 Good afternoon. Howard Wigg, Code Green, Think Tech Hawaii. Do we have an exciting program today or what? The new future is going to unfold before your eyes in the form of Josh Powell, CEO of Revolution, one of Hawaii's larger or maybe largest solar companies. We like to think so. Yeah. And disclaimer, disclaimer, we are featuring one company today, but this in no way implies that the State Energy Office or Think Tech Hawaii endorses this particular company. Hawaii is one of the nation's leaders in solar energy, and there are a lot of perfectly good companies out there in addition to Josh Powell's company. So welcome to the program, Josh. Thank you so much for being here. So the program or the title of our program is Batteries or the Future. And you say, no, wait a minute. I thought we were talking about solar as in photovoltaics. So Josh, why are batteries the future of solar energy? So you know, one of the anecdotes I like to repeat when I'm talking to new customers about storage and about batteries in their homes is, you know, 10 years ago when we started the business, I remember sort of talking to customers about having an appliance in their garage someday that would store enough energy for a day or two and enable them to have other things that you didn't get with a traditional grid tide PV system like resilience, maybe more control over energy, additional capacity, lots of other things that a grid tide battery without storage doesn't do. Now grid tide means on your roof, your photovoltaic system is creating electricity and that's going directly into Hawaiian electric grid. So all the solar that everybody got used to over the last decade, most of the, you know, net metered systems, things like that don't have any storage and they back feed electricity into the grid or, you know, you use it when you're consuming energy directly. But if you're not consuming it at the time and it's still producing, then it just goes back to the grid and either your neighbors use it or somebody else uses it. And the battery allows you as a consumer to have much more direct control over what's happening and to choose how you use it. And that really changes the whole game for everybody. So why don't you, can you walk us through kind of a brief history of photovoltaics in Hawaii? And I emphasize again, per capita, we are probably the nation's leader in this field. We're, I think you're real safe saying that we're absolutely the leader per capita. We're one of the most PV dense areas in the world. And in battery storage, we're absolutely the leader in the nation right now. But yeah, going back to say like 2007, 2008, when the market started to gain some steam, we first had changes in incentives or risk of changes in incentives. The risks actually didn't materialize in 2008. Incentives got extended. And so in 2009, 2010, you started to see the residential PV market really gain some steam. And usually we find that residential sort of leads commercial a little bit. Consumers are more confident or maybe they experiment more with their homes first, the early adopters. So we started to see us, the market go from hundreds a year to literally thousands a year. And in the period of 2011 to 2013, we started seeing crazy huge numbers like 10,000, 15,000 systems a year on Oahu on a grid where there's only 150,000 single family homes. So you can see how that starts to change the dynamic of who's producing energy relatively quickly. And then we started to obviously have an impact on how the grid was functioning to some degree. And I think more directly, you have enough people generating energy that you also started to erode generation revenue for the utility, which sort of woke up the utility from a policy perspective. And in the 2012 to 2013 timeframe started to work to change some of the rules to slow things down a little bit. Namely to discontinue net energy metering. Yeah. And it started, we really, nobody I think anticipated how fast solar would grow. Maybe not even us. Well, there was a little thing called, was it 30% state tax credit and 35% federal or reverse that? You know, the credits are powerful in Hawaii. But I think the single biggest factor in the 2008 to 2013 period was the price of oil. So all of our energy in Hawaii was essentially being produced by oil. Then it was 95% in 2008. It's about 80% today. And when oil went to $100 a barrel and $150 a barrel, energy prices, we were paying retail rates 35 cents a kilowatt hour. And that was on this island. And the neighbor islands are even more expensive. So when you think about that, that's three or four times what you might pay for the same energy on the mainland. Yeah, the typical mainland cost is 11 to 12 cents. And so three, three X, maybe four X on the neighbor islands. So there's not very many things in Hawaii you pay, you know, we pay more for most things, but we don't usually pay three or four times as much. And so when consumers realize they could do things that would drop that cost dramatically, usually by half, then they moved really quickly. And it's easy to scale with residential. So as that started to happen, obviously HECO focused on changing some rules with the PUC. And we started seeing those rule changes in 2013 at first by changing the rules so that you had to wait longer to get a system, sometimes eight to 12 months, maybe longer. That slowed things down quite a bit in 2014. And then ultimately net metering went away or the first state to stop net metering. And that sort of brought on this new market that we're talking about today. And if I can from an amateur standpoint explain what Hawaiian Electric's concern was, there in the middle of a sunny day, there was so much electricity produced by photovoltaics that they can back off their generating plants only so much. It's like you slow down a car's idle too much and it's going to die. They were backing off the power plants as much as they could and there was still too much electricity in the middle of the day. Is that a good summary? Yeah. I mean, when you think about it, the grid on Oahu is 1.2 gigawatts roughly. And so you have to, as a utility, you have to generate, you have to build capacity to support whatever the maximum of that grid is. And some of it you have to keep running all the time, whether you're using it or not. And fossil fuel generation doesn't ramp up and down very quickly. Some forms can ramp faster than others, but for instance coal, heavy diesel plants, those are not particularly fast. And so yeah, it presents a problem. The electrical energy we're getting from the sun, these are photons converting into electrons and creating current. It's moving at the speed of light. It's only limited by how fast it can move through wires and that maybe takes it to a third of the speed of light, but it's, you know, many, many, many orders of magnitude faster than what you can do with a fossil fuel generated energy. Especially considering the fact that there's something up there called clouds. Yeah. And you get a great big cloud coming over, big sunny. Your PV capacity goes down, down, down, down, down. Now Hawaiian Electric has to respond just like that. Yeah. Can absolutely ramp up and down quickly. Yep. Absolutely. So that's the problem from Hawaiian Electric's standpoint. Yeah. As a utility presents a conundrum, how are you going to support the grid? You've got all these, you know, at one level, this isn't often acknowledged, but you know, there's also a bunch of free energy that often isn't even being consumed by the people creating it. So there can be some net benefits, but those benefits can't really be realized unless you can put that energy somewhere in some form of storage. You know, and there's lots of ways, lots of creative ideas on how to do that, but what's happened now in just the last few years is the availability and cost of lithium storage, battery-based storage has come down dramatically and that's really started to change things. Yeah. So why don't we go into the duck curbs? It's a good time to, yeah, if we could bring up a duck curb slide here and examine it for a while. Okay. What in the world is going on with all these jiggly lines here now? So this is a great slide that actually was, I think, originally authored by HECO. This is a HECO slide and it illustrates what it's called the duck curve now. When it was originally presented, they characterized it as the Nessie curb because it looks a little bit like the Loch Ness monster and maybe there was some desire to get a bit of a monster in it, but basically that big gray curve is people coming home, turning on air conditioners, televisions, cooking, and you see that the needed generation goes up dramatically in the evening. Why don't you walk us through the whole slide starting with the left side there? Yeah. So early in the morning, the least amount of energy consumption, you see that yellow curve is sort of solar energy, a typical, well, actually, sorry, that's commercial load profile. They don't have a solar overlay, but if you were to look at a solar overlay, you would imagine almost a bigger peak over that yellow curve. But in that yellow zone that's highlighted in the center, that's your primary production. And you see your primary consumption during that period is commercial energy users. Residential load profiles go at their lowest during the middle of the day. So if you think about a residential net meter PV system, that works great. You produce energy and then use it at night and you get full credit for it. But the argument from the utilities perspective and what's shown here is that because it's decreasing in the middle of the day in terms of demand and you're producing all your energy, then they have to solve that other problem, which is the demand increase that comes later. And again, that's on the right side. And you're seeing that stark rise in consumption because, number one, everybody's coming home from school and work, turning on the TV, turning on the hot water, the stove, the oven. And this being a tourist economy, all the tourists are coming home from the beach or from shopping and the hotel rooms are going mad. And then they're going to the restaurants. There's no question that it's a real thing. I think we would argue that there's lots of ways to deal with it. You can use some load controls. You create some adaptations. But I think in general, people don't like to be told to change their behavior. So if there's another way you can help with that, I think that's probably, becomes the most acceptable thing. And we're kind of lucky. These storage technologies have been around for, lithium ion technology is over 30 years old. It's been around for a long time. We've been using it in our laptops and our power tools for quite a while. But it's been moving lots of improvements have been coming in, including electric vehicles. And that's really changed the pricing structure and made it more accessible. Yeah. Yeah. Something called mass production and improvements in technology all the time. But before we go any further on this, we need to take a brief break. Howard Wigg, ThinkTech Hawaii Code Green with Josh Powell. Powell, CEO of Revolution. Back in a minute. I'm Jay Fidel, ThinkTech. ThinkTech loves energy. I'm the host of Mina, Marco and me, which is Mina Morita, former chair of the PUC, former legislator, and Energy Dynamics, a consulting organization in energy. Marco Mangelsdorf is the CEO of Provision Solar in Hilo. Every two weeks, we talk about energy, everything about energy. Come around and watch us. We're on at noon on Mondays every two weeks on ThinkTech. Aloha. Aloha. My name is Mark Shklav. I am the host of ThinkTech Hawaii's Law Across the Sea. Law Across the Sea is on ThinkTech Hawaii every other Monday at 11 a.m. Please join me where my guests talk about law topics and ideas and music and Hawaii Anna all across the sea from Hawaii and back again. Aloha. Good afternoon again, Howard Wigg, Code Green with Josh Powell, CEO of Revolution. And we're talking about the Loch Ness monster and ducks and the explanation of the duck curve from any electrical demand standpoint and what in the world we're going to do with storage. So can we bring that other slide up, please? Slide to. Yeah, there we go. Now what in the world is going on with this orange circle here, Josh? So I like to color orange. So I put a big orange marker on there. But basically, I'm trying to carve out what I see as an opportunity instead of a challenge. And utilities generally present this as a big challenge and they use it initially as a way to fight additional PV integration and additional non-utility controlled renewable energy resources. And when you think about that excess demand there that's sort of above the sort of normal consumption we see in the other parts of the day, you know, once you have digital control over energy in time and that's what a battery does for you, you can shift that. So you can produce it a few hours before you need it and then use it. Or with a lithium ion battery, you could produce it almost a year before you need it and then use it. So we, when you think about our electrical grid, we've never ever had that in the 120 odd years that we've been playing with electricity. We've never been able to move energy around that way other than in a barrel of oil. And it takes a long time to convert a barrel of oil into electrons, whereas a battery, light speed, instantaneous. And again, we're storing that energy in the middle of the day when there's actually too much electricity being produced. Instead of it going to the grid and, you know, being redistributed or maybe lost, line loss, things like that, you're storing it right there at relatively high efficiency. So you're talking about five to 10% loss in the storage, whereas you might have 30 or 40% line loss in distribution. Now that five to 10% loss, we grew up with lead acid batteries and I believe that their loss was a lot higher than that. You're stretching me. Stretching, okay. Yeah, I try not to pay too much attention to lead. I mean, it's certainly been around and it's been a staple of the PV industry, particularly off-grid for a long time. Lead acid is a good example of a, you know, technology that's been around since almost the beginning of electricity and not really a tremendous amount of improvement. But I think it's actually, you know, you sort of segue into another important point. Lead has sort of been the, let's say, that's the baseline cost-effective battery out there. And what's happened in the last three years is lithium ion has come down, in the last five years, it's come down 70% in cost. And so it really wasn't obtainable at the kind of scale you'd need for electric vehicles and homes until just the last few years. But it's now happening pretty rapidly. And like you pointed out earlier, that's really just a factor of scale. Once there's demand in the marketplace and we start to scale these products, then we start to generate more manufacturing efficiencies. And those efficiencies lead to cost reductions, just like, you know, I think you and I can both remember maybe the Commodore 64, some early computing technologies and, you know, think about the memory we have in our cell phones now. Or even the memory in certain watches. I think, you know, more powerful than probably all the computers that existed in 1980, you know, 87. And, you know, we see the same thing happening with storage technology. So it really puts consumers in a great position where these products are scalable and accessible and affordable. And now you get a choice, like, what do you want to do with your energy? You can produce it, you can store it. That opens up new options for how you might utilize it, whether it's safety, security, resilience. I think for Hawaii, we don't talk much right now about resilience. But when we look at these hurricanes, Michael, Rodrigo. I'll be speaking at a resilience conference tomorrow. That's another huge benefit of these systems. And, you know, there's other things they can do in the grid to support the utility, actually make it easier to deal with other forms of generation that are already on the grid. Absolutely. And one really good example of what you're talking about was the fact that early in the PV game, the electricity went into the grid period. Then when there's an outage, what happens to all that live electricity going into the lines? So electric was very, very concerned about that. Well, you're the code guru, anti-islanding, right? So all PV equipment has to stop, essentially, or disconnect in the event of a grid outage so that, you know, any line workers, anybody that has to go fix the grid is going to be safe. So the system is shut down, they actually take five minutes to come back online. Those are all code-directed requirements that the equipment has to follow. So when you buy a battery system now, you've now created a microgrid, and we would kind of like to call it at the home level a nano grid, a very small grid unto itself. It has a built-in automatic disconnect. So in a grid outage, the system disconnects itself. So the line workers are safe? They're safe. And now the whole house is still in general. You can do different systems. We tend to focus on systems that will support the entire house. You can do part of the house. You don't have to do the whole house. You could do an emergency panel. But we find that most consumers would prefer to just have the whole thing done. And there's a number of products now that have, you know, we all, you know, almost everybody's heard of Tesla Powerwall. That's a very popular product that we sell. But there's a number of other manufacturers kind of coming into the game, too. Tesla kind of led the way with a lower cost product and good application controls that I think really reach the consumer. That was kind of interesting. It's not, when you think about the PV industry, we're kind of, you know, we haven't had like an Apple or a, you know, a brand like that in our business. And so I think it brought a level of consumer awareness that wasn't really common. Yeah. Good oldie Elon Musk revolutionizing things. And so if I understand it correctly, back in the bad old days, applying for storage in a permit, you have to go through the building permitting department. It was, it took a long time. It did. Yeah. But recently we passed the 2017 National Electrical Code and it has whole chapters on storage and the safe design of the storage batteries and the safe installation of the storage batteries. So as I understand it, all the applicants like yourself need to do is in essence tell the plan reviewer, I'm complying with NEC 2017. And they'll look it over. Yep, you are. Boom. Here's your permit. Is it that kind of simple? I think for a new product, it's always a little bit challenging with department of permitting. We work with them closely and we've developed, we're not the only ones, other installers too, develop materials and methods permits for specific products. And that allows us to get basically an instantaneous permit. So we don't find that we have a lot of delays there. When you're doing something really unique, sometimes you can run into that. And there's other commercial buildings. They still take usually a couple months, but residential permits aren't really a problem for residential PV and storage. You can usually get them really quickly. And everything's still there, like the tax credits are still there. Obviously the savings, there's in the non-export tariff, customer self-supply, which is a tariff that came out after net metering closed, you can get utility approval usually in about two weeks. So it's very quick. And that's kind of a misperception that some people hang on to from a few years ago that it takes a long time. We've seen now that the products have stabilized. There's enough of them. And the rules have kind of stabilized. We're actually starting to see pretty strong growth where I think Debet said last year, 2017, there was about 750 grid tied batteries installed on Oahu. We expect that to be basically triple or quadruple this year. So they're moving a lot faster now. And from the safety standpoint, it takes just one accident to spook everybody. And we had the famous Kahuku fire. Do you know enough about that? The wind tower? Yeah, I mean, that's a different kind of battery. And so, I mean, like anything, you can put more energy into something than you should. And that can cause problems. So I would say we're very comfortable with the residential batteries that we see out there. One, we haven't seen any problems like that. They have built in controls that prevent them from taking too much energy. That particular system, the Kahuku battery was an older system and perhaps wasn't designed right for the amount of energy a turbine can put in. Wind turbines can also, once the wind gets going, it's hard to slow them down. But there's always, you see that, I think the common thing is you'll see the videos of the Tesla car or something like that. Because it's new, we focus on it. We don't see a video every day for every fossil fuel car that burned out. Every once in a while, you'll be driving down the freeway and you'll see one. And I'm glad I wasn't in that. But I think fundamentally these systems have a lot of safety built in. You know, from the code that they have to be designed to disconnect, not to overcharge. The Tesla systems, which I'm most familiar with, have a secondary, they sit in a bath. The cells are actually about the size of a AA battery. It's actually kind of stuff we would all be very familiar with. They don't look like that when they're all put together, but they sit in a bath of coolant so that even if one went down or one had a problem, then the coolant would essentially keep the others from propagating that. And this is what the plan checkers are really concerned with. Health and safety above everything else. And I think these batteries from your description have been designed for real, real health safety. We've got over 500 systems deployed at this point. Some, maybe about 20% of those for the state of Hawaii on schools haven't had any problems like that with any of them. And it actually had very few problems at all. I think they're very safe. We heard more about that a few years ago, and I think there's been enough out there that people feel pretty comfortable. Bad news is real news. Good news is, yeah. So on that cherry note, we must bring this to a close. Howard Wigg, Code Green, thank you so much, Josh Powell, CEO of Revolution. Thank you, Howard. Must have been a pleasure.