 Hey aloha and welcome to Stan the Energy Man on Think Tech, Hawaii. I'm your host, Stan Osterman, and our show today is called Government Policy, the Invisible Mover of Almost Everything. And we're going to talk about Governor E. Gaye's vision for a clean energy future and address the issues of whether what we could do to bring about positive changes and whether we could do them faster, sooner, better. If you want to ask questions or participate in the discussion, you can tweet us at thinktech-h-i or call us at area code 415-871-2474. Our guest for the show today is Dr. Terry Sarels, and Dr. Sarels is the Acting Head of the State Energy Office. He's a dynamic personality that's actually been a part of the clean energy effort in Hawaii for many years, and has returned to us to help guide the state's energy policies while we search for a permanent head for the State Energy Office. In this episode of Stan the Energy Man, we're going to discuss a variety of topics, including the understanding of Governor E. Gaye's vision for a clean energy future, and how Hawaii has met previous energy objectives, and what we could do to bring about positive energy changes here in Hawaii even sooner. So welcome to the show, Dr. Sarels, good to have you here. Yeah, it's Terry, only my mother used to call me Dr. Sarels, and that was when she was angry with me. Okay, I won't do that. I'll call you Terry. Right. It's just a habit. I'm a military guy. Okay. Well, thanks for being here. I really appreciate it, and I know you've been in the saddle for a couple months now and taken the reins, but it's not new for you. Let's talk about some of the stuff you've done here in Hawaii in the past that qualifies you to help us cover the gap while Mark Glick goes up and does other things. Right. Okay. So, and I've known Mark for a number of years back to when I was first at Hawaii Natural Energy Institute in 2006, and just a quick recapitulation on my background, I spent many years in the National Laboratory System, actually about a quarter of a century, and I was also, had been on loan to the California Energy Commission and was actually a political appointee at Cal EPA, so, you know, I've been in and out of state government. So I've been working in Hawaii since 1981, initially through East-West Center, and later through Pictor were actually staff people there and was president of Pictor from 2003 to 2005, while I was also at the California Energy Commission and at EPRI, and then I came out here to Hawaii Natural Energy Institute in 2006 and was here until 2010, and since my wife didn't come along with me, she asked me in 2010 to come back. So my final full-time job was on the mainland. Okay. So I was back part-time with Dean Denise Conan in the College of Social Sciences and continued to work with the PUC, and now I'm back, and again, it's from the relationship I've had with people over the years here with Mark. So over the years going down to, you know, I worked, we worked on a number of projects I under the Bush 2 administration. We won the Maui Smart Grid Competitive Award. I helped the State Energy Office develop some of their first state energy proposals that allowed them in getting funding back in 2009 and 10, and over the years I worked with Maurice Kai. I had contracts way back when with Maurice, and then just as I said, I know I'm good friends with Rick Roshelow. I think HNAI is doing a great job. I know a lot of the people at HECO, I think they're really trying well. I know Jay Griffin, I've worked with him over a number of years. It now has been the governor's selection for the next PUC commissioner site. Then I've worked with folks like Blue Planet, too. So I know a lot of the people, I think I get along with most of them. They may or may not appreciate all of my opinions, but that's the way it is. You seem to be along with pretty much everybody. You strike me as a pretty personable guy. Yeah, well, thanks. You get much face time with the governor since you've been back this trip to really get a good feel for what his vision is for the future? Well, yeah. We've got some time. Initially, I was in with the D-bed director, Lewis, and one of my staff, Veronica Rosh, should have briefed him on the early what was going to be some of the administration proposals for this legislative session. And actually, because I'm sensitive even, so I've been back in California a couple of years. I'm sensitive to just somebody coming in from the mainland and telling people, well, this is what I think you should do. That's a big no-no here in Hawaii. And so I basically was, I didn't say anything at that meeting. And I did talk to the governor a bit in the hallway afterwards, but later on, I've had some meetings with Lisa Harioca, who's his advisor in this area, Mike McCartney, Cat, who runs the department, I forget the official title, and Dean Nishina. And so we had some discussions on where we might be going. And I developed an initial white paper on here's what happened when I was here in 2008 and when the Clean Energy Initiative was first rolled out. And basically, once it was rolled out, here's what didn't happen based on what we thought would happen. And here's what did happen that was somewhat unanticipated. And so what I'm doing now is that led to another meeting with just Lisa, the governor, and myself. And what we're trying to do is about an hour and a half. And what was a great dialogue, what we're trying to do is we're almost 10 years into the Clean Energy Initiative. And how do we redefine that in our minds to keep pushing forward, both in terms of energy efficiency, more renewable energy, and also trying to get our arms around transportation, where we haven't got our arms around that to date? Because the original Clean Energy Initiative was for both transportation and electricity. And over time, it was focused only on electricity. So in addition to the passage of the into law for saying we're going to be at 100% renewable electricity by 2045, we still have the goals of the original Clean Energy Initiative of in 2030, having 40% of our electricity produced by renewables, but also a 30% reduction due to energy efficiency. And so it's the idea of over the next 10 years, what might we be doing to reach those goals? Would those goals in energy efficiency include transportation? Right. Well, right now, I mean, for what we've been talking about, that while we want to get our arms around transportation, but I think that I would prefer to treat that. This is a personal opinion. I would prefer to treat that as a separable issue because you can work with the PUC. You can work with the utilities to get at renewable portfolio standards. And there's a lot of technologies in play in terms of distributed systems and behind the meter systems that are going to get you down the road towards greater efficiency. And you can have, for example, I mean, the big island is now at 54% renewable energy delivery in terms of their utility. But that's because they do have firm baseload renewables in terms of geothermal and hydro. And now there's, again, it's going to be before the PUC, how they move forward with a biomass facility, which would also be firm powered. To me, transportation is a bit more difficult. You don't have a commission that can regulate transportation. So in terms of moving forward on that, I think you need to develop some type of policies that can push the state agencies to be leaders. And once again, this is my opinion. This is something we haven't formulated yet. But one of the things I think we could do is really push to look at can you have a per capita reduction in ground transportation petroleum use between now and 2025? And it would be initially a relatively modest number, because I know Jeff McElene is concerned from BluePlan, and I agree with him, is that there's actually been a growth in ground transportation petroleum use between 2008 and I think Jeff's last number was 2015. But the problem is, how do you reverse that? And how do you develop some mechanisms that can drive down the use of gasoline, basically, in that? And certainly, there is a growth of EVs, electric vehicles and plug-in hybrids and hybrids, that's moving along. And I think this is going to continue, and I think it may accelerate. But the reality is that when you have oil bouncing along at about $50 a barrel, people like their SUVs. And I think there needs to be an evolution of how some of these new EVs or hybrids are going to move along and allowing them to penetrate some of the SUV market and so on. So Mark Glick initiated, I believe it was over a year ago, and do you know Alan Lloyd, Dr. Lloyd from California? Yeah, I know. You're connecting in California. He was, his organization ran a study here to kind of help Mark and your office develop a transportation plan. Have you had a chance to look at that? No. I will say, I like Alan personally, but I disagree with most things that he pushes. And so maybe I'll just leave it at that. That's fair. And like I said, I know Alan fairly well. And he's got some really good ideas, but I feel that his ideas, and I know you and I have talked about it a little bit, is his ideas in terms of hydrogen. Because when he was under Schwarzenegger, we really pushed hydrogen highways in California. But the problem always is, is the cost of hydrogen, the cheapest way to produce hydrogen is steam reforming that produces, guess what, carbon dioxide. And electrolysis right now is an expensive way to go. There may be ways that you can improve electrolysis. There may be ways you can start utilizing electrolyzers during peak periods in terms of peak generation periods that now can occur in the middle of the day because of the growth of solar. So there can be opportunities. But the other problem I've always had a concern about with hydrogen has been the delivery systems in terms of how are people going to go get it, how do you store it, and so on. And so these problems may all be solvable. And so the idea that Toyota is actually coming out with a hydrogen fuel vehicle, I think, tells you this may be a harbinger of the future. But I think there's just certain things that got to be worked on. And I agree. So that's where it is. So is that an opportunity to drive down the use of gasoline, sure it is. But I would prefer to come in with modest goals, perhaps have some legislation in the future that is going to require state offices and state fleets, if you will, to move towards EVs and hydrogen fuel vehicles. And that may be a way to start catalyzing the marketplace. And we had a chance to talk to Director Fujigami from the Department of Transportation about, because he's working with me on potentially doing some buses at the airport for their shuttles that take people to the rental car agencies. And he's committed some of his non-revenue funds that he gets from the contracts for the rentals. He gets a certain amount of each local rental at the airport. He's committed that to some buses. And I'm supposed to help build him a station. And we've got, actually we have several companies out there that are willing to build the station and pay back the bonds and things like that. So we're looking for that public-private partnership. Is that the kind of departmental incentive that you're talking about? Yeah, that would be something you could look at. I wasn't able to be, we did have a meeting, it would have been on the 15th of the month. And I was unable to go to that meeting. And Chris Junker, who's responsible for a lot of these things, was also unable to go to that meeting. But, you know, say it, well, I don't know. It's not sadly, what we're interested in, too, is my interactions have been more through Carol and Sean, another one of my branch chiefs about energy efficiency. And a lot of what we're doing there is performance-based contracting, where the development within the Department of Transportation for buildings, et cetera, has been to drive down the use of electricity within these buildings. Some of our bigger performance contracts, our performance-based contracts, are with the Department of Transportation in terms of the state to drive down electricity. Okay. And we're going to take a quick break here and be back in about 60 seconds to talk more with Terry, not Dr. Terry Stroud. Right, right, right. Whatever. Yeah. Come back to my lunch hour, Stan the Energyman here with Terry Sertles from the State Energy Office. And we're talking about things that have been going on in Hawaii for the last 10 or 20 years, the revolving around policies and government decisions that we make that drive energy decisions, not only for our population here, the citizens of Hawaii, but also our government agencies. So we're talking a little bit about how DOT has actually taken the first step of all the agencies to at least try and increase their use of renewables in transportation. And that's really encouraging for all of us. In fact, I would venture to say that between DOT's lighting initiatives that they've taken at the harbors and the airports to reduce electric bills and do that to energy efficiency piece you talked about on the grid, to the steps of looking at biofuels for the wiki-wiki buses and also hydrogen vehicles for the rental car shuttle, they've actually sent a message to the whole world that Hawaii is on the map to do things with renewable energy in a serious way. And besides the governor doing that 100% by 2045, there's a lot of policy things that I think the average citizen doesn't realize reverberates through the entire, not only U.S., but through the world. And we were surprised about three months ago to have the Department of Energy List, Hawaii is one of the top 10 states for hydrogen stuff. And I was real happy about that because that's my pet project, but it's kind of neat that it comes from government making statements, not necessarily always making laws, but having leadership step out. Like you say, there's no gun to Ford Fujigami's head to do this. He's like, no, I want to do this and he wants to do it. And that sends a huge message when leadership steps out and says we want to do this, that's a policy decision and that's where I think Hawaii's really making some great strides forward. Yeah. I mean, essentially, working here, it's in the past really got the attention of the Department of Energy. And again, I'm more of an electricity person than I am a transportation person. So a number of the things that Ford may be doing there, I'm aware of them, but not really plugged in. Again, I'm more aware of the performance contracting. But I'm more aware of the performance contracting because it really relates back to electricity savings. But the Department of Energy has been interested in Hawaii for a long time and for that matter because of their huge presence here, the Department of Defense primarily through the Office of Naval Research has been very interested in doing things here in Hawaii. So a lot of the initiatives in terms of the funding that's come through has come through based on funding either from the Department of Energy and this could be through the energy efficiency and renewable energy offices, but it can also be through the Office of Electricity, Delivery and Energy Security because it's all a matter of how do you modernize the grid to deal with more and more intermittent renewables. So there's that and then because of their presence here and it becomes a matter of security and resiliency, as much as using renewable energy, the Department of Defense, the Armed Forces is interested in this and again explicitly towards resiliency and security in terms of dealing with- Ben, I can relate to that. That describes our projects at Hickam, Joe Meade's Broadway. Yeah, well, I mean, that's your background, yeah, exactly. Well, I like to point out to people that over the last 15 years, basically the first time we plugged an electric vehicle into the grid, we started a revolution where electricity is now also part of the transportation sector and will become more and more part of the transportation sector as that solution to a carbon free transportation sector. It almost seems like we're at the whim of the OEMs, the manufacturers because we can only buy as many as they make of the kind they make and I've often talked about most EVs looking like a food processor with wheels, you know, I mean, I have yet to see other than Tesla a sexy electric car, BMW has a great one too, but if you're going to get it, you're going to pay $100,000 for it or more, but the future is going to be electric even on the transportation side. Does that start to impact your thinking of grid versus transportation relationship? Well, yeah, and first of all, I know that because my wife is at Stanford and she gets involved with Tesla and the new, what it is, the Mercedes, I get that all electric might be BMW, I forget which. And she's also ridden in the Chevy Bolt, which is the new all electric vehicle that Chevy is coming out with that's got an expanded range capacity, so you don't get into range anxiety. So that's a commercial for Chevy Bolt, which is supposed to have a range of 280 miles between charges, but yeah, I mean, essentially a lot of what's going on now, again, dealing with how the utilities have to address intermittency and how to maintain a stable and resilient grid, that involves how do these electric vehicles or hybrid vehicles fit in, well, electric vehicles in this case, not the hybrids, but impact the grid. And there's a number of modeling studies that have gone on to see how might you deal with this primarily. So one of the things I've been doing in California before I got asked to come out here is work on automated demand response. And the idea of using EVs in terms of dealing with addressing automated demand response batteries, basically, is well, no, no, no, no, no, no, absolutely people do look at them that way because you put them into the grid and they look at them in a storage on the grid. Well, it's not that simple. It's not that simple. And I've talked to the car manufacturers on this, like the electric car, they are not interested in in feeding power from their batteries into the grid where ADR works is if you're dealing with, if you're dealing with having too much generation, you can put, you can basically put, you can basically be charging your systems into this, or if you're dealing with how do you manage peak load, well, then you can have things to shut off this. But the way the car manufacturers have explained it to me, and this is where I do know something because I recently talked to them, is that they're, you know, the value of their cycling on their batteries is you're really dealing with an expensive utilization of the power in your electric vehicle to drive you around. So that's a value proposition versus what is a relatively low value proposition of putting the electricity off the battery into the grid. So at least for that, I'm not going to mention the company I talked to about this, but they're simply not interested in developing systems that are going to put electricity, the V2G, a modeling idea, they're not interested in doing that. But ADR, automated demand response can still be useful in terms of either, you know, using ease or either charging things during peak generation or turning off charging during peak load period. So it's still a value in how you model it and what you do. But did you ever, I mean, did they mention the potential impact to the batteries themselves by, yeah, by shifting their real use, which is to, they're like deep cycle batteries, supposed to be downloaded and uploaded and if you keep charging them and doing this, it actually messes up the life cycle of the batteries too. That is their point. Yeah. So a lot of people just envision, oh, we have a battery, we have a bunch of batteries in the grid, we'll be able to store all this intermittent renewal and it ain't necessarily, so there's got to be better ways to do that. For us as we've looked at it in California in terms of how does this is more, how does automated demand response factor into or demand response factor into, rather than using storage, you have another choice for how you want to go about of managing the grid either in terms of addressing peak generation during the middle of the day now because of all the solar form or dealing with peak load late in the, because the peak has never changed. You know, the peak is always around six or seven in the evening. Everybody's at home. So how do you deal with that? And so, you know, use of turning things on and off is still valuable to address both of those issues, either the peak generation or peak load. Well, we're getting close to the end here and I'd like to spend whatever time we have remaining talking about what your advice would be to your replacement that comes in to jump in the saddle for the energy office for the future to take Hawaii forward and maybe get us there a little faster. Well, you know, we're a policy office, so we have technical experts, but I think it's more a function of working with everyone to facilitate change and the way I'm always a little leery of betting on technologies through legislation because you really don't know what the winners are going to be because you can have breakthroughs that are totally unanticipated. I mean, we're talking now about we're going to bring coal jobs back. So we've just backed out of this important thing now with our con artist and chief, President Trump backing us out of the Paris Accord. The reality is coal is not coming back and why and the simple why is because of the breakthroughs and other technologies that fracking has dropped the price of natural gas so much and has made natural gas so available right now on the order of $3 a million BTU is that, you know, it's just cheaper to build a natural gas combined cycle plant that's going to operate over 60% efficiency versus a coal fire, even a new coal fire power plant with that may be a 30 to 35% efficiency, even if it's a ultra critical capacity system. So you can't you have to anticipate these breakthroughs. I made a political statement there that I felt like I wanted to make. But the point is even for these distributed systems and these behind the meter systems, these efficient systems, we don't know where they're headed, you know, and the breakthroughs can surprise us. The things are happening so fast. In fact, in the military sense, I say sometimes the technology is outstripping the acquisition process. And you can't you can't even buy stuff fast enough to stay ahead of it. Well, you know, and one of the things that happened going back to the clean energy initiative is that is that we were going to build big wind farms on Molokai Ilanai and well, it didn't happen, but it didn't need to happen because another unanticipated event was the collapse in solar panel and prices in terms of their construction and implementation. So and we now we're easily making our goals. Well, believe it or not, our half hours blasted right past us. And I appreciate your time here. That brings us to the end of our show. And we've enjoyed bringing it to you. I'm your host and energy man. And our guest has been Terry Searles, who's the head of the state energy office talking about government policy and that invisible mover of almost everything addressing issues that bring us all closer to renewable energy every day. So thanks, Terry. We appreciate your time today. Fun being here. Thank you. I'd like to also thank our production engineer Ian Davidson, our floor manager, Robert McLean and the people who care and contribute to think tech productions. If you want to see the show again, go to thinktechkawaii.com or youtube.com slash thinktechkawaii, where there will be a link to more shows just like this one. And you'll be able to rewatch this one. Thanks for watching and we'll see you next week. Hello.