 the state of clean energy with Josh Powell as CEO of Revolution, a very important solar and solar company in Hawaii. Thank you for joining us, Josh. My pleasure. Thanks, Jay. Thanks for the invite. Well, we originally were going to talk about shared solar, which is sort of an extension of community solar, as the Hawaiian Electric described it last week in our show on energy. But you know what? What's more timely these days is grid services. So let's today talk about grid services. And we can talk about shared solar and community solar later on when we see more happening because right now not a lot is yet happening. Sorry to say. So let's talk about grid services. And Josh, the first thing I want to ask you is what is it? So we've talked about this a couple of times on ThinkTech. But in short, grid services are any concept where and here we're talking about what's also been called virtual power plants and distributed generation. So we're talking about distributed grid services where people's solar systems and battery systems on homes and businesses can contribute to the grid by helping to solve grid-based problems like frequency regulation, all the sorts of things that utility has to do to make sure that the grid stays up and that everybody gets the energy they want. Turns out you can use the prolific systems that we have in Hawaii that generate energy at the site to engage in the grid and help solve grid-based problems. And Hawaii's literally at the forefront nationally, even globally, of developing these types of systems and integrating them with the grid at scale to solve problems. Sounds very high-tech. It also sounds like something that is changing while we watch. If we talked about this a year ago, it's probably way different now, simply because of the technology. And the technology is not just the inverters at the homeowner end, but the technology as well, the software that lies between the homeowner and the utility. I mean, earlier we had this hub and spoke kind of a conceptual approach where it was all generated in the hub and shut out to the consumer by the spokes. But it's not like that anymore and it's gotten much more sophisticated. And actually, I agree with you that we are way ahead. Hawaii's been thinking about this for 10 years at least, maybe more. And I'm really interested in the latest and greatest on the grid services and the equipment and the software that's coming into play. And you, Revoluton, would be very interested in that and you would be actually marketing it. Absolutely. Yeah. So again, I'll do a kind of a quick primer on sort of what's been happening. We've been talking about this for at least a couple of years on ThinkTech. But last summer, two programs were kicked off by the PUC and by HECO. One is a RFP-based program that HECO released that had been out in the public domain for a couple of years. And there have been programs before that. But that one is with a mailing company called Swell Energy and it's called Home Battery Rewards. The other program... Tell everybody what RFP means so that everybody... Oh, a request for proposals. So when the utility wants to hire somebody to solve a problem, usually these are pretty big things, they'll put out a proposal and request. And so there was a long proposal process that we participated in with this company, Swell Energy and with Tesla. We were the three participants in that and that was awarded to them early last year. And then the program started to go live and recruit customers about mid-summer. And we're just now getting to full implementation of that program. So we've been recruiting. We're in the very final testing stages. We have actually the first maybe dozen or so customers that are in the program now utilizing services and it'll start to scale up over the next couple of months. We have another program that the PUC put forward called Battery Bonus that is basically you bring any battery that meets the criteria. It's pretty simple. It's a discharge every day for 10 years from the battery. And you get some rewards based on how much energy you can discharge. Does that mean you send it back to the utility? Yeah, send back to the grid. Exactly. So imagine your solar puts energy in a battery during the day and then this happens to discharge from 6 to 8 p.m. When it's queued to discharge, then it would send energy back either at full power or at whatever. You can actually set it so it doesn't have to be full power. But you would send that energy back from the battery into the grid. And the idea of this program is to offset the Kalyloa coal plant, the AES plant, that's being shut down later this year and to basically replace the energy that that plant would deliver to the grid as firm power in the afternoon evening when people are coming home and starting to use everything after work. And the PUC has been concerned for a number of years about how we're going to displace that once we shut it down. The state has a mandated shutdown I think in September of this year and that grid services program Battery Bonus is meant to do that. And what happens is if a customer signs up for that program, there's two things they get to do. They can expand on an existing net metered solar system. So if you bought a solar system say five or 10 years ago and which you haven't been able to expand those systems typically on metering, they allow you now to expand the system under net metering. So essentially increase your original net metering contract. And then if you have to add a battery to be able to participate in a program like this, you get a cash reward essentially for the amount of KW that the battery can discharge. And that's been very attractive. I think probably every company on Oahu, every solar company on Oahu is recruiting people to do that and you know adding on to these systems. So let's talk about that for a minute. The cash bonus that you get back because you're you know sending discharging back to the utility so to speak, that comes from what? Utility? Yeah I mean basically right I mean it's the PUC who regulates our utility can tell them how to spend money and how not to spend money. And so for the Battery Bonus program I believe it was about 30, 35 million that was set aside in their budget to address this. But if you think about it that money you know one way or the other Hawaiian Electric has to pay for these kinds of services right? They either develop it themselves or they hire a contractor like AES to do it with a power plant. So in this case what they're doing is they're shifting some of that money that would normally go to you know say a commercial or industrial provider of energy services to the utility and they're sending it back to consumers you know and think of it almost like they're renting your battery. You know they're leasing or paying you to allow your battery to be used on the grid. You're in turn signing a 10-year commitment to do that every day and then there's software on board the equipment so we you know we call it a grid code in the industry but basically the battery is configured in a way that it'll do what it's supposed to do. And you have to you know once you've installed it it has to go through some tests and things like that to validate that so they know that the resource is going to do what what it's supposed to do. So Josh you know what what strikes me is that they we still have this issue in the legislature about credit tax credits for what adding on storage facilities storage equipment on an existing system. So if I have an existing system maybe I can get this bonus battery program but there is still an issue about whether I can get the tax credit. What's the answer to that? How does that correct? Yeah the way we see it is as long as you're you know as long as it's a system and you're adding PV the battery is necessary to that system and that meets the requirements of DOE tax. I'm saying that not as a tax advisor but I can say we have done some inquiries with DOE tax and that meets their regulatory requirements. What you're talking about is specifically the legislature making it okay to install a battery and get benefits with or without additional PV. So in in most cases with these systems batteries are being added with additional PV panels so additional production and and that's kind of the idea right you want the energy going into these batteries it's going to be discharged to the grid later to be coming from solar. So if presuming the existing solar on the house you know in the case of like an existing net meter system where you're going to add on a couple new batteries and some PV you know typically it's a pretty safe assumption that that existing PV is you know maybe covering you know some you know 80-90% of the existing home consumption maybe less usually over time we find that people use more energy so they're typically going to need more more panels anyway but then coupled together you know that typically there's not an issue getting the tax credit in that circumstance so but it would still be great for the legislature to make it simple for batteries and I think the this really calls that out I mean the battery is you know when you when you couple distributed batteries with a bunch of distributed energy production it makes for an incredibly resilient grid because as we started with your original analogy hub and spoke now you've got energy being produced and stored all along those folks all over the place and and sort of effectively connecting things in a much more robust way such that you know even pockets you know individual circuits could potentially you know be stronger in terms of resisting something that might shut them down a voltage draw or a line going down something like that it's a lot easier to isolate and then of course each home that has a system like that is individually able to disconnect and stay up stay on you know stay have power continuously in the event of some kind of outage you know do you know why the legislature is reluctant to expand the tax credit for existing solar facilities it seems to me there's no good reason and yet that bill has been in the hopper for five years running now for some reason it can't get through is there a policy objection to it you know I think the you know I'm not I'm not the policy wonk that I probably should be for for our local you know what the legislature's doing and on these particular things but I think you know if I recall in the past some of that has been you know there was a reciprocal erosion of the the tax credit itself which is a good credit I think when you you think about the latest from the IPCC and you think about where we are in Hawaii and the needs of our community you know we should really be doing everything we can and I mean Hawaii you know is in a profoundly good position to in this decade really become completely independent in terms of energy and and I just think you know the amount of revenue that leaves the state to buy oil to burn for energy it's you know there's no there's no technological reason that we can't with you know with things like this with grid services and other technologies there's just no you know we should we should be pioneering non-carbon based jet fuel in Hawaii you know we should be making that right here and helping airlines to you know to do that kind of thing and and we truly can get to a place where we're just not bringing hydrocarbons to Hawaii. Yeah well you mentioned earlier the you know the the termination of coal under that statute adopted a couple years ago that allows coal only until September 1 2022 which is what only three or four months away G-wiz and and the question the PUC has been concerned about and very explicitly is what are we going to do when we have to shut the coal plant down for that statute and I what I hear you saying and I like more detail if you can give it to me is that the solution to that problem replacing the coal which actually accounts for a lot a lot of electrical power in the state is through solar but can we do that if we really work hard and we do as you said everything we can possibly do can we replace the you know the gap left at the end of coal? I absolutely I mean I I I feel like I don't you know I don't even have to hesitate the customer customer demand is there I think the incentives that have come along with these programs are strong enough they've accelerated the market it's not a demand issue I mean honestly like in Honolulu the issue the biggest issue we have and I I always hate you know it's never the thing in Hawaii to call something out but the biggest impediment is actually entitlement in terms of like getting approvals and and I'd say that's at every level there are challenges with residential permits you know if I go back five or six years ago the automated PV permit system that we had almost a hundred percent of residential rooftop PV permits could be issued online with little delay now I'd say we're probably around 60 percent of permits submitted are issued automatically and the rest drop into you know multi-month reviews for you know a range of things not unreasonable things but you know frankly most of them are things that could be easily solved and you know we for instance in Hawaii still look at batteries they require a very specific separate permitting process call the materials and methods permit that takes several months to get for any new battery once you've got it then you can go through the automated process but you know for batteries that have now been deployed in Hawaii for several years UL listed you know NEC compliant these are the codes that are relevant you know no major incidents in residential homes resulting from batteries I think you know we're kind of past the point where we need to treat it like it's something unusual that needs to be scrutinized and I can do better than we can do better than we're doing and yeah and I'll say you know the the administration the mayor's administrative administration is is also looking at these issues among other things I mean they're trying to run a government but there's a lot we could do to improve the process and make it faster and you know I think we need a little more urgency statewide on on that um as we do you know globally yeah we all want to touch that too but um on the question of bad weather let's say extreme weather because it's out there it's out there and it's pointed at us at some point you know climate change is going to direct some bad weather our way and we'll have some kind of you know catastrophe that will affect our grid and so you know I'm I'm wondering two things about this so solar is a big solution and it clearly has emerged as as the best solution for all kinds of reasons some of them scientific and some of them are societal if you will or political um but um if we had bad weather and we have the people who can afford uh solar and batteries um they will be they will be in a better position a better condition would they not in terms of recovering from the bad weather on the other hand I'm thinking to myself you know in the case of the internet switches around the world uh in case of the cables under sea if a piece of cable goes down or a piece of internet connection connectivity goes down the software is smart enough to reroute the signal and that's why even you know bad weather or trouble at sea or at the ocean bottom doesn't stop us because we can reroute we do reroute now when when you're talking about grid services and talk about you know batteries and new storage techniques and and also software are we also talking about rerouting in other words if the utility cannot um pump energy out to me and I'm a non solar customer um does this new grid services technology help the utility dealing with um you know uh blackout possibilities uh bad weather what have you absolutely absolutely I think you know I'm also uh an architect and uh you know to me buildings you know need to be resilient and holistic from an energy point of view like it doesn't make sense to me to build a building at this point in time without energy technology embedded and including you know harvesting energy and and storing energy on site and that creates a basic level of resilience that you know we haven't had in buildings for a while but it's not like historically uh you know we've been in a period of time for the last 100 125 years where we've you know moved the source of energy away from the building you know prior to that you know you you're heating for a building you're cooling for a building you know water things like that were we're typically you know essentially centered on the building and you know physical plants were pretty common you know if you go back 100 years in energy and um you know we're we're moving because of this technology we're in a in a in a place now where that can easily be integrated in in the building as it evolves but then you know when you connect this in a network just like we you know the internet is a great you know great analogy for for grid services all these things can now move those move that energy around and so somebody that doesn't have enough they can they can borrow a little or buy a little and and vice versa and when it's integrated at the utility level within the utilities you know operations system you've got software that can help to manage that in real time and you know frankly it can move the electrons faster than somebody could even start a generator especially when they're stored in in batteries and and you have a robust supply and you know what's happened on oahu and and broadly in hawaii over the last four or five years is we've been deploying a lot of distributed batteries in homes because it's you know it just works out that it's cheaper for people to cycle their own battery with electrons day to night than to buy energy from the utilities and the price is high enough that people save a lot of money that way so even even in economically challenged areas I mean we need financing programs that get get access for people that are you know coming from a you know lower income strata maybe they can't use the tax credits things like that and we do have some programs we have you know state-based programs gems you know we have a number of things in hawaii that help with that too but when you connect at all you have this very robust system that you know both can be functional when it's disconnected and I mean I'd say in that sense it's almost better than the internet right I mean if we lose our connectivity all of our apps are kind of useless not the case in your home I mean if the grid goes down you still have an energy system that's going to work as long as you've got a roof um and you know we can get that takes me to another question I want to pose to you and that is um you know you mentioned earlier and it's a great concern that right now we're in a global crisis over Ukraine and just a Putin and Western Europe and and so forth and you don't have to read the times every day to know how how troubled we are and how disturbed our global oil markets are and and that is going to get worse in my opinion I think it's clear that it will and so you know this whole issue that you and I are talking about the whole thing about solar on your roof about grid services about the you know the new technologies that connect you and enable the utility to share the energy that is returned to you um more important all the time you know if we worried about importing billions of dollars of oil a few years ago we should be much more worried about it now not only in price but in availability in general you know the the world market is turning really sour um and so I think go ahead you know I think the the the most sort of uh the visceral example of this for for somebody living here in Honolulu right now is if you have a solar system already and you have enough energy to support an electric vehicle which you know let's say you already have two we have a high concentration of EVs you know people in that situation are not getting impacted by increasing electricity rates which we have you know we've already seen significant increases this year because of oil spikes and we've seen huge increases at the pump and so again if you're if you have a big enough system that you're supporting your transportation needs as well you're also isolated from that so while there's plenty of other inflationary pressures on the economy you know people that that frankly own their own energy system or are in an apartment building that happens to have one or something like that they're much better isolated from that um than than anyone else and so I look at it as just practical it's like it's something you can do you certainly you know I hope people are driven by the sort of noble ideal of let's do it to you know help help uh abate climate change and save the planet and things like that but um but you can do it very pragmatically just from an economic point of view and there's you know it's very easy typically to finance these systems um you know it doesn't it's not like a big you know you don't have to come up with the cash upfront and there's some really good incentives that aren't even tax-based right there's incentives just to participate in these grid services programs and that's real but the one thing that I think is also you know we talked about the economics and I want to make sure I make this point you know that money that was set aside by the PUC to support the battery bonus program estimates are that it's somewhere between one fifth to one third of what the utility would have to pay for those services if they were doing it in a traditional way and that's that's not just hawaii that's actually pretty pretty much what what we see nationally is that grid services programs will save utilities somewhere between one fifth and one tenth of what they currently pay for gas peakers and the types of technology that typically do these kinds of functions means your electric bill would be less in any event ultimately I think as we build out a ubiquitous renewable energy system we'll see that that costs come down across the board you know it takes a lot to build that out but I think that's what will ultimately happen we'll end up having a lot more energy resource honestly yeah and you know that we've learned we've learned a bunch of stuff from you here today one is we've learned that there's new technology in town that is available that can be installed that can be integrated with older technology that is something we've learned that it's a more resilient system when you can put grid services in and help the utility share the share the power so to speak between all its customers we've learned that there are at least a couple of really good reasons to a to to to go to solar and for that matter there are a couple of really good reasons to worry about not going to solar it's a carrot and a stick both um and and then of course I think we've learned although we haven't discussed this specifically but I think we've learned that we have to do this quickly and and this is the bottom line we have to do more of it we have to do the term you mentioned earlier everything we can here in Hawaii because we're an island state far away from the mainland and the national grids so my question to you is this what do we do now both in terms of the state government the quality energy industry the solar industry and the individual consumers to achieve the notion of doing everything we can possibly do let's say is you know today is the first day in the rest of our energy lives and we have to put the left foot out first what do we do I think it's actually really simple if you have a home or a business in Hawaii I mean this sounds a little self-serving because this is what we do but if you're in that situation and you control a rooftop you should make sure that you've got solar on that roof and you know batteries you know frankly should be coupled with it to make it truly resilient I think there's just you know for the resilience to avoid storms and the repercussions of climate change but also to help abate it and frankly to save money it's a really obvious thing to do um and there's there are ways to do it um at almost any level you know economics whatever none of those things should really be an impediment there's a bunch of other things around the edges you know improving the planning process and making it easier to to do do things but I don't think those are you know at the end of the day everybody just needs to get it done yeah I don't think that's self-serving at all you know in my view think tech has been advancing this notion for 10 years plus um and you know it's it becomes more and more clear that we have to do this and sometimes I think we we forget we have to do this it's a sine curve of public interest you know sometimes people are more ardent about it and sometimes they're not but our current situation here and globally mandates that we get on it and that we do everything we can and uh I'm with you all the way and I don't think it's self-interest I think it's it's public policy and I think it's absolutely necessary for the the success of the state and Hawaii's out in front it's honestly it's very exciting to be here to be able to be part of what's happening um you know we're we're leading this um very genuinely we're leading this nationally we have the most sophisticated grid services programs anywhere right now and that's pretty exciting what's your website address josh uh www.reveluesun.com wow one of the oldest wisest most successful uh solar companies in the state and you do more and that's the subject of another show perhaps about community or shared solar or who knows what going forward thank you so much power CEO of revolution thanks j aloha thank you so much for watching think tech hawaii if you like what we do please like us and click the subscribe button on youtube and the follow button on vimeo you can also follow us on facebook instagram twitter and linked in and donate to us at think.kawaii.com mahalo