 Hey Aloha and welcome to Mina, Marco and me on Energy. I'm Stan Osserman, sitting in for J. Fidow, my twin brother, on my lunch hour. So if you're having trouble distinguishing between me and Jay, I'm the one with facial hair. He's five by five, I'm five and a half by five and a half, but you know, hey, we're both energy guys, so who cares? So my co-host today and I guess my regular host on this show are giving us details on making renewable energy a reality and it's Mina Merida and Marco Mangelsdorf coming to us from the beautiful town of Hilo. The title of our show today is Cost-Effective Renewables or Renewables at All Costs and Mina and Marco are going to help me sort through the way ahead as we try to make renewables the prime source of energy in Hawaii. So welcome via the wonders of technology Mina and Marco. I'm glad I get to sit in here and chat with you because I love energy stuff and I'm looking forward to our hundred percent renewable here, but some recent happenings in the PUC is what we're really focused on and we're first going to talk about the Huonua over on the Big Island. So Marco, why don't you kind of fill us in on what you know it's pretty late-breaking so I know you're still sorting through some of the details on the Huonua projects over there on the Big Island. Yeah, I'd be happy to. First of all, thank you so much Stan for filling in for Jay and greetings to you on this sunny noon here from beautiful Hilo and I'll always fantastic to be back with my dear friend Mina Merida. So yes we had some pretty big news from the PUC on Friday when they announced that they were approving a power purchase agreement between Hawaii Electric Light Company Helco and Huonua. Huonua has been trying to revivify the power plant which for years and years was Hilo, Hilo Coast Power Company, that burned coal up until a number of years ago when they shut down and Huonua was planned was to restart the plan using Big Island produced biomass in the form of eucalyptus trees which grow along the Makua coast and the decision in order that came out on Friday was essentially an approval stamp of approval from the Commission of the modified and amended power versus agreement which was submitted to the Commission only just two some months ago back in May so they really did it in record time as far as reviewing and coming to a decision and their decision to approve essentially was based on their belief that the levelized cost of energy, the levelized cost of electricity to Big Island electric repairs would actually go down a little a little amount over the course of I believe the 30 year term of the power purchase agreement so in a nutshell they saw enough upside or more upside than downside to bring more renewable energy online here for the Big Island terms of power generation and we're willing to accept that according to the projections proposed or given to them where electric rates would actually go up would go up over the first I believe 11 years of the contract they were persuaded that over the 30 year length of the contract the rates or the rate pairs would actually go down a bit and again that's with a full understanding that the cone of uncertainty in terms of projecting costs beyond a few years once you start getting to five beyond five ten fifteen let alone 30 years there's a tremendous amount of uncertainty in terms of what energy costs will be at that time but all that being said using whatever reasonable assumptions they they used they projected that or they decided that on the whole this was a an agreement of power purchase agreement that was going to be more beneficial than detrimental to Big Island rate pairs and and this plan is is that the one in Onaka no you're you're thinking of huma kua energy partners or HGP that is a fossil fuel burning plants if I believe the largest generation single generation generator on the island and that is in Onaka and that's owned by a mainland company by the name of Arclight so he looked coast power company now who on Noah is in Pepe chaos so it's it's not as far as on a car it's a I don't know 15 minutes just outside of Hilo okay so it's still close enough to all the trees because they're mostly in the huma kua area not too far from Hilo and the power generation is actually closer to most of the users then correct okay so Mina what do you get from the who on the approval are you optimistic that they're gonna be able to stick with pricing me now are you still there you're cutting in and out of me too okay could you tell us what what you think about the approval by the PUC I mean we're just we both just got copies of the decision and order this morning and within the last hour so been looking at it real quickly I guess some of my concerns is that the original PPA that was approved had a low low fixed cost component and a high variable that was to the advantage of the rate pair and low risk to the rate pair and with this new revised amended revised PPA there's a high fixed component and a low variable which is higher risk for the rate pair how does that I've gotten out of this so far okay Mina you've got the time on the PUC how would how would it change like that come in at kind of like the 11th hour I don't think it was so much the 11th hour this has always been the proposal and I think that's what the concern coming from the consumer advocate was that you know you you're shifting the risk from the developer to the rate pair by by it's hot high cost high fixed cost component and so you know my gut feeling tells me this is a very favorable to the rate pair overall hmm well maybe they can switch to albiza trees and make the rate go down I'm not sure because they got plenty of those on the big island too yeah well I tell you what let's switch gears and talk about the power supply improvement plans that the utility companies have also gotten approved recently I mean what do you think about what's come out in those so far yeah what do you think of the PSIP's that have recently been approved okay I'm not sure why it's cutting out on I don't hear any issues with you you know folks are coming through just fine for me but I was asking about the PSIP's that have just been approved about two weeks ago by the public utilities Commission and if we can get any comments from Marco why don't you start off with your thoughts on the PSIP sure I mean it's still of course a work in progress I mean this decision was handed down on July 14th so two plus weeks ago and the the Commission I think was suffering from some degree to a piece of fatigue and that this process had been the piece of process had been underway and going back to when Nina was chair of the the Commission going back to 2014 and the the Commission approved the the last iteration of the PSIP's with a number of notable caveats because I think that it was it was time to move forward one way or the other and they commended the HECO companies on their more near-term focus which I think is worthy of commendation and can interestingly something that hasn't received much play in the media aside from a piece in the Pacific Business News day or so after the the DNO on the power supply improvement plan there hasn't been much discussion of what the projected increase in electric rates will be over the next five and ten years across HECO MECO and in helco service territories and and they're not insignificant they're anywhere from for helco if I remember correctly is 25 percent 25 percent increase in in rates just over the next five years and 42 some odd percent over the next ten years and the Commission seems to be clearly concerned about about race going up and then Chairman Randy Oase has been quoted durochitoli over the past month as being focused on the lowest cost of energy bringing on the new generating sources generation sources being brought on especially renewables of course had the lowest possible cost that's why it is head kind of head scratching to me that's the same Commission would turn around and approve the who knew of our purchase agreement at an all-in-cost it is that is 22 cents a kilowatt hour so I'm a little bit puzzled to press more than a little bit about how there can be this focus stated focus repeated focus on lowest possible costs and yet the this recently approved PPA for who knew I is not at the lowest possible cost but that said it's been having quickly along with Mina trying to digest this the DNO that we just received in the past hour so the Commission makes clear towards the end of the DNO that the Commission concludes that the levelized rate should not be the sole factor to be used in determining whether projects should be approved so I mean which makes perfect sense of course that it shouldn't be the sole factor so then they also put a benefit on the fact that the biomass of being burned in a combustion plant provides firm dispatchable renewable renewable energy and will provide quote ancillary services as well so I guess to kind of try to tie this in these two decisions with the the PSIP and the DNO is that in principle the desire is to bring on the lowest cost possible new renewable energy generation but in practicality that is not the sole determinant and then and nor should it be nor should it be but it just is kind of wild that you have this juxtaposition of two in order so over the course of two weeks one issued on the 14th which is the PSIP you know and then the other issued on the 28th this last Friday which is the new decision in order and it's kind of interesting to see how the lines either disconnect or or converge. Hey Marco do you think that might be tied to the base load of power versus intermittent renewable in some way? No doubt in my mind that there is a benefit that should be factored in in terms of providing a premium for being able to to have firm power which biomass can do and which solar PV with storage at this point is not available to provide I mean the key the folks like you see are pushing the boundaries with their battery storage for this the plant that was installed by Fuller City in Tesla and also the new one going in by AES but that's dispatchable power of five or six hours which is not the same as firm power over a 24-hour period so I get that there is a benefit certainly this should be quantified for having firm dispatchable renewable energy but to what extent it's justified to approve you know it's a subjective determination how much of a benefit how much of a premium should firm dispatchable renewable energy demand in terms of remuneration to the the power provider so I'm kind of like really like here would mean that. And I tell you we're gonna take a quick break here and come when we come back we'll get Mina's take on on the PSIP. All right we'll be back in 60 seconds. One I'm DeSoto Brown the co-host of Human Humane Architecture which is seen on Think Tech Hawaii every other Tuesday at 4 p.m. and with the show's host Martin Despeng we discuss architecture here in the Hawaiian Islands and how it not only affects the way we live but other aspects of our life not only here in Hawaii but internationally as well so join us for Human Humane Architecture every other Tuesday at 4 p.m. on Think Tech Hawaii. Hey welcome back to Mina, Marco and me I'm not Jay today I'm Stan but I'm like Jay almost as good but he's smarter better looking more talented anyway thanks so for being with Mina and Marco and me and we left off talking about the power improvement plans that were just approved by the PUC and Marco gave us his take on it now we're gonna get Mina's view on this on the issue. You know somehow I'm feeling that the Huanua decision is sort of counter intuitive to what the PSIP decision was where the commission appeared to be very concerned about impact to the rate pair cost impacts the rate pair the need for competitive pricing and also the need for flexible generation and this this decision doesn't appear to support any of those findings in the PSIP and what's really curious to me is you know the a facility like Huanua wasn't even analyzed in the PSIP so that's a real head scratcher for me but but I think again you know what is needed on a big island given that the big island has so much renewable base low generation in the form of geothermal for example and and really good wind resources is that what it really needs is some kind of storage or more flexible generation and this Huanua project being steam generators doesn't give them the that flexibility that's really needed in the system so those are some of the quick thoughts I have on how does this particular decision fits into the PSIP and all the stated concerns in the PSIP. Do you think it's possible to talk to some of the folks on the PUC or these I mean these are public hearings generally but the decision-making and final decisions are they as transparent as we'd like so that you can actually discern what their thought process was in approving these and you know like you say it just seems like it's a little bit out of sync with the most recent approval. Yeah you know a lot of this deals with the contract financials which is being done with confidential the review of those kinds of information is confidential so there's not much transparency here on how they arrive in their decision that these costs were reasonable. Okay well as an outsider to this show I'm gonna I'm gonna stretch myself a little bit and say there was a bill that was trying to get through the legislature last session or maybe this session before and it kind of shed some light on just what you talked about what's in the contract and what's in the contract is is pretty much confidential and when I was on Maui I asked the folks on Maui how much they were curtailed every day by Miko and they said you know we don't want to say particularly but it was around 20 and 30 percent every day and I said why can't you just take that power and like make hydrogen and do you know take that curtailed power and do something else with it and they said we can't but they wouldn't tell me why when you get down to it a lot of that stuff's in the contract that none of us can see and that's why I'm saying I think the transparency issue here in some of that I understand the need for privacy in the contracting side and and you know but it seems to be getting in the way of some of the decisions that are being made well what would you say to that Mina I I know when the hydrogen issue came up before the legislature I mean I was still the chair in being able to use excess power production for hydrogen I think some of my concerns at that time as a regulator was you know how how much of this would be pushed off to the rate here and subsidized by the rate here when it goes to other uses other than the electrical electrical system so you know that that but those are issues that need to be discussed and we can work through but you know definitely with the amount of comfort internal information being passed back and forth that that that is a concern on how decisions are made well about Marco have you seen this as you know something to be concerned with where there's certain things in the contract as the PUC is looking at approving or not approving where you'd kind of like to see more transparency to the public on some of these details in the contract that would de-mystify some of the decisions a PUC makes well I'm not in the same type of position in terms of having the expertise to really comment too much on that and again based on a really quick read of the 60s some on-page dnl decision in order for who onua seems to me rather transparent in terms of the commission's rationale their discussion of the various parties positions from who onua helco and the consumer advocate that I don't see any lack of transparency there I mean there is stuff confidential to the docket which is not part of the public record and I guess I'm a position I don't know what I don't know as far as whether that's material in terms of making a judgment from the public's perspective the commission noted that there were 700 public comment 700 public comments on who onua so clearly there was a lot of public interest a number of legislators got involved and gave their their thumbs up to to moving forward so there was there's been quite a bit of a public discussion and one of the reasons apparently that the the commission thought that this would be an okay thing to do and they note that in the decision order that the the previous power purchase agreement that became essentially an all-in-void after who onua was unable to meet a number of milestones and the original PPA was canceled but that all in cost of the original PPA in twenty seventeen dollars was twenty eight point six cents a kilowatt hour twenty eight point six cents so I think that they must have played some factor that this amended and revised PPA which they did improve did approve was coming in a twenty two point one cents a kilowatt hour which is clearly a good chunk less than twenty eight point six so again to go back to your question in terms of transparency I mean at least as far as this particular decision issued on Friday it seems to me that it's it's as transparent as I can tell okay I'm gonna we would need to get on to the next topic but for a quick a quick check on the process Mina does the consumer advocate get a chance to see the contract details if the rest of the public can't or is it still kind of outside of his purview the consumer advocate has access to all confidential materials okay great that's good well if we could do we've got a couple minutes left and if we could talk a little bit about the energy PV projects here on a while that we're also approved any comments there Marco yeah last week was a big week in terms of decisions from the Commission so prior to who knew on Friday dear to prior the Commission approved three utility scale solar projects for a while who that had been in play for several years prior to that these were three projects totaling about 110 megawatts 110 megawatts worth of solar generation on a while who that were originally awarded to a company called son Edison son Edison which was a global company in terms of renewable energy development today they declared bankruptcy last year they collapsed into themselves and Hawaiian Electric was concerned about moving forward with son Edison or successor company to son Edison son Edison today was playing in a bankruptcy court so they essentially Hawaiian Electric heco canceled or decided not to move forward with those projects with son Edison or the the want to be successors to those projects and project developers and Hawaiian Electric took a fair amount of flak from multiple parties for we're canceling that project and not moving forward and now I happen to think that their decision was was the right thing at the right time and I believe that decision has been vindicated in that they are moving forward with another big energy development company called NRG based in Texas to go ahead and move forward with these three projects at pricing reduced pricing compared to the original son Edison contract between 10.4 and 11.4 cents a kilowatt hour which were all these for the three projects cheaper than the original son Edison project so I think it's a win-win for both Hawaiian Electric and more importantly a win for a Wahoo ratepayers who will be getting cheaper power from from solar that is a that is a really good price I gotta agree so Mina you got the last word for the last minute go ahead Mina only a win if if there's economic dispatch right that that these cheaper PPAs can come online and not be curtailed by for example the net meter projects which the utility will have no control over to curtail right yeah so I mean I mean that there are some technical challenges here because where we have keeper power here because it's curtailable or probably get curtailed by the net meter projects in the long run unless there's some way to control the net meter projects and move more towards economic dispatch so you're saying that these 110 megawatts worth of generation when they come online that there will or maybe times during the day when the output of that 110 max will be something less than that max based on the need the system operators need to throttle it back because of largely beyond their control NEM systems which are feeding to the if eating you the grid is that am I interpreting you correctly yeah yeah I just hope that the system does what's what's right for the ratepayers and doesn't just lean too far towards indiscriminate you know curtailing of power or limiting what what those companies can do if they have curtailed power maybe letting them look at other ways to to use that power and generate revenue whether it store it and put it back in the grid or whatever but anyway I'd like to thank Mina and Marco for today's show this has been a complex topic with lots of personalities and moving parts and there's obvious a lot more to work to do and it'll take a bunch of experienced folks like you to actually help us get there so mahalo to you and the studio staff here at think tech Hawaii Ray Sangelang the broadcast engineer and floor manager Robert McLean and thank you so much for watching think tech thanks Marco thanks Mina we'll talk to you next Monday