 This is Think Tech Hawaii, the community matters here. Next week. Sorry I'm not there. Three, two, one. We're live! Live! Lou Plierisi in Washington, the CEO of Eprink, and me, Jay Fidel here on Think Tech, here on Energy in America. We are so excited to be together with Lou again to investigate all these fantastic trends that are happening. So many changes. If you thought things were changing in general, they're also changing in energy. And why not? They're changing on both sides of it. They're changing on the renewable side and on the fossil fuel side, believe it or not. And so we have to keep track of this, especially, especially in Hawaii. Lou, welcome back to the show. It's always nice to have you here. Great to be here, Jay. Great to be here. So let's look at your slides first, so to get warmed up on this. Right. I was going to take you. I think it's an interesting thing to think about. So I thought about it before we start off with this, look at what's happening to you. Particularly utility. You know, the voltage and so on and so on. Look at the first slide. It shows you what we call the utility scale over PZ historical span. Right. You can see there's either two kinds of pictures here in this slide. On the left is the what we call picture. Right. And on the right is one axis. One axis follows the picture where you are. Okay. Now you're going to have to explain all that to our audience so they know what it's all going to be about. You can have it sit out there on a kind of picture, maybe move, move, you know, the tilt can be changed a little bit. Okay. And you just captured the sun as the earth moved about. Right. The so-called factor, one axis factor moves with the sun so you can observe the picture. And it's more focused on for a longer period of time. Mm-hmm. During the day. And I think the thing I wanted to say about this slide is this picture you can see that the cost of, you know, to deal with the subpartum requires a lot of different things. There's so-called softback. Softback. The land, sales, taxes overhead. There's the labor cost, the hardware, the inverters, and the modules. And the modules are the yellow part, right? Mm-hmm. The modules are not everything. Mm-hmm. You know, in fact, modules are less than they have to cost now. But we have a long battle with the Chinese on the cost of the low cost, the subsidized actions they take, and it's been hurting the production of modules for the U.S. Company. Mm-hmm. And in fact, on January 23rd, the Trump administration issued a proclamation of the new character on imported sulfur cells and modules. And this is in response to a trade so-called 201 petition. And this is an outcome of two companies meetup later joined by a company called Solar World. They took their case before the International Trade Commission in act 2017, alleging that Asian companies unfairly build the price of solar cells in the module to an understandable level. I think today with the global community on this, right? Mm-hmm. Some people say, look, the real issue is getting these- The real thing deployed. And the real payoff is getting them in the field. Not so much making them. Yeah, the Chinese did a lot of subsidies and government intervention, but this is just going to make it more expensive for us to deploy it. So, and, you know, so I think that the president decided to do this. And I don't think it's going to kill those three. It's going to take some time, let them sort of pass out the impact. But so I thought I thought this would be a good fine conducting point to go ahead and talk about, you know, how do we kind of measure the role of the solar against all the other fields going forward? Absolutely. But before we leave this slide, though, I have a couple of questions about it. Sure, sure. The one on the left is a fixed solar panel. The one on the right is a tracker. Okay, so it sounds like- And the number at the top, the top of each is what? The cost of the amount of energy generated. What is that? So that's the cost for 100 megawatt. Okay. Basically, you know, those are the, you know, the top of the scale is $6. So if you go back to 10, you were paying $5. And we're down to where did he use a fixed tilt or an axis? About a dollar. Okay. So it looks to me, if you follow this chart, it looks to me like we're actually spending less, I guess that's per kilowatt hour, less per kilowatt hour in 2017 using the fixed tilt. Then using the $1.15 tracker. Neither one of these deal with the question of availability or how much of this capacity is available to you at one point in time. And I'm going to get to that a bit later. Okay, let's move forward and talk about the comparison of photovoltaics and other fuels, especially in light of the tariff. So we can get off this slide and look directly at you. Yeah, let's move to the next slide. I just want to show you that this slide is kind of just a document that we need growth in its old and old age. It's growing rapidly. And we expect it to grow through 2020. And the cumulative forecast from 2016 to 2020 is going to be about 387 gigawatt. That's a lot of power. It's not a lot of power. But remember, it's only when the sun is shining. That power is not available to you. We talked about this before. You need some way to stir energy that's not available after the sun goes down. What is the blue line on this chart? There's a blue line and some blue legend there. The average annual growth rate in about 9% to 4 to 20%. I think if you talk to people in the environmental community, they're excited. Fantastic. The plus mean, we can get off a fossil fuel site. The plus mean, we're not going to need them so much for the future. Well, that's demand though. You're not cranking supply into this chart. There's only demand, yeah? Right. Right. Only demand. Only demand. This demand is going to be met. Okay. Let's go to the next slide. Because I think the next slide is very interesting. This was just released today. Okay. And this is the energy consumption forecast. The so-called reference data. But the U.S. Department of Energy independent agency. All the energy information agency. The U.S. Very respected data collection and analysis agency of the Department of Energy. It was created in the mid-70s after the Arab oil embargo. It produces lots of data and analysis. And I think if you look at there, and what we're going to look at today is what we call the reference case, right? Okay. And the reference case is kind of their best guess. Everything else being equal. This is kind of how it's likely to play out. Given current policy. No major change in current policy. And current policy is continue subsidies for a few years on solar and wind. Renewable so-called renewable portfolio standards are feeding tariffs by the state. So this embeds in this forecast. All the things the federal government doing and all the things the states are doing to encourage the use of renewable fuel. So I will start first with the, on the left, the consumption by sector, right? Okay. And you can see, and this is done in what we call quadrillion British thermal units or quads in the business, right? Okay. That's a lot of power. And I can, next time we talk, I can give you that number in equivalence of barrels of oil and gas. But, you know, the U.S. will, you know, if you take the today, which is where we are here, right? Let me just hang on a second. I don't know what's going on all of a sudden. So if you take where we are here, we're going to continue to see growth in electric power. Yes. A lot of that is, that's projection now. But by respect to the organization. Yeah. It's pretty good. You know, it's not a crazy number if they show kind of modest growth. Yeah. Industrial use is going to grow. Industrial use of energy. Yeah. And transportation can grow that much, right? Right. This is kind of kind of declined or gasoline consumption is going to decline more fuel efficient. But eventually it turns around. Okay. Just to be clear, though, you're talking about energy in general, not any specific sources. So we're going to go to the fuel types in a second. And we're talking about the country, the national numbers. The whole United States. So this is for the whole United States. Including Hawaii. Including Hawaii. There you go. Awesome. Wow. If you move to the right side, the energy consumption by fuel, which is really the more sort of interesting area for us, you can see the petroleum and other liquids. So this would be gasoline, diesel fuel, ethanol, probably, well, maybe some of the ethanol is down to renewable. But mostly gasoline and diesel, liquid petroleum gas, LPG, stuff you use for the Tiki lights in Hawaii, all that stuff. So that actually, they show that declining and then slowly recovering to, you know, almost where it is now by 2050. So we don't see a lot of demand in what we call the liquid piece in the U.S., right? That's the top line. Petroleum declining at first and then ascending again. So this is gasoline, diesel fuel, liquid petroleum gas, probably condensate, petrochemical feedstock. Yeah. I don't see any renewables on the right-hand side of this chart. Well, you haven't seen them yet. We're going to get to them. Okay. Okay. Oh, I see. I see. It's down below. It says other renewable energy. Okay. There it is. Natural gas grows substantially, right? Yes. Largely. Part of this is exports. Part of this is, well, this is an industrial sector and the utility sector. Well, so you need a lot of gas to back up the renewables. Yes. And then you see, we have a decline. Coal continues to decline and kind of flattens off. Yeah. And then we have something called other renewable energy. Yes. And the reason they call it other renewable energy is they don't put hydroelectric power in there. Often people want to show a big increase or a big percentage of renewable power. They bury the hydro power in there. Hydro power really isn't that new. Yeah. That dams for a long time. So the EIA has separated out hydro power from other renewable energy. This is largely wind and solar. Okay. Yes. And that wind and solar grow. But it's out of the total, you know, it's only going to account for about 14 quadrillion BTUs, 14 quads. Okay. It'll be about equivalent to coal in 2050. Nuclear decline and hydroelectric power kind of remains constant. And that does what we call liquid bottom fuel. Okay. This is ethanol and whatever you guys do in Hawaii. Yeah. Yeah. We're having a program about that next hour. Yeah. Yeah. So you can talk, you can kind of wring your hands over the tariffs. You can talk a lot about solar and stuff. But these are official forecasts from the U.S. government. Okay. So on that note, Lou, we're going to take a very short break. We're going to sort of integrate this. I'm going to come back and we're going to talk about the implications of it and the intersection of these numbers that you've given us, these charts and policy. We'll be right back, Lou. This is Think Tech Hawaii, raising public awareness. Good afternoon. My name is Howard Wigg. I am the proud host of Code Green, a program on Think Tech Hawaii. We show at three o'clock in the afternoon every other Monday. My guests are specialists from here and the mainland on energy efficiency, which means you do more for less electricity and you're generally safer and more comfortable while you're keeping dollars in your pocket. In the Chinese department. Okay. That's Lou Puliarisi. He's talking about his son who has a scholarship to the University of Washington, Nanjing, did you say? These are Minoa students. Minoa students. See what happens, you know. Hawaii does have a connection by way of Washington to Nanjing. So you have some more slides that you want to present to round the picture up. The first slide is, the next slide we have is, I call this, this is actually the courtesy of a good friend of mine, a brilliant physicist by the name of Mark Mill. He's a venture capitalist, also works as a scholar at the Manhattan Institute. And this follows the title of this slide is Doing Chemistries, right? And here's the interesting question. How much, if you think about an automobile, you want to know how far you can go for a pound of something, right? How far will a pound of fuel, a diesel fuel, a gasoline take you? And how far will a pound of a lithium battery take you? And if you look at this data and you get all we know about physics in the known universe, or at least in our current universe, you know, not an alternative universe, but in our universe, and you double the lithium battery. And this is really the extension of what we can do with the chemistry and the physics. We can probably go a mile a pound over time. But for a pound of diesel or gasoline, we can go seven times more. And the gasoline engines are also getting more efficient. So the first thing, we still have this problem with battery technology, right? It's just not as efficient, not as cost effective, and just doesn't take you as far as a pound. And remember, if we're going to do all this electric battery, we're going to have to mine lots of lithium around the world. We're going to have to accept those environmental costs from that. So I think that's something we should keep in mind. We still have to fix this problem. The second part, the last slide I want to talk to you about, why might the EIA numbers be correct? You know, what is it about the EIA numbers? If you think about the EIA forecast, it's basically a cost-based model. You know, the government policy is in there, but it has certain limits. So when they run their big NEMS model, this monster model of the U.S. economy, they put the cost in here. And this chart is very interesting. If you look at, on the left side, you have, what can you get for a million dollars of capital expenditures? That's what the cap acts like. So if I put a million dollars into a shale well, right, I can probably get 400 barrels of oil equivalent production over time. I can get in a wind turbine if I put that much money, 90, and a lot less than a solar, right? But that's one story. So right now, capital expenditures yield more energy output for a million dollars in the shale field. But let me ask you though, if you put a million dollars into shale, you're processing the shale, and then you've spent the million dollars and you've processed the shale, you have the bottles of oil, 400 of them, whatever, and it's gone. The money's gone. There are no assets left because the million dollars doesn't include the assets. It's talking about the processing. But if you have wind, then the cost of building a wind turbine leaves you with a wind turbine. You still have it. And the cost of putting photovoltaic up, yes, you have the photovoltaic energy, but you also have the panels left over, no? Is it ready to depreciation? Mm-hmm. Okay. You get depreciation in the shale well, eventually a decline, but you also keep that in, you have to repair and fix these wind turbines, they don't last forever, and even the photovoltaic way out. Okay. I just wanted to clarify that the million dollars is being to, includes depreciated and asset-based. But the right side is the more interesting point. Okay. The solar and wind are probably now reaching, if you look at this decline in the cost reduction, right? Mm-hmm. For solar and wind, you see by 2030, you're kind of, you're already in 2010, 2015, on the flat end of the cost curve. That is, the asymptote is coming down as close to zero as you go. There is no more improvement in this technology in front of us. Mm-hmm. So these numbers on the left reflect where we are in the terms of the improvement in this technology. Oddly enough, the shale well probably has still a few iterative technology at dances in front of it. Mm-hmm. It's not on its slope. So one of the dilemmas we face is we get a higher return for cattle action shale, and it's likely to improve, you know, maybe another 100% over the next 20 years. For the shale and wind, we're kind of done. And so we have to figure out what we do about that. Yes. Yeah. So, okay, that takes us to the next part of our discussion. How does this all, you know, you're talking about projections on, you know, on factors that are not necessarily linked to or a function of government policy. And I guess the question is, you know, what kind of government policy is inherent in this and what kind of changes might take place and how would those changes affect these numbers? We do know that, of course, we're going to need all the improvement we can get in batteries and solar and wind. But we're not going to get these kind of colossal transformations unless we're willing to pay a lot more. That's the conclusion I would take. Well, suppose I threw, how much is the wall supposed to cost? $18 billion? Suppose I threw $18 billion at getting, you know, better batteries. Or for just a small example, the cost of a military parade, you know, through the center of Washington. I know you're looking forward to that. So the cost of that, what, a couple hundred million, whatever it is. If you asked me what to do with that money at the margin, I would send it back to you as I put it in the article. But I believe that low return. That's just a good question, you know, how should we spend our money on public money? And probably the big return is invested in human capital. We kind of have plenty of dough invested in solar and wind. We're at the end of the cost and it's unclear the government has a lot more to add there. Yeah, we probably may be able to do, get some efficiencies in better management of the grid that are, you know, we should have a decent research program but at the margin that's just to be. Okay, I mean, but theoretically though, theoretically, I mean, if you put all the other issues aside and you make a decision that you want you want energy to be renewable why because of carbon emissions because of, may I say COP 23 and the Paris Accord. So if you make that decision what do you do? So if you decided that you wanted strategy to reduce emissions you probably should not be spending $1,800 a ton for zero emission vehicles as California does. Instead, you probably should go to China buy out a bunch of coal mines and sell them LNG from America. That is probably only like 50 bucks a ton. And that's the problem. It's not a local air pollution problem in the Los Angeles Basin. It's a global problem. And US policy is on the high end of the cost curve. Yes. I mean, I know the US administration is not particularly interested in environment nor are they interested in renewables looking at that coal line and the chart you showed one of those first slides and saying to myself, well, do we really need to have that much? If we were concerned about fossil fuel concerned about carbon emissions we would take the coal off not incentivizing it, but de-incentivizing it. Well, we could do that but I think the EIA numbers are very instrumental in that are suggesting that the existing policies which are largely what was in place when Obama left, right? The amount of changes the administration made are much more modest than you should believe reading them. The local newspaper, okay. But clean air most of the utility sector is driven by state policy anyway. Yes, you might be able to drive the coal down a bit more. You probably are having a little bit of a kind of expensive play on the nuclear side. Actually, that's one of the big dilemma. We are disincentivizing nuclear power or if you like we've created a regulatory framework that makes it very difficult to build out and extend our nuclear power plants which are emission free. Well, why he has a provision against it in the Constitution? It's been firmly invented. The Constitution prohibits nuclear power? No, it requires a two-thirds vote of the legislature. I think a special vote, a special percent. I think it would be a mistake for Hawaii to use nuclear power as well. Yeah, yeah, yeah. So I mean, but you know where does this fit? Because I think the demand and the expectations the charts the projections on those charts very valuable. But it also raises the question of what do we do to massage those numbers? What do we do to... Legislative approach. We've tried to ram and shoehorn all this climate stuff into something called the Clean Air Act. It doesn't really fit in it. The Clean Air Act was aimed at getting soot out of the atmosphere and local jurisdictions getting lead out of the fuel, things like that. This is a kind of global issue and it may also suggest that we should have a hard think about where to allocate our money between adaption and mitigation. And my view when I look at those numbers, I say, well, wow, the U.S. can probably alter those a little bit. We could put a lot of money and maybe drop the coal down a bit. You know, some people suggest you could buy out the whole coal industry 50 to 100 billion. 50 to 100 billion. Build a lot of schools, pay a lot of welfare, write a lot of social security checks. You've got to ask yourself, is it worth it? Maybe we need to rethink... That's an interesting question. ...some mitigation and less on... I mean, more into adaption and less on mitigation. I think it's a big problem. And right now we're kind of stuck. We're stuck. Yes, we probably should get them down. But this is the reality what's going to happen. Well, one of the things you mentioned in our preliminary discussions was the Exxon initiative around shale. Can you talk about that? They were going to invest in the United States $50 billion to produce oil and gas in the domestic economy. And my question is, well, why would they do that? But then you look at the EIA numbers and you say, well, they're doing that because EIA said the demand for gas is going to grow enormously in the U.S. And the Exxon is part of the world market. The U.S. is exporting a lot of oil to the world market. And we're going to continue to do so. Well, you know, this home raises the ultimate question which I would like to ask you here at the end of our show. And that is Hawaii. We're going to use these numbers. And let's assume that the common policy remains pretty much the same. The direction is pretty much the same. And so those numbers, those projections actually play out. So the question is, what is Hawaii or any state which has a certain interest in renewables? And we have a very enthusiastic interest in renewables. But what do we do to fold all those projections into our planning here in the economics? It is an island. The natural resources it has are largely renewable. And so the question that policymakers should ask themselves is why are they pursuing this policy as opposed to that policy? Is the intent of the policymakers in Hawaii to provide the lowest possible cost of power to the citizens of the state of Hawaii? Or is the policy to provide 100% renewable so people can be good when they go to an international company? I mean this is really. And the question is, that second alternative if you're realistic might be very, very expensive. And so probably you want to get on a path that kind of preserves the option of keeping the cost under control. But moves along and makes some progress on renewables. That makes sense. That's a great approach to it. Lou, this is a great discussion. We have to continue this. We have to discuss these various priorities and options and see how they affect Hawaii of course. Thank you so much for coming around for a show. We'll see you in two weeks I hope and I'll see you next time. Thank you so much. Aloha. Thank you so much.