 Okay, so aloha y'all and welcome to Hawaii, the state of clean energy. Our sponsor is the Hawaii Energy Policy Forum and we look for good policies for energy here in Hawaii and support them and if there's some a clanger that comes through the legislature we also comment on that as well. So it's our funding comes from the Hawaii Natural Energy Institute and I'd like to say hello to my co-host, Jay Fidel, who runs the Think Tech Hawaii organization, so hello Jay, thank you. Thank you Mitch, I want to point out that one of our underwriters is also Hawaiian Electric, who was a guest on a show today. Absolutely, well I was getting to that. And here we have one of our sponsors, Hawaiian Electric, we have Richard Barone, who's the director of demand response for HIKO and what we want to talk today is about electric grid upgrades that increase the amount of renewable energy on our grid so we can eventually get to the 2045 goal of 100% decarbonized grid. So Richard, hey, welcome to the show. Thanks Mitch. And why don't you tell us a little bit about what your job description means? What do you do? Yes, demand response, always a, you know, crowd pleaser. What we do in my division is we look to leverage resources that sit on the customer side of the customer's home. Anything that's interactive as an energy resource and can be manipulated in some way, shape, or form. Those manipulations that we trigger from our system operators can give our grid that much more flexibility. The end goal is to be able to take better advantage of the renewable resources that we have and apply their usage more flexibly. So I can give you an example. Okay. A lot of people in Hawaii have electric hot water heaters. And normally they'll just go on and off throughout the course of the day. They'll consume and they'll try to regulate towards a specific temperature. But if you intelligently made the water hot at certain times, let it, you know, let it stay hot for certain periods of time and we're able to actually control the consumption of that device to be aligned with when the system is producing more solar and not use it as much when we have sort of troughs in electricity generation. The famous duck curve. Yeah, right. We've had a show on that. Oh, yeah. Everybody out there knows all about the duck curve. That's great. Well, that's an example as a thermal storage technology. But there's plenty of others. And, you know, PV and behind the meter storage, electric vehicles are all sorts of flexible customer assets that we can use to maximize the value of renewable energy. So it used to be that we used to curtail or not use a lot of this renewable energy. I mean, I can recall working with one of the big island wind farms and they were curtailing gobs and gobs of electricity and they actually wanted to look at, can we make hydrogen with it? But now I understand you guys are getting so good with, like you say, your manipulation or control systems. There's hardly any curtailed energy. Is that correct? Well, that's part of what you do, right? That's where we're heading, right? And there's a lot of ingredients in that recipe. The grid modernization as a whole. Systems, not to bore folks at home, but systems like an advanced distribution management system, the advanced metering infrastructure, as well as DER distributed energy resource programs, which is what my division drives, the things I was talking about before. These things in their totality help us to avoid that kind of curtailment. Not to mention the fact that with a lot of our new renewable projects, as a new wave are gonna be coming online here soon, big scale projects, we're pairing a lot of those solar projects and wind projects with battery storage. And that buys you, hey, we don't need the energy right now, but guess what? Put it into the battery, we'll draw that down later when the system's a little short. Isn't that where it's gonna end up? It's gonna end up with batteries and customers. And when the customer needs, you can turn it from the battery, customer doesn't need to give it somewhere else. But it sounds like the algorithm for this, this would, do you deal in the algorithms? Do you help design? Because if you do, I wanna talk to you about it. Do you actually design the algorithm and how you give it and how you get all that? So the short answer to that question is no. Oh, sorry. But what we do is we actually, and one of the exciting things that's happened recently that I hope to talk about in just a moment is we've created a new market model or third parties to come in and help with exactly that type of thing. So we sort of provide here the parameters for how this stuff's gonna be used, when it's likely to be used, what it's worth. You guys go manage a portfolio of this stuff and you contract with the utility for delivering us certain quantities of different services. All of those parameters and rules that we set forth in that type of a solicitation inform the development of an algorithm. So the logic of their algorithms has to conform with, in many cases, the economic optimization of those assets. The thing that flows from that is where does this technology live? In other words, I take it that it's sort of a distributed technology. There are little black boxes all over the grid, all over the grid and they do a little function. Ultimately, it has to be centralized. Ultimately, there has to be somebody somewhere that's controlling all the distributed little boxes and I have two questions about that. One is, oh, how does that work right now? And two is, to what extent is it actually working right now? How much time you have? Yeah. Well, I was encouraged before we sat down to use a simple and easy to understand language. So the challenge now is doing just that. So let me see if I can achieve this. And the right now, look, nothing is static in this world, right? So you can say where are you at in the staircase. And so what I can tell you is we have envisioned and now deployed an architecture of information, technologies and then operational technologies. The operational technologies are the stuff we're talking about. It's water heaters, it's batteries, it's PV inverters, it's electric vehicle chargers. It's the OT. The IT is all of this intelligence. The company has procured and installed what we call a distributed energy resource. There's that term again, management system. So that's our hub, that's our maestro. That system, our operators work directly with that system, they have a problem. They say, oh, what is our collection of distributed assets? Give us, let's get that right now. So that's there. And then these third party folks, they have their own servers, let's call it that. They have their own head end systems. These systems will be responsible for talking directly to the stuff in the field. So company X might manage 10,000 PV systems with batteries. They work with us to deliver what's available. Our operators see that plus the same set of things from other third party guys. And then they take that action. Our DERMs that I referenced a minute ago then sends the signal out to their head end systems and then they communicate outbound to all of the distributed assets in the field. That's largely how it works. So they have their algorithms sitting there in the cloud. That's comforting. But sometimes if the function that we require is very fast, like if I tell you, for those who don't understand the term system frequency, here's the simple lesson on that. System frequency needs to stay pretty steady state at 60 Hertz. If you get meaningful drops from that, for example, you have an under frequency condition, very bad. The frequency is sort of like the glue that keeps everything running. So we have a function, for example, that we say, hey, you guys have to provide under frequency support. That response is in about a fifth of a second. There's no way we send a signal out for that. Instead, all of the devices out in the field have to detect that, respond to it immediately. Device by device. Yeah, and so that's a way of there's two different ways depending upon the speed of the need that the actions are taken. So that's a simple answer as I can get you for how these things are starting to change. But that leaves two possibilities for any given device or technology. One is you leave it in the field, in the consumer equipment or in some field equipment and it takes care of everything. And the other one is that this system, in this neighborhood maybe, or that neighborhood or whatever the breakdown is, is communicating. How do they say it's all about communication? Everything in the world is about communication. So you have to communicate through your system, your grid system, to tell the other part what you're doing and what you need and what you're gonna be able to supply. That's a lot of communication. And my question is, how do you do that? I'm glad you're throwing me all the softball questions. That, again, there's no one-size-fits-all answer to that. But the communications bottleneck is one of the primary reasons that we've had to designate some functions happen autonomously because we just can't, you cannot communicate and execute in a fifth of a second, right, it's just too much. So there's certain things that have to do it themselves. But, and maybe this is a good opportunity just to explain a little bit, conclude on what is our market model. A lot of times, the utility historically might have a program and they say, okay, we're gonna basically pay customers to provide us with a capacity service or they're gonna reduce their consumption during these times of day and we'll pay them a certain amount and pretty straightforward. It's starting to change because of the complexity of the services, the dynamic nature of a renewable grid. Things change dramatically, quickly, unpredictably. So we have to have a little bit more dynamic sets of services. So instead of us trying to say, here's one program for this service and here's another program, we need this service and here's yet a third program, we were encouraged by our commission and by some of the other forward looking jurisdictions around the U.S. and beyond where we engage with a market structure. So we say, look, here's a whole slew of different services we need. We put out an RFP and we look to engage a third party for multi-year contracts. So guess what? For the next five years, you're gonna commit to us, the utility. You're gonna deliver us XYZAB amount of services one, two, three and four. You're gonna go out there, you're gonna find the customers, you're gonna enroll them, you'll enable them, you'll get their stuff communicative, you'll have the head and system and then you'll interface with our terms and that's your obligation. So a very different model, we're not doing programs per se anymore, we're actually doing improvements. I was gonna say you have to write a pretty good specification for that. And we have and I've got the folders of paper to prove it and here's the thing. So back to your question, the way we've decided to do it in this instance is we tell the, and we call these guys, by the way, aggregators because they're aggregating a whole bunch of customer assets to give, we don't care what's doing the thing, we just need the service. So we specify the service you deliver to us, that's fine by manipulating stuff on the other side of the meter. Great, we'll pay you for that. But for you to deliver it, you've got to go out, you've got to market, you've got to recruit, you've got to enroll and enable. And part of your responsibility is making sure you maintain the reliable communications from your head and system to all of the things you're controlling. That's on you and if you don't, if you fail to deliver or you have communications breakdowns, there's an impact in terms of whatever management fee we would be paying you, that will be impacted by any failures to deliver. So we've put it there for now, now in the future, look, work. We're getting an advanced grid here, we're in the process of grid modernization. So we're gonna have smart meters, we're gonna have advanced metering infrastructure. A lot of the primary value there is in kind of this settlement and build accuracy customer information. But that network can certainly support command and control. So there may be a time in the future, especially if you and this is conjecture. But let's say you five years down the road, you say guess what? And our first wave of those contracts with the aggregators communications were kind of crummy. So we found we didn't get the reliability of service. What if we were to look at expanding the bandwidth on our advanced metering infrastructure network and then ride those command and control features right on the network, talk directly to them years ago. So there's a lot of ways to, that's why I say there's no simple answer. What I can say is this is our current solution, how we're pursuing it now and the big news and I think maybe one of the exciting reasons that I'm here is that after working on this concept of procuring, by the way, that contract is called a grid services purchase agreement, GSPA. It's akin to a power purchase agreement, not quite the same and it's shorter. But after- The term is shorter. Yeah, sorry. The length is somewhat shorter. But that's negligible. This contract, we really started this process of identifying the procurement cycle and then getting the contract in order and solicitation and round two and it started really in 2015. We got an agreement finalized at the end of last year, submitted it with cost recovery and so forth to the commission and finally we got approval. So our first grid services purchase agreement and now we have a second wave RFP out there on the street was finally approved two weeks ago now and we'll really start to see specific to communications, how well is that gonna work and among other things. So that's kind of big, exciting news for us. On that happy note, we're gonna cut for a one minute break and then we're gonna come back with more questions. So Richard. So here we are, you can see what other shows are available on Think Tech Hawaii. Hello, huh. My name is Wendy Lowe and I want you to join me as we take our health back. On my show, all we do is talk about things in everyday life, in Hawaii or abroad. I have guests on board that would just talk about different aspects of health in every way. Whether it's medical health, nutritional health, diabetic health, you name it, we'll talk about it. Even financial health. We'll even have some of the Miss Hawaii's on board and all the different topics that I feel will make your health and your lifestyle a lot better. So come join me. I welcome you to take your health back. Mahalo. Hello, I'm Winston Welch, host of Out and About. It's a show that we have every other Monday on Think Tech Live here. We explore a variety of topics that are really interesting. We have organizations, events, and the people who fuel them in our city, state, country, and world. We've got some amazing guests on here like all the shows at Think Tech. So if you want to catch up on stuff, tune into my show every other Monday and other shows here on Think Tech Live. It's a great place to learn about stuff, to be informed, and if you have some ideas, come on my show. Let's talk about it. See you later and aloha. Okay, we're back live with Rich Barone from HECO. He's telling us all about the mysteries of this new fantastic grid that he's building. So Richard, when we broke, we came to kind of a natural stop there, but I have a question like, so you've contracted all these, or a supplier, and he's got to provide the service. My question was, does he come with his own equipment and he has to install it in all the various houses or businesses or establishments? How does that work? Yeah, the short answer is yes. First of all, I just want to clarify for folks at home, I am not personally building the new fangled grid. That is not in my job description. Well, the role of you was HECO. Okay, good, thank you. I just want to make sure that people don't start directing phone calls my way. The short answer is yes. We took specific guidance from the commission, actually way back when, and I'm getting into mid-2015, and they said, you know, technology agnostic approach, focus on defining the services. So we've really held to that as Bible, and that's a result to your point. You have to create lots of specifications and lots of delivery requirements. Here's what the service is, here's how you have to deliver and so forth. Here's how you have to integrate with our system. Here's the type of telemetry and meter data you have to supply us for settlement and measurement and verification. Beyond that, we don't ask any questions, you know. I mean, obviously, it can't be some cockamamie thing that doesn't work or puts people at harm, and there's lots of liabilities contractually on their side with what they have to pay attention to. We don't really stick our nose into what the technology is, and that's up to them. You just want the result. Yeah, we need to see that they're able to either manipulate, load, or actively deliver power into the system as desired. Just a follow-up, like, okay, you get the contract that starts on day one, like, they're gonna have to install all this equipment, they're gonna have to go and liaise with all the customers. What kind of a lag time or how long is that gonna take for them to do that? Yeah, and the perfectly reasonable question. But you only have a five-year contract in, you know? So, first round of the contract, since this is sort of a trial balloon, we said you can enroll and enable for the first two years. And we wanted them to provide us a projected enablement schedule by quarter, right? So, and then we kind of hold them to that. And then it's flat for the remaining three years of the contract. We'll see where that goes. I can imagine in the future, and I think this is the case with our second RFP, that we're allowing the enrollment to carry forward for the first four years, but we didn't think it was prudent in their interest to have only one year of, sorry, less than the final year of full management, right? So, it's in their best interest that in our collective interest to have as much of the stuff activated and enabled as quickly as possible. Now, we think that there's economic, you know, rational behavior there that will cause these aggregators to get as much stuff into the ground quickly, because they'll make more money, we'll have more services. But that's sort of how we're handling it. It's not like putting in a power plant or a big PV array system where you kind of have a construction date and then it's in service and you're good. This is a growing total over time. So, it actually made the modeling and the economics and the valuation of the bids kind of difficult because you have to do a lot of funny math to figure out exactly what's a levelized cost. So, just one quick follow up again is what about permitting and all the rules and regulations we have in Hawaii that could be, you know, impediments or speed bumps to this? Yeah. Do you anticipate any of this? And is there anything like somebody like the policy forum that help HECO out with with like trying to knock down some, you know, less than helpful policies that we have in the state and put in, you know, accelerators so that we can go faster? Yeah. All of that, including for example, for any systems beholden to rule 14-H and for those who don't know what rule 14-H is. I don't. You don't. Okay, so rule 14-H is really the record. Okay, great. I actually don't specifically know but I can generally tell you what it is. 14-H is the rule for interconnection. So if you have a distributed photovoltaic system at your house and you want to install it and interconnect to the grid, there are sets of requirements you have to abide by. So we basically say if your system is, if 14-H is applicable to you, you have to abide by 14-H. Anything that goes along with putting any PV, any battery, like vehicle charger, any kind of those things and coming upon the aggregators to figure all that stuff out and we are as clear as we can be in the context of our solicitation and the contract, they have to take that into account as they're putting together, that I mentioned before, they have this enrollment ramp. They've got to kind of figure out how long is it going to take me? And so a lot of the folks that are coming in the first wave of proposals, they already had a lot of things already in the ground. So that gets you your running start and then you build on top of that. And I think we'll see a lot of that happen. But to your question, while it's not specifically the companies that would say, hey, knock down some of these barriers, I think more broadly and holistically, the community of participants in kind of making this reality happen, there is and should be a collective interest in trying to streamline the process. I mean, I think if you were to ask the PV community, including the utility, when you put together a timeline, there's a lot of pieces in that puzzle. There's the review process and supplemental reviews that the utility has to undertake. But then there's this also period of permitting and then there's inventory from the contractor coming in. There's a lot of elements and wherever and we've taken measures, I think to reduce some of our lags. And I think you'll see more of that in months and years ahead in other dockets, which I can't speak to, but there's also other holes, I think, in the process that we have no control over, right? And I think a larger stakeholder community who can bring that to light and have open dialogue about that would be beneficial to the community. Jay, you had a couple of questions. Yeah, just some thoughts about what you said up to this point. It seems to me that I make sure that all the contractors interface properly, interface with you and on occasion with themselves, that they follow certain standards of communication. And if they don't, there's a problem. So I get to the question about nimbleness and flexibility. Let's assume neighborhood A has a setup, one contract. Let's assume that, okay? And he's a bad contractor. He's not doing the job and he has no deep pocket and he's gonna fail and all that happens. You try to prevent that. You try to vet them so that doesn't happen, but it still remains possible. So you have to be flexible enough, don't you, to run that neighborhood without him, if necessary, or cover him over with new technology from neighborhood B. So I mean, this has gotta be part of a very complex plan about how you handle the individual neighborhoods plus all the neighborhoods. You gotta be flexible. How well do you sleep at night, actually, Rich? I sleep well, but that's only because I get exercises often as I do. And then when that fails, there's a glass of wine. But I think, look, I mean, you broke it down simply. It's not, it doesn't probably quite work out to a simple geographic dispersion, but rather aggregator one, aggregator two, and there may be co-mingling. The good news is we have a great legal team at Wine Electric that really helped us think through risks and scenario analysis. And so, you know, utilities get beat up a little bit, I think, for things taking a long time. The regulated environment in general is not a fast or nimble environment. That, as an aside, though, going through these risk scenarios and how you risk mitigate and what your contingencies are, these things take an awful lot of time to think through before you finally execute a contract. Complicated, for sure. And so, I sleep relatively well on that front because we did, I think, the very best we could to foresee where we might have those bumps in the road and create off-ramps and contingencies of how we would handle, you know, some of them take the form of liquidated damages. What does it matter if a company goes bankrupt? You can hit them with those and you're probably not gonna get your money back. We do our best to impose standard protocols of communication so that if we had to take them on or offload those onto another aggregator, we could do that as well. There's no silver bullet here, but I think we've taken a lot of care to do our best to kind of patch all of those potential holes. The other part of that, the flip side of that is, you know, here we are, we're talking about the grid. You know, we've been talking about the grid in an aspirational way for 10 years. Now we're really doing it. The grid is going to be high-tech soon. Tell me a different kind of grid. And it's gonna be based in large part on what you do because demand response is the core point of how the new modernized black box grid is gonna work. This is really fabulous. However, things change. We have one better. One, really? Yeah. So one day, you know, there might be a new battery, a new kind of fantastic, you know, profoundly better battery or a new kind of solar cell or something, okay? Everything changes. And I'm glad you have shorter term contracts for these jobs, but the reality is you're gonna have to move really fast if there's a big technological change in some part of this whole network of technology. And then you have, you know, as we've referred to this, you know, have the PUC, which sometimes takes a while, the utility which sometimes takes a while, and planning actually, no matter how quick you are, you still have to take a while to do it. How are you gonna deal with this rapidly changing system, rapidly changing technology so that you're nimble enough to keep up? That's a cliffhanger, because I think we're out of time. No, I'm just kidding. We'll have you back. Try to foil it again. Look, all I can say is that these are valid points. And really where, if you wanna break it down, where that rubber hits the road is, not so much in that technologies are changing, but that in the changing of technologies, it forces us to modify our resource mix, which changes the types of services that we need to procure. And that's really one of the driving reasons for these five-year cycles rather than longer ones. The good news is, starting next year, we have an integrated grid planning model, which will be our cyclical grid resource planning, which will take into account any significant modifications or improvements to technologies, which gives us a chance to then reassess what services we need and then move forward with it, maybe a different or modified procurement to be responsive to that. Now, that's probably gonna be a three-year cycle, I'm guessing, which is pretty rapid. Sounds right, though. Yeah, and so that's the big hope, and there's gonna be more to come on the IGP for next year and the integrated grid planning. And it's the way we're gonna start to look at planning into the future and how we do all resources procurements. So, customer-sided stuff, utility-scale stuff, IPPs, and so forth, thank you. Well, we're at the end of our time, believe it or not, I told you we'd go fast. Yeah, you're right. Richard, thank you so much. Yeah, it's a pleasure. And it's really good to hear that he goes in such good hands and they're so forward-looking now. I mean, this is great news, and I hope our audience is encouraged by this, so thank you very much. So that's it for now. We'll be here in another week, which goes by at the speed of light, and on Hawaii, the state of clean energy, aloha.