 This is Think Tech Hawaii, Community Matters here. Okay, this is Think Tech. I'm Jay Fidel. It must be Monday because we're going to do Mina, Marco, and me and Michael on Monday today all about energy. So welcome to Think Tech for the week of broadcasting. We'll do 30 shows this week. It's going to be a busy week. And we have a special guest today on our Mina, Marco, Michael, and me, and that's Michael. Michael Hastings. He's the CEO of Half Moon Power. We're doing a project on Molokai. So welcome both of you guys to the show. Marco by Skype, from Skype Audio, from Hilo, and Michael Hastings by Skype Audio. Maybe Video, I'm not sure. From Chicago. Isn't that great? Welcome to the show to you, Marco. Tell us what's going on. Well, thanks so much, Jay. And it's great that we can keep our alliteration going with yet another M person. So super to have Michael with us today. If we can't have Mina, Michael, I'm sure will be a fantastic guest for us and talk about something near and dear to my heart, which is what's going on on the beloved island of Molokai. So thank you too for joining. Yeah. And Michael, welcome to you. Michael, tell us a little about your background, about your company, and then we'll ask you about your project. Yeah, sir. I mean, for me, it's really visceral. I spent like a previous career living in Asia, and I'd watched the environment there deteriorate. You know, it was there between 1990 and 2002. And, you know, it used to be blue skies and cleaner water. But then by the time I left, you couldn't even like see more than like half a mile on many days because the pollution was so bad. And there was like so much coal soot being like, you get so dusty everywhere. And it's just, it was like, this max just fumes. It was really hard to deal with that. But on the economic side, we were doing banking and we had done like all these IPOs for these big state-owned enterprises. And, you know, China was trying to develop as well as the rest of emerging Asia. It's just like, it became like actually very clear to me, you know, back then that, you know, competition over finite resources like coal and oil is just, you know, there's no way that the earth can sustain 8 billion people, you know, driving big SUVs and so forth. So it was like really important for me that, you know, we figure out how to make renewable energy work so that everybody can use electricity, you know, reliably, cost-effectively and without polluting. And so I didn't really know much about renewable energy, but fortunately we were pretty early in the game and we raised friends and family capital to do a portfolio of large-scale wind projects in the mainland, early in the Midwest like Minnesota, Michigan and Wisconsin. And so we kind of like learned the industry from the ground up and we were able to sell our original portfolio of wind farms to larger developers. And then because of these connections I had to Asia, we set up a joint venture with a true independent power producer that was listed on the Hong Kong Stock Exchange called Concord New Energy. And they were really interesting as far as like a partner for the U.S. They were looking to diversify outside of China, but they had no government ownership and it was in fact like 10% owned by the International Finance Corporation. So we knew that they were like squeaky clean in terms of like finding a partner from Asia and it was a really good venture. And so we ended up building a portfolio of solar projects around the U.S. The portfolio includes some operating projects in Hawaii, Wisconsin, Illinois, Indiana, Ohio, Rhode Island and New York. But it really started getting interesting to us in the past couple of years as we've kind of developed an expertise in renewables. We became familiar with how we can operate batteries integrated with solar because that helps you firm up your generation and enables renewables to become base load, which for decades was pretty much elusive. So we built a project about two years ago in Ohio, in a small town of Minster. And that was the first municipal scale integrated solar storage project. And we were not only able to offer the town inexpensive solar, but we're also able to help them reduce demand charges with batteries and do all these other ancillary services would help improve power quality. So we kind of really cut our teeth on that. And we just decided that the direction where business was going to focus on smaller scale solar and battery projects because we think that it's the components of two really kind of like modernizing technologies, which is lithium ion batteries and solar cells, they've become so cost competitive now that to us at least the future is this is a very, very growth oriented opportunity right now. So to Molokai, we had always wanted to do more than anybody from the mainland plus to two. What attracted you to Molokai? Of course. What attracted you to Molokai, Michael? By the way, I'm developing the M words today. So I have Marco, I have Mina, even though she's not here. I have Michael, I have me, I have Monday, I have Minnesota, I have Michigan, I have Munster. Minster, was that the town you were in? Yep. And now I have Molokai. I think we're almost at 10. That's right. 10 is my goal. We're almost there. Yeah. Anyway, so what attracted you, what attracted you to Molokai? Well, it was funny. So this developer that finds projects for us, he'd been kind of like a golden goose. He'd always identified these really interesting opportunities for us. And he suggested Molokai like four years ago. He said he knew some landowners there. And so they arranged a call with Maui Electric and we had that conference call. And it was just, it was kind of intriguing just because of the 100% renewable mandates. And, you know, we knew that batteries is going to play a big role here. So that project didn't really pan out anywhere, but Maui Electric told us there was another developer from San Francisco that was working on a project for Molokai that was an integration of solar and storage. And I just kind of cold-called that group. And we ended up acquiring the rights to the project from them. Oh, you succeeded them. What was the name of that company again? The name of the company was Princeton. Yes. We had, we had a couple of shows with them back a couple of years ago. Yeah. Yeah. Okay. So you're actually on the same track they were on. But how does your project differ from what they were doing? Well, I mean, it was, I mean, it just, it still needed more refinement. So, you know, we hadn't been through the feasibility study, both financially and technologically speaking with Maui Electric. So it was really hard to tell who was feasible. So we, what we did, honestly, was just invest a lot of money into it to, you know, just get like all the, you understand what the permitting realities were going to be. We're going to be understanding what the community response is going to be, of course, but the kind of like low profile operation early on, but it was really largely focused on the interconnect study and whether or not we could do what we proposed, which was providing the island with about 41% of their energy with solar. And then half of the production would be used for time shifting so we can actually do solar at night. And, you know, it took almost like 18 months to get through that process with Maui Electric. So, Michael, you've been doing good feedback. We were able to come up with a commercial structure that works for Maui Electric that appears to will work with the rate structure for Molokai and will work for us. So it was, you know, just trying to satisfy all the different stakeholders. Well, what's the status of your project right now, Michael? We're still in negotiations. There's still a couple of remaining scenarios that Maui wants us to run just regarding, you know, contingencies, what happens when there's outages, like a pole goes down and Manaloa, can they reroute the energy and turn everybody back on in a reasonably short timeframe. But there's a lot of technical back and forth that we're still kind of fine tuning. And then obviously another huge part of this is understanding what the community's response is going to be. So starting earlier this summer, we started doing a lot of grassroots door-to-door talking with locals and then, you know, meeting with businesses, meeting with other government officials and, you know, residents that we're aware of that were typically activists against any kind of development. What kind of reaction have you been getting from your walkabouts? I mean, you know, we've been warned countless times that, you know, developing anything in Molokai is difficult and there's a great deal of suspicion about, you know, mainlanders coming in and trying to do like big resorts or something. And, you know, but once we kind of like shared what our plan was, it was pretty favorable. The overall response that we received just because, you know, it's a pretty benign project and we're offering renewable energy and the rate that's, you know, affordable. So there's really nothing, it's hard to object to that. And so we, you know, we, but, you know, again, we are still very cautious about how we would do this. We want to make sure that they're accepting because we're going to be there for a long time. We don't want to have a bad relation with your neighbors. So, you know, we had actually a large meeting back in early October where we invited pretty much everyone on the island. We had a really good turnout, a couple hundred people and it really productive. It was a good four-hour meeting. It was all videotaped. I think you can get it on Akula's website if you're looking for a link to that. But I'll share it with you later if you're interested. And then we just took open questions and answers and it was pretty remarkable. And we left feeling very good that, you know, there was definitely a path forward with the locals. And that was, that made us feel very optimistic. And as you say, that's very important in all the kind. Marco, you got some questions. You know, I got to warn you, Michael. Marco's questions are more incisive than mine. I'm just a superficial fellow. Marco has questions because he's very well familiar with all of this, I think, right, Marco? I guess I'll let the questions or comments speak for themselves. As a preface, I first want to say having been involved, I had Molokai part of my blood for the past 50 years. It's very important and kind of near and dear to me as far as what happens on that island. And I am excited and encouraged by what Michael's company is trying to do, because I think being able to turn that island and have it be conceivably the first island in the chain to reach 100% renewable in terms of power generation is very exciting. And that said, having been involved on that island as long as I have been, only whereas Michael mentioned as well, the various challenges and the kind of knee-jerk reaction on the part of certain locals there and certain groups to the change where they represent or what they see as a threat to the lifestyle and the culture of the island, which really hasn't changed a whole lot, at least the 50 years that I've known it. And those challenges, as Michael knows and anybody knows who's tried to do business there, and I've done some business there myself over the years, that resistance can be formidable, the pushback can be formidable. So I think it's really encouraging that Michael was able to so far navigate those waters carefully, thoughtfully, and so far with that. I guess one of my questions, first question to you, Michael, would be, what kind of time deadline do you guys have internally in terms of negotiations with utility company can take a long time, as you know, and as I've learned in the past as well? What kind of deadline do you have internally in order to move forward that you need to wrap up these discussions with MECO and be able to come to an agreement on a power purchase agreement that would, I would think, soon thereafter be submitted to our Public Utilities Commission for their review and their determination? Yes, I'd like to remember what John McCain, when he was a prisoner of war in Vietnam, said is that he never told himself that he was getting out in a day or a week or a month. He said, I'm getting out someday. And you know, we're, I was going to have, and that's kind of like the approach we're taking with Wine Electric. It's kind of a first of its kind of project for the utility. So they've got a, you know, obviously, what is their responsibility? They've got cost and reliability are the two things that they have to be laser focused on when getting stuff through the PUC. And so that just simply has taken time. And you know, we've been going through this for, we're into our third year. And if you had Princeton on top of this project, it's been under development for four years already. But again, the big breakthroughs have been recent that give us kind of like optimism and we might be able to get everything ready for signature in a power purchase agreement in the next couple of months. If things continue to go this way. And then we know that the PUC is going to take another six, nine months after that. So we're still looking at, you know, the earliest commercial operation they wouldn't be until, you know, honestly, probably like early first quarter 2019. And that's if everything goes silky smooth, which, you know, they don't ever. So, you know, we are investors and we look for signals and triggers that allow us to put more money into a project. Like if we, if we feel it's a, you know, good calculated risk, we'll continue investing in an hour. Kind of at that point, we're willing to kind of double down to try to accelerate the time frame. But I can't, you know, again, I don't know the exact day yet. Okay. Marco, Michael, we're going to take a short break now. One minute break. We'll be right back when Marco, you can continue to drill down on this. And we can, we can figure out, and I would suggest one question. And that is how much does this mean to Molokai? How important is this project for the development of energy on Molokai? Let's take a short break and come right back. This is Think Tech Hawaii, raising public awareness. Plan for fun and responsibility. Choose a DT. Captain of our team. It's the DT. For every game day, a sign a designated driver. Guys, don't forget to check me out right here at the Prince of Investing. I'm your host, Prince Dykes. Each and every Tuesdays at 11 a.m. Hawaii time. I'm going to be right here. Stop by here from some of the best investment minds across the globe. And real estate, finances, stocks, hedge funds, managers. All that great stuff. Thank you. Hey, welcome back to Meena Marco and me and Michael on Monday, talking about Michigan, Minnesota, Minster, Montelua, Maui, and Maui Electric, I suppose. I'm trying to go for 10 on the M's. Oh, you have a McCain. McCain. Thank you, McCain. I think we're there. Michael Hastings joins us by Skype from Chicago. He's the CEO of Half Moon Power, doing a project in Molokai. And of course, our regular co-host, Marco Mangostore, joins us from Provision Solar in Hilo. Marco, you were having some questions with Michael? And I'll just add one more M, which is you two look marvelous. All right. One of the things that I think is inevitable in terms of the, let's assume optimistically that you come to agreement with Maui Electric and Hawaiian Electric, the parent company Miko, and that a docket is opened and the PPPA is provided to the Commission for their review that there are multiple forces, shall we say, that come into play in terms of their consideration of something of this importance. And even though people would like to say that what politics really doesn't play a part in any kind of decision like this, it should be based on rate pair, best interest. It should be based on a number of other kind of more tangible factors other than politics. It's clear that as we saw in the effort on the part of next year to buy Hawaiian Electric Industries that most people would tell you that politics definitely played a role. And it did help, of course, that the governor of the state of Hawaii came out against the deal. So my question to you, Michael, is so far now you've been into this now for several years and I don't know how much money you've spent up until now, your company's spent, but I gotta believe it is a non-trivial amount. What have you learned so far in terms of the role that politics both on the island of Molokai and in the state is going to play in a decision like this? I mean, it's deeply pervasive. I mean, all the different constituents and stakeholders all play a significant role in this. I mean, we've met with countless state and federal politicians, all the PUC members. We've gotten to know the folks at both Hawaiian Electric and Hawaii Electric pretty well. So we know how the system kind of operates there. So it's really about trying to get everyone to buy in, which at the end of the day, this is still a relatively small project in the portfolio of Maui Electric and Epo Electric on top of that. It represents less than 1% of Maui's generation capacity. So it's really a tiny percentage and to us, it's a good starting point for a very aggressive political agenda, which is getting Hawaii to 100%. So I think a lot of folks would agree it's a good starting point to kind of fine tune this and get a good operating project for the other islands to look at. But really at the end of the day though, what we're trying to do is just offer reliable solar to the people of Molokai to help with rate relief. And that's been almost impossible with solar and energy storage until the past couple of years is all these products have become commoditized and a lot more affordable now. And the technology's improved. So we're confident we can get to where we need to be on that. Mark, you're really familiar with Molokai. You've been over there working and visiting for years and years, as you said. And I wonder if you could help me with whether this is an important project for Molokai, whether Molokai in fact needs this supply energy and to do renewables and hopefully to do renewables at a good price. How important is this project to Molokai? We're kind of cutting it out. You're breaking out. Sorry. How important is this project to Molokai? I think it would be enormously important. I mean if it were to happen then within the next several years Molokai would be pretty darn close to 100% renewable in terms of power generation. If it weren't to happen then it'll continue to limp along and it'll take a very different course. I think it's a very big move in a positive direction. If it were to, if all the stars were to align and all the M-words were to sound sweet, I think it'd be a very big thing to the folks who live there and for the state at large. Let me ask you this too. So this would be a substantial amount of kilowatts for Molokai, megawatts. And if you wanted to get, if you want to do this project, do it now, you know, start it up in 2019, hopefully by then or soon thereafter. What follows? What would be the plan to follow to make Molokai 100%? Well, this type of system we have a battery that can be, you know, a battery is very versatile. So you can perform different functions at different times. What's interesting is down the road is that, you know, one of the problems with Molokai right now has been the suspension of the rooftop generation because they're generating too much during off-peak and not enough during peak. So they've had to curtail and kind of table rooftop solar, which has got a lot of people upset because, you know, there's a couple hundred that are stuck in the queue. They just, they've grinched, accepted it right now. But what a project like this can do is help enable more distributed generation, which is, I think, what we've learned at least is that's very important to the people of Molokai to keep their independence and have their own generation source. So this does pave the way toward that. It'll take more batteries and more solar, but I mean, effectively, if and when this project is completed, the island will be, you know, nearly two-thirds solar, which is fantastic. It is fantastic. So, you know, I was telling you guys that there was an article in PBN this morning about Kawai, about a project that KIUC is doing that wraps around solar and pumped hydro. It'll be the first time that Hawaii has done pumped hydro and good for KIUC for being adventurous in that regard. But I'm thinking of Molokai too. Molokai has the elevations. There's a lot of water and, you know, there's a lot of undeveloped land up the hill there. I'm wondering if in that next phase, you know, that one-third remaining, if you will, that pumped hydro and the KIUC kind of plan would be useful. I mean, we would need to think carefully about that. I mean, I don't know if this is the immediate answer. Yeah, there's a lot of land, you know, on a Kukai that, you know, could be suitable for this. You know, to me, like intuitively, it feels like it's, you know, if you want to kind of balance the generation, you want to have it more distributed across the island. You're not, you know, just from a security and reliability perspective might make more sense to have generation elsewhere on the island. But I am not a technical engineer, so I can't really elaborate on that too greatly. Yeah, what do you think, Marco? I would comment, guys, that water issues, as we know, across the state, are quite a hot issue, so to speak, and can be very contentious. And I can tell you, based on my time on Molokai, that water rights and the availability of water where and when is a very, very contentious issue. So I think it's a different order of magnitude to try to conceive and think you can pull this off on Molokai compared to Kauai. So I don't see pumped hydro on Molokai as being part of any time in the near future. I mean, if it's going to be a challenge to do PV plus storage near the one and only MECO power plant outside of Kandukukai, which it is going to be a challenge, doing pumped hydro on that island, I think, is many orders of magnitude much, much more difficult. Well, assuming it goes forward, you know, past the two-thirds and into, you know, closer to 100% using solar, of course, and batteries as in this Half Moon project. Will Molokai be able to reduce the cost to the consumer? Will Maui Electric be able to, you know, reduce the cost to the consumer? And I know, you know, ideally, you have uniform rates around the state, but that's not immediate. That's not coming soon. But what about on Molokai? Molokai is very high rates now. What effect would this project and projects like it have on rates to the consumer? So, you know, the price of diesel has collapsed the past couple of years, which really made it more challenging for us to come up with a price that would be acceptable to, you know, everyone, the residents, to the MECO and to the PUC, the consumer advocate, but, you know, despite that threat of substitution, we're also, you know, we're able to offer energy that is below the avoided cost for Molokai right now. So it's like a penny or two lower than diesel. So we have zero control over the rates that Maui Electric charges. All we have to do is hit a benchmark that they're targeting, which is below their avoided cost. And so we've got there. So whether that gets passed on, I can't really comment on. Well, Marco, what do you think? What are your impressions about the Half Moon project and what's happening on Molokai and how it impacts the general development of renewables in Hawaii? And for example, how it affects the Hawaiian Electric world and the Big Island, of course, and energy in the state. What are your thoughts? Just overall part of a larger mosaic of many pieces of this energy puzzle and when it comes to power generation, not even, of course, discussing transportation, which is a whole other mosaic puzzle in and of itself. And I really salute and admire the folks from Michael's company and others who have taken on these almost sycophant tasks. I mean, I knew that, or I had a feeling that Michael and his company were involved for the past couple years or so, 18 months, but I didn't know what was going on. So it really shows the dedication and commitment and the heart to be able to want to do something big and bold and really good for the community and kind of allies are on Maui Electric at this point to see whether they, when all is said and done, are able to pull the trigger on a power purchase agreement, which can really realistically only hope to provide some savings for electric bills for those 2,000 or so, 2,000, 3,000 Maui Electric customers on Molokai, but ultimately not going to be super dramatic savings as far as I know, and of course Michael knows the numbers a lot better than I do, but saving money is only part of the puzzle, part of the mosaic. And another big part, I think, is doing right for the community, doing right for the island and anything that can be done to dramatically decrease the amount of fossil fuels coming into that island, the power of the economy, I think is a very good thing. Yeah, it's interesting, all eyes on Molokai. Molokai becomes a kind of laboratory for the neighbor islands anyway. Now, thank you, thank you very much for setting up the show with Michael Hastings-Marco. And Michael, thank you so much for joining us by Skype from so far away in Chicago. Thank you for having us today. I appreciate that. And I hope when you get here next time, I'll be back in the next couple of months. Yeah, good. Well, look us up. We can do this in person. Thank you, Michael. Thank you, Marco. And I'll talk to you soon. We'll have another show in two weeks. More of Marco, Mina, and me on Monday. And in the meantime, enjoy. Enjoy the Thanksgiving holiday.