 Arco Mangelsorf here on Energy 808B cutting edge. I am so very pleased to be able to offer today our exclusive interview and talk story with one Mike Calachini, Senior Director of Pune Geothermal Adventure. And Mike, you know, you and I go back a ways. We've both been in the trenches here to one degree or another in the energy field. And I always had so much respect and aloha for you. So first, let me just give you my thanks so much for joining me and joining us today. I really appreciate your interest and consideration for joining you today. So let's take a dive right now. I was looking at your LinkedIn bio before I started this session and I see you've been at Pune Geothermal Adventure PGV for short. You've been there now more than 32 years, 32 years and worked your way up to the position you have now. So man, you've been around since even before the first kilowatt kilowatt hour was generated because if I'm not mistaken, you guys went live in 1993, right? How first can I take a step back? How did you start and I'm starting a PGV long ago and it was under different ownership back then, right? Because ORMAT is I believe the second owner? Yeah, ORMAT was the second owner but ORMAT was actually involved in the engineering and procurement construction. They built the facilities, their equipment, but then the owners that operated was the company Constellation Energy of Maryland and Baltimore, Maryland. Okay, so I see you were in the U.S. Navy. Thank you for your service before. What led you to PGV long ago? So I was in the Navy. I was in the engineering department. My specialty was gas turbine engines. That was a mechanical systems operator for gas turbine, which is basically a jet engine, right? And on the ship that I was on, we had large LM-2500s generate electric jet engines that were used for main propulsion to make the boat, you know, cool. We also had smaller gas turbines that we used to generate electricity. So that's where I got all my experience in the engineering background is the Navy. And I was stationed in San Diego and believe it or not, I met a lady from Hawaii Island in San Diego. So we got married and my enlistment ended and she said, let's move back home. I said, okay, right on and I'm from Oahu. So I'm thinking, all right, we're moving back to Oahu, but nope, we'll move back to Hawaii Island and Hawaii is from Honamu. So that was in 1990, the end of 1990. And that was right around the time the state was doing, you know, a project about all high school, about Kileopuna Forest. And in parallel, the company I hired on with was doing the 25 megawatt project here in Kapoho area. So that's how it started off. I hired on as an operator entry level in 1991, saw a lot of exciting things throughout the years. And, you know, I worked through administration and I was plant manager for some period of time and then transitioned to business development, which is what I'm doing today. That's why they call me the senior director or man. And time flies, Michael. Amazing. Mike, is there anybody there at PGV who has been around as long as you have, my friend? Or are you the gray beard without the beard? So I am currently the longest ten-year employee. There's a few others that are in the 20s and close to 30-year employment years. So I'm, yes, I'm the, I don't know, I'm the old guy on the block. Well, and you bring, you bring, of course, you know, incalculable, aca-minus and wisdom, of course, just because of your time there and having seen, seen so much when you said, oh, I'm 2,500. I kind of perked my ears up because that's a general electric model if I'm not mistaken. And there are two LM-2500's up the coast of Hamakua energy. And I believe there's two or more Kehole that Hawaii Electric Light works as well. So that's interesting. The LM-2500 seems to, seems to get around both for stationary power generation, also for mobile power generation in the form of naval vessels. Well, that's, that's fascinating. And as far as I, I understand, you know, the history of geothermal goes back to sometime around the 1980s when there was, you know, discussion going on, I believe, I don't know, 85, 86. And it took, of course, something of a gestation period to get to the point of getting the necessary permits and building and going online and so forth. So I believe in terms of actually being online, aside from volcanic interruptions, we're going on 30 plus years now. When did things actually start producing power there in 1993? Yeah, we started in 1993 on the middle of the year. So we actually started the plant up in April of 1993. Then we, you know, we had to do acceptance tests and capacity tests. And so it was a couple months later when we were able to declare commercial operation date. So right around the June, July timeframe. So this year marks 30 years with the exception of the break that we experienced during the eruption. I frequently say, Mike, without knowing the exact number, just because it sounds kind of impressive, which is that PGV operating for now 30 years has prevented the need to import a gazillion barrels of oil that otherwise would have been combusted in a turbine, right, or a boiler. Do you have any, can you help me out here in terms of gazillion, of course, isn't all that accurate? Do you have kind of even a rough number of how many barrels of oil or petroleum products has not needed to come to this island because of PGV? Yeah, we do have that number. And it's a slightly over 145 million gallons of oil. 145 million gallons, well, 145 million gallons. That's quite a bit. That is, that is very impressive. And this is kind of a broad question. But let's see where you want to go with it. What difference do you feel that PGV operating these past 30 or so years has made to the big islands energy landscape? You know, I think what we just mentioned about the displacement of petroleum is probably environmentally, you know, the largest contribution, right? I mean, today you look at greenhouse gases, climate change. We've been doing this for 30 years. Even before when it was, you know, climate change was maybe just something that was just being discussed. So that to me is a huge part of it. The fact that we have this facility here that provides economic support for our island to the Pula district, you know, we have 31 full-time employees here working, earning living wages, you know, it's tough on Foy Island, right, to get employment that, you know, you can raise a family on. And so that also trickles down through the economic contributions we've done throughout the neighborhood, the community, the schools nearby. We go out and purchase things from the stores and we rent homes and we get contractors. So, you know, those things are, to me, has made a difference and will continue to make a difference on the big island. And Mike, if I'm not mistaken, you know, obviously any power generator that's going to sell power to the utility company has to have something called a power purchase agreement, you know, the terms and conditions, of course, of, you know, party A is selling power to party B and that original power purchase agreement, if I'm not mistaken, that was up to a maximum of about 25 megawatts of power. Is that correct? Correct. Yeah, it's correct. So the original power purchase agreement was 25 megawatts in 1993 because that we were fortunate that our geothermal resource was much more productive than 25 megawatts. We negotiated an additional 5 megawatt increase two years later in 1995. You know, so we went from 25 to 30 megawatts with the same equipment and we're utilizing only the steam from the geothermal resource. So what we have here that comes up in the form of heat is in hot water, which we refer to as brine and steam. And the original 25 megawatt equipment was designed for the use of the steam fraction only. So we had enough steam to go to 30 and that was 1995. And so throughout the years we were not using the heated or the hot water, the brine. So it wasn't until 2012 where we negotiated an eight megawatt increase. And that's where we are at today, 38 megawatts. So 30 megawatts from the steam plant, eight megawatts from the hot liquid or the brine plant. And Mike, also if I'm not mistaken, I believe the first 25 megawatts are still being or are PGV is still being compensated at the so-called avoided cost rate, which floats up and down depending on the cost of oil, right? That's correct. So the first 25 megawatts for the peak period is still tied to avoided costs. The first 22 during off peak is also tied to avoided costs. The anything above that, up to 38 megawatt are all fixed prices anywhere from 12 cents to as low as seven cents a kilo amount. And since PGV came back online, if I'm not mistaken, November of 2020, after the the interruption due to Madame Pele. So we're going on, we're going on almost three years now that PGV is producing power again. What is the peak output that you guys have been able to achieve post-irruption? So we've actually gotten close to 30 megawatts for a short duration, but we've been experiencing some mechanical challenges on some of our wells. And so we have been able to perform capacity tests. I think that's 25.7 megawatts is the highest. Today, we are at about 22 megawatts because we're making adjustments to our well field. We just completed drilling a new production well, which will take some time to connect to the plant. But it looks like it's going to be a productive well. We're hoping it'll be a good one. And once we connect that though, then we'll see how close we can get back to 38. Our plan is still get to get back to 38 before the end of the year. Right. And as far as I know, whereas wind farms on the island, such as Habi Renewable Development there in North Kohala and Bukini Nui down at South Point, they are both curtailable that Helco can decide based on certain criteria to not purchase wind power produced. I don't believe PGV has, you guys have never been curtailed, have you? They've purchased everything that you've produced? For the most part, we are delivering everything that we can produce, with the exception of when there's been a lot of rain. There has been off peak periods where the hydro facilities in Helo have seniority on the pecking order, the dispatch order, so to speak. So when they were providing a lot of energy from the hydro plants, and this is off peak, of course, we were asked to be curtailed if the load wasn't just there. So we would be curtailed. Interesting. So hydro production is senior to geothermal production in that pecking order. That's interesting. In the PPA, in the P Power Purchase Agreement pecking order, that's correct. Power Purchase Agreement pecking order, yeah, a lot of peas there. So let's scroll back to those fateful days in May 2018. And I mean, I could only imagine how it was like for you and the crew there as the lava seemingly was surrounding the facility with a lava lake. And I mean, I can only imagine how those days were for you guys. I mean, did you ever have much fear that it was really going to be game over and that level of lava was going to keep on rising so that essentially, all of PGV was going to be inundated or were you guys on enough of a kind of a rise that you thought, as long as things don't get really crazy, I think we'll be okay. What was that like? It definitely was a once in a lifetime experience for all of us. We definitely were concerned. I mean, the eruption started on May 3rd in the afternoon of May 3rd in Leilani. However, weeks leading up to the actual eruption of lava to surface, we were in very close communications with civil defense, USGS, because they knew that the magma was migrating down the rift zone, right? And then once the lava lake just disappeared at Kilauea and went somewhere. And of course, just being here and knowing people out in the community, you could just sense and you could feel the earth beneath you just like moving. Like if you had an upset stomach and you had the gurgling, that's how Mama Earth was treating us that time. It was such an unbelievable experience. But getting to the point about being totally covered, we knew that the well field as far as elevation-wise are the lowest. And if anything, the well field would be the first location. And these are the geothermal wells and some other equipment. That would be the first location where if the eruption continued and produced more material, they would be covered. But if you got back to the original equipment in the control room, it's about a hundred feet higher at least in elevation. So we felt pretty comfortable. And that was all in the design to build that equipment at a higher elevation in the event there is a lava eruption. And so from that perspective, the developers of this project did their homework. Now we know and our folks know that the rift zone, the east rift zone is very active. There's been eruptions in 55 and 60. And it's right along the lines of where we're at. And so what ended up happening is two of our geothermal wells got covered, two of our water wells got covered. And some of our equipment, including our drill rig, got covered by the eruption. But the rest of the plant was largely spared. And so our thought process was if the lava was going to be as high as a hundred feet more, all of Puna would be covered. Yeah, it was exciting. Never, never will forget those moments, that's for sure. And then, you know, Ormads said business to make a profit. That's typically the way it works in capitalism society that we live in. So this rather serious event takes place, which shuts down the possibility of revenue for the facility for who knows how long. Right. You know whether, I mean, and of course, I don't know, but I would think that the plant was adequately insured. And the folks at the top levels of Ormads, you know, how the decision, well, we're going to spend money to bring it back. And not knowing when bringing it back was actually going to take place. Or, you know, is, are we going to call it a day, you know, after, after what, 20, 25 years or something. What's, were you privy to that? And why did Ormads decide to, to march on in the face of lava inundation? Good question, Michael. You know, that covers quite a bit of other questions that we were asked all the time. You know, people ask, well, why do you build a facility, you know, on the most active volcano? And, you know, that, that's something that we always say, look, the reason why we have the facility on the East River is that's where the research is at. Right. So it's not much different than other facilities that Ormads owns and operates worldwide. We have equipment and facilities in Indonesia, in the Philippines, or something in Iceland, in, in Africa. And we've experienced, you know, Mother Nature, like covering up our equipment with ashes from a nearby volcano. And now this one was like a super duper experience, right on this level from 2018. So we understand those risks. We've had insurance. And so I personally would give credit to the leadership of Ormad at the time, because the CEO, as soon as the eruption started, and our executive vice presidents, they flew over to Hawaii. They gathered all of the employees and said, look, you guys, we don't know what's going to happen. This eruption has just started. But we can tell you guys one thing. We promise to keep all of you unemployed for at least one year. And let's see what happens in one year's time. Right. And so, of course, the eruption started early May, late May, it surrounded us so we couldn't get back on by land to the location. So we had several people flying in by helicopter and taking time. But the rest of our guys, we volunteered at the hub in Pahoa. We volunteered. Our employees volunteered with the American Red Cross in Cal all during this eruption. And I gave credit to the Ormad leadership, the CEO at the time, his name was Isaac Angel. And so the folks at the very top level said, you know what? August, the eruption was officially called an Antoid by USGS. And for Ormad to decide to let's go back in and recover and get back to doing what we do, which is generate geothermal electricity, I tip my hat to them. I mean, they could have easily said, yeah, you know, this is the end of it. Right. And there was lots of folks that stated that they thought this was the end of a geothermal here. But again, our folks understand the risks involved with geothermal. We don't take it lightly. We take it seriously. And we're fortunate, first of all, for the employees here, for the island, for the state, that we continue to work our way back up to 38 megawatts. And candidly, my candidly, I'm always kind of embarrassed to say I was one of those people as well who thought there's no way there's no way PGV is going to come back from this and to your credit to Ormads credit to everybody who has put their heart and soul and sweat into making this happen. You know, you guys did it. And let's kind of shift gears here. I mean, ever since people were talking about the possibility of a live geothermal plant on the island back in the 1980s, there was opposition for a number of reasons, whether it's, you know, just the creating man on Pele because of the safety risks, whether if there happened to be some type of, you know, catastrophic runaway event, or emissions, there's been opposition. And there continues, as you know, there continues to be opposition. And, you know, I'm not a scientist. I don't live in Puna. I'm not in a position to really come to a considered judgment. But I mean, you've been in the hot seat there for for decades. And I guess my question to you is just if you look back historically over the past years and decades, have there been many events minor or major, however that's defined, as far as emissions that have caused people to not feel well or become ill? You know, what's this great straight scoop on that, Mike, from your perspective? Yeah, sure. So yeah, when we when we speak about emissions, the primary concern is hydrogen sulfide. Hydrogen sulfide is naturally occurring in the geothermal resource beneath the earth. And hydrogen sulfide is formed naturally by the decomposition of organic matter, right? So that's where you get that rotten egg smell, organic matter decomposed. So you got that in our resource. And although the plant's designed to be closed loop, meaning, you know, the production heat comes up, we generate electricity, the cooler geothermal fluids are then rerouted back into the air to warm up over time. You know, that's what the design is of the facility. But from time to time, we've had mechanical failures, a seal or a gasket. One of the first setbacks we had was in 1991 in June, when one of the wells that we were drilling was uncontrolled for 31 hours. That was the KS-8 well. And so you had this geothermal fluid emissions to the atmosphere. Just for 31 hours unabated, meaning it's not treated, right? So we have a system at the at the facility whereby if we release through the system, we add sodium hydroxide and water and it chemically treats the hydrogen sulfide so that you reduce it to a level that's very safe. Anyhow, back with that well, we didn't have that. So at the time, we probably had, you know, in the parts per million range out on our perimeter. And why I say parts per million is that since then, we have had to comply with the Department of Health Clearing Branch. We cannot exceed 25 parts per billion of hydrogen sulfide. Billion or million? Billion. With a B. Okay, 25 parts per billion. Okay, got it. If we exceed that, it's a violation of permeate. We can be fine. You have sensors, I would think, right? We have sensors around the facility. So over 30 years, I can count on one hand how many times we exceeded that 25 parts per billion, you know. And so, but to give you a more insightful perspective, OSHA allows employees to work in an H2S environment up to 10,000 parts per billion, not requiring safety gear. So you can see the perspective how we are regulated at a very nuisance level. Okay. So, and I'll give you another example. In 2014, when Tropical Storm Izel made landfall here in Pahoa in Puna, we did have an upset. The trees took out the transmission line so we had high pressure buildup. And so we went through our safety relief system, which abated H2S. However, we had safety valves that our safety valve that failed. And it released, we calculated a little less than 100 pounds of unabated H2S in this big storm, right? The result of that is we had reports that over a dozen people passed out, over 100 people got sick in the area in this big storm, right? And so we went and did like community discussions with civil defense, with Department of Health, with alcohol myself. So now take us to 2018, right? So we got all these fissures, 24 fissures south of us. It's the emissions is sulfur dioxide, like how we see up at the crater, right? When it's really booming up there. Sulfur dioxide is considered to be five times more hazardous than hydrogen sulfide, respiratory respectively. During the heyday of this eruption, the fissures next to us emitted 400 million pounds per day. And no one reported any illnesses. This comparison. I don't know what to say to that. That is quite the comparison. Well, thank you so much for that explanation. And let's move on to kind of bring us up to speed, Mike, as far as where we are now in 2023. There is an amended and restated power purchase agreement that is in play between you and the Hawaii Electric Light Company. And please tell us about that. And why should we care about that? Well, so, you know, the state's mandate is to get off of fossil fuels, right? There's so many things going on. But first and foremost, what happened some years ago during Governor Igay's first term was he mandated that the state reach 100% renewable energy by 2045. So we're a big part of it. I mean, before the eruption, Hawaii Island was close to 60% renewable energy. And PGB contributed about half of that, about 31%. Right. And so we were like on a roll there. We're like moving our way up to the near to the 100% mark. So now, even before the eruption, we started discussions with Hawaiian Electric about doing a reparring project. Basically, what we propose is that we would install three newer, more modern and efficient generating units. We commissioned the old 12 units that we have. Use the same geothermal resource because they're so newer and efficient. It would enable us to generate eight more megawatts, the same resource, smaller footprint, modern equipment. The other thing is we're talking about all pricing being, they link from oil, no escalation for another 30 years. And then combine the two PPAs that we had into one, you know, one consolidated power purchase agreement, the amended restated power purchase agreement. So the PEC actually approved that original application that was done in December of 2019. Took some time. It wasn't until March of 2022 that we received a conditionally approved ARPPA. The primary condition for PGB was to perform an environmental review. So we've opted to perform an EIS, an environmental impact study statement. So we're doing that. We cannot do any construction until that's completed. And then we're also in the process of reviewing, well, we worked with Hawaiian Electric submitted an application for an amendment. So we're asking for an increase in the pricing because of what happened during COVID and supply chains and everything just dramatically changed during that COVID period of time. So that's still going on. Hopefully we can get a decision from the PEC within, you know, before the end of this year and in parallel be completed with our EIS. So the sequence as I understand it is PGB will be submitting the environmental impact statement to the accepting authority or agency, which in this case is the county of Hawaii, correct? Correct. And they will be, I guess, yay or nay, up or down, hopefully up. And then that information essentially is transmitted to the PUC that PGB has fulfilled that particular stipulation. And then it's up to the PUC to give final, I would think, final approval for this amended and restated power purchase agreement that will be for all 46, you know, max 46 megawatts at a fixed price for all output, whether it's one megawatt or two or 10 or 40, and that there is no escalator over the course of that 30-year PPA, correct? Yes, correct. And then once that approval is given, sometime later this year, fingers crossed, then PGB has a certain amount of time to be able to ramp up to that 46. Is that correct? That's correct, yes. And you have what I think you shared with me before, three years? Yeah, so that's what we're requesting in the approval is 36 months. We anticipate doing it quicker than that, but we just want to get some, you know, weight in case we get more supply chain considerations. And just, you know, because obviously I've got some electrical background here is you're driving, you know, from Ka'au into Puna, you see a pair of high voltage transmission lines, which go into the Puna district. And is it correct to assume that even going up to 46 megawatts max output that the infrastructure that Helco has in place right now is adequate to be able to handle the additional output from your plant? Yeah, that's correct. There's the two transmission lines and they both are able to handle up to the 46 megawatts by itself. So we got some redundancy there. So yeah, we have to do some studies for that. So I mean, given, I mean, if I, you know, if I asked you, okay, Mike, back in November of 2020, now that you were back online, now, where do you think you're going to be, let's say several years hence in 2023 as far as peak output? I don't know what you would have said, you know, whether you would have guessed on the low end or the high end, but I mean, it's still somewhere in the 20s now. I guess what I'd like to ask you is how confident are you and your team that in the 36 months after approval from the commission that you all will be able to hit that 46 megawatt target? Right. So I would say that our competence level is very high. The key is, of course, getting back to our 38 megawatts today because then we have the resource that we need to do the 46. All the manufacturing, of course, going to take time, the big equipment, the generators, we do a lot of that. So we have a high sense of confidence that we can accomplish it in 36 months. Great. That's good to hear. I'm going to wrap up with a speculative question for you, Mike, because I'm really going to be curious to hear your response here. As you're well aware, there is a certain cohort of people on this island and in the state that see the geothermal potential here on this island as being vast, right? So vast that not only could it produce a heck of a lot more power for big island residents, but that over time, geothermal from this island could power the rest of the state. Now, I have some rather strong views on that that I'm going to hold my tongue for now. And I wanted to get your take on because, I mean, brother, you've heard the same stuff that I have had. I've been hearing over the years that see geothermal is almost kind of a panacea. And if we could just put the power cables from Maui and then Maui to Oahu and so forth and so on. What's your take about that? You know, I wish it was as simple as how some of those thoughts come across to everyone, you know, and it's not. I mean, look at us, right? We've been here 30 years. We're still challenged to get back to 38 megawatts. Now, there's been studies of throughout the state. There's the Hawaii groundwater and geothermal resource center, right? That's been established under the University of Hawaii, who has done some preliminary work statewide Maui, Lanai, Oahu, Kauai. So the potential is there, Marco. What we haven't done is spent the money to actually do some geothermal drilling to prove if a resource is viable or not in different locations other than the East Rift Zone of Puna, right? To me, that's the key. And we've been an advocate. We've been hoping that the state will step up because the state has these mandates for energy. The state's going to have mandates for we do net zero carbon and all that. The state has claim to the mineral, right? As the mineral rights, they own it. We should be like how the oil states do in the mainland is go and prove up the resource, have them ready. So when we need electricity, it's right there. So it's going to take time. It's going to take money. And I believe there's enough energy to power up now. We wouldn't want to put all of the plants in Puna. Let's move them around because why? There's going to be more eruptions in the future. We've got a plan for stuff like that. Well, I've heard, Mike, I've heard people like Don Thomas and others who have said that whether it's perhaps along the saddle road going between Mauna Kea and Mauna Loa, whether it's the slopes of Hula Lai, that there are other possible feasible practical geothermal assets, resources on the island. So the obvious question to me is, which I don't have an answer to, maybe you do, why has there not been more surveying done to be able to nail that question down as opposed to, well, we might have usable resources versus, hey, we've tested it, we think we do have. That I just don't get. Right. So I don't either. I know there's been some efforts at the legislature to appropriate funding to do that type of research by the Hawaii Grout, Dr. Thomas and Nicole Laozi's group, but so far that has not been successful. I understand, Mike, and I'm getting the hook from the producer. We're over budget here, but hey, you and I could go on for a while longer, but I'm so very grateful to have you on, Mike, and please, let's agree to have you back before too long because there's just still such more juicy stuff to talk about. So Mike Calichini, senior director, put it as you go through a venture, Mahalo Nui for joining us. Thank you, Marco. Thank you so much for watching Think Tech Hawaii. If you like what we do, please click the like and subscribe button on YouTube. You can also follow us on Facebook, Instagram, and LinkedIn. Check out our website, thinktechawaii.com. Mahalo.