 us today. This is Kondo Insider and I'm Jane Sugimura. I'm your co-host for this show. This is the show for condominium residents and board members and people who deal with condos. We deal with condo issues and we have a really interesting topic today, new technology, which I'm sure all of you will be interested in. I know I live in a high rise and we've been trying for years to get PV coverage and we've been told we can't do it because the building is too dense and now there seems to be a solution for that and our my guest today his name is Stephen Walecki and he is an independent PV consultant and Steve tell us about yourself. Thank you. Well first of all thank you for having me on the show. I am originally from Milwaukee Wisconsin kind of similar to Hawaii in many ways very friendly people weather's a little different but the people seems to be pretty pretty similar. I've lived in Hilo and installed solar over on the Big Island really love Hilo. I've worked for Hawaii Energy here in Honolulu for a year and recently been working for a contractor and now I am doing some independent consulting. I've also I would say one of the most interesting things about me sets me apart from people as I sailed across the Pacific on a 30-foot sailboat. Wow. So when it comes to renewable energy I have lived off of solar panels for five years. I've lived off of batteries. I've had to catch my reign so I'm very near and dear to me renewable energy and off-grid living and all these things I've actually done it lived lived it have a little bit of insight into that kind of kind of lifestyle and we're trying to ultimately get Hawaii to ultimately function like a sailboat. Yeah. Well you know the state of Hawaii has established a deadline to be in energy independent. I think it's 90 what is it. 1945 no 20. 2045 right 2045 and 2035 for the university so the university has to be there 10 years before. And so you're going to be talking today about building integrated photovoltaic BIPV. BIPV. What is it. Okay so BIPV is something most people know about yet but it stands for building integrated photovoltaic. Voltaics. Okay. The main gist of it is we're taking normal parts of your building and turning it into solar. Like what parts of your building are you talking about. So we can take primarily what the technology is doing. We're taking glass generally windows is the the biggest thing that BIPV is. We can take your windows and replace windows with solar. Solar producing transparent windows. It looks like a window. You can see through it but it generates electricity. We also can use the same technology for lanai railings and lanai glass where before you just had maybe some bars and some lanai glass now we can put actual solar panels there that will also be transparent but they generate electricity. And the other final thing that is really out there right now is floor tiles. So if you have a courtyard out a pool deck or a courtyard we can actually put solar panel floor tiles that generate electricity as well. With the one with the floor panels can you walk on it. Yes the floor tiles are actually rated for their non skid rating is all handicapped approved. So it actually has a little bit of grit to it has a little bit of rough bump to it. You can actually walk with crutches on it. It passes national tests for that and it is a hard it's glass and absolutely it's there's there's a couple colleges so far in the U.S. that have it implemented so far in Hawaii. It hasn't been it hasn't been done yet. So we're trying we're really excited to get it out here and together. But are there any projects who have initiated the work to to install this type of product in Hawaii. Yes yes there are. We're working with a couple developers right now. There's the whole idea of retrofitting a building. It can be a bit clumsy and we're trying to do with new construction is really where this comes into comes into play. For a developer he can he can opt to use traditional floor tile or he can use a solar BIPV floor tile. So we actually have put together a proposal for for a new developer where we have actually shown that it's far less expensive to put in our solar floor tiles as opposed to the original sunk cost of regular floor tiles. So those should be rolling out fourth quarter this year. That sounds pretty exciting. But you know there's something in Hawaii with high rises. You know what seems to be a big item. The windows have to be replaced. You know the the sides are you know failing so that the rain is coming in. So and that is a big ticket item when you have to replace the windows in a high rise. Can this product be used to replace the windows that now have to you have to replace in a high rise. Absolutely that's actually the most exciting part of this building integrated foldable tax. Instead of going through the whole nightmare of changing or removing the glass and resealing it to stop these water leaks and put back your old glass is probably 40 years old which is kind of a standard age around here for glass. You can start fresh with a solar window. You'll get brand new frames around the whole thing. Tax credits actually over 100% of it is going to be covered in tax benefits. Let me mention how how much does all this cost. I mean is it more expensive than replacing it with regular glass. Yes so that's a great question and that's that's the biggest question. So it's two two answers. One is it's more expensive and it's less expensive. So the initial cost is usually one and a half to two times the traditional glass. However with the tax credits that are currently in place 30% is the federal tax credit. 35% is the state tax credit that comes up to 65% of the system is actually covered in solar tax credits. Except that condos are non-profits so they can't take the tax credits. So how do they get take advantage of the fact that tax credits are available. Right and this is a standard situation for condos and for associations. PPAs so a power purchase agreement is the standard way of letting associations access this technology and take advantage and monetize these tax benefits but through a third party. So basically a third party investor will come in and own the product and then sell you power. And so this has been going on in Hawaii for quite a while. Putting solar panels on the roof if you can't afford it you can still put solar panels on the roof another company will own it and they'll just sell you discounted power. So now you get solar and maybe save a penny or two on your kilowatt hours from from the utility. And what's the buyback what's the usual buyback period for for this if it were if you were to allow an investor to come in and pay for the glass to be put in and then basically lease it from them what is the buyback period. Well from there's in the PPA in the power purchase agreement there's buyout times and different times in the contract that you can purchase the the association can actually buy out the the whole system. The depreciation schedule out there right now is it's going to take five years for this asset to actually be depreciated. So we usually don't see the association's wanting to purchase this until after those depreciation benefits are taken out as well. So those depreciation benefits on top here 65 percent then the rest of it is actually this depreciation will come over 100 percent. So when investor will come in he'll put his money in say a million dollars put a million dollars into a glass project and he'll come out with a million and seventy thousand actually come out it's about seventy seven seventy thousand dollars above his initial investment. For the association of course the investor wants to make a return on his money so he can actually if you were the owner of the building and had all the tax liabilities yourself the payback could be under two years. We model paybacks from two to five years in those models where where you're the tax owner where you're the actual where you see your tax liability but if you're the association of course the owner the investor is going to shave a little bit of profit for himself and you can expect under ten year payback periods for the associations however we're still working on ways to get a little hui going within the association so if you want to invest your money into this little LLC then you can get a piece of those tax credits yourself. You're talking about the unit owners who live in that building could then be part of the hui invest their money in the hui which will be the owner of the glass. Absolutely. And and and get the benefits of the tax credit and the payback. Yes and we we think that's better than having having a mainlander investor. It would be way more preferable to have the actual tenant owners. Everyone say okay here's five thousand dollars investing and they're going to pull out a little bit over five thousand dollars in tax credits over the next five years. This would be the best thing for everyone. Everyone is tied to it. They have their new glass. They're getting the tax credits themselves and it's not mainland. I think that's and it's and it's part of your services as a consultant would you be arranging for investors you know because with with the association I mean they don't have the expertise or the wherewithal to go out and find these investors so would you the consultant or the contractor be the entity or the person who would find these investors. Yes so that's something else that we bring to the table we have high net worth individuals that have very large tax appetites that are trying to figure out what to do with their money right if they don't deploy this money they have to pay taxes and instead of paying taxes they can invest in renewable energy and actually come out with a bit of a minor but it's still a return and that's not even including the energy sales or the final buyout just the tax play alone is is really quite attractive. And are there people out there who would be willing to do this? Oh absolutely absolutely and I there's there's people Wall Street there's plenty of people with with tax appetites out there large banks large insurance companies that are looking for long-term investments and these are safe long-term investments for them tax investments. And so that they would come in and they would be willing to come and finance these projects in Hawaii for a condominium who wanted to put in the product. Absolutely so for 100 financing we can actually have a third party come in pay for the whole project and invest in the project put in a whole new building envelope for you and the payments the association will make will be lower than what they would be saving to try to do this project in the future. A lot of these HOAs and associations are trying to save money they might assess a new fee for the for the units to do these projects. Well by having a third party come in and doing it right now and taking advantage of these tax credits while they're here the association doesn't even need to raise their rates. In fact with all the energy savings they're going to get out of the the windows it's really a no-brainer. It's actually such a no-brainer that people still find it hard to believe. Okay so so that means that you know that the that the project if an association were to decide that they want to install this project uh the the contractor or you as a consultant would be able to arrange for the financing. That's right. And that the payback would probably be about 10 years or less. Yeah it can be under 10 years. And then and then it would belong to the association. That's right and those are all terms of of the people the power purchase agreement how that it is all negotiable everything's negotiable. If you wanted to as the association maybe had some reserves and said hey how about we put some money into this and we'll kind of buy down this power purchase agreement maybe we can do that. You can kind of depending on every building is different. Every building has different financial situations. Some people want a long fixed rate. Some people want a low a low beginning rate and a variable rate that's going to save them more money now so they can deploy to do other projects. It really depends on every every building is a little bit different but the money is there and there are investors that want to do it. The technology is there. You don't need to have a special assessment. You don't need to save up all this money and delay this project five six years down the road. Right now is the window of opportunity. Pardon the pun but we have the tax credits right now. 30 percent in the federal tax credits right now are going to be going down to 22 percent by 2020. So that's an eight percent reduction just in the next two years and these projects take some time to get actually going to do a whole building envelope like this. This is not a quick feel so the permits the ordering everything it really needs to be starting now if you want to get in on these really amazing tax incentives. There's also the possibility of the hawaii state tax credit vanishing at some point as well and a lot of people after the net metering closed they felt oh why didn't I why didn't I do that. Oh my gosh the neighbor across the street has solar on his roof and I can't have it anymore. And this is going to be a similar situation. This is the window of time to actually do these projects and get all these large financial incentives. Okay well we're going to take a break now for for about a minute and then we're going to come back and you're going to tell us how these associations can save money. Aloha Howard Wigg. I am the proud host of cold green think tecawaii. I appear every other Monday at three in the afternoon. Do not tune in in the morning. My topic is energy efficiency. It sounds dry as heck but it's not. We're paying five billion dollars a year for imported oil. My job is to shave that shave that shave that down in homes and buildings while delivering better comfort better light better air conditioning better everything. So if you're interested in your future you'd better tune in to me three o'clock every other Monday cold green Aloha and thank you very much. Thank you. Welcome back. This is James Sugimura co-host of condo insider and I'm talking today with Steven Walicky who is an independent PV consultant here. We're talking about BIPV. BIPV. BIPV. And so it's why why should we care? Why should we care about BIPV? Okay well as Hawaii we are we we're mandated we have to go 100% renewable by 2045 and most people don't even believe that's possible just because the current technology the bureaucracy behind everything and people are really how's this going to happen? It's doable with the implementation of batteries. Whenever we talk about renewable energy we always come to the same energy storage problem. So really every building out there has the potential to be off the grid. It's really they have no choice because now you can't be on the grid right? That's right so now the net metering is now cut down. The only way we can do this is the consumer self-supply. So at this point we need batteries and the batteries are out there. There are different batteries there's batteries of 20 year warranties that are non-flammable that are actually out there with financing as well. There's actually quite a lot of solutions out there that people just don't believe are out there but they are. And so when you put BIPV which is a project you probably need to do. You probably need to do your windows. When you do those windows it's a great opportunity to also buy batteries. So the government will allow you to add so many batteries with the solar at the same time. As part of the tax credit? As all included in the balance of the system. So if you were to go out and buy a battery and put it in your backyard and that's gonna you already have a solar system and now you're gonna go ahead and put in a battery. You're gonna pay full price on that there's no tax credits. However if you install a solar system on your roof and put in the battery at the same time now the battery is included in that whole system. So that's the same thing with the building envelope and the BIPV. When you do the windows you're not only doing windows I we highly recommend to put the maximize your battery efficiency at the same time. Get as much battery as you can when you put in any solar because this is the future you need batteries. So if you put if you do a high rise and you're you're replacing all of the glass in the the windows where would the batteries be kept? So we can keep there's the parking garage seems to be the best place. We can also go into electrical rooms but really parking garages seem like the and how large are we talking about how large are these batteries? Well on a you know on a high rise building downtown here we're looking at I would say anywhere from two to four of these batteries which are about 40 foot containers. We're very large. However the very large building is a very large power consumption needs. Part of this is I'm sure you've heard of demand charges. Demand charges are put in by the utility to say hey last year you you had this much this was your worst moment last year was all the way up here. You might be down here for the rest of year but then in one moment you hit here all the pumps turn on all the things aligned and you had a maintenance guy that turned on every pump and everything just went poof. The utility says we have to be prepared for that amount of usage at any given moment if we're not prepared the whole grid will crash. So the demand charges are there to keep their grid up if instead of that by putting in batteries you're actually pulling from the batteries first before going to the grid. Now the end goal is to be off the grid but it is hard for a downtown building ultimately to do that. There are other technologies that we can implement to to basically get you off of the traditional utility. So the glass PV that that you're talking about or those or the PV that's in the the tiles would not only create energy to to operate the ongoing energy load with the building right but you could store excess yes and that's what the batteries are for. That's right. So generally that means if the power goes out if there's a storm that means that the building still has power. That's right. So you still can have the higher the building the harder it is. The lower the building the easier it is. If we have a factory we can we can actually put all roof solar to some windows and put a battery and actually get you pretty close to off-grid. The the other the piece of the puzzle that a lot of people are talking about right now it's really exciting stuff is co-gen plants. So the co-gen plant the solar windows and we'll still put traditional solar on the roof put out the the solar floor tiles. This whole package putting together is really you're going to is really going to get you to that point where you can unplug from the utility. The difference is that you're going to a different utility. You're not really going off-grid because you're going from perhaps these co-gens are using natural gas. So you're going from one utility to now the gas utility. However you're controlling your own power and you don't have these demand charges. And the co-gen plant is so efficient it's really amazing. The gas is pumped into the building and it turns like a generator like your diesel generators that most people have these big backup generators. It runs like that and the exhaust comes off and the exhaust actually heats up water. So instead of a power plant far far away where you're pushing electrons over these wires far far and then all this energy to move electricity you lose a lot of energy. But when you actually move the gas to the building and burn right there you get all the energy right there. You get the heat captured and put that into your hot water maybe into your hot into your pool. The anus generating electricity and in general these co-gen plants are actually more efficient than your boilers that you're using. So instead of just boiling water you're actually getting electricity at the same time. So what we do is we try to reduce the load in the building. First we can do LED lighting, variable frequency drives. There's heat pumps or we go into this co-gen plant at the end but the idea is we reduce the load then we produce as much as we can with the building envelope. And then we come in at the end and we can put in a co-gen plant to basically take care of the remaining load. So that you can store the energy for use later. So you can store the you can store the energy for use later and ultimately get to a point where you're energy independent or off the traditional utility and the goal is that we can actually get these buildings smart enough and reduce the amount of energy that you can actually live off your batteries. You're going to have enough energy produced for self-consumption and hopefully you have extra that you can put in. Now it is harder on higher buildings it is harder on a higher building but if you say have a four-story building that's a lot of roof space and a lot of windows we can there's a good chance we can actually do it there. The extra energy that's produced throughout the day that you're not using that goes into the battery and we sort of store that out for night. Okay now now comes the million dollar question. Yeah. How much does it save? What are the savings to the to the association? Of course of course. That's about that's the bottom line question. Yeah the the real deal is the more skin in the game you have the more you save. So in these situations where you own it yourself you really can save quite a bit. In one example we're looking at taking the building is $50,000 a year in electrical costs and we're looking at actually putting in a battery system and completely taking them off-grid completely. So they're going to say $50,000 a year. The thing will actually pay off in about two years and after that they're going to be saving $50,000 a year. Now that's that's a that's more of a factory setting. On a I would say on a regular base association think about saving about 60%. You're going to you're going to save on your thermal load from your air conditioner. If you have a central chiller we're going to reduce your chiller load. We're going to produce power as well. With one example say for example say you have a million dollar a year electrical load is pretty large but if you have a million dollars a year we can actually get you down closer to like 400,000 in your electrical bill. If you're still tied to the grid. Okay and that's in cost saving. What about maintenance? What's the system going to cost to maintain? Well this is the beautiful thing for association. Since you don't own it as association because we have a PPA we have a third party owning it and they're selling you the power. It's actually in their best interest to keep it clean. So this is one of the best lurking variables here is that the PPA provider the owner of the windows will actually hire glass cleaners to come and clean the glass for you. So how often does this have to be done? Well we say two times a year. We say two times a year but if the production we can remotely monitor what's going on and if we notice that is it's the production is dropping a good chance that it needs to be cleaned. So you're talking about maybe a 30-story building with all these windows replaced the the the the lessor the the entity that owns the windows while it's being financed by the association will have to actually come out and maintain it. This is a beautiful thing for associations because they don't have the risk they don't have to worry about it. It's actually the third party is owning it. But then after the the 10-year period is is is completed they will have to maintain it. Yes and so you can after the buyout after you would buy out the system then you can get into an O&M agreement with with us with other companies and you can actually have a maintenance agreement or perhaps even handle it with internally. But you you can get an O&M agreement usually around one to three percent of the actual cost per year you throw into an O&M agreement which is maintenance operating and maintenance. And so that would be like a an annual contract that that services would be provided. Sure and at that point you've already you've already bought out the system and now you're actually saving all this energy and you it's unbelievable when you look at these things over 20 years 30 years when you actually when you actually take this not these numbers and and you'll it's into millions and millions and millions of dollars of savings. And that's just in the energy savings. You also right away when you do this you you are familiar with the cap rate. You've basically improved and increased the value of this building immediately. You've dropped your operating expenses and you're still the same cap rate so therefore you just increased the value of the building. So now not only are you saving energy you just created more value in your building which means you can loan against your building more and move your money around even further. It's really there's really no setbacks to it. There's really no drawbacks. Regarding the system once it's installed how long does it last? There's different manufacturers of different glass. Typical warranty that I've seen out there with one of ours that we work with is five-year warranty and a 10-year production warranty. So most solar products have two types of warranties. One of them is your all-in solar manufacturer warranty and the other one is a output production warranty. So solar degrades over time. So there's two warranties. So far we've seen five and ten five-year warranty for just manufacturer defects and and then ten years would be it's guaranteed to be at 80 percent of what it was originally producing. Wow well geez you know we're running out of time and that that really went fast. It did go fast. So you may have to come back and update us and give us more information about you know where this technology is going. But thank you to the viewers for tuning in and next week Thursday at three three o'clock please join us for another episode of Condo Insider. Thank you very much. Thank you very much for having me. I appreciate it. Thank you for being with us. More than a third of Hawaii's population live in some form of association and our show is all about educating board members and owners about the responsibilities and obligations and providing solutions for a great association. You can watch me live on Thursdays 3 p.m. to 4 p.m. each week. Aloha.