 Welcome to Stand the Energy Man on ThinkTech Hawaii. I'm Rachel James from the Hawaii Center for Advanced Transportation Technologies, where hydrogen is really a gas. Okay, so we all like hydrogen and H-Cat, but it's not the only thing we know. So today we're spreading our wings and talking to Eric Kwam, Director of the Renewable Energy Action Coalition, to talk about the thinking that goes behind planning energy projects. Eric, welcome. Thank you very much, Rachel. It's a great pleasure to be here. So I'm super excited about energy action and coalitioning. That's something that is really kind of a hot topic in present, well, today. Yes. Lots of coalition building up to today, but particular to energy, can you share a little bit about what the energy, and I'm probably gonna get the name wrong, so if you could correct me. Well, it's called Renewable Energy Action Coalition of Hawaii, or Reach for Short. I'll go with Reach. And it's a trade association, its members are renewable energy companies, and through Reach, basically those companies have a voice in the legislative process, and also in the regulatory process, dockets of the Public Utilities Commission. And the way that I got into this was through my own experience as a renewable project developer, solar PV projects, and through that, I became interested in policy in the very first docket that I was in through my company was the Net Energy Metering Docket, and now I've been in about maybe 12 or 15 dockets, including the major ones that are going on right now, things like power supply improvement plans, the distributed energy resources docket, and others. Okay, so I was gonna do a deep dive into what does it mean to be in a docket, we might revisit that though, so we could just talk a little bit about who you are, and how you establish Reach, and kind of sure how do you do what you do? Oh, thank you very much. Well, I'm an attorney, I've been an attorney for 30 years, and before we started, we were talking a little bit that you're in law school right now, and as an attorney, I started out as a tax lawyer, I still am a tax lawyer, and being a tax lawyer, I also got involved in transactions, specifically equipment lease transactions. Equipment lease transactions are actually very similar to power purchase agreements. Oh, okay. Okay, so when I came to Hawaii, and I'd been interested in renewable energy before coming here, I was very influenced by a book by a man named Paul Hawke and called Natural Capitalism, and he advocated a services approach to thinking about energy and other services, and I really liked that. In fact, at the time I read it, right at the time I read it, I became aware of the business plan for the company that later became Sun Edison, which became the leading, you know, business using power purchase agreements in renewable energy. So, I moved to Hawaii in 2003, and after being here a couple of years, I was looking around saying, you know, this is a really good place to do solar, photovoltaics, so I launched my company called Zero Missions at that time, and pursued that for some years, and now I'm practicing law under Hawaii Energy Law Services, but really shortly after I launched my company Zero Missions, I was interested in, well, what's the big picture because of course I had great ambitions for my company, and that's what got me into first the Net Energy Metering Docket, and then all the dockets have followed. So at this point, what I've been making the focus of my work for the last few years, the last four years really, has been focusing on the electric utilities planning process, and I had a role in talking with people at the Hawaiian Electric Utility Companies about the merits of a goal of 100% renewable energy. So that's a conversation that I started with the Hawaiian Electric Companies four years ago, which was about three years, well, maybe two and a half years before that consensus by the companies helped the legislature create the renewable portfolio standard. I see. So the seed planting it seems. There was a lot of seed planting there, yes. Very nice. So you also mentioned the in the docket again, and I'm going to dig a little deeper into that because I find that PUC, the Public Utilities Commission, that comes up often, but people discuss their understanding of it differently. And so what does, if I could do just a quick educational on the PUC and what they do, and then when you say in the docket, what do you mean? So as an intervener, like what, how are you engaging? Well, our electric utilities, they're regulated by the Public Utilities Commission. For the Hawaiian Electric Companies, which are investor-owned utilities, that means primarily that they regulate the return that the utility gets on its investment in the electric grid, and that's called, so they get a regulated rate of return. And the bargain is that effectively they have a franchise monopoly on the transmission and distribution of electricity, and that's why their return is regulated. As overseers of the investor-owned utility, so they're interested in all major decisions that are made by the utility, including the future of the grid, and what kind of grid do we want? What kind of grid does, is Hawaiian Electric planning for? What kind of grid do the people at the utility want? And so that becomes the topic of what I call the planning dockets. And the major ones are the power supply improvement planning docket, the distributed energy resources docket, there's an important pilot program demand response docket, and there's going to be another major docket that's going to be called the grid modernization docket. It's a lot of planning work. These are very, very comprehensive planning efforts being made by Hawaiian Electric companies in response to the directions from the Public Utilities Commission to come up with plans. And so as you engage in these dockets, and I'm sorry if I'm tiptoeing through this, but just so that everybody's on the same page, as you engage in these dockets, do you generally provide input on behalf of those affiliates in reach or just from a planning perspective or does it depend on the docket? Like how are you engaging with providing information in that space? What I try to do is think about the issue from the utility's point of view and recognizing that they are the decision makers for what renewable energy options get implemented. And my belief is that when the utility has a planning process that yields what I call consensus decisions to implement renewable energy options that deliver optimal benefits for their customers, when they have that kind of a planning process, a planning process that says we want this option, we want this option, we want this option in this order, and here's why we want them. We've carefully evaluated each of those options, we've carefully evaluated the options that we haven't included in the plan, and these are the why we want the ones that we do. When you have that kind of a planning process, then those of us in the renewable energy industry, then we can understand why those options have been selected, then we can have a conversation with Hawaiian Electric on have you considered this assumption? Have you considered this particular combination of renewable energy options? And we can arrive at consensus together between the renewable energy industry and the Hawaiian Electric companies that yes, we want to see these options implemented, and that's progress. That's how my belief we can get to 100% renewable energy. You're watching Think Check Hawaii, people expect. Okay, so there's a few things in there that I'd like to tease out. In mentioning that Hawaii, well we know that we have a 2045 100% renewable energy mandate, and so as the utility plans to progress in these different stages of reaching these increasing percentages, you mentioned that HECO is essentially the decision-maker, so I'm curious, particularly in respect to distributed energy resources, as those will likely take shape in different communities throughout the islands, what engagement do community members have or businesses that are outside of kind of the regular framework of energy planning? Okay, that's a really good question. Well, right now the mode of participation is through the the dockets that are before the Public Utilities Commission. In those dockets, ratepayers, customers, the general public is represented by the consumer advocate. That doesn't mean that interested citizens can't submit their own letters and things, and if they make a case for why they might actually be participants in the docket, they can pursue that too. In fact, one of the recent dockets, I think one of the demand response dockets, there were some individuals, I think a person had a PhD, and this is his thing, and that person got into the docket. So that's generally how the public in general participates. Other participants in the docket include trade associations like my own, representing renewable energy companies. There are also, I suppose you call them, well not-for-profit, organizations that have a focus on energy, and the two principal ones are Blue Planet Foundation and Ulupano Initiative, and also I shouldn't leave out Life of the Land as well. So they bring their own perspective. They make an investment in studying it and coming up with policy solutions that they think will help the movement towards 100% renewable energy. Okay, so it sounds like the planning process, and correct me if I'm wrong, but is it less focus on the technologies and more systems and how they serve individuals? Well, yeah, the planning process, there are two planning processes. Okay, there's the planning process used in the, to create the power supply improvement plans, and then there's the utilities actual planning process. I see. Okay, and the utilities actual planning process does focus on the technologies, and in my most recent report, which I call Hawaii DR report, I talk about where the utilities at in their planning for the major categories of what are called DER technologies or options. DER stands for distributed energy resources, and again, I'm trying to characterize it for people in the industry. Here's where they're actually at. The the planning process used for the PSPs, that's more of a visionary thing, where this is where we see ourselves going, where we might want to go. But what matters tonight, this is what I assert, is that what matters is decisions to implement options, right? Because if you've got a vision, that's great, okay? And that's that's part of it. Ultimately, we want to see decisions, more embedded decisions, to actually implement the options. I see. That's what's going to get us to 100% renewable energy. Okay. And so really what utility resource planning is, and this is all just electric power, we talk about transportation perhaps in a little bit. What utility resource planning is, it's a decision-making process, right? And the end result of it is what I call a consensus decision to implement a renewable energy option. And the way you get a consensus decision to implement a renewable energy option is if you have consensus starting among the people at Hawaiian Electric that we want this option because we've evaluated it, evaluated it in comparison with all the other options available to us. And we're sure we want it. Now you've got the basis for implementing it. Okay. You've got the confidence to implement it. And so that's what I spend a lot of my time talking with about with people at Hawaiian Electric, that kind of a planning process, so that they're making more and better decisions, transparent decisions where everyone understands, you know, the basis of their decision and we can have a conversation about it. We can actually be helpful to them in their decision-making. This strikes me as a smart goal planning process. And I don't know if I'm probably really simplifying what you're saying and forgive me for dumbing it down so much. But it sounds like you're having discussions, broad discussions about how to identify goals, but making sure that the goals you identify are realizable. Right. Well, what I call it, first of all, I call it a planning process oriented to a goal of 100% renewable energy. And then I say, there's a saying and you'll see this in business management studies. It's called, begin with the end in mind. I'm going to give a pause just there. We'll begin with the end in mind when we come back. We'll take a short break and return to our audience with the rest of that capture statement. Aloha. I'm Carl Campania. I hope you please visit us this summer. It's a wonderful summer. It's actually a cooler summer than we're used to. But I hope that you come back and visit us and watch our show, Education Movers, Shakers and Reformers here on Think Tech Hawaii. It's at noon every Wednesday. See you Hi, I'm Marianne Sasaki from Life in the Law on Think Tech Hawaii. I'm delighted to tell everybody I'm so excited. I'm going to Washington to march with women on Saturday, January 21st. It's going to be a huge, huge event. And I think we're doing something in Hawaii too, aren't we? Yes, we are here on Oahu. We're going to be at the Capitol starting at 8 a.m. I'm certain you were on the edge of your seats, wondering how you begin with the end in mind. So thanks for hanging on. We're back with our guest, Eric Kwong. And he was sharing with us how to begin with the end in mind. So please continue, Eric. Thank you. So you were speaking, Rachel, about a goal. And what we have is a goal. There's consensus among everyone that I know of, the legislature, the PUC, the renewable energy industry, the electric utilities themselves, that this is what we want. That's our goal. And so the question, I call that a shift in the conversation, because once there's consensus and clarity on that, the conversation shifts to how do we do it. And so for the last year and a half, we've been still at the very first step of that how conversation. And I call that the conversation about what kind of planning process do we use to create a plan to get there? Because you need, you know, I would assert in my papers that before you can have consensus on the options to get there, on implementing options to get there, you have to have consensus on a plan for those options. And before you have consensus on the plan, you need consensus on how to make a plan. Okay, in other words, you know, how are we, you know, what benefits are we valuing, are we valuing these renewable energy options for? Okay, look at any given option, what are its effects on the performance of the grid? What are its economic benefits relative to its economic costs? For renewable energy options, one measures benefits in terms of avoided costs, the fossil fuel you don't have to burn, the fossil fuel burning facility that you don't have to build. Other important options, very importantly are the energy security benefits and the environmental preservation benefits of getting to 100% renewable energy, they need to be valued too. And so at that, so we're in this how process, we're really very much at the beginning of it where there's a lot of confusion about how do you make a plan to get there. And so when I talk about begin with the end in mind, we've got the goal. Okay, but the goal or the end result of the planning process, the end in mind, I would say is a consensus decision to implement a renewable energy option. Okay, okay. So how do you create a process, the end result of which is a consensus decision to implement the renewable energy option. And I address that in my new report series Hawaii DER report. And, and I'm going to be doing a longer brief on that actually as part of the reaches submission in the piece at docket. Oh, I see. Okay. So it strikes me as making sure that you're choosing the right tool for the job. Would that be kind of what you're talking about? Well, it's when you have you see when you have it's about the consensus decision. Because if people are in consensus that, yeah, this is going this option. Okay, the next one we do is going to move us the furthest towards 100% renewable energy at the lowest cost and the greatest economic benefit. It works with the grid, it either maintains or improves the performance of the grid. It aids in our compliance with environmental laws. And overall, it presents, it has resiliency benefits in terms of avoided other avoided risks. Let's do it. Okay, then there's no resistance to doing it. There's confidence that that this is the next thing to do. And you've modeled it properly. And then you find out. Okay, but the main thing is that a decision is made to implement it gets implemented. Okay. And it's not a pilot program just to test and find out, and there are ways to to to mitigate the risks of the first implemented options. And then you see, oh, you know, we chose demand response, for example, as our as the thing that we think we utility engineers, people that are making the decisions is going to give us the greatest benefits and the lowest costs. And then we implement it. And our model said it's going to turn out this way. Well, it might turn out better. Okay, they turn out not so good, then you adjust. So the in what I suggest, invite the utility to consider is that the solution to getting to 100% renewable energy is not in a plan. Okay, the solution is in consensus on the planning process, the planning process in which the options are evaluated for those benefits I mentioned, in a way they can be compared. And then from your evaluations, you compose your plan to get there. And then you focus on the immediate options that show up in your in your comparison and your systematic evaluation, as being offering the greatest benefits and therefore giving you the confidence to implement them. And we're on our way. So you know, it's kind of a virtuous cycle, where people see the results from those options. And it's like, that worked out great. Right. Let's do more of this. Okay, let's get even better at our planning. Let's deepen the conversation with the renewable energy industry. And let's get there faster. Okay, let's get there faster. Interesting. Yeah. So as that planning process applies to renewable energy. Can we broaden the discussion a bit into how renewable energy and transportation could be planned? Would you say that it would follow a similar right? Well, that's why I think yeah, the, you see, for renewable energy for electricity, we're much further along. And I would suggest the reason we're much further along is that we have consensus on the goal of 100% right renewable energy for electricity. And that consensus was a little easier to obtain because the central decision maker for electricity are the electric utilities. Right. For transportation, it's it's more complex to get that consensus because most of the entities that are decision makers in this are utilities are decision makers in that process. Public agencies are decision makers in that process. And also you have a market. Yes, you have a market act private enterprises in the market and their customers, the manufacturers of electric vehicles, and the customers for electric vehicles. Right. They are all decision makers in this. So the question is, is how do you get that kind of alignment and consensus among such a diverse body of decision makers on the goal of 100% renewable energy for transportation? And I have my own thoughts about that, which I haven't yet expressed in report. But I intend to and my initial thought about that is that that perhaps the proper body to cohere that kind of consensus building would be our Department of Business Economic Development and Tourism. Interesting. Okay. And, you know, that might be an appropriate place for them to to participate because after all, we're talking about the marketplace. We're talking about the suppliers and the customers and users of renewable energy options for transportation. And, you know, that they might have the capabilities to do the planning, what I talked about before, that systematic evaluation of options, which would be a guide to providers of those options and also customers about which options might the market be most likely to adopt to to favor, to be most commercially viable. So in my mind, business development, that's very much a function of what DBED might do. Interesting. My own thought. That's just my thought thinking about it right now. Now that we're here to hear your thoughts, actually. So I appreciate you sharing that particularly since it's not out for public consumption just yet. So thanks for giving us a preview. You're welcome. So as we near the end of our show, I wondered if you had any closing thoughts that you wanted to share with our audience or just any lasting ideas that you'd like people to ponder over the weekend? That's a good question. The again, it's, it's an exciting time. And before we started the show, I mentioned that I was just at the legislature on Wednesday for opening day. And I ran into at least six relatively young people. Okay, fresh out of university or or even grad school. They were there at the legislature. And they're excited. Okay, they want to be part of this. They want to they want to see things happen. They want to see and the way that that they'll maintain their excitement was is when they see things being implemented. Okay, decisions being made and progress being made. Everyone who doesn't want to be part of that. Right. And so what I would say to them and other people, again, we're talking about the STEM area of education is that the it's going to get really exciting here. It's going to get really exciting. And generally, is that the obstacles to getting there? It's not for lack of lack of good options. It's not for lack of economic options. It's not for lack of public support and willingness to do this. It's really just a matter of clarity of thinking, especially about the planning process. Okay, so and and being clear on what the decision making process is that yields consensus decisions to implement renewable energy options. Because when we have that kind of a planning process, things are going to accelerate and it's going to be very exciting. Excellent. Well, these are exciting times and we hope to accelerate into 2017. Audience, thanks for taking your time with us today here on Stand the Energy Man on Think Tech Hawaii. Thank you, Eric, for joining us. You're very welcome.