 Hello, and welcome to Mina, Marco, and me. I am your guest host, Raya Salter. I'm an energy attorney and the principal attorney of Imagine Power LLC. We've got Beaming in via Marco. Do we have you on Skype? Or are you both on the phone? Okay, we've got you guys both on the telephone. No, I'm just going to be on the telephone. Whole-fashioned telephone. Okay, so on the telephone, of course, as you guys know, this is the regular slot. Mina, Marco, and me. So it is her Mina Merida, a long-time player in the energy scene here in Hawaii, former chairwoman of the Hawaii Public Utility Commission, and also Marco Mengelsdorf, who is the president of ProVision Solar. So today, on Friday, ThinkTech went to Kauai to take a look at, among other things, the new Tesla battery plus storage project that the Kauai, KIUC, the utility on Kauai has been working with with Tesla. So this project is fascinating. I think we've got a couple of pictures of it that we can show. It has more than 50 megawatt hours of storage from 272 Tesla power packs, and it has 13 megawatt hours of PV. That is more than on several acres of land. So we've got a big project, the largest of its kind. And also, in this instance, which is also a unique situation for a project of this size, Tesla is owning and operating this project, which is Tesla Power Pack, and it was Solar City PV. And so Tesla is, in fact, now the generator, and that is going to be selling this power to KIUC at a price that, according to the utility, is cheaper than the price they had before for conventional generation. So an interesting project. And I just want to dig into this, what it means for Kauai, what it means for other islands, with our experts on the line. So hello, hello, Hermina, and hello, Margo. Hi, Raya. Greetings, salutations, and solidarity from the wonderful People's Republic of Santa Cruz here on the beautiful California Central Coast. Fantastic. It's amazing how we can have both of you guys on via telephone. So let's just go ahead and get started. I'd like to ask both of you. This project is considered to be groundbreaking. It's gotten a tremendous amount of attention, international attention, when we were on Kauai talking with Beth Tokioka, the communications director for KIUC, she said that she'd had CNN out, that there's been a tremendous amount of attention for this project and what it can mean for Kauai and its goals for renewable energy, which they now feel they can reach 100% by 2020. So I'd like to ask both of you, what are your thoughts in general about this project for Kauai Island? And perhaps go ahead, Hermina, please go first. Well, I think the listeners know that I do live on Kauai and I am a member of the Kauai Island Utility Cooperative. So I'm really proud of the accomplishments of the cooperative and how aggressively they've moved to come to this point. And it certainly is an exciting project with KIUC in the spotlight right now. And so I think the next step is really looking at the performance of the dispatchable solar agreement, power purchase agreement, and really focusing on how the system will perform, and the ability of the PTA to meet its terms. So that's next step. Super important. How about you, Marco? What are your thoughts? Well, first, I mean, I think KIUC President David Bissell, Mike Yamane, Beth Tokioca, Brett Rockwell, and the whole crew there at KIUC deserve a tremendous amount of kudos for how far and how fast they've been able to bring, not just renewables online, but more cost effective renewables. And I kind of look what they did in this recent project with TV and Tesla power packs on kind of two levels. One is what I'll call the bling level. I mean, Elon Musk, who is the head of Tesla and now head of Solar City, SpaceX, and other interesting projects. I mean, the guy brings a certain star power to kind of whatever he does. And one can argue about how sustainable financially the model is, or whether it's made much money of profit, which it hasn't. But the fact that Tesla worked first with this scrappy little co-op on Kauai to, as Mina mentioned, to bring on board dispatchable utility scale storage. And what's meant by dispatchable is that the solar energy, which is produced during daylight hours, midday, especially when the sun is high in the sky, the debt power is made available hours later during peak demand. And that is a new thing in terms of utilities, just starting down the path of having dispatchable power. So again, on the bling level, the fact that Tesla and KUC came to the dance first, I think, is not worthy. And then second, that KUC is one of the first in the utility world to put together utility scale storage with utility scale dispatchable power. And that is a wave of the future. I mean, I'm seeing more and more here in California, if I'm taking a deeper dive into colorful energy issues and topics, that having surplus PV power during the day is not just limited to Kauai or Molokai or other parts of the island chain, but in other parts of the country as well. So I think it's a major achievement on multiple levels. Yeah, that's really exciting. And that's something that we definitely focused on when we were there. This is really Hawaii and Kauai taking real leadership on the integration of clean and renewable power. I think it's interesting that you mentioned that bling factor. I think that's kind of a big deal. What do you think it means? And Meena says about, well, now what really matters is how this is going to perform. And as a member of KUC, I'm sure she's going to be, as she would for any project in Hawaii, very interested to see if the bang for the buck in the performance is going to be as expected. What do you think about just the fact Tesla as a company relying on generation in this way from a, well, Tesla as a company, but yes, in that it's, will this bling company be in it for the long haul? I think there are a lot of questions about the company, its valuation, is it overvalued? Is this type of thing a consideration that a utility or any island should be thinking about when they're engaging a company on these projects? I'll ask you, Meena, first. Yeah, well, I think, you know, definitely the management of KUC went in this with their eyes wide open. You know, we've seen how Tesla, their marketing is pretty amazing. I mean, you know, getting their name out there and again, the bling factor. But I think, you know, they're dealing with a cooperative that's very cautious, very savvy, and they know how to negotiate. So I think the advantage for the cooperative is that they have little, little risk moving forward in this project. You know, if it works, we've got a great PPA. If it doesn't work, right now, they can fall back on their generators. So yeah, so, you know, people have their fingers crossed. And I think we have to face the reality to that. You know, while we do have some sunshine, we also have a lot of cloud covered rainy days, too. And so, you know, what is the performance of the dispatchable solar during those periods? And how will it affect the system? Those are important considerations. It's all not fine and deadly right now. But again, I go back to performance to see what happens when they fully start serving the utility. What are your thoughts, Marco, on this topic? Well, I mean, it's 100% correct in that the risk to KUC is minimal, whereas the risk to the owners of the system for city Tesla and whoever ponied up money to finance the project because KUC is not purchasing the generating assets, neither the PV array, nor the battery storage. So it's completely incumbent upon the owners of the system who have entered into this long term purchase agreement to provide a given amount of kilowatt hours in order for them to be financially viable. And there's no reason to believe that that's not going to happen after probably some burning period and some tweaking of the system. Again, I go back to the idea that this is really breaking new ground and for any utility across the United States as far as utility scale, solar with a dispatchable battery storage of many, many megawatt hours. And it's just going to be the beginning. I have no doubt, no doubt about that. In terms of the finances of Tesla, well, the reality is, and you talk about overvaluation, perhaps, Raya, I mean, the big news last week is that Tesla, the market capitalization total number of shares times the share price on the New York Stock Exchange surpassed Ford Motor Company as the second largest auto company in the United States. And they're they're nipping at the heels, I think, of General Motors. And you look at the the volume that Tesla has, which is an infinitely small percentage in terms of selling electric cars compared to GM or Ford. I mean, it just boggles the mind. So I mean, the reality, whether it's fantasy or not, which is perhaps contradiction in terms of the reality is that the marketplace, the investor class, the capital funds believe that Tesla and Elon Musk are a good gamble. And Elon has proved so many people wrong time and time and time again. And I think, you know, the big solar is kind of iffy because for maybe reason we can get into another show, but storage, I'm absolutely more convinced now than ever that you practice storage, not both on the residential scale, which Tesla is doing and on the utility scale, which Tesla, Samsung, Panasonic and others are doing both American, Chinese, Japanese, European companies that storage, storage is kind of the Holy Grail right now. You crack storage and you can do it effectively, cost effectively and reliably. I mean and it kind of, you know, the risk hyperbole guides the limit. Yep. No, I think that's right. I think that's interesting what you brought up. I mean, as someone who, you know, as we all went through the dot com era, you know, there was, you know, and I think Greenspan, who was our Fed chief at the time called that, you know, major that bubble that we had froth. So not to say that Tesla is in any way frothy, but it is remarkable that a company with that type of market share could be rivaling a Ford and that you mention, you know, yes, Tesla, Samsung, many different battery companies, many different battery companies operating here in Hawaii, you know, Blue Planet Energy, different technologies, lithium ion, some considered better than others, some having better guarantees than others. What does this groundbreaking project like this mean for other islands like potentially Lanai or Molokai or Oahu, but are looking to do this type of project? And how can they be evaluating these technologies? Me now throw that to you first. Well, I, I, again, yes, Hawaii is a really, really good showcase. And we shouldn't overlook the fact that there are multi electric is using batteries in a limited way on Molokai. And there has been long ongoing evaluation on various battery technology by the Hawaii Natural Energy Institute. So I think one of the concerns that I have regarding batteries is, you know, we, we don't have that much data, especially on longevity of batteries, of the, you know, major types of investment. So, so I come back, I guess this is my word for the day performance, you know, it all comes back to constant performance. As we move forward, as, as there's very little information on chemical batteries. You know, I think there's some discussion going on about pump storage and the possibility of pump storage on Oahu, within several reservoirs. And that's always a possibility and foremost on the mind of, of the TIUC management. You know, they, they, you know, they would like to move aggressively on pump storage on Kauai. And so while the chemical batteries may have some sexiness to it, I think when you really look at the technology, you know, the reliance is on the proven technologies like, like pump storage. Thank you. Marco, we need to take a break. But when we come back to Meena Marco and me, Marco, I look forward to you digging in on that question of how islands grapple with tech this new storage technology back in a moment. If you are a long time listener, a viewer of Think Tech Hawaii, you would know that we are on every day, five to six hours a day, basically streaming stuff that's happening here in Hawaii that matters to everybody worldwide, basically. There's a lot of stuff that we got going on and we're excited about many of them. 2017 is going to be really cool. Right now, I can tell you that we are on iTunes where you can listen to all of this stuff now. We're really excited about how that's going. And we have just started a on the street feature where we take a camera out to the street and stream live to you guys out there and getting what people in the local community out what they want or are thinking about and sharing that with you. And we're really excited about all that stuff. We're really excited about you guys watching and following us on all the social media sort of things Instagram, Facebook, Twitter, all that good stuff. Look for us. Think Tech H.I. Watch us on Olalo. Thank you so much. Everybody here appreciates it. Hello, it's welcome back to Mina, Marco and me. I am Raya Salter, energy attorney and guest host for today. We've got both Mina and Marco on the phone. Hello. And when we stopped at the break, I had just asked Mina about her thoughts on this new, you know, we've got this great new, a really innovative new Tesla battery storage project on Kauai and just sort of asking with all the different battery technologies out there now, how should other islands that are looking to perhaps do this type of project be it on a Wahoo, Molokai and I be looking at this technology and making some of these decisions. And I had asked Mina and now I would like to pose that same question to Marco. Well, and it occurred to me over the break, Raya, that I should probably and I will mention the full disclosure that my company Provision Solar is in fact a Tesla dealer. We're one of a number of Tesla dealers in the state of Hawaii. We're not selling the fantastic Tesla EVs, but we are selling Tesla energy storage. So I just wanted to get that out there. Thank you. And to go to your question, it is important to note that while Hawaiian Electric, the Hawaiian Electric company Fico Helco Miko, have yet to go down the path of dispatchable utility scale solar. It's not as if they've been sitting on their hands either. They have utility scale storage in the form of lithium titanate technology from a company on the mainland called Alter Nano. They have about a two megawatt, if I'm not mistaken, battery that has been in place on the friendly Isle of Molokai since mid year, which I had a chance to check out myself, middle of last year, super, super impressive to see this 40 foot container just jam packed with all these batteries and all the technology small electronics. And the Helco as well has at least one of these at or around the HRD, Hawaii Renewable Development, their 11 or some megawatt wind farm. So while these battery storage units are not for dispatchable power, fundamentally, they're more for kind of ride through an anomalous conditions on the grid. In fact, on Molokai, they have been able, the Miko operators have been able to get some dispatchable power from this lithium titanate battery, in other words, store energy from excess or surplus solar during the day and have it be available at some time later in the day. So I'm happy to see that Hawaii Electric is doing that. But that's if you look at the the projections of their the near term plan for under the power supply improvement plan, which is submitted to the commission last December, they note that utility scale storage, perhaps may be possible in the Hiko territories as of 2019. And they're deaf, they're certainly using it in the conditional, not it shall be deployed by 2019, but maybe, or perhaps I forget the exact word is not in front of me. So again, it's kind of striking. Oh, it's great that you mentioned that that is, you know, both, you know, we're seeing I mean, you know, we've got the 2045 goal. And then we're hearing these numbers 2020 out of Kauai 2019 out of in the 2019 you mentioned about the PSIP. And then sort of going back to sort of gosh, yes, you're talking about these, you know, these various technologies, things that have been deployed. And as as Mina is talking about, you know, I presume by their individual, you know, program managers are being, you know, monitored for performance. But what should you know, how should regulators and utilities and islands be looking at what types of investment, what types of technology can be the best? Is it, is it chemistry that they should be looking at? Is it, is it bling? Is it the prior experience of doing a project at the scale which Tesla now has? Is it cost? Mina, if you could speak to, if you could speak to that question, please. Yeah, I think right now is it's a cost issue. And, you know, is it better to move forward with a no regret strategy? And finding ways of optimizing our investment. Now, as we wait for the technology to sort itself out, to become cheaper. And if we jump in at the early stage, it may be very expensive, and more costly for the rate here, or for the customer. So, you know, what are our best options right now, as these technologies are being developed? And, and I think, you know, listeners should understand that there are two functions of the battery. One is to deal with the frequency, voltage issues of the system, which is a real high cost, high value function of batteries. And then the other function of battery is for storage and to dispatch when necessary. And while it's something that would be nice to have but not necessary to have, unless it's cheaper again, we're going to hear generators, which you can see has done. So, you know, not all batteries have the same function. And the value of the battery has different cost values to it. Got it. And I and it's helpful because they're they're different, different things that at stake in those in those sort of two functions that you mentioned. Yeah. Marco, we're going to explain it better than I can. Please, Marco, go ahead and share your thoughts. Well, I mean, if I were advising Alan Oshima or David Bessel, Alan being president of Hawaii Electric and the subsidiaries of Elko and Niko, I mean, it seems to me to be a no brainer that if there are other companies, other entities that wish to deploy, install and deploy storage, dispatchable storage at their cost and enter into power purchase agreements or energy providing providing power agreements to the utility company at their cost. I mean, that seems to make much more sense to me than having ratepayers pay for it or have it be above the line in terms of the fine electric companies paying for it themselves out of their pocket. And it just doesn't seem to be and it's not as if I'm living the financing of utility scale storage. But from what I can tell, there doesn't seem to be any shortage of investor capital out there and the willingness of these these providers to take on that risk. And again, if you the contract is structure structured so that you're only the utility company is only paying for the power provided, then that seems to me to be minimal risk and maximum reward. And that seems to be the direction that obviously KUC went and they're not just standing on their laurels in terms of the project they completed with Tesla and Fuller City, but they you know, publicly announced to deal with AES as well, the owner of the which is at H-Power, I think on Onowahu to install, you know, their next utility scale storage or next utility scale PV with storage at an even lower cost than the deal with with Tesla and Fuller City. Well, this, thank you for mentioning that I think in both you and me and I mentioned the issue of risk of negotiation of skin in the game when it comes to the developer and the investors. We've only got about a minute and a half left. But let me ask, what do you think are some of the regulatory considerations that islands and developers may want to consider as they go forward with wanting to do more of these projects? Me now I'll ask you first. Well, definitely, you know, when issues we have to look at opportunity cost and effective regulation on and opportunity cost, you know, if you look at these PPAs that coming forward that are far cheaper than what existed, you know, several years ago, you know, how can we get it to the regulatory system faster, so as not to be affected by opportunity cost? Given the time Marco? Yeah, go ahead. We've got about a minute left, Marco, if you could share your perspectives, please. Oh, just simply, I think, kind of a conclusion that it's really kind of the Wild Wild West in the sense of being on this new, this new energy frontier. And there's still certainly question marks in terms of how these buggers are really going to work in the field and there's going to be hiccups, there's no doubt in my mind. And there will be tweaks along the way. But I think it's just a really exciting time where we've got some major institutional players, again, whether American, Korean, Japanese, Chinese, European, who are jumping into the space. And I just think it's very exciting. And you know, we were talking mostly about utility scale. But there's also going to be a huge market and an necessity, I would say, necessity for Yeah, Marco, I don't mean to interrupt, but I think that's about the end of our show. I can't tell you how I'm excited, exciting it's been to sit in for Jay and getting to talk to our state's top experts on the Wild Wild West, that is the new frontier of energy, solar and PV in Hawaii. Thank you so much, Mina. Thank you so much, Marco, signing off for Mina, Marco and me on Think Tech Hawaii. Thank you. Thank you very much.