such utility scale projects that have been permitted yet on Oahu. So there's that absence of, let's say, $100 plus million. So if you take the $120 million from last year, we're right about the same total project value last year without the utility scale as we are this year. But you're including the utility scale projects in the number. And so if there are some big projects coming along, I mean, big permits coming along between now and the end of the year, that would improve the 22%, right? Edward, I don't think that's going to happen because the RFPs, their request for proposals, which one electric has been doing over the past several years for major utility scale, renewable energy, solar, and storage, they're still in the bureaucratic phase from what I can tell and are not close to breaking ground this year from what I know. And I'm not sure about next year. Yeah. When you say bureaucratic, is that at the utility level or is that at the Department of Planning and Permitting? Well, I mean, it's a long run. Once you start talking utility scale, you're talking about land use, more studies being done, more players being involved. I mean, these are being developed by, typically, outside of Hawaii companies. And it's just, from my perspective, it's just a much longer timeline to get these projects actually operating and in the ground. So the reduction in the tax credit, you're talking about federal tax credit. What's the reduction? Is it substantial? Is it enough to encourage me to go right away and discourage me from going later? Well, last year was our last year at 30%. So this year, it's 26%. Next year, it's 22%. And depending on what happens across the country in the short 15 days from now, as to whether we go continue in the Donald Trump direction or go off into the Joe Biden direction, we'll have an impact, I believe, on whether that tax credit, the investment tax credit is allowed to wind down as it's scheduled to now, or whether, say, under a Biden administration, which purports to be more friendly towards renewable energy, that there would be a push in the part of the friends of solar, the friends of renewable energy in both the US House and Senate, and then with the Democrats in the White House. And I think it's reasonable to believe that there may very well be, sometime for six months of next year, perhaps a new tax credit, which would stop the ramp down at a minimum and maybe push it up, who knows, who knows, hard to predict. Well, going back to, I wanna cover that, but going back to the state. So we have a difference between the mainland, you know, rooftop solar numbers, I guess, and Hawaii, why? What is it that's happening here that differentiates us? What is affecting the process and consumer sentiment and the like? That's a great question. And got all the years I've been doing this, Jay, you know, in terms of coming up with answers to your good questions, sometimes I'm left kind of befuddled. I mean, why are we the outlier? Not that I'm complaining about being the outlier in this regard, but why are we the outlier? And I think it's gotta be because we have some well-entrenched PV players here, both local here on this island, Maui, Oahu, and we also have a number of entrenched, very active mainland players, Sanron being one of them, Tesla being another, and there's no shortage of aggressive pricing. There's no shortage of competition, and there's no shortage of incentives both from the federal tax credit perspective, the state tax credit perspective, and we're still dealing with electric costs, despite the cost of oil being 40 bucks or so on the world market and has been parked there for a while, we're still kind of more or less three X or more, depending on the island of energy costs, electricity costs here. So it continues to be a compelling, shall we say value proposition for those homeowners, those businesses who have yet to go solar electric for them to say, well, maybe it is time and the tax credit will go down in the next year or apparently will go down. So the psychology of people jumping to take action when they fear they're going to lose something of value to them as opposed to, that's even more of a motivator apparently than if I were to call you and say, Jay, I got a hot tip for you by XYZ stock because it's going to go up. But if I tell you, Jay, you better sell some of your existing holdings because you're going to lose money if you don't, you're probably going to be more motivated to do the latter than the former. Yeah. Well, let me throw a speculative theory at you and see what you think of my speculative theory. Okay. First of all, we're really talking about residential. Because a business that has trouble staying solvent is not going to go and do solar right now, not in COVID. I mean, that has a profound effect. Unlike wise, people who have no money, who don't have jobs or who are fear for their jobs, people who are living on cares, money, the like, they're not going to do that. They're insecure at the least or they're desperate. They're not going to do that. So who is left? Well, it's the people who have some bucks stored away, the people who are not worried about their ability to pay the bills and buy what they need to buy. It's the people who are not being forced to go to work, the people who stay home. And my theory is that it's a nesting thing. If you stay home all day without a whole lot to do, except maybe have talk shows with think tech, maybe, you look around you, you look at your house and you say, this is a time to improve the house. This is a time to get chores that I wanted to do before it done now so that when we come out of COVID, I'll be better prepared. It's nesting. It's attending to your home, to the home, the home experience. Okay, and I think people must be having that experience. What do you think? I think that's a reasonable proposition, yeah. And I'll add this maybe a good segue as well to one of the things I noted in my data crunching over the weekend is that on Oahu for last month, September, the Honolulu City and County Department of Planning and Permitting, the percentage of all those PV system permits issued last month by DPP, 82%, 82% involved included energy storage. That was a record today. I hadn't seen that. We were parking around in the 70s, but 82%. So obviously more than four out of five people are going storage and that by far, by far, by far is leading any mark on the mainland in terms of storage deployed on a per household basis. So that to me as well over time, especially, I'm kind of actually surprised not that I'm disappointed, but surprised that we haven't had more hurricanes rumbling through the mid-Pacific after a scare of what, a couple months ago, that storage adds to the reliability and resiliency not only of a home that is going to be at least partially supplied with power in case the grid goes down, but over time will strengthen the robustness and the resiliency of the grid writ large. There was a great piece in green tech media about what Green Mountain Power in Vermont has been doing with deploying thousands of Tesla Powerwalls through a program that they've supported to allow the utility company to add their discretion when needed to tap into these individual PV systems and Tesla Powerwalls to support the grid writ large. And that's inevitably where we're going across the country, but especially where we need to go faster, further deeper across our isolated hurricane of vulnerable islands. So more and more storage going in. Yeah, Green Mountain Power, is that where our recent addition to the Hawaiian Electric Board of Directors came from? Yeah, my friend, Mary Powell used to be longtime CEO for this fantastic, fantastic person, just in all respects. And she retired about a year ago, well, December of last year from her long tenure at Green Mountain. And prior to that, so it was back in, yeah, 2019, she was one of three new Hawaiian Electric Industry Board members and she continues to be on the board. So yeah, Mary, Mary's done a great job there and her successors, of course, are doing a great job as well. She did a great job in Vermont too, clearly. But that leads to another point and I think it's also worth mentioning is that in the time of COVID, just as with information technology and all these communication systems and social media platforms and all, people are interested in technology. And I think they see solar as technology and especially solar storage. It's an expression of living better through technology. And so I think the whole pitch, you know that the industry has made to the public about storage and also to the legislature, I should add, about storage has found a home now, literally, that people are doing this in part, at least in part, because they see the benefit of that technology joined with existing solar technology. What do you think about that theory? Yeah, I do. And that kind of, you know, I'm gonna riff a little bit on that. Elon Musk, CEO of Tesla, he did an earnings call about a month ago and also did so-called battery day, battery day. So I watched the earnings call, which was pretty extraordinary in and of itself in COVID times. And then he and one of his associates essentially brought the world up to date to speed on what Tesla is doing in their approach to do two really important things, Jay. One is to bring the cost of these batteries down and two is to increase the energy density, where you have more power per cubic centimeter of battery storage. And Tesla's taken the approach of essentially trying to capture the entire value chain, which is, you know, having the land, owning the land, leasing land, where you can actually mine and extract the raw materials, aka lithium, and then going from the very beginning, which is the raw materials, right? And having a finished product. So whereas other providers, other producers or other users of battery storage are kind of being more narrow in their approach, here Tesla is all in, which doesn't surprise me at all from Musk, you know, to be able to control from start to finish because he sees, as many of us do, of course, that the way to go where we need to go is not just more renewables, more renewables, more cost-effective renewables I always wanna add, but exponentially more energy storage, both in terms of the transportation sector, but also in terms of stationary storage. And the only way he sees being able to hit his targets of millions and millions and millions of Tesla's produced a year is to have more control over the whole process. So, you know, it's really this incredible frontier in terms of we need a whole bunch more, whole bunch more storage. And you see all these multi-billion-dollar players from the United States and Japan and Europe and the Chinese who are all chasing after this stuff. And hopefully, you know, it'll make good things for competition and lower prices. Well, yeah, and you said, as you said, this is where we wanna go, where we are going. But where are we going? I need to ask you that. What does it look like in the future? If I give you a community that's loaded with solar and storage together, which is apparently the direction as revealed by the COVID time, where does that take us in terms of your energy in our community? Well, it takes us to a much more bi-directional power grid, whereas the typical Edistonian model going back 100 plus years has been essentially hub and spoke, right? You have big power plants and then the spokes rating from the power plan are sending power in the case of the mainland, thousands of miles away, right? In this case, we've got, you know, distributed generation or distributed energy resources, whatever their other acronym you wanna come up with, where you have many power plants spread throughout the grid. So it's not the Edistonian model that's the so-called, and I don't like saying this phrase too much because it's so kind of ambiguous, the smart grid, okay, I said a smart grid where you have independent power producers spread across the grid that are not only producing power but storing power, and the utilities are gonna be less of a power producer, and this has been going on for the past 20, 25 years, they've been getting out a generation and more and more into transmission distribution, where it has to be a much more tightly choreographed experience in trying to manage, in our states, you know, hundreds of thousands, well, not hundreds of thousands, but close to 100,000 rooftop PV across our major islands, and the Hawaiian Electric has gone on record in the past years saying we envision a massive increase of rooftop solar, as in 2X, 3X, and I applaud that. I do, we all do, and yet how you get there from here is really is gonna be something to unfold, and it's gonna be, and then you throw in hundreds of megawatts with hundreds of megawatt hours of utility scale projects, four of them on this island, multiple on Maui, multiple on Oahu, Molokai as well, Lanai, and you've got the utility scale with storage, you've got rooftop with storage, you've got power plants that are burning something for combustion or burning something in order to maintain a base level of reliability. So it's truly a new frontier here that I'm excited to see happen, but it's also, can be rather bumpy sometimes as well. Yeah, let's turn to the mainland again. The whole green energy thing was, what's the word, discouraged, has been discouraged by the Trump administration, and things that might have happened during this four year period didn't happen because he doesn't believe in climate change, he doesn't believe in green energy. I remember his initial encouragement for coal, coal, would you believe it, coal? I don't think he's making that noise right now, but that was going on for a couple of years at least. And so now we turn, we got a couple of people in Congress who care about it, Biden apparently cares about it, and as you said, it's a fair chance it's gonna change. We're gonna have the federal government encouragement, like incentivization if Biden is elected, and certainly that would be a great and important thing. But the question is, how are they doing right now? How is green energy? I'm not necessarily limiting this to solar or batteries on rooftops, but how is green energy doing as an initiative right now? And if we know what's going on right now, then we can get a better prediction of what would happen in the future under Biden hopefully. Well, let me just mention coal briefly since you brought up the C word, Jay. For the first time ever, not long ago, if you look at global coal, coal fired electricity generation, compare that to renewable energy generation for the first time since these stats have been kept. Going back, I don't know, industrial revolution. Renewable energy has surpassed coal. Coal is going down, no president of the United States or any other leader in the world is going to bring coal back in my opinion. So that terminal crossover of renewable energy has now surpassed coal and that will continue to go up whereas coal must inevitably, I believe, go down. So that's a very, very good thing. Since you brought up coal, I need to ask you where gas fits in all of this because I know the Trump administration is trying to sell American natural gas all over the world and feels that that's the future. Of course, this is an economic business transactional thing for him. But the reality is there's a lot of money going into gas. Where does gas fit between coal and renewables? Some people call it a bridge, a bridge fuel. It's still releasing greenhouse gases in the atmosphere, it's certainly cleaner than coal. So if I had to choose one or the other, I mean, hands down, you go for an ad gas. Interestingly, as you know, our governor made a key decision a number of years ago, essentially turning down liquefied natural gas, LNG, for the state, I think that was the right move at the time, saying, we need to avoid that bridge and just go straight to renewable. So I see gas continuing to go up in terms of consumption. I don't follow the gas market too much today, but my hit is that gas prices are also quite low right now. And we're a major gas producer, but a number of other countries are as well. So there's a lot of politics, man, oh man, there's a lot of politics when it comes to gas and energy. There's a lot of money involved in energy. And you can quote me on that. So, okay, so what about renewables? What about greens such as it is right now and greens such as it might be? I mean, we were already to some extent green, it's already a good bet, but query how well is it doing as opposed to how well it will do? Well, let me answer that this way. I think it was, you know, beginning of last year, we did a show where we talked about the so-called Green New Deal, right, Green New Deal. Alexandria Ocasio-Cortez, AOC, right? She and her thoughtful brood there, the Democratic Party and the House came up with this very bold, very, very aggressive Green New Deal, which was essentially shelved by Nancy Pelosi. It hasn't seen the light of day as far as I can tell in the Democratic Control Congress since AOC spoke about it. But nonetheless, it's still, you know, Green New Deal, Green New Deal. And, you know, taking the politics aside, you know, it appears that in a Biden administration, there would be a greater focus on renewables, which of course, how can I not but support, which I do. So that's the number of days or weeks or months off. So how are we doing right now? What we are seeing right now is if you look at kind of a, to me, a clear barometer of how renewable energy is doing, not just in this country, but on a global basis, look at some of the ETFs, the Electronic Trading Funds, that are 100% exclusive into renewable energy companies, including module manufacturers, both foreign and domestic, power electronics, foreign and domestic, and how are they doing? Well, I mean, they've beat the pants off of any type of S&P 500 or Dow Jones Industrial or pretty much any other ETF. Now, why is that? I think, again, I'm not a stock analyst, but I've certainly got some of my money in these ETFs because it feels good to do number one, well, and at least the co-number one is been doing very well. So I think it's likely that there's a buzz right now. There's a, whether it's a rationally exuberance or irrationally exuberance, thanks to Alan Greenspan, focus on ETFs that are renewable energy based. You asked the question, how are we doing right now? They're doing quite well. I mean, Sun Run, which has become the dominant player in the US after Solar City, AKA Tesla slid down. Sun Run, my goodness, you look at their stock performance for the past year and they're up by six or seven X, you know, we're not talking 150 or 200%, it's six to 700% X. So there's clearly a running for, not so much running for the doors, but a running for clean energy ETFs. So I think this is in prelude or in anticipation of a possible, dare I say likely Joe Biden victory in 15 days that is seen to bode well for renewable energy companies and renewable energy public companies across the country and across the world. Yeah, so last question is this, we talked about Hawaii, we talked about how, at least theoretically it sounds like people are interested in technology, interested in a better, more efficient world going forward. That's why they like solar even at the time of COVID. That's even more so why they like batteries in the time of COVID. And it strikes me that if you look at the markets, look at the markets here and look at the markets on the mainland as you have described them, they're probably a reasonably good indicator, a likely good indicator of the world to come. The world to come after Trump, the world to come after COVID, COVID and Trump are really the same thing. The world to come after these times, these difficult times, okay? And the world, like information technology, you know is going to be there in that world. Solar and batteries are gonna be there in that world and renewables are gonna be there in that world. I think these markets as we see them now and as they show strength and an otherwise relatively threatened market are a statement of the future. And we can see through them, we can see the future. And this discussion today helps me understand what the future looks like. What about you? What do you think? Yeah, I like that spin. I like that spin. Yeah, I mean, I kind of feel like the world, at least myself and a whole bunch of others are kind of holding our collective breath for yet another 15 days, right? Hopefully, inshallah, God willing, we'll have a clear result at the end of the day on the 3rd of November. I mean, we have to, I have to, you have to, we need something to look forward to and trend lines that are going in the direction that we wanna see, right, as opposed to off the cliff. So renewable energy has always been a part of our existence on the planet. And I see no pun intended, bright future for renewable energy and for storage. And we live in this test laboratory, essentially here in Hawaii with our isolated islands with no prospective inner island power cables anytime in my lifetime, most likely. So we've got a chance to do really wonderful, wonderful things if we have the courage and the foresight and the commitment to do it, not just in the 25 years and I'm 100% renewable power generation by 2045. But I mean, she's a lot can happen 25 years and we need to get our act together. So what will happen is we'll have much more serious climate change, sea level rise. We'll have extreme weather. And I think that probably part of these trends that we're describing, these changes in public thinking and in business thinking, have to be folding in on climate change. They have to be thinking of that because although this administration denies it, that's another show. But the fact is that people in general and business people don't deny it. And part of the, what do you wanna call it, new appetite or the future appetite, the emerging appetite for more green energy is based on concern about climate change. Don't you think so? Yeah, absolutely, absolutely. So yes, indeed. Well, we'll be on two weeks from today and imagine the drama, the anticipation will be one day away from election day. Oh my God, we'll know a lot more then. Marco Mangelsdorf, Energy 808, The Cutting Edge. Thank you so much for this discussion this morning, Marco. You're welcome. And in the words of our friend, Fred Rogers, I'll see you later neighbor.