 Marco Mangelsdorf here on Energy 808D cutting edge, and so please to reconnect with and be on the show again with Jennifer Potter, aka Jenny Potter, former PUC commissioner, and currently with Stratagen doing wonderful things with them. Great to be back with you, Jenny. See your smiling face here on the Think Tech Airwaves. Thank you so much for coming on back. Thank you so much for having me, Marco. I always have a great time here with you and love to educate the public about what's happening in our energy space here in our great state of Hawaii. Well, let's dive right in. Always no shortage of juicy energy topics to talk about. And since I live in the Big Island, there's been a little bit of recent news regarding Pune Geothermal Venture, which of course is not too far from where I live here on the east side. And just to give a little bit of background to the listeners. So PGV Geothermal Power Plant has been operational since 1993. There was discussions kind of mid-80s that started here on the island about geothermal as a possible power source. Finally got up and running 1993, 30 years ago with a hiatus. Thanks to Madam Pele in 2018. They've been back online now for a couple of three years. And they've been a major supplier, provider of renewable energy into the Helco grid over the decades. And I haven't actually quenched the numbers, but I got to believe there were a gazillion or at least many millions of barrels of oil that did not have to be transported here and burned in a combustion power plant because of PGV. So I favor PGV. I find it to be an important component of the stable grid here on the Big Island and getting us to that promised land of 100% renewable power generation in 2045, which is only a scant 22 years ago. And there's been discussion, of course, as of late about a new power purchase agreement that would allow PGV to go from its current max output of 38, which by the way, they have not yet. Since the eruption in 2018 there, I believe around 25 megawatts, but they have approval, a prior approval going back to an amended PPA in somewhere around 2011, 2012 of memory serves to go to 38 megawatts. And then the new PPA, which of course you're familiar with would allow them to go up to 46 megawatts. And just as of note as well, the first 25 megawatts, as I understand it, PGV receives compensation from Helco at the so-called avoided cost rate, which right now I looked it up yesterday, about 19 cents a kilowatt hour for both peak and off peak within two or three tenths of a cent of each other. And just interestingly, last year, a avoided cost went up to 30 cents a kilowatt hour. That's the highest I've seen for a long, long time. And the lowest has gone down to about nine cents a kilowatt hour. So what it cost is well tracks depending on what the price of oil that is being paid by the company, so in electric, to private suppliers. So it's not in the rate pair's best interest, of course, to have any energy source pegged to the price of oil, especially since likelihood of the price of oil going up over time is more likely than not. So I could go on for a while, but I think I'll kind of bring it too close here that the current PPA is pending approval before the commission. According to documentation, I saw as part of the docket file back in April-ish, PGV has roughly, or they've stated, they're gonna provide the environmental impact report, Q3 of this year, which is coming up, the accepting agency, I believe will be County of Hawaii. And then let me just kind of ask you a question here, Jenny. So this particular EIR is first provided to the County of Hawaii. And do they and the commission both have to approve this EIR in order for the commission to conceivably move forward with the approving, the amended and revised power purchase agreement? Luckily, no. So the commission really did look for an entity that was going to be the accepting agency for the environmental impact review. So that was a process that actually took quite a bit of time because it's a very lengthy process that requires a lot of resources for an agency to take back on and the commission did not feel that it had the qualifications to oversee an environmental impact review. So they reached out to the County of Hawaii and asked them to be the accepting agency for that review. They will be ultimately the approvers of that and make a recommendation to the commission to proceed or finally approve the PPA as a, that was the condition back in March of 2022 when we approved that original PPA. Since then, there has been a first amendment that has been filed. So that kind of convolutes things a little bit because we did a conditional approval of the PPA based on the outcome of the EIR. And then they subsequently filed a first amendment to that in reflecting some of the supply chain, the global supply chain issues and challenges that they were having getting the resources that they needed to get the plant back up and running. So. Okay, thank you for the clarification there. So last week, one of the lawyers, I believe from a regulatory department of one electric sent a letter that was made public to the commission, essentially bringing the commission kind of on notice that, hey, there are delays at PGV as far as ramping up. And what is the import, if any, on that particular letter? Jenny, can you explain please? Sure, absolutely. So ultimately what they asked for is a stop of the procedural schedule. And so what that means is ultimate, there won't be a decision that's made in time for the clock to. So ultimately there's like the clock begins under the contract conditions for PGV to meet certain milestones as soon as the PPA is approved. When you stop the procedural schedule, you're essentially stopping that clock of performance as well. So that means that PGV isn't going to meet those performance standards in the same timeline that we had expected it to. So ultimately it's like a full court stop. I prefer to think of it as a pause, right? Stop seems a little bit ominous, right? And as I understand it, and correct me if I'm wrong, once the commission were to approve an amended and restated power purchase agreement between PGV and the Hoy Electric Light Company, is it true that PGV has three years, a maximum of three years to bring their output to that stated 46 megawatts? That is correct, yep. And what if for some reason they ran into drilling issues or a Madame Palais event or a force measure that would preclude them from hitting, for meeting that requirement of getting to 46 megawatts within three years after approval? What would be the consequences? Well, the companies could actually terminate the contract with PGV if they were not able to deliver under the terms of the revised First Amendment. So that would put the energy mix on the Big Island in quite an interesting place if that were to occur. So we would hope that there would be some compromise and some dialogue that happened between PGV and of course, Hawaiian Electric Light. So that's it. And of course, you know, what brings to mind as well is that during the long, long saga of Pujo Nua, Honua Ola, which we're both very aware of, is that there were failure on the part of Pujo Nua a number of years to go to meet contractual obligations and Helco, as per their right by contract, terminated the PPA, which caused a lawsuit in federal court, Pujo Nua's suing Hawaiian Electric. And then that led to the last PPA which was approved under Randy E. Gay's commission and the rest of that is history. So my point simply is, is that there is a precedent on this silent for the utility company to cancel a PPA for non-performance. So of course, pretty much hoping that's like a data case with Pujo Nua and Helco. So moving right along, let's move over the island chain hopscotch over Maui and Lanai and land on Molokai, which is so near and dear to my heart and yours as well. So how about giving us an update on what the efforts are, progress made, challenges as far as the community there, which has been very active and trying to gain more control over the power generation on the friendly aisle. Yeah, this is quite a hero's tale in my opinion. What Molokai has done is really groundbreaking in terms of how a community comes together and really organizes itself to put a stake in the ground of how they wanna see their energy future unfold. So what they've done with the help of Hawaii Natural Energy Institute, which is located at the University of Hawaii and also PNNL, they've created what's called the SeaRap Report. It stands for the Community Energy Resilience Action Plan. And what they've done is they've looked at the system as a whole and looked for areas where there's pucas and then areas where there's opportunities to strengthen the resiliency of that grid and then what kind of resource mixes that they'd like to see on the grid that would they be able to establish firm, a reliable resource that could serve the entire island, which right now under the certain circumstances, there are some homesteads and areas that are just incredibly vulnerable to power outages. They do not have the resiliency that they need. Some of the homesteads do not have electrification at all. And so they're looking at opportunities to really expand the electric system in a way that's renewable, it's clean, it's consistent with the values and the morals of the Malachi community. And so what they've done, not only putting this report together is come up with recommendations that are applicable to at the state level, with the PUC, at the county level, with Maui County, and also within their own Huey and their community members and other stakeholders. So they've identified actions that each of these entities can take in order to further the vision of Malachi's community of renewable energy action plan. So they've done a tremendous job of getting a consolidated voice from the community and really formulating a solid action plan that I think can take them a long way because really what they've done is they said, enough of having the utility plan our future and tell us how we need to look at energy within on our island and what kind of resources will be deployed and where they would be deployed because during the CBRE, the community-based renewable energy process, they actually came to the commission and said, look, we wanna understand what the process is here. How do you guys make decisions? How are these RFPs approved? How would that go through this, how can we get involved in a way that's meaningful and where we can actually have an impact? And so sitting down with community leaders, with state leaders and asking those questions and coming up with a Huey and a community that stands behind that Huey and the co-op and saying, okay, how is it that we can start planning for our future now instead of having the utility do that for us? And so this community energy resilience action plan is the outcome of that effort which has actually taken about two years. And the first step that this community took was under this community-based renewable energy program where they provided two proposals to the companies about projects within areas that they felt were better and would better serve the community than the ones that the utility had selected for and basically had a land RFQ, if you will. So those were company-owned properties. They wanted to build renewable projects there. The community said, look, those are in areas where it's a flood zone, we can have tsunamis and it'll take the entire plan out. This isn't a good place to do it. So they were able to weigh into that process. They were able to weigh into what they wanted to see within the RFP and changes to that including community benefits packages so that they're in terms of developing sites that are next to community members. There would be a benefit to those community members such as workforce training that would be local individuals that could actually work on these projects in their community and help maintain and service them and even develop them. So they have done a really comprehensive job to look at how energy impacts their economy, how it impacts the environment, how it impacts their community morals and values. And it's just a tremendous, I mean, I can't speak more highly than this organization. They've just done a tremendous job of taking community leadership and really steering the way to pave the path for their energy future. And I hope that it falls, they did turn it into the PUC on Friday. So it is actually now in the PUC's hands for consideration. So really excited to see how the PUC looks at this and what they just like to do with this. So good job, Malachi and the Huey there. We're super proud of you. Excellent work. Well, thank you so much. That's a great enthusiastic update. I really appreciate that. And you know what it brings to mind, Jenny, is if I remember correctly, one of your first ever votes on the commission in 2018, let's go back a little bit. You may remember a company called Half Moon Venture, which also to their credit, in my opinion, put in quite a bit of energy into trying to get local buy-in multiple meetings. They hired a number of Hawaii based reps. They actually signed a deal with Maui Electric Company, Power Purchase Agreement for Power Plant, PV Power Plant and Storage there at the Palau, the single one and only power plant on the island. And ultimately the PPA was, and you voted, if I remember correctly, you voted with reservations, but you voted yay nonetheless because you believe that the benefits outweighed the negatives. And then at some point after that, Miko canceled the PPA, claiming non-performance of the Power Purchase Agreement to which Half Moon said, you guys delay this and delay this and delay this. And then you're canceling the contract. Well, that's not right. So there is an ongoing lawsuit in federal court, which I don't have any current update on between Half Moon and Maui Electric. So, of course, I hope very much that this second go around, the second iteration with more community support, seemingly Hawaii Electric buy-in to date reaches fruition. And we're talking about, as I understand it, about a two and a half megawatt or so solar array near the power plant in Palau, 10 or so megawatts, a megawatt hours of storage, and then somewhere around 300kw or so with storage up in the Kuala Poo area by the rec center there. So let me ask you kind of on a scale of one to 10, given that you and I both know how challenging it is to bring projects like this into fruition, actually throw the switch at power flow, what's your level of confidence that this is all going to work out this time? And there will actually be a community owned solar plus storage, two locations that will provide Molokai, rate pairs and residents the benefits of lower cost, clean solar power, how confident are you? With this community and the action that they've been taking in order to try and harness these opportunities, I'm very confident that this will move forward. This is what they want. And I have a feeling that they will fight for it. If they want these renewable projects to go in, they also see the savings that there are the opportunity there with the solar and battery projects. And so they're excited about that opportunity as well. So I do believe they'll move forward. I hope that the utility is as excited as I am about getting these projects installed. So that'll be really the saving grace, I think, if they move quickly. And ultimately, that's what the community is asking for, is for the utility and the PUC to move quickly on these projects and so that they can get them installed and in the ground. And because we know that these projects take a long time and the Molokai is even more challenging. So ultimately, yeah, they're looking to see some quick moving action from the utility and the commission to hopefully. So it's certainly a good sign as you noted if I understood correctly that there has been a PPA that has been submitted now officially to the commission, which of course took usual haggling back and forth right by the parties. So it's now in the commission's hands and then by statute, of course, the machine on the CA will chime in on it as far as this is the best interest of repairs residents of Molokai. And I think the number of interveners on this docket is very small, right? I mean, that doesn't stop anybody, I mean, anybody can submit public commentary right on any docket. But as far as the official interveners in this particular docket, I mean, there aren't gonna be too many, there aren't too many of seats at the table, right? That is correct, yeah. I don't remember the number, but I do remember that it is a small group that's actually participating in the CBRE docket. Yeah. Well, I can tell you, I mean, having done projects on Molokai now for the past, you know, already 16 years, both residential and larger commercial, that anybody, any contractor, any developer who looks to get into Molokai and hasn't done it before, you can game out multiple contingencies, you can put fudge factors in in terms of costs and so forth. But I mean, it's a real challenge doing anything of note on that island just because of so many challenges. So I wish them, of course, Godspeed and Goddess of Speed to that they make progress as quickly as possible. Okay, so that's great too. Anything else you wanted to add on Molokai before we leave the friendly on? I think that they're setting a precedent for so many states, so many communities, and in particular those, even like tribal communities that can, this is really a strong stance that they're taking in terms of trying to shape their energy future. And in doing so, they're taking a lot of the challenges that we have when fighting these community-based renewable projects or just community renewables or utility-scale renewables. There's challenges that we run into with communities that say, we don't want this in our backyard or you weren't listening to us the first time that we were talking, these types of action plans are the exact thing that we need within the state and throughout the country for that matter to have the voices at the table so that we can hear these concerns in advance of trying to cite these projects where we might be opposition. We could be avoiding lawsuits and dragging on these projects that, I mean, I know that there's some here on the Island of Maui that have been going on for years since 2018 or 2019. And those lawsuits are tying up, whether we've developed solar projects on the Island of Maui. And that, you know, when we're talking about trying to meet and reduce carbon and to meet our RPS goals and all of those things, these types of stoppages are not helping us meet those objectives and those goals and helping us fight climate change. Ultimately, we're fighting in courts instead of having listened in advance of actually building these things or proposing these projects on these properties close to the communities. Then those are the voices that we need to hear in advance so I would encourage community groups to continue to step up to the plate and be an active participant in state and local planning. And that's just gonna help smooth the ride a lot for the rest of us as we try and meet these very ambitious goals. And to be clear, and if I'm not, please correct me, one of the real and tangible benefits to rate pairs on Molokai, once this system, these systems are up and running, is that they, as if they choose to be subscribers, if they choose to be subscribers with our two or with the Huey, that they will receive a portion of the output of these solar systems at a cost which will be lower, likely be lower, positively lower, absolutely, that I'm not sure lower than what Maui Electric would charge them, is that correct? I mean, that's, of course, one of the, you know, a lot of people, oh, solar is great, yeah, but what's it gonna do to my bill? You know, I'm paying 350 bucks a month and I have to choose between paying utility bill or keeping food in my pantry. So I mean, that is really one of the kind of bottom line benefits to residents of Molokai, is that correct? I agree, completely, mm-hmm, yeah. All right, so let's move to the smart area of smart DER, smart DER, Distributed Energy Resources. How about giving us a quick intro, Jenny, on the nature of smart DER, why people who aren't policy and utility and energy wonks like you and I are, why residents of Hawaii should care and then what new developments on the smart DER drama that you have to report, please? All right, I can only speak that, you know, DERs are absolutely one of my favorite things because they are distributed and that's truly the future to me. I think that we have a distributed future, it's not gonna be centralized, our power will actually be spread out across our grids and again, consumers will be paying a big part of that. So how we actually open the door for our residents to start playing in this energy space and saving money on their bill and participating in programs that help stabilize the grid and provide grid services and ultimately reduce costs to all ratepayers because of their actions of adopting solar and participating in programs like demand response where they're shifting their load from the middle of the day to the, or from the evening to the middle of the day. And so those are the types of activities that strengthen our grid and help us become more diversified and resilient. And that's really what's critical. The economy in Hawaii also relies on stable programs for distributed energy resources. We have a really prolific solar and battery programs here. Our vendors are often, you know, they're installing, they have thousands of tickets in the interconnection queue for people that are looking to split up their solar system. So having a strong DER program is critical. What we've had for the last, I don't know how many years you might know is interim DER tariffs. Do you know how long those have been in place, Marco? No, I'm gonna guess, you know, five, five or six-ish, maybe even longer. Okay, yeah. So in 2019, the commission opened up docket 2019-0-03 2-3, which is a DER and docket, so our distributed energy resource docket. And that was intent to, basically, we were looking at not only the IRP, the Integrated Resource Plan, or IGP, the Integrated Grid Planning Process, and looking at some of the capacity shortfalls that were occurring after the closure of the coal plant. And so the idea was, how can we get distributed energy resources to step up and fill the gap? And so we created an interim program called the Battery Bonus Program that incentivized the adoption of batteries so that they could actually help fulfill some of that capacity problems that we were having. So there was a significant capacity shortfall, approximately 150 megawatts. And so we determined that if we could solve 50 megawatts of distributed energy resources, then that would help us fill the gap and reduce the potential for an outage by a significant amount. I mean, we would literally reduce it to almost nothing. So the idea was really trying to encourage these DERs to come online. So in doing that, we said, okay, this is an interim. Now you need to build companies. You need to build a new DER program, just smart DER program, and bring your own device type program. And then we need to get those in place as soon as possible to help us build certainty within the industry so that consumers have, they know what they're going into, they know what their payback period is when they're purchasing these types of systems, which can be quite expensive upwards of $50,000. And they need to know how quickly they're gonna be able to pay that off with the energy savings and demand response participation. And so those having programs that are permanent and in place, knowing that they're gonna last for 10 years or 20 years, that provides certainty to the industry and to consumers that they know what will happen and what program they're signing up for. And so interim programs will be going away at the end of next January, and then we'll see the new DERF coming to play in November 1st, 2023. And so the battery bonus program, which is currently in place right now will end as of October 31st of 2023 and be replaced with a very similar program, which will be the bring your own device program. So that will have an upfront incentive, very similar to the bring your, the battery bonus program. So really important to just providing that certainty to consumers and to the industry, solar developers that they know what they're signing their customers up with. The customers know what they're getting into. This is really critical that we have these things ironed out as quickly as possible so that we can move forward and really get that, start planning for how these DERs are going to provide services to the grid and they're going to help us with some of these capacity shortfalls in the long run. Oh, wow, my mind head is bursting with everything you just shared with me. So just to kind of briefly summarize. So the smart DER program goes live on November 1st, from November 1st to the end of January and by my calendar, that's November, December, January. Those wishing to go the DER route as in typically rooftop PV and with storage, they will have a number of options during that three months period where they can go with the existing customer grid supply. Plus they could go with customer self-supply CSS. And they will be able to go with have the choice of the smart DER program which we do not know what those compensation rates are going to be. We do not know what kind of value will be provided or payment from the companies to those who opt into the BYOD program as far as distributed storage. So we know the launch date, assuming it's not pushed out yet again, but less than four months, but we don't know any of the details. So I'm thinking of it from the perspective of my company and other integrators across the state. Once word gets out and this is inevitable, it's not so much I'm complaining as I'm just observing that uncertainty in the marketplace can lead to kind of a pausing and freezing of consumers launching into a major major purchase which of course PV plus storage is. So once the word leaks out, there's the typical consumer, oh, if I just wait a little bit longer, I'm gonna get something better, right? So I'm hoping that's not gonna be the case and I'm hoping as well that it's not going to be on October 31st that the companies will be putting out the details or the commission will be putting out the details in a decision order that we'll have some time, substantial time prior to November 1st to kind of wrap our head around this. Yes, absolutely. I couldn't agree with you more. We do not want last minute decisions. And I just wanted to share this with you as we wrap things up, Ginny, because a colleague of mine brought this to my attention all last week was either in Clean Technica or one of the wire services that deals with energy. So you're familiar with ERCOT, right? The Electric Reliability Council of Texas ERCOT, which is kind of a grid into themselves because they've opted, Texas has opted not to really be connected to the transnational transmission grid, right? And so they're going in the direction of VPP's virtual power plants, which is tapping into residential, commercial solar plus storage, right? And at some point last week, yeah, because as you follow the news, I mean, the heat across much of the mainland, especially the South going from Arizona, going East Texas, Oklahoma into Florida, I mean, it's not only hot, hot, I mean, it's dangerously hot, right? You know, I both know that when it's dangerously hot, people crank up AC to try to survive, right? So it's record demand for power generation. And Tesla has apparently come up with some type of entity called Tesla Energy. And what they do is apparently they're aggregating owners of power walls. And I know something about that because I got a couple of my house as well, 13.5 kilowatt hour per power wall per different homes. So the punchline here is at some point last week, Jenny, the utility company or some type of ISO comparable trader dealer, organizer, manager was paying up to $5 per kilowatt hour, $5 per kilowatt hour. So some guy who owned a couple of power walls was arbitraging this and he said yes to, yes, I will sell power for my power walls. And he made $150 in a single day allowing his battery to be tapped into by said utility company because the utility company was a such desperate need of power. I mean, isn't that wild? Can you imagine that happening in white? I mean, utility company is crazy, crazy, crazy. That is, that's remarkable, absolutely. And I mean, they're not even valuing resiliency. I mean, when into that, it's just capacity. So that's an interesting, I wonder how they came up with those numbers, $5 a kilowatt, is it? $5 a kilowatt hour, I mean, close my mind. Absolutely, yeah. Well, my mind has been blown in a very good way, being back, you and I together today and always such a pleasure. We always go, I think in very interesting directions and thank you so much for coming on back to this giddy up roundup for energy in 808 and I hope I can count on having you again soon because as you and I both know, there's never a shortage of interesting energies to talk about. So one Jenny Potter strategy and Mahalo Nui until the next time, thanks so much. Mahalo Nui, thank you. Thank you so much for watching Think Tech Hawaii. If you like what we do, please click the like and subscribe button on YouTube. You can also follow us on Facebook, Instagram and LinkedIn, check out our website, thinktechawaii.com. Mahalo.