 Okay, welcome back to Amino Marco and me on Monday about energy in Hawaii here on ThinkTech, and we are delighted to have on the phone both of them, Amino Morita, former chair of the PUC, and now the manager or the proprietor of Energy Dynamics, which is an energy consulting and blog, and Marco Mangelsdorf, who is the president of Provision Solar, and a longtime energy man in Hawaii and the Big Island. So and who writes and sends us articles and whatnot. He's everywhere. Marco, you sent an article this morning from the Wall Street Journal about new dimensions in solar and PV combinations in multiple cities around the mainland. And one would think from that article that it's going gangbusters. What's happening? Well, first I wanted to say how pleased they am to be back on with my two Amigo and Amiga's. I think it's the first time in six or eight weeks that the three of us have been on together. So it's great to get the terrific triad back together again. So thanks again for having me and having, being back with you as well. Thank you, Marco. Thank you, Amiga. It's interesting to see what kind of the mainstream media, I don't know to what extent people would consider the Wall Street Journal, the mainstream media. I mean, I happen to think just a brief editorial comment that the reporting is actually very, very, very solid as far as their op-ed with Rupert Murdoch. I mean, that's a different whole different story, but I have a lot of respect for quite a few of their reporters. President Russell Gold is one of their energy reporters, he writes out of Texas, and his piece today in the journal is looking at utility-scale storage and how in certain parts of the country there's substantial money going into deploying multi-megawatt-hour batteries as high as 100 megawatt-hours worth of storage, which is not chump change in terms of energy storage. A big project going in Arizona was developed by our friends at Next Air Energy in Florida, the one-time suitor of all electric industries a couple, three years ago. And one of the most, I think, important takeaways according to the piece is that if you can have battery storage to take care of meeting the peak demand that the utility experiences at a certain time of the day, typically afternoon or evening, depending on where you are in the U.S., it's making more and more sense to rather than run so-called peaker plants or ramping up fossil fuel generation to meet demand instead doing it with storage. And if the storage can be charged up by renewables, which at least with solar, you know, sun don't shine except during the day, so if you could have utility-scale storage that's charged by renewables that's able to take the place of peaker plants in more and more service territories. That's a good thing and it's getting cheaper and cheaper to do so because when utility companies and companies like Next Era are careful with their investments, careful with their money and they don't go for things like this unless they think it makes sense economically. So it's a great movement in the right direction, I think. Yeah, it was really interesting that Next Era should be the one doing this. We were, some people here were concerned in the approval process as they were not focused on photovoltaic and renewables enough, but clearly they're focusing on it in two significant cities and two significant projects right now. The other thing I get out of this is that, you're right, a peaking plant is very expensive because it has to ramp up and ramp down right away and the numbers that were cited in the Wall Street Journal article was that for an hour, what is it, a megawatt hour or kilowatt hour, 87 cents per kilowatt hour on a peaking plant, that wouldn't be the result all month, but during the hours of peaking, 87 cents per kilowatt hour. And for batteries it was 36 cents, so it's less than half the cost during the peaking plant time of the clock, which is really saying something about the future for a while. And we have a peaking plant at Kapolei, I'm sure that it falls right in that same comparison. So what do you think, I mean, have we done enough on batteries in Hawaii, what do we need to do to follow this apparent trend that is being described in the Wall Street Journal article? You know, again, you have Kauai as the leader in this with dispatchable solar and storage, our purchase agreement already negotiated and, you know, one plant operating and the other one is being built. You know, I see batteries as a, or storage in general as an important component to moving to larger penetrations of variable renewables onto the system, and, but I mean, it shouldn't be looked at a panacea, this is a really, really good direction, and one of the things that we should note here is, you know, the amount of ancillary services batteries can provide that, you know, like regulation and voltage control to keep the grid stable. I mean, you know, that's really important, especially when you're dealing with so much variability, and so it's a good direction. And I think we need to get people to look again, instead of storage from just a distributive energy resource to also store it as an important utility resource that has a larger impact on grid stability. Now the reason it's an interesting question, I mean, that is, you know, we have a lot of residences out there, smaller installations where there are batteries right now. A lot of people have done that, you know, a lot of money has been invested by individual homeowners into storage and PV, you know, combinations. Is it better, from a community point of view, a state point of view, is it better to put that investment on individual facilities, on individual single-family residences, or for that matter, on a community solar, or should we rather put it at the utility level where you have much bigger numbers? You know, for me personally, I'd rather see it at the utility side, because you do reach greater numbers of people that way. And, you know, while distributed energy is a good resource, we have to be looking at these bigger issues on such as grid modernization to get a larger impact system-wide. Rather, you know, it's going to happen on both ends, but if you see great pair of resources and taxpayer resources to me, it has to go where there's the largest public benefit in that it's on the utility side. Marko, how do you feel about that? That's a great segue into something I wanted to mention, guys, which is that not being a lawyer, nor being a tax accountant with those caveats in front, there is a case to be made, and I can guarantee you there's a fair amount of four, five, four, six hundred dollar lawyers that are looking at this in great detail, a case to be made that under the current IRS language for the renewable energy tax credit, or I should say the investment tax credit, 30% investment tax credit, which is 30% this year, 30% next year, 2019, before it starts ramping down to 2020, 2021, 2022, there is a case to be made that adding storage, adding energy storage to a facility that the storage is charged 75 or more percent by solar, that that particular investment of adding storage as long as it is charged by a majority 75 or more percent coming from renewable energy can qualify for the ITC. So we're talking a substantial incentive here, obviously, right? If you can, if you as an investor can install a 20 megawatt hour, 100 megawatt hour battery, and you can have high confidence based on a comfort letter ruling or something akin to that from the IRS, that your investment will qualify for 30% federal tax credit as long as it's charged majority wise by solar or renewable energy. That is, and I don't really like to use the phrase game changer because it's so incredibly overused, but that would be a very, very big deal in the deployment of energy storage, both on the utility side of the meter and also on the customer side of the meter. Yeah. Yeah. Well, how does this impact the bill, which I believe is introduced already to, I guess, to link or add battery investment, you know, with a state tax credit to solar? Where is that? And what effect does it have on this issue? I spoke briefly to Chris Lee last week, chair of the House Energy and Environment Committee, the committee that Amina was a long, long time chair back in her days in legislature. And there is a bill in play right now. It's on the Senate side that was introduced, I believe, by Senator Lorraine Inouye here on this island and co-sponsored by others that would establish a state tax credit for the addition of energy storage at a 30%, starting at 30% state tax credit. That will have to survive a center floor vote before, what is it? I think the first decking, which means that it would transfer over to the House for the House consideration. And then the House would consider it and make changes certainly. And then it would go to conference at the end of the session, as it did in 2017 as it did in 2016. So we can only hope, at least those of us in the industry, can only hope that maybe the third time would be a charm that a state tax credit for storage would get out of conference in May and early May and make it to the governor's desk. Now, again, it brings up the question of if it's taxpayer money and is a further hit on the general fund in light of other priorities that the state has from homelessness to taking better care of our kupuna on down the line of priorities, is it reasonable to subsidize this type of purchase, whether it's commercial or residential industrial utility scale, with taxpayer dollars? And I'll just remind both of you that the largest tax credit, the largest hit on the state's general fund over the past year has been by far, by far, by far, the state renewable energy tax credit to the tune of about half a billion dollars for the three years that we have the most recent records for, which is 2014, 2015, and 2016. No, excuse me, 2012, 2013, 2014, 2015, we have the most recent records in terms of do-tax, and there was approximately half a billion dollars claimed for the renewable energy tax credit. So does it make sense to subsidize through state incentives having taxpayer dollars subsidized storage? Yeah, let me add a thought before going to Mina on this. The thought is that if you have a federal tax credit of 30% for this kind of installation, and then you add a tax credit of 30% on the state level, that's a 60% credit. And you know, we want we want these credits to incentivize. Okay, go ahead. I don't think that's the correct statement. I think you have to deduct the tax credit. I mean, a federal credit before you can take the state tax. Okay, okay. Nevertheless, you know, it's two credits. And the question I put to you is, and that's an interesting question is you, these credits are all about incentivizing behavior or de-incentivizing it. And do we need both levels of credit to incentivize to the extent we need to incentivize, you know, to move the needle ahead on renewable energy and, and for that matter, batteries? Do we need that much, Mina? I don't support a separate tax credit for energy storage. I think if you design the system correctly, you can take the renewable energy tax credit, which includes the entire system. And so I'd like to move more in that direction than a separate tax credit because, you know, a lot of people who put solar panels on their roofs have benefited greatly from public funds. And to me, a separate storage tax credit is really a double dip. You know, they already, a lot of people already have great advantages from net meters system, taking the tax credit really favorable payback period. So to come back with another tax credit, I find that quite frankly, hard to come up. Hey, very interesting. We're going to take a single dip actually now, Mina and Mark. I'm going to take the dip of a one minute break. We'll be back right after that. And we can talk about what's happening on Molokai and with grid modernization and demand response, all the issues that are popping up these days will be right back after this break. I'm Winston Welch. And every other Monday at 3pm, you can join me at Out and About, a show where we explore a variety of topics, organizations, events, and the people who fuel them in our city, state, country, and world. So please join us every other Monday at three. And we'll see you then. Hi, I'm Ethan Allen, host of a likable science on Think Tech Hawaii. Every Friday afternoon at 2pm, I hope you'll join me for likable science. We'll dig into science, dig into the meat of science, dig into the joy and delight of science. We'll discover why science is indeed fun, why science is interesting, why people should care about science and care about the research that's being done out there. It's all great. It's all entertaining. It's all educational. So I hope to join me for likable science. Okay, we're back with Mina Marco and me on Monday about energy in Hawaii here on Think Tech. I'm Jay Fidel and we have Mina Morita and Marco Mangelsorf on the phone to talk about developments in energy and Marco, you had some comments on what Mina was talking about in terms of the, the policy around giving credits to solar battery installations. Yes, I definitely understand and appreciate Mina's perspective on this. And I just wanted to not so much counter what she said, but add to it in the sense that there is a reasonable argument that can be made that adding storage on both sides of the meter provides a level of greater resiliency and redundancy to our vulnerable island grid. And I think especially in light of what we continue to witness as the pain and suffering of the folks in Puerto Rico, who now five months after Hurricane Maria, there's still upwards of 40 ish percent of residents who do not have reliable electricity getting clobbered so badly by that hurricane that there is a societal benefit. There is a communal benefit to subsidizing the deployment of more and more energy storage on both the customer side of the meter and also on the utility side of the meter. And I've talked to my Hawaiian electric friends for time to time about this in terms of when did they foresee that we will reach a point of a smarter grid that will be more interactive, more interdependent and more resilient, that's able to take advantage of the greater deployment of energy storage and they don't have a definitive answer because the reality, of course, is there's no such thing as a definitive answer to that question. In terms of the timing, but it is an important is an important thing to strive for as these isolated island grids that we have that we are on a hurricane track here, we have very long supply lines. And if batteries can add to the stability, resilience and redundancy protection of our grids, then it's something that is worth supporting tax payer dollars. I sure agree with the idea of watching studying Puerto Rico what happened there. There was a program a couple of weeks ago with the National Disaster Preparedness Training Center that brought in people from Puerto Rico, also from the Virgin Islands, to talk about, you know, the resilience of their grids and what they would do differently was very interesting. And my own view is, we need to study Puerto Rico, because otherwise, it could very well become the ghost of Christmas future for Hawaii in many you wanted to say something. Not that I disagree with, with Marco, I just think that with public money with great care and money, we have to be more targeted in our approach to where the public gets the greatest benefits and also help reduction in cost. You know, to subsidize an individual that has the ability and makes the choice to move in this direction is very different from subsidizing, you know, a public facility that might have that might need the resiliency and has a bigger effect on the community, especially during the disaster type situation. So we have a limited part of money, public money, great care money, make really good decisions on how we extend those kinds of resources for the greater public good. Let me let me go to another solar issue. And that is the ultimate agreement reached on the Half Moon Project in Molokai. You've been following that closely, Marco. What happened there? Well, this is a, at least for now, a successful milestone conclusion, well, not really conclusion, but a conclusion in the long going discussions and negotiations between our electric HECO and this firm based in Chicago called Half Moon Ventures and Half Moon. We had their president, Michael Hastings, on our show a number of months ago. You might remember that, Jay, and they have developed a number of projects around the mainland US and also in this state and they have pitched to Miko for the past, gosh, it's going on two years, I think, a large PV plus storage at the adjacent to the one and only one Miko power plant on Molokai. And this would be a seven and a half megawatt solar array, which is fairly big, especially for that island with a 1515 megawatt hour battery. So the clock has been ticking in terms of getting this underway so that the tax credits, full tax credits can be applied for, which means that the system would have to be up and running essentially by the end of next year, the end of 2019. So it's really a pretty big deal. The next step is that the parties will open a docket file for opening a docket with the Public Utilities Commission. I expect that to happen within the next 30 or so days. Mina can probably answer much better than I could in terms of with a power purchase agreement that's being proposed by the parties in this case, this new entity called I'm just going to look at the Molokai New Energy Partners, Half Moon Ventures, Molokai New Energy Partners and Miko and Hiko, the consumer advocate will be an intervener. But to what extent will Randy Wasse, Lorraine or Kiba and Jay Griffin have it be wider open, have in other words, accepting interveners or participants on a broader scale? And of course, the more people you bring into the party, the more they're going to want their say the longer things are going to drag on. And I think practically speaking, new Molokai New Energy Partners needs a go no go by the Commission. I'm going to say, you know, by fall or late next year at the latest in order for them to be able to do what they need to do in terms of pull the trigger on it, logistic challenges and so forth and so on, permitting. You mean late this year, don't you? You mean late this year? This is going to take them a year to build it, no? Yeah, and having worked myself on and off on Molokai for over 10 years, I know what the challenge can be over there in terms of trying to pull things off. You can't just hop down into your van and go to Home Depot and get whatever electrical stuff you need. It has to be flowing in and it's really a big, big challenge logistically to do projects over there. So it's the first big step here and I was really pleased that Mico and the Chicago company were able to pull this off and Hico, I mean, because Hico obviously is the parent company of Mico and they had to give their a sense. So this is really cutting new ground or we'll be breaking new ground, especially for an island that is just one power plant, a limited number of customers, about 3,000 utility customers. And if it goes live, as I hope it does, it'll be great for renewables. And as proposed, it's going to be about 17 cents per kilowatt hour, which is considerably less than the president college, a little, if you could really improve things on Molokai. So, Meena, what do you think? What does this mean? And is it possible to get it through the PUC on time? Well, I think, you know, there is, I'm not familiar with this proposal, but I think some of the things that he's looking at is, did it go out for a competitive bid? No, it did not. Yeah. So, you know, they would have to come out and they would have to make a business case for and, you know, 17 cents compared to what they're paying right now looks like a real bargain. So hopefully, I wish there was a faster way to process, because you don't want, you know, there's a lot of opportunity lost here, the longer it's up there. But if I could ask you, Meena, do you have any sense for a power purchase agreement like this, as it's been proposed between a private party and a utility company, in this case, MECO, that MECO determined is under no bid. In other words, you don't have to go for open bidding process. What the procedure would be in terms of the commission deciding who or who would not be accepted as possible interveners? You know, I don't know what standard is being used right now, but for somebody to intervene and delay the process, especially when you're looking at much lower costs, you know, you hope the commission will consider, again, the opportunity cost in not moving ahead quickly. Yeah, one thing that strikes me is I agree, certainly, Marco, the more interveners you have, the longer it takes. But in a case like this, where it would significantly reduce the cost, I mean, to a really acceptable level, relatively speaking, in Molokai, would, you know, you worry not so much about interveners in general, but about interveners who would delay things, interveners who would object, you know, and try to and try to slow the project down or stop it. So the question is the question I put to you, I mean, all that we know about this, even including the fact that there were no competitive bids, which, you know, I'm not sure we really need them here in this case. Do you think anybody would come in and intervene and oppose this project, knowing what we know? You, there's always a posture, I guess I'd have to accept that. You know, the other thing that I think that's kind of important with this project, too, is ancillary services. You know, you're looking at a really small system on Molokai. And, you know, right now, there's a dependent on what these old generators, that they really can't turn off in a period during the day where they've got too much solar and no demand. So I think, you know, having the system come on is really important to ancillary services on the island. Yeah. And it makes a good case, I think for the adding to the resiliency of the grid there, because like you mentioned, Mina, I mean, they have as many, if I'm not mistaken as 10, they have 10 generators at that plant that they rotate, and two of them have to be on minimum, two of them have to be on any given time, because they can't just have one on if one goes down, the whole island goes dark. So they have two generators on and the generators are obviously using fossil fuels, some kind. And if you can offset the runtime of fossil fuel generators with solar and batteries, I mean, and do it cost effectively. And in this case, what's the risk on the part of the rate pairs? What's the risk on the part of MECO? They've got this PPA nailed down, assuming it meets regulatory approval, scrutiny and approval, then their risk is fairly minimal. So I think it's hopefully going to be a win-win for all concerned. But, you know, as I've known or determined in the 18 years I've been in this game here, these past years that it's really one day at a time, and there's no doubt that the HEI board and the next year board had a high degree of confidence that they were going to be successful, right? Otherwise, why do it? And it turned out that after hundreds of millions of dollars were spent and break up fees that they weren't ultimately successful in getting regulatory approval. So I'm hopeful, of course, that it's going to work because it's the one factor we haven't talked about is sustainable molokai, which is what we call an activist organization, a molokai. And one of the co-managers of that is a woman named Amelia Nordhoek, who we spoke to when we visited a molokai a couple months ago, and she was talking about expectations by that group of having a piece of the action, either in a percentage of ownership or in a percentage of the gross. And I wonder where that fits, to extent that they're there and they have expectations, they may get involved in the procedure, the procedure of approval, too. Do you have any idea, Marco, about what they might be expecting these days? I would think that, let me answer this way, I would think that if any organization had a chance of becoming an intervener, assuming they were willing to pull the trigger on that higher legal counsel, or if you're in that case of somebody like Henry Curtis, you do it yourself for the most part, but it's not a trivial thing to do to go for intervener status and become an active intervener and on a docket. It's not trivial. It can be rather expensive in case, in fact, depending on the particular docket. So, to what extent a sustainable molokai would have the ome, have the individuals, have the money to be able to be truly a seat at the table rather than just be a seating at a conference table when a presentation is given, which is what they have done in the past, I really don't know. I don't get the feeling the sustainable molokai is backed by Boku Bucks anywhere and, you know, it's it's great. I'm not dissing them by any stretch, but being kind of a grassroots organization, trying to work at the grassroots level and being an intervener on a docket of this magnitude, there can be two different things. I really don't know, Jay, I guess that's my answer. And then, you know, the thing is, they wouldn't have to distinguish how they're interested, different from the consumer-advocate-representing. Yeah, right. Well, you know, you guys, this has been a great discussion, and I'm sorry we didn't get to all the points on the agenda we wanted to talk about. We should next time talk about the PUC approval of a couple of things, including the modification, grid modification plans, and the demand response program, and maybe other things that come up in the meantime. The PUC has been approving Hawaiian Electric's proposals here, and that's really notable. So why don't we plan to talk about that, and anything else that comes up in the meantime, including articles in the local publications and on mainland, about energy in Hawaii. Thank you, Mita Morita. Thank you, Marco Mangostoff. It's always great to have these discussions. You guys rock. Thank you very much for having me.