 Think Tech Hawaii. Civil engagement lives here. Welcome to Stand Energy Man here on Think Tech Hawaii, where I am the, actually the angry white male this week. That's my role here at Think Tech Hawaii. Now actually, I'm here to talk about energy and thank some people from last week when we had the Renewable Rebuild Hawaii had a great turnout. So thanks to Michael Mark Rich, Hawaiian Electric and all the folks that sponsor that great event. We had a good turnout. We had some hydrogen vehicles downstairs and had a lot of good discussion. So thanks and Mahalo to the folks that put that together. It was a great forum. And in those lines, I'm gonna start off today with a quick video. I got this video from University of California at Los Angeles and it talks about their hydrogen station. So we'll kick it off first before we get to our special guest today. Hello and welcome to the Cal State LA hydrogen station. Opened in 2014, this station is the first station in the world to provide hydrogen to retail customers. A brainchild of Dr. James Ataro, this station was built to educate and encourage new strategies for alternative power sources. Thanks to the donors at California Air Resources Board and other donors, the hydrogen station is at an advantageous location close to downtown Los Angeles and the 710 and 10 Highlands. At the Cal State LA hydrogen station, we produce our own hydrogen. The process of creating hydrogen starts with city water, which is demineralized and sent to the electrolyzer. At the electrolyzer, the purified water mixes with an electrolyte. Then electricity is run through the solution to separate hydrogen and oxygen from H2O. The hydrogen is kept and stored for fueling and the oxygen is released into the atmosphere. The hydrogen is then sent to a low-pressure compressor, which increases the pressure of the hydrogen from the initial pressure of 150 psi, meaning pounds per square inch to 6,200 psi. For reference, the pressure in a car tire is around 32 psi. For conversions, 1 bar is equal to 14.5 psi, which is equal to 0.1 megapascals. After hydrogen is compressed, it is sent to the storage tanks to be stored for later use. There are three storage tanks which hold 20 kilograms in each tank, so in total, 60 kilograms of hydrogen can be stored on site. Once these tanks are full, the electrolyzer shuts off and waits for a fueling event. A typical hydrogen vehicle stores hydrogen at 10,000 psi, which is a higher pressure than the hydrogen in the storage tanks. Hydrogen at higher pressures allows consumers to feel more in their tank. Therefore, a second set of compressors are required, which are called hydropaths, which increase hydrogen pressure from 6,200 psi to roughly 10,000 psi. After the hydrogen gas is compressed, it heats up, so hydrogen goes through a chiller in order to cool down, which also allows the hydrogen to be fueled at a faster rate without overheating the car tanks. A hydrogen dispenser is designed to be similar to CNG fueling and easier for the consumers. The dispenser nozzle is equipped with infrared technology, which communicates information such as the vehicle tank temperatures and pressures, which allow the system to monitor and find fueling rate or stop fueling if there are any problems. Other precautions such as leak sensors, flame detectors, and leak tests are taken during fueling, making fueling completely safe. We hope that after this virtual tour of the station, you have learned a little more about the Cal State LA hydrogen station and that we will see you soon. If you'd like to learn more about the station, please visit our website. Hey, thanks to Dr. Bleckman and the folks from Cal State LA for putting that video together. I thought it was really great. It showed the inner workings of the station and just so happened the first day they actually sold any hydrogen from that station. I happened to be in California and visiting and the price hasn't changed in two years by the way. It was still $15 a kilogram then and that's actually quite a bit. That would be the equivalent to about $7.50 a gallon for gas, but we find that most of the cost required is transportation. So they kind of, I don't want to say they're price fixing, but because they're hydrogen, they're trying to keep the hydrogen price fairly standard across all the different stations in California. They kind of set the price at $15 a kilogram, but that electrolysis station actually can produce it relatively inexpensively if they have a nice big PV array, it'd be even better. So anyway, thanks to the Cal University of California folks for letting us use that video and we'll show it again from time to time. Now we're going to get into what we're really here for and that's to talk about GEM and that's not like in Jewelry GEM. I know that it'd be fun if we could get that kind of energy into the show, but no, the GEM program that Department of Business Economic Development Tourism started about 2014-ish to try and encourage people to put more solar PV and other energy, renewable energy equipment on their property, in their businesses and things like that. At least that was the dream as they started, but I'm not an expert in it, so we brought an expert in and I'd like to introduce Guanyama Motolao. Thanks for being here and you're the GEM expert now and you're the GEM expert in the state. So thanks for being here and helping me explain to people what this program does, what it's out there for and how we can start to get more people involved in it. Thank you, Stan. Thanks for having me. Just to give you a little bit of background on myself before I get into that. I am a recovering banker. I've been in banking for 30 years, commercial banking, primarily in the commercial lending sector. I joined a community development financial institution a few years ago, started doing low income housing tax credit financing. We expanded to SPA Small Business Lending and then we delved into the energy lending side and that's where I started getting my passion in doing the energy lending. So I joined the authority, Hawaii Green Infrastructure Authority in 2016. The program was launched, constituted in 2014 with the issuance of the $150 million bond. It got off to a slow start, admittedly it got off to a slow start. I took this position as an executive director in January of 2017 last year. I'm the fourth executive director for the program. It's quite a bit of a turnover. It's quite a bit of a turnover. It's been a tough ride for a number of reasons. You're right. The purpose of it was to facilitate solar PV and other clean energy infrastructure to the general public. But with a full focus, 51% of it on the underserved defined as low moderate income households, renters and non-profits. Can you kind of give the audience an idea of what advantage there is to a program like GEM compared to the legislature giving revenue out of their budget to do this stuff? How does a bond work? It's an investment tool for people to invest in outside for their retirement of funds or whatever. A lot of, I mean, I have bonds that I have in a trust for my dad's estate and things like that. So kind of explain the idea of bonds and how that impacts the state or saves the state from having to tap into revenue. Sure. So what D-Bid did, so this this bill went through the legislature in 2013 and D-Bid was very innovative and forward looking in taking a rate reduction bond that utilities typically will use for stranded assets and they use that same financing mechanism, the bond and instead of using it to rescue stranded assets, they used it to capitalize a clean energy loan fund and that in itself was very innovative, very forward looking, D-Bid won recognition nationally and internationally because of that. That was the first that was done. The really neat thing about the bond and the green infrastructure fee that was put on the utility is because it's a non-bipassable fee on the utility bill, it enabled the state to get the best rate possible. So the bond rate is it's 15 years and the rate is 2.99 percent and it's because of the reduction of the risk because of the non-bipassable green infrastructure fee that the state was able to get such a good financing structure. So for the folks that are investing and putting their money in on the money input side, is it a tax-free bond like a lot of the other state bond systems or no? You know I'm not sure if it's tax-free, I do know though from a risk perspective as an investor it's the low risk and that's why the return is low but the risk is low. So we have this bond, 150 million that's a lot of that's a lot of money to work with and it's focused on helping people like initially when solar was kind of ramping up that's what it was intended to use mostly for solar to ramp up and then the solar market kind of went a little bit flat because of HECO kind of reaching a max. I mean they can only take so much that's more the side I'm familiar with because you know I'm familiar with their duck curve and I know how much renewable is getting pushed into them and although a lot of our statistics the renewables are on the neighbor islands, Oahu has got a lot of solar. I mean if you you fly over in an airplane you get a real eye full of how many roofs actually have solar on them and it's quite a few and for all that HECO has a balancing a grid balancing problem so but so they have to slow down a little bit and the market kind of slowed down but ideally we'd like to keep that market going and we'd like to keep gem involved in that and financing that so what does it look like in terms of maybe including other renewable energies wind or small wind or things like that in the GEMS program is that even possible? So right now so the program is overseen by the board of the Hawaii Green Infrastructure Authority and then also by the PUC so we're regulated by the PUC. Okay so you're a PUC right. So whenever we want to finance something whenever we want to come up with a new loan product we need to go to the PUC for approval okay and so right so we it started as solar PV we expanded to commercial energy efficiency we recently expanded to a residential energy efficiency for for solar hot water and heat pumps okay while we're not approved right now to do anything other than those things we would need to get we would we if there was a well we would go to the PUC and ask for approval. Okay and about how long does it take for that process a PUC approval process for these is it very or is it pretty consistent? Right so good question so on when the PUC approved our financing loan program they included a list of what they called approved technology that would be solar PV commercial energy efficiency battery storage if it's on the approved list we can then go back to the PUC and ask for approval for specific loan programs or products and they have a 15-day decision-making process. Okay so that's pretty quick if it's already on the list. Right. So how do we get things on the list that's a whole different process. So if it's not on the list then it would be a longer process it could be a 45-day process or it could be longer depending on what it is. For example we are approved to finance the consumer on community solar when that is launched. Okay. When there's a solar from there we're not approved to finance the developer in a subscription model. So if there was a developer that needed assistance in financing we would have to go to the PUC and get approval it you know it will of course take a little bit longer. Okay who would normally start that process in terms of getting something on the list at the PUC is that something your office would do or the governor's office would do or the legislature would do or the or you know an individual could say hey I think this ought to be on the list and can an individual start it. Right so it would come to our office and it could be through an individual or company that has a project that meets financing. It could be through the governor's office and then that which would go through the legislature so any of the above. Okay okay I know you brought some slides and I don't know you want to jump into those. Hey Robert if we can pull up the first slide. So we just launched on June 1st our green energy money saver on-bill program and for those of you who have been involved in Hawaii's on-bill program you'll know that this has been a very long journey it started in 2011 and fortunately the energy industry is a very resilient group so the GEMS on-bill program was approved and we're very excited about that. We're super excited about the fact that this mechanism can address credit barriers especially to the low-income population. As you can see on the slide those are some of the features of the program and as almost half of our households in Hawaii rent we designed this on-bill program to minimize landlord objections to provide split incentives for landlords to install and own a solar system on behalf of their tenants while enabling the tenants to enjoy immediate day one savings on the utility bills. Yeah that's kind of neat because you have a situation too where you have people who are renting and then landlords who have maybe get the benefit and the tenants know but it's a kind of a way to share it. It's a win-win. To share the benefit. Right. Okay we've got some more slides coming up but I think we're going to take a quick break here and we'll be back with Gwenda to look at the rest of sides as she can explain the rest of the GEMS program. Hi I'm Dave Stevens the host of Cyber Underground every Friday here at 1pm on thinktechkawaii.com and then every episode is uploaded to the Cyber Underground. That library of shows that you can see of mine on youtube.com and I hope you'll join us here every Friday. We have some topical discussions about why security matters and what could scare the absolute bejesus out of you if you just try to watch my show all the way through. Hope to see you next time on Cyber Underground. Stay safe. Hi I'm Pete McGinnis-Mark and every Monday at one o'clock I'm the host of thinktechkawaii's research in Monart and at that program we bring to you a whole range of new scientific results from the university ranging from everything from exploring the solar system to looking at the earth from space going underwater talking about earthquakes and volcanoes and other things which have a direct relevance not only to Hawaii but also to our economy. So please try and join me one o'clock on a Monday afternoon to thinktechkawaii's research in Monart and see you then. Hey welcome back to stand the energy man on mine and Gwen's lunch hour because we're both state employees so we have to do this on our lunch hour otherwise we get have to take vacation time so thanks for being here Gwen and and we're talking gem we're not talking gems like diamonds and rubies we're talking gem like the real way to get financed for your renewable energy program so I'll let you jump back into your slides Gwen and talk about how the program works great so qualifying for the on-bill green energy money saver on the program is a simple two-step process the first process would be to you know let me step back we're not doing traditional underwriting with gems with the on-bill program we're doing non-traditional underwriting so we are no longer pulling credit reports and that's how we eliminate credit barriers we're simply sending a request to either Hiko Miko Helco and asking if there was any disconnect notice within the last 12 months if the answer is no then the applicant is eligible to apply for the program homeowners renters small businesses and nonprofits on all-rate schedules except f which is street lighting may qualify for this program okay next slide the second step is to analyze the energy improvements such as a solar hot water heater or solar PV program system that's being requested the contractor must be a gem's approved contractor and if the energy improvement is a solar hot water heater the contractor must also be a Hawaii energy clean energy ally the on-bill program requires the proposed improvements to generate an estimated minimum 10 utility savings after installation the savings must include the gem's program charge which will appear on the applicant's utility bill to repay the fund's advance to install the solar system the reason why this is requirement is very important is again we're not doing traditional financing and underwriting and we're not analyzing the credit worthiness of the applicant we're researching if the applicant has paid their utility bill for the last 12 months if yes and with the minimum 10 percent savings this the future utility bills is smaller than what they have paid in the past then we are confident that the applicant should be able to continue to make the utility bill payments in the future that's a good good process so about how many of these contractors are already approved to do installs is it a good number i mean folks have a good a good selection so yeah so we have 14 on our approved list we're looking for more we had never focused on the solar hot water heating before because this was just an approved technology so we would like to get more solar hot water heating yeah solar contractors out there they're doing solar hot water and so jump on that list and get some more customers that'd be great okay well the next slide Robert so a number of technologies were approved for gems financing for both the residential and the commercial installations the loan term is based on the estimated useful life of the energy energy improvement thus allowing us to stretch out the repayment longer to allow for more immediate savings additionally we will be working closely with the hawaii energy with hawaii energy on energy efficiency installations and will be offering the applicant an option to either use their hawaii energy rebates to decrease the cost of the energy improvement or to buy down the interest rate okay so yeah for a lot of folks a lot when it comes to the energy efficiency the hawaii energy folks there's a there's like $50 here $100 there when it comes to installing or purchasing certain equipment so they can actually instead of taking that as a cash thing they can apply it towards their payments and reduce their bills right for example if it's a solar hot water heater and the cost is $6,500 the rebate is $500 they could either use it to lower the cost to $6,000 or let us use it as part of a interest rate buy down and the reason we're doing that is not because we're trying to do an interest rate buy down necessarily we are but what we're trying to do is i would like to invite private capital because we like to leverage our funds public funds with private funds and this is a non-traditional underwriting so what i'm trying to do is build a loan loss reserve so that when we invite private capital in there are risk mitigators to make them feel more comfortable because again we're not pulling credit reports we're not doing any of that underwriting they have to get used to that this is non-traditional okay but it's still a relatively low low risk investment for investors also okay i think you have one more slide yeah so this is an example of a family of four on a wahu who will be installing a solar hot water heater heater using the on-bill program their pre retrofit energy bill is $218 a month they will be using their hawaii energy rebate to buy down their interest rate to 4.5 fixed for 20 years their post insulation energy bill is estimated to be $140 and their gems program charge which is being used to repay the cost of the solar hot water heater is estimated to be $43 a month so their total post retrofit energy bill is estimated to be $183 per month which is a $35 per month savings or 16.2% savings so again we're looking for a minimum 10% savings to qualify this will definitely qualify at 16.2% and in addition to the estimated immediate projected utility bill savings as the homeowner they will also benefit from the solar tax credits for an estimated total benefits in excess of $12,000 so this is like the gift that keeps on giving so that's over how many years again the $12,600 that's what's the average loan so it's for 20 years because that's the estimated use for life of the system so you drop your utility bill by it looks like 20, 30, 35 bucks and that keeps going forward I mean no matter even if the utilities go up the cost stays low because they're reducing either reducing their consumption right yeah so and this is um and this and they're not out of pocket from the from the very beginning day one no money down up front no money down they it's a $6,500 installation which they reap over $12,000 in benefits over the life of the system and so when they install the system uh is there like something with the contractor where there's a warranty on the system and right we require warranties um workmanship warranty and manufacturer warranties all right and those warranties are standard and how for how long um so for solar pv it's 20 year warranty so matches with the loan then right okay that's perfect yes that's perfect and but we encourage the um the homeowner to you know do their due diligence so look at the approved list but do they do the diligence on which contractor that they want okay well that's really good and what are some of the we've kind of taken a walk through the program what's the future look like for um maybe expanding your program expanding the um the things on the list that we can use the gems program to fund uh and maybe even expanding to other areas uh or doing this in other areas like um uh maybe agriculture or something like that similar model um you know what's what is the future so i'm going to take off my executive director hat now and i'm going to talk as quen as a banker as a recovering banker um so i think the purpose of the gems funds certainly is to help the underserved who has not been able to adopt solar or clean energy in the past um that's certainly a purpose of the gems funds i also think that this is just my personal opinion that um we should be using our financing to jumpstart new technology that is not quite accepted by the conventional lenders you know once the the gems is not for everyone if they can get a loan from a bank or credit union they should get a loan from bank of credit we're there for those who are struggling to get a lot of time right both on the commercial and the the consumer side similarly um you know i remember back in 2011 um when uh solar pv financing was a new thing to lenders and so uh i was at the cdfi at that time and we used our funds to create a loan loss reserve fund to help mitigate the risks for banks and credit unions and then they started getting comfortable doing solar pv lending and then now they do their own solar pv lending so similarly i personally believe that part of our funds should be used to jumpstart new technologies that people aren't quite comfortable with until we can get the private capital markets comfortable with that financing so that would be other technologies outside of solar pv so could it be applied to some new businesses that are using new technologies i mean i know we're getting way outside the scope of just gem itself but i mean is this technique something that the rest of the state could look at because it does i mean whenever you starting to something new and i i've run into this with the hydrogen stuff everybody wants the state to dump a bunch of money into it to get it kick started to get to overcome that that first under shan get things moving the state of california in in my area in hydrogen they put a hundred million dollars a year every year into infrastructure and hawaii can't do that we just can't do it so there's a program like gems um is that something that we should be looking at maybe like i say maybe in the agriculture sector or other tech sectors where we can be applying tech to improve production or and grow our own food things like that are there programs you see maybe coming up in parallel with gem in the department of ag or things yeah i'm not too familiar with what the department of ag is doing but i will say that to me the underlying mechanism under what gems should be doing could be doing if we need to finance things that has a repayment mechanism ability to repay and the part of that is it gets repaid and that same dollar gets reinvested in another project and another project and another project um that's how it becomes more sustainable for the state and everybody else as an example the legislature uh passed a bill this past uh session i think it's on the governor's desk for signature to convert 50 million of the gems fund into an energy efficiency revolving loan fund for state agencies and so that allows similarly allows the state agencies to borrow to do their energy efficiency retrofits they are going to reduce the consumption their savings on the utility bill will repay our loan they pay us back we loan it out to another state agency to do more energy retrofit so similarly if we can look for situations like that where it can be reused and reinvested that same dollar so that every year the legislature doesn't have to come up with new money for that i think that would be ideal great well it seems like we got the right executive director in there for now and uh and i wish you good luck with the program and anything that we can do to help and you want to come back on the show and uh and talk about changes and improvements and advertise for more contractors or whatever you're welcome to come back yeah we're right up against our 30 minutes here and i want to thank you for coming by thank you so much appreciate it go d-bed so thanks for being with us on stand the energy man this week it was an all d-bed show and uh we'll have you back next week and talk about some more energy stuff aloha