 Energy 808, The Cutting Edge, I'm Jay Fidel. This is Think Tech and on the phone with me is Marco Mangelsdorf, who joins us from ProVision Solar in Hilo, Hawaii. Welcome back to the show, Marco. Good morning, but I'm just going to say it is an enchanted Monday morning whenever I get a chance to talk to you, my friend, so thank you so much for having me back. I am thankful. I am thankful that you haven't broke out in song. Well, let's move on. There are three things we're going to cover in Energy 808 today. One is the solar coaster, largely in Oahu, but around the state. And two is we're going to cover the status of PGV, Pune Geothermal Adventure and the future of geothermal in Hawaii, Big Island and maybe more. And the third is the PUC, the Public Utilities Commission, how they're doing and how their view of things has affected the movement of renewable energy in the state of Hawaii. So very excited about this. Let's start now. Let's start now, Marco. Let's talk about the solar coaster, and I know that's your term. 100% definitively take ownership of the solar coaster. I just remember using it myself a number of years ago, and whether I saw it used by somebody else or I was very first, I don't know. It's kind of taken on a life of its own, but I do find it to be rather descriptive in terms of what we've been experiencing here in Hawaii in terms of the rooftop solar market. You're trying to say that it's been up and down over the past several years, and sometimes fantastic up and sometimes fantastic down. Yeah, and I was able to, with the help of my great staff here, we've got data going back to 2011-2012, so a good chunk of time that we've been able to track and pretty much real-time kind of what the solar industry is doing out here. So we just recently crunched the July numbers for Oahu, and Oahu, of course, is the biggest market in the state, and the good news is that there was a bump last month in terms of PV permits issued by the folks at the Honolulu Department of Planning and Permitting. They issued 369, but it will take system permits last month compared to 219 for July of 2018, so that came out to an increase of 68%, which was one of the biggest year-over-year bumps for a month since the slowing down of the solar coaster. The total number of PV permits, January to July this year compared to the same trade last year, was up a smaller percentage of 3.6%, and what's uninteresting to note is if you look at the, I don't know if you've had a chance to post that graphic. Yeah, let's put the graphic up. Okay, this is called 2012-2019 Oahu PV Permits Issue. This is the Department of Planning and Permitting numbers, I guess. Yeah, this is all open source data. Anybody who has the time and inclination to go through thousands of PDFs from the county, or the city of Honolulu, can go ahead and do the data crunching themselves. But effectively, our boom time years for rooftop solar here across the state were between 2012 and 2015, when there was anywhere from 16 to 21,000 photovoltaic system permits issued across the four counties of the state, and it was again 16 to 21,000, and the average over the past three years, including 2019, has been around 5,000, 5,000 plus or minus, maybe a couple of hundred, so it appears that we're reaching perhaps kind of a, I don't know, a stasis point or a place where maybe the new normal is certainly significantly down from the old normal of between 16 to 21,000 permits per year, the new normal being around 5,000 PV permits per year across the state. So looking at this chart, looking at this chart and looking at these years and looking at the high years there at the beginning and the stasis years now, the last couple years, what conclusions would you reach about where we're going on this? Why have we had this particular chart? Why has it been like this, and what does it tell us? Oh, those are great questions, Jay. Why has it been this way? You know, in any type of product and service, especially a big ticket item like a photovoltaic system installation, you're going to see an adoption curve with the early adopters, small number of early adopters at the beginning of adopting any type of product or service, and then you get a ramp up, kind of bell shaped curve of more and more people getting on board, so to speak, and then inevitably, especially when you have a finite number of possible consumers of the product, you're going to start getting on the tail end of that graph. And I think one could make the case, at least according to the data that I've been crunching and living and breathing by for the past years is that in terms of the adoption of rooftop solar, rooftop solar in the state of Hawaii, that as much as it hurts me to observe this, I think we're apparently on the tail end of the adoption curve, the incentives which existed to allow for substantial expansion, like we saw, 2011, 2012, 2013, 2014, 2015. One of the biggest incentives was net energy metering, and that was available in the state from 2001 to 2015, so 14 years. So you can certainly make a correlation observation that when NEM was brought to a close by regulatory fiat in October of 2015, that's essentially marked the beginning of the ramp down in terms of adoption. So I think that's an important point, and I think, you know, that the desire of home owners to go PV, clearly according to the data, the desire has peaked. Now is it possible to make a case for the desire and ramp up, a significant ramp up over time of the solar coaster? I mean, I'd love to be able to make the argument yes, that in fact is entirely possible. Well, let me ask you this though. I'll assume that these are new installations rather than adding storage or revamped remodel installations. These are all brand new installations of PV. Predominantly yes, very predominantly yes. So assuming all that, if I made you king, or a benevolent dictator person who could call the shots, then, you know, what would you do to get us back to the kind of accelerated installation we had before? What changes would you make in terms of incentives and other tax breaks in terms of regulatory change? What would you do to, you know, move the speed back up? Well, I mean, there's a part of me which is I'd like to feel somewhat grounded in reality and understand that energy metering is great as it was. I mean, I was one of the few people in the industry who was calling for it to be brought to an end back in 2014 and 2015 because there was an incentive that was wildly successful. And I happen to believe that just because you have an incentive for a certain amount of time doesn't mean you should have an incentive in perpetuity. So to argue, well, let's bring back NEM to me, I just can't make that argument from a number of different angles. So I'm not going to say let's bring back NEM because that's not where we're at anymore. I mean, let me address your question this way. I mean, Tesla came out last week and their market share has dropped off the map largely. Their previous incarnation of Solar City prior to Tesla under Elon Musk purchasing Solar City back in 2016. Solar City was the path breaker. They were the dominant kids on the block for a rooftop solar for residential under the third party leasing and power purchase agreement framework. And they have since over the past years, their market share has dropped. Sunrun has become number one, Viv and Sunnova. And now Tesla is either number three or number four. And they came up with the idea last week as a way of trying to reinvigorate their market share and getting back into the market of renting, get this Jay, renting the solar electric system to a homeowner where the homeowner is paying nothing out of pocket and instead agrees to have a solar system installed on his or her home where the homeowner is paying a monthly rental fee. And I don't know if there's a long term contract involved, but assuming the rental fee is going to be less than the accrued savings on a monthly basis, because who's going to want to rent a product where they're paying, where they're not getting commensurate, if not more than commensurate savings on their utility bill. So as Elon and his team onto something that beyond solar leasing, beyond power purchase agreements, hey, how about renting, how about a homeowner renting like they rent a couch or rent a lazy boy chair? And maybe what's a rent to own possibility, but it is trying to lower the acquisition cost to the homeowner as a way of accelerating or trying to increase the demand for the products. I mean, if he's creative, certainly I hadn't heard of that before. And as to whether it's going to be successful or not, it's too early to tell. Well, it's good to see innovation. But before we leave the subject, and we do have to leave it, I wanted to ask you one other thing. These numbers and this chart we're talking about is this sort of bare data, the sense that it's the number of permits issued for the installation of solar. But there are other things changing under the hood all the time. The number of local companies has changed. The local of national companies that have come into this market has changed. Their capitalization has changed. So many things have changed. And I wonder if you could give us a handle on what is happening under the hood. We have a consolidation here. We have an in and out arrangement where we don't, you know, we don't know. Let's take a short break, Marco. And we'll come back and you can answer that question. Okay. Aloha. I'm Keisha King, host of At the Crossroads, where we have conversations that are real and relevant. We have spoken with community leaders from right here locally in Hawaii and all around the world. Won't you join us on thinktechhawaii.com or on YouTube on the Think Tech Hawaii channel. Our conversations are real, relevant, and lots of fun. I'll see you at the Crossroads. Aloha. Aloha. My name is Wendy Lowe, and I want you to join me as we take our health back. On my show, all we do is talk about things in everyday life in Hawaii or abroad. I have guests on board that would just talk about different aspects of health in every, in every way, whether it's medical health, nutritional health, diabetic health, you name it, we'll talk about it. Even financial health will even have some of the Miss Hawaii's on board and all the different topics that I feel will make your health and your lifestyle a lot better. So come join me. I welcome you to take your health back. Mahalo. Hey, hello, everyone, and welcome to the Think Tech Hawaii studio. My name is Andrew Lanning. I'm the host of the Pretty Matters Hawaii. We air here every Tuesday at 10 a.m. Hawaii time, trying to bring you issues about security that you may not know, issues that can protect your family, protect yourself, protect our community, protect our companies, the folks we work with. Please join us and I hope you can maybe get a little different perspective on how to live a little safer. Aloha. Energy 808, the cutting edge with Marko Mangelsdorf, who joins us by remote call from Hilo, Hawaii. So Marko, the question that we were talking with before the break was all about the changes in the industry as it exists here. Consolidation or the opposite? What have we got going on? A couple of quick takeaways, Jay. One thing that stood out to me is the dominant player in the Hawaii market over the past several years has been a company called Sun Run. They have a strong presence on Oahu, the big island, not so on Maui, as far as I know, maybe a little bit on Kauai. They have seen a significant drop-off in their permit count so far this year for seven months by 62 percent, according to my data, for Oahu and 57 percent on the big island. The reason for that, I'm really not sure that's something, of course, that they're not keen to talk about, but what we're seeing is kind of a re-division of the pie as opposed to an expansion of the pie, although the pie has expanded by 3.6 percent from this year to last year. The other big thing that I'd love to trump it is that the deployment of energy storage has gone up significantly. Two years ago, that figure was roughly under 30 percent of all PV systems permitted on Oahu had battery storage and now we're up to 75 percent so far this year. Clearly, under 30 to 75, that's a monumental increase. That's only going to continue to go up. The dominant players so far in terms of battery storage residential are Tesla with their Powerwall and LG Chem, a big South Korean conglomerate with their RESU line. Those are really kind of the two dominant players in Hawaii, and interestingly, not surprisingly, those are the two dominant players in the golden state market of California. Well, we've got to continue to cover this, Marco. Obviously, it's an ongoing issue. There's so many things happening that we need to understand it better and better as we go forward. It's the most promising renewable in the array and if we're going to get to our targets, we'd better use it and watch it. Let's move on to our second point though. Our second point was what is going on with PGV, Pune Geothermal Venture. I mean, we had an eruption a year and change ago. It couldn't even get down there because of the road. There was all these issues about when are you going to start again and can you start under the existing power purchase agreement or are we going to have to reorganize the whole thing? What's the status? It's an ongoing saga there, Jay, and it's really quite fascinating to me for a number of reasons. Just in the brief history, like you said, PGV was operating pretty much nonstop for 25 years, 1993 roughly to 2018 till the first week of May when they went offline in reaction to rather serious volcanic eruption and lava flows, we all know, and now we're August 26th and the power plant is still offline. Helco and Ormat, Ormat being the parent company of Pune Geothermal Venture, their assumption was, has been that after PGV spending the necessary money to bring the plant back to life, that it was essentially a pretty clear road and path to be able to fire up the plant again and start selling power to Helco. And that assumption has been now clearly have been shattered by the Public Utilities Commission saying not so fast, essentially. And what I mean by that is that there's been discussions and rumors and press coverage that there is a renegotiation taking place between Helco and between PGV regarding what the purchase price is going to be of 25 megawatts, the first 25 megawatts of power output from that plant. Because FYI, ever since PGV has been in operation for decades, those first 25 megawatts have been priced at the so-called avoided cost rate. What's the avoided cost? The avoided cost is what Helco, Hiko, and Niko determined to be what the, if they were to no longer peg, excuse me, if they, it's peg to the cost of oil. So as the cost of oil goes up, the avoided cost payments from the utility company to the power producer goes up and as they go down, the payments go down. So this particular avoided cost rate structure or price structure was officially banned by our legislature back in 2006 signed by Governor Lingle at the time and ever since then, 12, 13 years ago, there have been no new power purchase agreements that have been at avoided cost. But the first 25 megawatts of PGV has been at avoided cost. So as a sweetener, to be able to smooth the power plant going back online, there have been negotiations between Helco and PGV for those first 25 megawatts to take it, to no longer have it be avoided cost and have it be at a fixed, a sensibly lower price that would be more attractive for essentially benefit ratepayers on the Big Island and also make it more palatable to the PUC to approve PGV going back online. Well, compromise is always good. Negotiation and compromise is always good. And I guess that's those elements of compromise sound reasonable. What's the problem? Well, the key takeaway here is that the commission is effectively saying we will wait before we allow PGV to come back online until we will wait until we have a fully completed and submit it to us to PUC because this is all of course subject to regulatory approval. We will wait until you Helco and you PGV provide us with a completed new power purchase agreement for those first 25 megawatts. So the assumption on the part of Hawaiian Electric has been up until last week that they would be able to move forward with going back online at some point in the not too distant future or so they hope as they continue to negotiate with PGV to come up with a done deal contract and the commission essentially says no we are not going to give you the green light to move forward until you provide us a completely negotiated finalized PPA for those first 25 megawatts so that we will review and approve or not approve whether those terms are acceptable and in the public interest. Well, I can see this is going to affect the timeline because those steps take time but how does it affect the future of PGV? Is this a good you know can this be a good thing for PGV or is this some sort of death knell for PGV? It's not good news. I don't think anybody could spin it as good news because I mean by my rough calculation the geothermal venture and ORMAT is losing about three million dollars a month in terms of lost revenue due to not being able to sell power for Halco and you know you add that up over month after month after month I mean that adds up to some real money you know ORMAT is a you know fairly big company but how much can they continue to sustain? How long can they continue to sustain loss of three million dollars a month revenue and I have no idea how long any type of business interruption insurance continues you know it doesn't continue in perpetuity I can't imagine so no no it's definitely not good news and this definitely from what I can tell pushes out any possibility PGV coming back online until sometime next year sometime next year. You want to do it at the end of this year but I guess that's off the table right now. That is that seems to strike me as completely off the table. Yeah one other thing is that we you know we have the protesters they've wanted protesters top of Mauna Kea and for a long time there were native Hawaiian protesters protesting PGV on the basis that it was a piercing belly's breast and all those issues and I and I wonder if those protesters are also targeting PGV. Do we have an unresolved cultural conflict here? I have heard absolutely nothing about any protests or protectors being in the vicinity of of PGV nothing so I think that the attraction surely is Mauna Kea as opposed to what may happen in the future regarding kuna geothermal venture. Okay well let's move on to our third point and I guess this relates to an article you sent me entitled Hawaii Public Utilities Commission Transforming Electricity Sector. Can you talk about that article and you know what you know what summarize it and what it means in terms of the future. Sure I just give a shout out to our friend Henry Curtis first of all because he is one of those folks who's working the trenches day in day out you know keeping the public informed of energy happenings across the state and the the Public Utilities Commission and so forth so you know it's thanks to Henry and his diligence and his dedication so I again want to give a shout out to Henry and Henry is sharing today amongst those people on his distribution list that was titled Hawaii PUC Transforming Electricity Sector and I think he's actually right on that this particular Public Utilities Commission of Jay Griff and Jenny Potter and Leo Asensio are truly a exemplar as far as I'm concerned in my you know decades of being in the trenches here an exemplar as far as the commission that is super thoughtful very progressive very proactive and very very much getting it the it's being what needs to be done in this state in terms of the clean energy transformation at a rate that we can afford to do so so that's kind of the you know the broad brush strokes of what's going on at the the macro level but you know in the trenches as we've talked about before the performance-based regulation is the most important docket before the commission and it's going to continue to take time in terms of an actual decision in order and we're easily a year and a half out I think if not longer but you know this is going to reshape the utility landscape for Hawaiian Electric out here and and I think that's a good thing there's also so-called integrated grid planning our IGP which is looking holistically at forecasting planning procuring combination of energy solutions to solve the needs of the entire system in terms of generation transmission generation transmission distribution so-called non-wire alternatives behind the meter storage and so forth and so on so in addition to that micro grid you know being able to establish clumps in the grid where you are able to keep the power on when let's say due to natural disasters trees across power lines lava flow and so forth that part of the grid is taken down but not the whole grid so it all goes towards greater robustness and resiliency of our grid so that's certainly a good thing and then the big news of last week which was Hawaiian Electric putting out a request for proposals for as much as 600 megawatts 600 million watts of renewable power generation across the five line electric service territories which would include a tremendous amount of storage as well so just a lot going on and then it's really exciting to have to be a small spectator and a small observer and a small participant like I consider myself and my company and other solar rooftop solar companies and I just feel a tremendous enthusiasm and gratitude that we do have more and more people at the top positions of decision-making bodies who really care deeply and who really get it well you know one thing you you know you mentioned that utility Hawaiian Electric is doing these large affordable take arrays and all that are those permits included in the chart we looked at earlier in this program utility scale solar is included in the list of permits issued by Department of Planning and Permitting but we're talking about in a handful of permits for these big mega systems so you know if you have a system that's going into 30 megawatts it's not you know 100 permits it's going to be yeah so you have to evaluate that chart with understanding and some few of those permits could represent hundreds of megawatts that's something we could talk about going forward yeah the other thing that strikes me is that you know and there have been so many articles about climate change so many indicia of climate change coming faster than we thought you know and on the national scale we're not moving fast enough to achieve renewables and it's a real problem it's a problem for this country in terms of energy policy it's a problem for the world and of course Hawaii has been doing its part but but the question I put to you Marco with all of that with all the optimism that you know we can find in in our place here in the sun um I'm moving fast enough uh can we move fast yeah absolutely go ahead no I mean um you know you think back to the signing of the Hawaii Clean Energy Initiative which is my goodness already 11 years ago and she had Connie Lau from HCI you had Governor Lingo you had people from the Fed and it was you know it was kind of a key marker and what have we done in the past 11 years well we've definitely made progress but I feel a greater much greater sense of urgency not only in our state but in our country and on a planetary basis uh that the progress has to go further faster deeper further faster deeper and uh we're we're not keeping up with what needs to be done there needs to be change agents kind of at all aspects of of the of the matrix to use uh uh neo neo going back to the the matrix films what 20 years or so again or 20 years or so ago there needs to be change agents and what I call visionary disruptors at many more key nodes of the matrix and uh there are not that many of them out there I mean it takes a lot like an Elon Musk or Bill Gates and you know fill in the blank well and it takes parallel the parallel change agents right here in the state of Hawaii and I think in our discussions here on Monday on energy 808 the cutting edge we should talk about the companies and the individuals who are the change agents that matter the government officials and organizations that are the change agents and going forward we ought to do what we can and say what we need to say to keep the pressure on to keep moving ahead to realize our goals in a timely fashion and that's what energy 808 is all about right Marco on that note we're going to have to close the show I can't handle anymore thank you Marco Mangelsorf thank you for the show thank you for these great discussions I look forward to talking with you again soon parting is such sweet sorrow but uh I will I will be a swage by uh knowing it won't be forever well there was one good thing about it no doubt and that is at no time during the show that that either of us sing anything so thank you so much Marco Mahalo my friend Mahalo