 This is Think Tech Hawaii, the community matters here. Bingo, we're back! Welcome back to Think Tech, okay? This is Hawaii, the state of clean energy. Every Wednesday at 4 p.m. we are so happy to do this show. I was telling Peter, it's my favorite show. He says I say that to everybody. That's Peter Rosick on my left. Spokesman for Hawaiian Electric. And co-host for the show is Mitch Ewan, who is going to introduce Terry Searles. Hello, how are you all? This is Terry Searles, my buddy formerly from HNEI. And now with the California Institute of the Environment and... Energy. Energy, got it. Okay, and we're going to talk about storage in California in a few minutes. Lessons learned. But first, hot news top down. Seven, count them seven contracts for relatively cheap clean energy. What's going on, Peter? Well, we've talked about this a little before, but in last February we did an RFP request for proposals. We got over 20, 24, 25 proposals. We chose the seven. Ultimately, we found another eight. We chose the best ones. And just before the end of the year, we sent the contracts to the Public Utilities Commission for their consideration approval. The headline in a way is it's the biggest infusion of renewable energy in the state's history. Some 260 plus megawatts. 263. There you go. I knew somebody was counting. But in addition, they're all solar with storage. So each one of them can store about four hours of solar during the day when there's a lot too much for us to use. And we can use that in the afternoon and evening, four o'clock, five o'clock to nine o'clock, when we have the greatest demand. And of course, the sun is not shining. And on top of that, the prices are the lowest in the history of renewable energy here in the state. And that has created a lot of sensation on the mainland. One of the headlines in the energy news business was this was mind-boggling. Because our average fossil fuel cost is about 15 cents a kilowatt hour. We don't take a profit on this. We don't mark it up. It's whatever it costs us to get this energy or to buy the fuel to get this energy. And now these prices are coming in at eight to 10, one of those a little bit more expensive. They're basically in the eight to 10 cents a kilowatt hour range compared to that 15 cents. And four of the projects are on Oahu where they will make a substantial contribution. But especially on the neighbor islands, on Maui and the Big Island, they don't have any large-scale solar. They have wind. And now they're going to get this infusion of low-cost solar that's going to really, I think, make a difference for them. It's going to change the way energy is operated and the systems are going to operate on the neighbor islands. They're used to dealing with wind farms and with some geothermal on Hawaii Island, but mostly balancing out the wind farms against their conventional power plants. Now they're going to get a lot of solar and during the evening as well. So we're going to see, you know, from our point of view, it's going to be a great change on those islands. But from the customer's point of view, these are the largest solar, the largest renewable projects on those islands, cheapest by far. You know, Big Islands always had a lot of renewables, but they've also had some old prices. This is going to change the average. Change the rates. Change the rates. I think they'll see us, you know, the rates are subject to a lot of things, not just the price of fuel, but in the price of fuel category, I think this will definitely make a difference. Big question. Well, a couple of questions. One is, is it approved? It's with the Public Utilities Commission. We never speak for the Public Utilities Commission. We're very optimistic and we're very hopeful they have been involved every step of the way. They knew these were coming. They helped us get them in before the end of the year so they could take advantage of federal tax credits. They've been very, I don't want to say helpful. They may get upset, but they've been very receptive. When we had a problem on the Big Island, last May we lost Pune Geothermal Adventure. It's going to come back some day. We don't know when. We went back to the commission and said, can we go for another project on the Big Island to help keep that Big Island at a high renewable level and level out the prices? What's the timeline? In other words, if you had approval in a week or two, how long would it take to put them in the ground and have them operating? We think they'll be in operation before the end of 2022, which is for these kinds of things, it's relatively fast. It's speedy by the definition of utility projects. It would be a big help if it came in a little earlier, but before the end of that year, I think we'll definitely see those in operation. We have a 2020, 30% renewable energy milestone to hit yet. These obviously will not contribute to that directly, but it will pave the way for the next milestone after that. One last question, Peter, and that is when you talk about how the price is lower, it's quite remarkable and it buzzes on the mainland about what happened to make it lower? What are the factors that drove it down that way? Well, a number of factors. Mainly, first of all, we have a new kind of contract and it allows the big risk if you're doing a solar project is that it might be curtailed. In other words, the utility, because there's not enough demand, might not be able to take all the electricity coming off the system. Well, so the storage helps to alleviate that and the contract we have established, it's a new one and again in the wonky world of utility contracts, it's getting a lot of attention, but it reduces the risk of curtailment and once that risk is removed, the developer could reduce prices without taking a chance on losing money. And the other factor, as I mentioned, there is a federal tax credit for renewable projects. At the end of last year, at the end of 2018, it began to decline. So anything that was on the books, it was in the works officially by the end of 2018, could qualify for that. So you got in before that deadline? We got in, again, we had seven contracts, seven different, well four or five different developers and each one, each project is a little different, but we were able to come together and create that, those contracts, get them into the PUC on time. And so those are the main factors and the fact that there was such a vibrant competition from the competitive bidding, everybody that was bidding knew that they had to make the price. They were going to be in contention for a number of factors, but price is always going to be one of them. So I think they all sharpened their pencils, as we say, and said, you know, what's the, given these new circumstances, given these reduced costs and reduced risks, how low can we go? And the result was very, very positive. So whatever we learn from this particular experience and try to re-duplicate those same factors going forward and get that price are even better. Right. Your witness, Mitch. Over the chair. Well, it was so apropos, it was so apropos that we had Peter on first talking about you know, solar with storage. And here we have an expert in that with Terry Searles from California who's wanted to talk about solar and storage on the California grid and lessons learned. So we have a series of slides. I'm going to turn it over to Terry. Okay. Just work your way through your slide deck. Okay. Well, you know, first of all, I am here. I'm working as a consultant for HNEI. That's why I'm back. And some J, I know might remember, I was here as interim administrator for the state energy office. Sitting in that very chair. Two years ago, sitting in this very chair talking about these things. But so I'm back and forth now. My primary work in, at CPUC, California Public Utility Commission is more oriented towards demand response. But there are components of storage there, obviously. In California these days, do they talk much about PG&E? Oh, yeah. Just wondering. Just wondering. It's off topic here, but let's put it this way. I live on the North Coast up on Mendocino and we've had planned outages on big wind days. And I have to admit what PG&E was thinking when they didn't shut everything off for this campfire that destroyed the town of Paradise. I don't know what they were thinking. Because, like I say, we've had smaller wind events towards Mendocino Coast where I live and we had no electricity. But we didn't care. I mean, there was no electricity because they, you know... I think there are going to be some traumatic effects of all of that. Well, there will be uncertain. Yeah. It could be the best way to look at it. Sorry, I interrupted you. No, no, it's okay. So, I guess going on from there, we can go on to whatever slides you want to... Oh, you went back to the original. You didn't... Well, I set them the changed one, but didn't get in the slide deck. Actually, the new title that I've used in the past, because going back to being in this energy business since the early-mid-'70s, is the title is Be Back Soon, I'm Off to the Thirty Years War. And the reason being is this is just an ongoing slog. And, you know, for people looking for silver bullets, and the C is that things can be solved quickly, that's in the form of being delusional. So, that's why I use that as a subtitle. But anyway, moving on. This AB 2514 is the legislation that mandated 1.3 gigawatts of storage to be installed by the investor-owned utilities in California, and that's PG&E, Southern California Edison, and San Diego Gas and Electric. And since then, well, it talks about the genesis, I'm not going to walk through these slides, but the point is it went in place, it was a legislative band, a CPUC adopted it, and effectively, you know, called out the 1.3 megawatt goal, and went from there. Is it really practical for the legislature to get into exactly how much storage should have right down to the gigabyte? They actually, it wasn't that prescriptive. What CPUC came up with when I first saw this, they were using proprietary models from two different places, so you didn't, it was black-box stuff. And not only did they call out for the 1,300 megawatts, but they basically said, here's the amount that each of you will use for transmission, each of you will use for distribution, and each of you will use for behind the meter. My point is wouldn't the commission be better, the regulator be a better place for that to come from because they carry the expertise, presumably, but the legislature, the legislatures don't carry the expertise, sorry. Well, no, you develop any one of a number of data-less, you know, laws. I mean, that's true, you know, on a federal level, it's true on a state level, and you know, that just happens. I mean, my favorite example going back to the early 2000s when I was loaned in is that Gray Davis said, well, we're gonna have 20% renewables by 2010. And of course, you know, I said right then, it was like 2002 or 2003, I said, you're not gonna achieve it. And we didn't. And the reason you didn't achieve it is the infrastructure wasn't there, the technology wasn't there, the costs were exorbitant. And also, in the end, for this law being passed, there was no penalty associated with it. So 2010 came and went, you know, they didn't achieve the goals. But then they set these new goals. Now times have changed, right? As Peter has talked about, you know, the prices of PV have come down dramatically. I mean, on the mainland, where you don't have to worry about storage backup because you still have thermal ramping, is that some of the new projects coming out in Arizona and Nevada are on the order of two cents a kilowatt hour, you know, for utility-scale storage. So, but the legislature does these things. You know, I'm involved in a thing now with the CPUC where they've legislated, expedited dispute resolution between the utility that doesn't want to interconnect and the people that want to interconnect. And basically, there's been a lot of foot-dragging. So the utility, or there can be foot-dragging and so basically the legislator said, this is going to stop and we're going to have expedited dispute resolution. So it's kind of what we are. So, yeah, they get down and dirty. And, you know, let's face it. I mean, it happens here in Hawaii, too. It's not just California. I still like Hawaii better. Yeah, well, whatever. So at any rate, going back... I don't want to say that because Mitch wants to speak to us all now. He wants to tell us it's about time to take a break. I bet you're fine. That's what he has to say. It's time to take a break. Nice job. Is that happy enough? Very nice. This is Think Tech Hawaii, raising public awareness. Bingo, we're back. Mitch, will you agree with me when I say we're back? We're back. Okay, we're back. Let's see if we can pick up what we left off. Oh, P.S. Peter Rasek went back to his office. There's a lot more to discuss with him. We'll do that at a later time. We'll do that at a later time. We'll do that at a later time. We'll do that at a later time. We'll do that at a later time. There's a lot more to discuss with him. We'll do that at a later time. Thank you, Peter. Okay, Mitch, why don't you continue with Terry and see if you can pick up what we left off. Okay, so Terry, why don't we flip to the next slide? Okay, the next slide. All the other slide had said was all the other slide had said was all the other things that the legislature has developed since the initial AB 2514 was passed. And actually, because we were talking about this, right, that the problem is you sometimes have the development of dataless legislation. You have regulations and legislation that get passed that are effectively counterproductive and contradictory to one another. So what we characterize this is that you can end up with a dog's breakfast of conflicting rules. So one of the problems is that even though you're pushing for more storage, there are other things that may inhibit you from getting there. And in addition, there's other technologies that may allow you to do what you want to do with storage that actually like demand response technologies where you don't really need to meet the goal of the 1,300 megawatt storage. I guess the legislature by setting the amount of storage is also telling us how long the storage should last, whether it be overnight. Who's telling us that? And that's a moving target, isn't it? Because the technology changes and PS, I don't want to mention anything you don't know, but extreme weather is coming. And that's going to change the algorithm, don't you think? Oh, sure. So some of the things that you can even... Actually, this is the discussions we're having here when you look at microgrids. So California is investing a lot of development money in looking at microgrids and where that might go. And the deal with the microgrids is, will it cost more? Will it cost less? Is it good for some people? Bad for others? And a lot of it gets now, we don't know. But what you want to do is to improve resiliency. So where do you want to improve resiliency? And the preference is around emergency services. So there are microgrid projects around hospitals. There are microgrid projects around Cal Fires facilities. So things like that, that you have a disaster happen and you then still have your emergency services operating because you've developed a microgrid that would be islanded. Can you explain how that works? Why would the existence and how would the existence of a microgrid around a hospital better deal with, let's say extreme weather? Better deal with something that would pull the rug out from under the existing grid. Well, power goes out, right? The grid goes down, or at least the grid goes down in the region you're in, but you want these emergency facilities to be operating. So you establish a microgrid. And I will admit, I don't know all the details of these microgrids that the California Energy Commission is funding, but basically, you know, they're looking at one of the key issues is how do you deal with emergency services. Where your power goes out, but it doesn't go out, where your water goes out. I guess I see what it is. The hospital is connected to the larger grid. The larger grid fails or the connection from the larger grid to the hospital fails, but the hospital has its own source of power. And with the microgrid, it can deliver that power to any part of the hospital. Simplistically, when people think about this in the old days, just a backup generator. But now you want to look at it with different kinds of things based on what your local resources are. So it could be solar with storage backup. It could be even as you're developing more small wind, small wind with storage backup. You can still have a backup generator. So the whole idea is to protect your emergency activities. And the emergency activity is larger these days. Oh, sure. A hospital back in 1940 would have been one building. Right. Now it's a city block. It's a complex. And you need more than an emergency generator that would cover one building. You need a system that would cover all of them, hence the microgrid. Exactly. Am I doing the right thing? Has HNAI got involved in this, Mitch? Yes, we do. We have a microgrid group at HNAI headed up by Leon Roos. And we do a lot of microgrid work. And we do a lot of this kind of evaluation of what it should look like and how it should interface with your regular grid. So the question is, can California learn from you or can you learn from California? I think a little bit of both. I mean, I don't want to presume that we know more than California, but we have some smart people here too, and they're doing some good work, particularly in some of the other in the Asia-Pacific region as well. So they're coming to us for our knowledge. Okay. All right. Do you have another slide you want to discuss? Yeah, well, let's kind of move on. We did the dog's breakfast one. Which is my favorite. And you know, this is some of the things. It's just we're now set. The renewable goals are 60% by 2030. And in California, that does not include large-head hydro because, and it does not include behind-the-meter generation of PV. You mean from households? From households, well, or commercial, whatever, but behind-the-meter. Right. So, okay, next slide. And this shows the, this is what I just said, you know, the growth is substantial. But again, behind-the-meter generation is what you get. And you can have right now as much as 5 gigawatts of behind-the-meter generation on a sunny day, but that doesn't count towards the RPS percentages. Next slide. And this simply gives you a de-aggregated amount of renewables. Now, you've probably read where California is looking for 100% fossil-free electricity by 2045. So, just like Hawaii, once they get there, they would be counting large-head hydro because you're not going to get there without that. Next slide. Next slide. Okay. Now, one of the impacts on the mainland, and I know this is something Peter left, but we could talk about this, is that you're generating so much electricity during the middle of the day, either utility scale or behind-the-meter, that you've got to keep the thermal units running. You can't shut them down and then restart them to deal with the evening peak. So, these thermal units are effectively selling their electricity either below what it costs them to generate or actually, in some instances, negative prices. Can you help me with thermal units? What is that? Natural gas combined cycle. Okay. Or even the geothermal up in the geysers. Let me interrupt you to remember. And the nuclear power plant. Oh, we don't talk much about that here. Yeah, right. But let me interrupt you about this. It seems to me that as we go forward, some of the, what do we call it, the alternative sources that we were considering earlier go away. They don't survive the market process. They're just not relevant anymore. They're not happening, and so we drop them off. So it's changing. Yeah. The portfolio is changing. Sure. And I wonder what we are learning. We're really asking you both. What are we learning about how those changes should be recognized and adopted and maybe even reinforced? Some things just, we know they don't work, so we should drop them off. And I think there was a time, maybe still, where we had this idea that maybe X source was useful and we argued for diversity and we argued for a multifaceted portfolio. There comes a time when you have to drop the losers off. So are we learning about that? Are we doing that? Anybody? Well, you know, I mean, all I can talk about is the continental U.S. and basically, I was having this discussion with somebody else today, is that even in states that mine coal, like Illinois, Indiana, Ohio, Pennsylvania. I don't shop there. But coal-fired power plants are being retired there and they're basically being replaced by natural gas combined cycle plants because they're just cheaper to run. I mean, a lot of the control technologies, forgetting about climate change and a lot of control technologies you've got to put in place for coal-fired power plants is all about particulates, sulfur dioxide, nitrogen oxides, et cetera. And so you really have to... Those are costly to maintain and operate. So natural gas combined cycle is, first of all, the efficiency is way better. I mean, a good coal-fired power plant will be in the mid-30s efficiency and natural gas combined cycle will be over 60%. So that's... 80% of what? Well, you know, of the total energy used. I mean, 40% is still wasted energy, but as opposed to a coal-fired power plant, 65% is effectively wasted energy. What's your answer to the question, Mitch? The question? Yeah, what are we learning about dropping non-producers, non-producing sources off? Well, some of them are just falling off naturally, like Terry said. I mean, you know, it's just that technology is better. I mean, you know, we went from steam locomotives to diesel locomotives, because it was necessarily cheaper, but it was more convenient to be fueling the engines with diesel fuel rather than having to shovel coal in it. Give me an example. O-TEC or Wave Energy. Now, they're still in development. There's still a lot of money going to try to develop them, right? Maybe H&I is developing or trying to develop these things. Well, we're working with both of those, yeah. So how long do you continue doing that when they're not in the marketplace? And, you know, I mean, I don't know what it looks like in terms of their competitive efficiency, but what's the analysis? Well, they're very early technologies. I mean, really, we're just doing little pilot plants, so we haven't really actually operated full-scale, so we don't actually know enough to make that kind of a decision. And if you look at the amount of energy that humanity needs, we're going to need everything. So, you know, we can't just arbitrarily throw something out the door because, like, today, it's like brand-new technology, hardly even out of the egg. We're going to throw that away before, you know, inventive people figure out better ways to do it. For example, the O-TEC plant, they've developed a new heat exchanger that's improved efficiency by a factor of 25 times. This is in Nelha. At Nelha, yeah. I mean, that's huge. And that's a game changer. And so how many other game changers are out there that we don't know about yet? Not too soon because they may lose the benefit of technological advances that are just about to happen. Exactly. You have to have confidence, you have to have optimism and all that. Yeah. And like, who's we? Who's going to drop it off? It's the market's going to make the decision. Including the market that funds the research. Exactly. But, you know, there's enough people that have confidence and, for example, Wave and O-TEC, they're still funding it. Yeah. Terry, we're almost done, so can you sort of shape your final thoughts and take away to our audience? Well, we've been all over the map on this. So, you know, we actually never really talked about storage, but that's okay. You know, I think that, you know, getting back to your question is probably a more important way to close this out because, you know, we have to be prepared for change. And we know that things will change. We don't know how things will change. And the work we've done, this was something when I was working with the governor's office two years ago, that we pointed out that when the Boy Clean Energy Initiative was started, we were going to put in these, you know, huge wind farms on Molokai and I. Well, we never did that. But in the meantime, we're achieving our goals of renewable portfolio standard goals because of the price of PV plummeting to the point where it is now. The issue with storage, and I might as well point that out a little, is that if you look at technology trajectory for the time being, how do we get to the 40% in 2030? It's really going to be a lot more solar. You know, there may not be much wind. We're not considering inter-island cabling. So it's going to be more solar. And at a certain point, you are going to need storage. And storage has a couple problems. Okay, number one, it's expensive. It's not as expensive as it used to be, but it's still expensive. And because you're going to get to a certain point where you have so much solar with the way we were talking about it, and this is an HNEI analysis that you basically are going to need four kilowatt hours of storage for every kilowatt of PV you're putting in place. Now, do we need that right now? Actually, no. I really have too much than too little time. But it's costly to put in too much now. And particularly if you're doing utility scale, the consumer advocate has to approve these things. But at a certain point, if you're not installing these things as you move along, which is what they're trying to do, you're going to find that you don't have enough storage and you get into curtailment problems. Why don't you just go out and buy more batteries? It can't be that complicated, can it? Yes, it can. So Mitch, how do you want to wrap this up with Terry? We need a takeaway here. A takeaway is this is a difficult problem. It takes a lot of brain power to get it right. You don't want to jump too soon because if you make a mistake, it's really an expensive mistake. You throw out technology, you invest in huge batteries that might not work. And we can't afford to waste money. We can't afford to waste time. We've got to be smart. That's why we call our project over in the H&I, the smart grid project. There you go. We started in 2007 on Maui. The other thing that's worth noting is that one of the things we're trying to do in California and one thing that the US DOE office, the storage office is doing is how do you move other storage technologies to the front of the line? The problem is everything's expensive and while lithium ion is expensive, they clearly have taken over. But in the long run, and this gets back to what Mitch just said about OTEC, you can't stop funding these things because when might there be a significant breakthrough in a way that allows these other redox storage systems to have a breakthrough and become much cheaper? To leapfrog. To leapfrog. And it's leapfrogging in terms of the capabilities, the operations and the cost. And at this point, there's a lot of work going on at a DOE and in Washington looking at other storage, other redox systems to get at these things. So one saying we had in submarines was never get sold on one solution. There you go. And that pervades our thinking it should. It's so nice to see you Terry. Yeah, good seeing you again. I must say we regret that you went to California. I suppose there are beneficial things. I know there must be something in California that's good. Yeah, like my wife. And enjoying that is very important. But I want to point out to you, although we didn't get into detail about this, there are two big jobs open in Hawaii. I just need you to know this. One is they're still looking for another PUC commissioner. And the other is our friend Brennan Morioka went over to the College of Engineering at UH leaving the electrification of transportation job open at Hawaiian Elect. I just want to point that out to you. Yeah. It's not too late to consider those possibilities. What do you think, Terry? Well, that's interesting. The PUC thing, as I said before we got here, I was talking to people about who might be the person and stuff. But when you get to transportation, I'm not a transportation guru. I'd leave that. Let Mitch take that job. There you go. OK, and that's where we'll leave it for now. Mitch, you would thank you so much. Terry Searles, thank you so much. Good seeing you again. Thanks for sharing. Yeah.