 Okay, it's Wednesday, and I'm Jay Fidel. This is StakeTech. And what does Wednesday mean? It means Hawaii, the state of clean energy. And that's how we're going to talk to Jack Schreiber, who is the manager, director of generation development in Hawaii Electric. And he's got some really interesting things, developments to tell us about. Jack, welcome to the show. Thanks. Thanks. And welcome to the, you know, Driver Holley here. It's my new office for the foreseeable future. Also by remote, Mitch Ewen from the University HNEI, co-host of the show, and speaking for the Hawaii Energy Policy Forum. Hi, Mitch. Welcome to the show. Thank you very much. Here I am, marooned on the beach, just opposite Coconut Island. It's really tough out here, I got to tell you. Yeah, we live in a new abnormal society. And I'm really pleased to say that ThinkTech, you know, designed this remote thing months ago. And so when coronavirus happened, we were ready to do remote shows all day long. And that's what we're doing. And we're reaching a lot of people these days. It's great to have you. So Jack, tell us about your projects. And you can refer to slides and then Mitch and I will ask you about them. So why don't we pull up the slides and you can go through them one by one and describe what we're looking at. All right. All right. So, yeah, just as a brief intro, you know, it's kind of a segue from the whole discussion about, you know, being stuck at home and so on, you know, we're going public and seeking the public's inputs on these projects at this point. Because the timeframe, which I'm going to talk about a little bit more later on is really kind of compressed for these projects. Although the whole COVID-19 pandemic has kind of put a pause on our social lives, it hasn't put a pause on our pursuit of the whole 100% renewable energy portfolio standards. And some of these projects that I'm going to describe are tied to the retirement of existing power plants that have deadline dates. So we are going out and seeking public input on these things now, despite the fact that everybody's struggling with what's going on, because time does march on. So I apologize for that, which we could do a lot more in-person meetings like we had planned to, but we are where we are. So with the slides then, do we have, bring those up? Okay. So we'll step through these and then we'll talk about the justification for them later on, I think you guys are asking questions. But we have five proposed projects that we have bid into what Hawaiian Electric is calling the phase two renewable and storage RFPs. RFPs were issued last August. Bids were due in November. We put in these five bids. And we won't find out whether these projects are going to proceed until May. But we're starting the process now of the permitting because of that compressed timeframe that I just mentioned. So we're going to find out in May, Jack, what's going to happen in May that's going to let you proceed? We're going to find out whether or not any of our five proposals were selected through the RFP process and any of the other bidders that fit in. And there are lots of other bidders. Whoever gets selected is going to find out in May whether their proposals were accepted. Okay. We can talk more about that later. Go ahead. Yeah. Yeah. So these projects here, if they're not selected, they won't go forward. But this is what we have put together. So the first slide there was what we're calling the CEIP Battery Energy Storage System, or BESS. On the kind of sort of top right of the picture there, you can see our existing CEIP substation. And what we're proposing is to the left of that, or just west of the existing CEIP substation, is to install a 65 megawatt, six hour battery energy storage system. And on top of that, it also has a 50 megawatt half hour battery storage system. And it ties into that existing CEIP substation and ties to the grid there, 130 ATV level. So that would be a new piece of land that we're going to purchase if we're selected for this project and installed there. The second slide, view of that same project from the street, from the nearest street. As you can see, you can't really see it much. These batteries are becoming these modules that look like shipping containers basically. So that's a view from the street. And you can just see our CEIP substation there in the center of the photo. The battery is actually on the far side of it. And the point of this picture is you're really not going to be able to see this from most public places. That's the first project there. Where in the Wabu is this? Are we talking about our Kihei out in the, but we're part of a Wabu? Yeah, it's down in the southwest side, kind of down near this star advertising building actually. Okay. Down near Kasko, down in Kapolei area. So the important thing there is it's tied directly into the existing substation so that it has a very robust interconnection with the grid and can serve as what in the utility sense that we call capacity. In other words, you can call on it and it's designed to standard that is to meet certain reliability criteria. Okay. The second project, I think if we call up the third, a few slides for this next one. This one, look, you may recognize the Kahi power plant in the sort of left side of the picture there. To the right, often on the slope, up to the on the south end of the Kahi valley there is our proposed battery energy storage system. This one is quite a bit bigger. This is 135 megawatts for six hours. And again, same technology, battery storage in modularized containers. On the near end of it there you can see the step up transformer and the interconnection will tie into the existing substation power plant. And I think we have some street views of that one too. Next slide there, this is a view coming south on the highway there. Kahi power plant in the foreground, you really can't see. So this is a zoomed in view. You can just barely see underneath the power lines and the trees there. You can see some of those battery storage units on the hillside on the other side of the power plant. And then the third view is as you're passing by the Kahi power plant, if you looked to your left sharply past the power plant, you would see it in this picture, but the vegetation is blocking it. So the point there is it's not going to be much of a visual impact on the road there. So those are the two projects for Oahu to satisfy the overall capacity requirement for Oahu of 200 megawatts of storage for six hours plus 50 megawatts of storage for half an hour for a contingency user. And over on Maui, I think we have some slides available for Maui coming up. These are the big island ones, so we'll talk about those first. We have two smaller projects slated for the big island. One of them here at Keahole is a 12 megawatt one hour battery. And that is on our existing Keahole power plant site and tied directly to that existing substance user. And the next is a six megawatt one hour battery that would be installed at our Puna power plant over on the east side of the big island. And so the total capacity for the big island of 18 megawatts for one hour. And that's more of a regulating and contingency reserve requirement that we need to provide for great stability on the big island. Then on Maui, we have one project that we're proposing. This is a map here. Maui looks like we're, and I didn't include some of the graphics there, so we'll just go into the next slide. So here you can see, for those of you who are familiar with Maui, we are there on Pulehu Road right across the street, right across Pulehu Road from the central Maui landfill is a 65 acre site that Hawaiian Electric has owned now for a while. It's outlined in blue. And on that 65 acre site, we're proposing to use about 1.8 acres for what we're calling the Wayana Bess battery energy storage system. You can go to the next slide. There's another computer rendering of what it would look like. It's looking from Pulehu Road out into the former sugar fields out here. And this vehicle staging area in the foreground, that's there right now. And what we're proposing to put in is just beyond that Wayana Bess, which is a 40 megawatt four hour battery. And the interconnection is there to the right. The polls for all of these projects that we're proposing would be on the land. We're not proposing any new power lines to go outside of our properties. So what you see is pretty much what you get. Those are the five projects there. And let's go back to context check. So what we have here is five separate RFPs, five separate proposals in five separate processes, or is it all lumped up into one? Well, somewhere in the middle. So the company issued what we call the phase two RFPs. We're shooting for this 100% renewable goal in 2045. And in order to get there, we've got a constant drumbeat of renewable acquisitions. And when I say acquisitions, I mean new resources on the grid. So we completed the phase one RFPs back in 2018, and brought on a bunch of new resources, which are currently in the design and construction phase. Phase two RFP, there were three of them issued, one for Oahu, one for Mali, and one for the bigger one. And each of those RFPs solicited bids for different amounts of renewable generation with storage attached, and also separate standalone energy storage requirements. As the utility developer, what we focused on was the standalone energy storage requirements, because those are what we consider to be grid reliability requirements. And that's what we're obligated to participate in. So because of the requirements of the RFP, we had to divide up our bids into two projects on Oahu, two projects on the big island and one project on Mali. Those three RFPs, five bids. You were talking about how this gets to be decided in May, but you have to have a separation, don't you, between Hawaiian Electric as the potential developer, you as a developer, and the people who decide which of the winning projects in May. How does that work? Yeah, it's a really important process. So back in 2008, the Public Utilities Commission issued what's called the Framework for Competitive Bidding, and that serves as the baseline document that sets up the criteria that the company needs to follow, the processes that the company needs to follow in order to issue RFPs like this. And in particular, once those RFPs are issued, if the utility is going to be in those RFPs as a bidder, then it lays out the processes that are required for that. So in order to be fair to all the bidders and not to ensure that the utility doesn't get any kind of unfair advantage in the bidding process, the company developed a strict code of conduct and submitted that to the Public Utilities Commission that was approved by the PUC. We all had to read and get training on this and sign a bunch of acknowledgement documents, and so we had to follow those rules pretty carefully. And the rules basically established two teams inside the utility, one of which is the RFP team, and those are the folks that developed the requirements, they issued the RFP, they've been discussing it and getting it approved by the Public Utilities Commission. And as the bids come in, they're the ones who evaluate these proposals on the basis of the evaluation criteria that were approved by the Commission. On the other hand, there's the self-build team, and that's the team that I'm on, and we are the developers for the utility. We are not allowed to talk to the RFP team about anything related to this RFP. I have to communicate with the RFP team through the same methods that any other bidder does, I have to put in questions on the website. I didn't get any advanced notice of the RFP aside from what was made public. And so I have no, you know, the rules are set up to ensure that I don't have any sort of inside knowledge or inside track on all the evaluations. I should also say that Just one more thing I just want to mention, the whole RFP process is overseen by an independent observer that's selected by the Public Utilities Commission, and that reports to the Public Utilities Commission on the fairness of the process. Why is it why electric want to do this? Why is it why electric want to be a developer in this country? Why don't you just leave it up to, you know, the market to provide developers who would bid competitively and so forth? Why do you want to be in that? Well, I think for a couple of reasons, you know, we're in the business to be in business. And so just like any other company, we, this is our core business, we generate, transmit and distribute energy and now we want to store it in G2. So that's one reason from a business perspective, from a system operations perspective, having resources that we own and operate as opposed to resources that are managed through a power purchase agreement contract, I think provide some flexibility and advantages to the company in terms of our ability to do what we need to do to keep the lights on on a day to day basis. And also, you know, we feel like we have an obligation to to make sure that the pricing is fair, you know, and so we put in proposals that we think are very that are fair cost and in the event that other developers can't meet or beat those prices, then we can provide a really solid and reliable proposal for our customers. So you might win on some of these projects, but not others. Correct. Yeah. As a matter of fact, you know, I mentioned that the RFPs were soliciting a whole bunch of renewable energy generation. We didn't put in any bids per generation. So we're not actually even competing in the generation aspect of the RFPs. I'm revealing a little bit to my competitors out there. We have to be careful not to tell them too much. What about the technology that you're using for storage? I guess the storage technology in each of the projects you're proposing is going to be pretty much the same. That is like you're a subcontractor who provides the storage devices. It's going to be the same kind of device in each case, right? If you've settled on it as appropriate for one, I assume you've settled on it as appropriate for the others. Am I right? Yeah, correct. In this case, we did. I mean, we did consider mixing different technologies. In particular, I mentioned that on different islands, the use case for the energy storage projects is slightly different. So in some cases, it might have been it was worth considering different technologies. But in this case, we did go with the same technology for all of our bids. Well, and one other assumption, Jack, and that is in the maps you show that there are locations that are allocated for these projects. And all these locations are approximate to or included in the existing wine electric facility. I take it that the spaces, the locations, would be the same for anyone who bids. In other words, wine electric doesn't have a particular advantage because the project is taking place on its land. Anybody who bids on the project would be able to use that land. Am I right? Yeah, that's correct for any of the land that we own. So one of the requirements of the RFP process was that any sites that the self-built team would use for on a wine electric owned property would be made available to all bidders. So the Kahe site, the Waianna site on Maui, and the Puna and the Cahole sites on the big island are all currently owned by the company. And they were made available to all bidders. The CEIP one is not currently owned by Hawaiian Electric, so that would be a site that we would purchase. And that is, so that was not made available to anybody else. Mitch, your turn. I'm going to be immersing with questions. Oh, yeah. So what about the interconnecting equipment? Because, I mean, I read through the RFP and some of those interconnections are like eye-wateringly expensive, like, you know, four million dollars for a big switch, switching gear. Is that also available? Or is that not even there and people would have to, you know, install it anyway? Well, the cost of the interconnection stuff that you're talking about has to be included in each developer's bids. Included those costs in our proposals and other people have to include it in theirs as well. The interconnection locations of those substations that I showed were ties into the grid. Those were made available to all the bidders. Okay, that sounds pretty good. So if you, I guess you can't say which battery manufacturer you guys have selected yet, because that would be giving the order. Yeah, well, that's, we're not sharing that yet. Okay, all right, okay. So what kind of a life on the batteries are you expecting? I mean, we live in a hot tropical environment. I mean, the battery of choice for everybody is lithium ion batteries. You know, there's variations of that. You know, at H&I, we've done a lot of work on evaluating batteries and lithium batteries generally don't hold up like 40 or 50 years. So at what stage do you think these batteries would have to be replaced or what's kind of a lifetime are you expecting out of there? Or is that once again, competitive? Yeah, that's a really good question. No, we're proposing 20 year projects. So the design life cycle of these projects would be 20 years. We've based our proposal on that, our maintenance plan on that, and what's called a capacity maintenance agreement, which is basically an agreement with the battery manufacturer that they will maintain and supplement, if necessary, the batteries to keep the guaranteed power and energy requirements throughout the life cycle. So we don't actually put in, at the beginning of the project, we don't actually build out every one of those modules that you saw in the graphics there. We lay the foundations and we put in the electrical connections in the duct work, but over the life of the, and then at the beginning of the project, we put in enough of those modules for the first couple of years. And then, depending on the usage, the first couple of years, we would augment the project with additional batteries or replace things that fail. Okay. Well, let's remember that we're in the context of coronavirus. And I'm sure that affects or could affect your made decision process. It could also affect the construction timetable. So what do you anticipate? I mean, what was the original plan for construction timetable and a turnover date for these projects? And how, if you know, would that be affected by the coronavirus? It's affecting everything else. On the other hand, we certainly want to see renewables develop at a high rate of speed. We want to see storage should develop at a high rate of speed. So how fast can we assume this will be developed given the uncertainties of the virus? Right. Well, it's important to mention that the basis of the RFPs for at least for Oahu and for Maui is to provide replacement capacity and replacement energy to enable the retirement of the AES coal plant here on Oahu and of the Kahlui power plant on Maui in order to be able to retire those generating power plants, those resources, need to have replacements both for capacity and energy. So the timetables written into the RFPs were based on that. Well, we have guaranteed commercial operation dates for these projects that are pretty tight, especially for Oahui because the AES's power purchase expires in 2022. And so we need to, you know, the selection is going to happen in May of 2019. So when you talk about the permitting process, you have to get through permitting and then of course, you know, design and procurement and construction and testing and have everything done and working in time to make sure that it's up and running before AES power plant fires and similarly on Maui Kahlui power plant. So the timelines are tight and they are not, there's no relief in sight for that timeline. So as a result, you know, even though we have, we're all, you know, working from home and we're making changes to the way we do our initial public outreach and permitting process, take that into account. So we actually, I would just like everybody to, that's watching if you're interested in these projects or if you have questions about them, you would go to our website. We have a single website for all these projects, which is www. Hawaiianelectric.com slash self-filled projects. And that's on that website. You can find information about the projects. You can find presentations about them. You can also have an individual email address for each of the five projects. You can put on that and you can submit your comments or questions and we will get back to you on those. And we're also scheduling where we would have normally had public meetings and meetings in person. You started them, you started public meetings a couple of weeks ago and and we attended there also. But then I guess right after that coronavirus got more serious and I think you must have put them off. Yeah, so we had, we did have some neighborhood board meetings that we were going to attend. Those got canceled. We had some public meetings scheduled and we have replaced those with virtual public meetings for Oahu. Again, the details are on the website and also a virtual public meeting for Maui and the Big Island as well. We'll be transmitting a presentation either over an online platform on Oahu. We're going to use WebEx and Maui. We're going to use community television and we'll sing with Big Island and then we'll have the ability for people to email in their questions and we'll answer those questions live on the air. And we're hoping that this method is effective and that people are kind of maybe sitting around looking for something to do and they'll tune in or click on the link and join us and put in their questions and comments and I'll be there to answer them. Yeah, definitely better than some of those late night movies they've been showing at us lately. Yeah, so. Not as good as the Hawaii reruns. Sure, of course, this is right after they finish watching all the Hawaiian electric appearances on ThinkTech, right? Exactly. I've just had any kind of hint on what the community acceptance might be. I mean, just looking at what you're showing us, they look pretty innocuous as to shipping containers. It's not putting a big wind turbine in somebody's backyard or taking ag land for PV arrays. So I would expect it to be fairly easy to get this through. But any any indications that that may not be the case? Or is it still too early in the process? I think it's too early to tell. You know, the community has asked us the ones that we've interacted with so far have had a lot of really good questions about the technical aspects. Why is this needed? How much is it going to cost? When does it go in? What are the, you know, so a lot of good questions at this point. We haven't really had anybody sort of commit one way or the other about whether they wrote it or not. Yeah. It doesn't a kind of project where you expect any any opposition of this. This is all equipment, you know, essentially within the existing facility. Who would complain? Well, you know, they have people who have all kinds of different concerns. Yeah. Okay. I would think safety might be a concern. But, you know, there was no there was no indication there was any housing nearby. So that if there was some kind of an accident, it wouldn't affect the actual private citizens here. So it looks like a pretty benign project really. Well, that is the plan. What is the economics here? I mean, we're in a strange place. You know, oil we had a show earlier today is down. I don't know if it's the kind of oil that one electric is buying the, you know, that special crude that it buys the light sulfur kind. But the general is down to $10 or less per barrel right now. It's no kidding. It's actually less than $10. That's so, you know, I mean, and if that if one electric has the benefit of that, well, then, you know, then, then oil should be cheaper. And that would that would suggest way to keep on using oil. I don't know about coal, AES and the coal, I don't know. But, but at the same time, you have a problem of people who are I think this has been recognized people who don't have any money and may not pay their utility bills. This is a problem. If there's a lot of people like that in the state, and it seems like there may be, then your cash flow is impacted. At the same time, if you get approval in May or soon anyway, you're going to have to, you're going to have to come up with the capital to build these projects. And, you know, Mitch was suggesting that even the interconnect is millions. So where does that come from? Is that in house money that you would use? Is that special funding? How are you going to finance the development of all these projects? Well, like, like most developers, we would finance these projects through a mix of, you know, debt and equity. We take out some loans and also, you know, sell some stock to raise funds for our capital program. We don't finance projects individually. We finance them as a, as a package. So we would be financing these projects once they get approved, assuming that they get approved, of course, you know, in selected in May. And then we would go to the Public Utilities Commission and you see their final approval where we start spending out, you know, borrowing and spending a lot of money. Basically, the way it works in terms of cost recovery is that once the projects are built and placed into service and that they're certified, that they're working and providing value to our customers, then they get incorporated into rate base. And we base our, our electricity rates on that's one of the factors that goes into our rates. Yeah, that's the next part of my question is, okay, so you go through the whole process and you, and you construct and everything, turn it over, you know, and now it's part of the rate base and all. So question is, we know that the system will be more reliable with projects like this. We know that as just logic. But will it affect, will these projects affect the rates ultimately that the ratepayers pay, aside from the benefit of reliability, will there be any benefit to them in terms of the rates? Will it be more or less the same? Yeah, good question. And the answer is, I don't know. I think that the RFP team, that's their primary criteria. They're actually evaluating each individual bid or mixing the bids into different combinations and analyzing them as different portfolios to select the best jigsaw puzzle of renewable resources and energy storage projects to, to mitigate the costs. I think, you know, one of the things that we have to be aware of that the AES coal plant, you know, as much as people may object to use coal, it does provide some of the lowest cost energy here on Oahu. And when that gets retired, if the replacement resources are a higher price, then that will impact the rates. So the overall impact, we won't know until the RFP team has really good deliberations. And what one thing I would say, though, is that the more we, you mentioned, you know, this oil dip in price, and then it's going to bounce back at some point, and that volatility in the pricing is a cost all into itself. One of the advantages of transitioning to renewable resources that are generated locally is that I think that we'll see more price stability, whether that price stability is higher or lower, you know, remains to be seen, but, but it will be less volatile. Mitch? Yeah, I had to turn my microphone off. I'm right beside the air base. So like I had helicopters flying all over here. I'm actually pretty well out of questions. I mean, I think you gave us a very good overview what the current situation is. I mean, you're kind of constrained and, you know, getting in drilling into the details, because it's still a competitive situation. So frankly, I don't have any additional questions, except I just want to make a comment. I wish you the best on this project. That's a huge project. And only a Submariner or Submariner could probably manage this. So that's you. Oh, yeah. I know about that. It takes a special kind of management skill. You know, I appreciate managers more these days. And like, you know, you know, what managers do they plan? How many could use more planning in connection with the coronavirus? So one other thing comes to mind, though, Jack, is that, you know, where does this fit in the March to renewables? Where does it fit? You know, I mean, why do we care about these storage facilities? Why are these storage facilities important in the overall plan? Yeah. So generally speaking, you know, with renewables, you know, everybody has been saying this for years, they they're there when they're there, and they're not when they're not. And so energy storage up to this point, we've been able to manage the grids by accepting all of the, well, nearly all the renewable energy that is generated, whether it's generated at the right time or the wrong time, we've been able to dial back the firm power plants to accommodate that generation. And then that generation goes away to do, you know, whatever the sun going down or the wind stopping, then we are able to ramp up. In the meantime, you know, we've kind of reached the limit, or reaching the limit of how much we can do that. And so we're reaching the point where the renewable generation capacity is going to exceed the demand, certainly during certain times of the day. And that has to be that way in order to produce the appropriate amount of energy to fuel the islands and keep the islands running throughout the day. So in order to even that out and store that energy so that we can deliver it when our customers need it, energy storage is is is the key to making that happen. Yeah, so it saves money and it's more reliable and it's more efficient. I would like to take out of that. And how about you, Jack, you're am I right about it? You want to change my assumption? Well, I think that I don't like the jury's still out on whether it's going to be lower cost and more efficient and so on. I mean, I think we do have to take into account the fact that, you know, with a with existing technology and with our current arrangement of renewables, that energy is consumed the moment that it's generated. And we only generate as much as we consume. So there's a you know, an elegance to that and there's an efficiency. One of the one of the issues associated with energy storage is that any energy storage technology has an efficiency factor. And so for most of your battery systems, one of the reasons why battery systems are the are the current favorite for most ability scale projects anyway, is that they are highly efficient from an electrical perspective. They're about say about 85% efficient. In other words, you know, you put in 100 kilowatt hours of energy, you're going to get 85 kilowatt hours out. But you do lose those 15 kilowatt hours, about that 15% of amount of energy. So the more energy storage that you use, the more energy that you're that you're not delivering to your customers, you're losing it through storage. So the efficiency has to be carefully balanced. We picked these battery storage systems and the technologies that we did is because of that efficiency number. Because if you think about it, the second order effect of having of using a potentially a lower efficiency energy storage thing is you therefore need to build bigger renewable power plants, more wind, more PV. And the higher the efficiency of the energy storage technology that you select, the less energy you lose in that storage process, the more efficient and less generation. So efficiency saves money for sure. Yeah. So I'm also wondering, you know, you're the director of generation development. I don't know if I have that exactly right, but some some word. What's your title? Director of generation project development. Okay, so how does it fit, you know, your your regular title of this project? And the other thing I get, you must be, this is a complex project. I mean, it's really five projects that have this must be taking a fair amount, if not all of your time lately. Can you talk about that? Sure, I have. So my my division was created to be well, as the title suggests, to develop any projects for new power generation that has expanded in the last couple of years into energy storage. No, technically as a generation, but you know, we did build to our generation in the last couple of years. And we're looking forward to the opportunity if we get selected here to get into the energy storage. We have a relatively small lean team of folks that are focused on on these projects. And but when we, if we win the project, we create, you know, we create a real cross functional team throughout Hawaii Electric to make sure that we got all our eyes across all of our teas. And we put a lot of effort firing really good consultants and contractors to execute these projects. But it does take a lot of time, particularly in the permitting phase. I ran out of questions 10 minutes ago. You followed up. Well, Jack, thank you so much for coming down and telling us about this and showing us about it. I mean, it's just it's another dimension that we have to understand about what Hawaiian Electric is doing and what we need to do to move forward. And I compliment Hawaiian Electric on taking the bit this way. And actually, it's leadership. It's leadership in a business sense. So it's very good. And I hope you get at least some of these projects approved in May. And maybe when you do, you can come back and talk to us about, you know, what happened and what you see going forward at that time. Yeah. Well, thanks a lot for your time and interest. And I think with respect to the leadership role, you know, this as our former CEO would tell you, this is going to be a real team effort to get us from here to 2045. It's not going to be just the utility. Everybody's going to have to pitch in to make this work. Okay, Richard falls on you to, you know, to thank Jack and to say farewell to our viewers. You want to take the bit on that? Yeah, I'm going to do it really quick. Jack, thank you so much for your time and effort and all you're doing for us here in Hawaii. And with that, it's Aloha and we'll see you next Wednesday.