Energy in 30: Local leaders shaping the energy transition

Tune in to Energy in 30 hosted by David Meisegeier. On our latest episode, "Local leaders shaping the energy transition," we welcome Gwen Yamamoto-Lau, Executive Director of Hawaii's Green Infrastructure Authority; Minh Le, General Manager of Energy and Environmental Services for Los Angeles County; and Deb Harris, Vice President in ICF's Climate and Sustainability Group. Together, they delve into how state and local governments are stepping up to lead the energy transition, fostering innovative solutions to decarbonize communities, and ensuring affordability remains at the forefront of clean energy efforts.

Topics in today’s episode include:

• Innovative programs like Hawaii's Solar Hui Investment Fund.
• L.A. County’s rapid expansion of municipal EV charging networks and its push for zero-emission transportation.
• Financing strategies, such as tariff-on-bill programs, to overcome clean energy adoption barriers.
• The evolving role of state and local governments in leading affordable and impactful energy transition efforts.
• The importance of partnerships and community engagement.

Full transcript below

David: Hi, all, welcome to "Energy in 30." I'm David Meisegeier, and we'll use the next 30 minutes to explore how utilities and the industry are reacting to forces that are shaping new offerings for customers in order to meet decarbonization goals.

On this episode in "Energy in 30," we're diving into the growing role of state and local governments in the energy transition. I'm joined by Gwen Yamamoto Lau, executive director of Hawaii's Green Infrastructure Authority, and Minh Le, general manager of Energy and Environmental Services for Los Angeles County, as well as Deb Harris, vice president and ICF's Climate Change and Sustainability Group.

Gwen leads efforts to make clean energy investments accessible and affordable for Hawaii's underserved communities, leveraging innovative financing tools to stimulate private investments and promote energy justice. Gwen has more than three decades of executive experience in commercial and credit union banking, as well as community development financing.

Minh leads a team that manages the county's energy assets as well as regional energy programs that focus on energy efficiency, transitioning to zero emissions in transportation, and expanding renewable energy deployment. Prior to this role, he served at the U.S. Department of Energy, where he led the highly successful SunShot Initiative.

And Deb leads efforts in climate action, decarbonization planning, and stakeholder engagement. She leverages data and technology to help federal agencies, state and local governments, and utilities implement effective climate and clean energy programs. So, welcome, Gwen, Minh, and Deb.

Gwen: Thanks for having us.

Deb: Yeah, thanks so much.

David: Well, it's the beginning of a new year and no doubt there'll be lots of changes. One of those changes, or at least trends that we've been seeing is an increasing role of state and local governments in the energy transition.

Gwen, I wonder if you might tell us some of the things that you have going on in Hawaii.

Hawaii's innovative Solar Hui Investment Fund

Gwen: Oh, thanks, David. It's been a very busy year. You know, we continue to administer existing financing programs. Also, we just launched our C-PACER Financing Program, and we are working to launch a new program that the Governor signed into law this year, which will create a Solar Hui Fund.

Hui means group in Hawaiian, which is crowd-investing for condominium owners locked out of solar because they don't own their rooftops to invest in a fund that installs solar on low-income households to lower their energy burden. It's a very novel idea, and it's a win-win for both parties. I'm excited to launch that this year.

David: Wow, that's really fascinating. Minh, how about you? What do you have going on in L.A.?

LA County’s rapid expansion of municipal EV charging networks and its push for zero-emission transportation

Minh: Well, in Los Angeles and actually all across California, there's a number of different programs that are making a lot of great progress. You know, first off, I want to share some data in terms of where we need to be making investments, both at the local and state level, as well as the federal level, in order to make progress towards a lot of different challenges.

From a greenhouse gas emission standpoint, in California, roughly half of our emissions comes from the transportation sector, cars, heavy-duty trucks, planes, you know, shipping. Roughly half the emissions, actually, just under half, but then when you include the oil refinery needed to provide fuels for that sector, it's over half. And then when you drill down into that, the vast majority of that emissions actually comes from automobiles. And LA is considered the car culture capital of the country, if not the world.

And so the transition that's underway towards zero-emission vehicles for the light-duty segment is actually very fast here in California. One out of four new vehicles sold in California are now electric, and in the county itself, we're supporting those goals. The state has regulations in place that will basically ban the sale of fossil fuel vehicles past 2035. And so in order to meet those goals, we have to deploy EV infrastructure, and we're doing that at a pretty rapid clip in Los Angeles County. My team runs the EV infrastructure network across the county.

We now have over 1,600 charging stations at county facilities. I believe this represents one of the largest, maybe not the largest, but one of the largest municipally-owned and operated EV infrastructure network that we install at, like, parks, libraries, you know, other facilities, hospitals that are accessible to our employees, our fleets, as well as the public. And so we're making a lot of great progress there.

And I do want to point out here is that, you know, because all the goods that...40% of the goods that come into the United States by shipping goes through the port of Long Beach and the port of Los Angeles. It goes through our region. And so that's a pretty significant fraction of all the goods, especially coming from Asia.

So if somebody in Kansas City or New York City or Florida purchases something on Amazon, there's a high chance that it's actually going through one of our ports. And that means it's got to get on a truck or a diesel locomotive, and it's creating emissions in our region. And in the southern part of California, that means air pollution, okay, and smog. And so that's why there's a very big push towards lowering emissions.

I'm excited that there's been actually a significant amount of federal funding that's been won competitively by the ports, I think around $412 million to the port of LA to decarbonize, you know, some of the segments there, as well as about half a billion dollars won by the South Coast Air Quality Management District to focus on heavy-duty transportation.

So I know I said a lot. I'll pause there because you have other visitors here, but that's just on the transportation side. There's a lot going on in building decarbonization, which I'm sure we'll be able to talk about in a little bit.

David: Wow. I had no idea about those statistics, so that's amazing. Deb, does this track what you're seeing with other states across the country?

Deb: Yeah. Thanks, David, Gwen, and Minh, for your comments. I think that you all are great examples of leaders in terms of innovation and securing funding for high priorities. It's very clear to me in thinking about, Minh, what you're saying transportation is a critical sector to address for the LA County region, and Gwen, for you, renewable energy in Hawaii just makes so much sense. And it's clear those priorities, and you all are seeing kind of funding and movement align with those.

We're seeing similar trends across the country where different states are really going hard into certain priorities in some of the states we work with, whether that's electric vehicles or building efficiency, weatherization, electrification.

It's great that you all have been successful in getting funding. I think that we're seeing pockets of that throughout the country that are really advancing different actions and really creating a need for more infrastructure and scale-up of infrastructure, both from a resource perspective and from, like, a hardware and capital investment perspective to support those different measures.

I think that you all are both in supportive political environments in a lot of ways, which is great. Not every state necessarily is in that position, but I think that there's a lot of creativity in this workforce in finding pockets of opportunity to align with decarbonization goals and clean energy goals. Even though it might be called something else, it's still advancing those priorities across the country. So I'm very optimistic about the momentum that's going on right now.

David: Yeah. Speaking of priorities, how do you guys prioritize the needs? And maybe, Minh, I'll start with you. You know, you focused on transportation. You mentioned that there's other needs as well. You got to prioritize across all those areas. What goes into those decisions?

How do state and local governments prioritize across potential investment areas

Minh: You know, as a local government, we're trying to make the most effective use of taxpayer resources, right? And so you're spot on. It's about focusing efforts on the areas that will give you the most impact for dollars spent, right? And I mentioned the stat previously around GHG emissions. So GHG emissions, a lot of it is around the transportation, liquid fuels.

But when you look at stationary power, okay, and the emissions related to power plants, in California, we passed SB 100 a few years ago, which basically calls for zero emissions from the electricity-generating sector. And that deadline is fast approaching, right? And so that obviously means a faster shift towards renewable energy, etc. And that also requires infrastructure upgrades.

One of the great challenges that we're seeing in California is rising utility rates. And islands like Hawaii and other parts of the country are also seeing these challenges. Actually, a big chunk of the reason for rising rates is really due to, in California, the impact of climate change, right? Wildfires are creating greater liability to the utilities, especially the investor-owned utilities.

And so that's creating upward pressure on retail rates for electricity because more investments need to be made in terms of hardening the electrical infrastructure, from vegetation management to undergrounding power lines. At the same time, we need to upgrade the transmission and distribution network to accommodate greater electricity use, and in part, more intermittent renewable energy.

We actually have quite a bit of solar in California. I'm actually excited that in LA County itself, we've done a great job in terms of transitioning towards 100% renewable energy for county operations because we created an organization called the Clean Power Alliance that basically is able to procure 100% renewable energy for the county for those facilities that are eligible.

But going back to the rising rates issue, this is going to be a real challenge because we have to balance the need to mitigate against climate change that is causing more wildfires, which is requiring us to make more investments in wildfire mitigation.

David: Yeah. No, that's true. And all that keeps pushing rates up. Gwen, you know, you mentioned a couple of programs that you're working on. Same question. Like, how do you prioritize across all the things you could be investing in?

Gwen: Yeah, good question. So, you know, we are an island state. We are one of the most isolated landmass in the world. We are at ground zero for climate change. And so I'm so proud of our forward-looking and courageous policymakers. You know, I think Hawaii was the first state in the nation with a 100% clean energy goal by 2045. Additionally, in 2013, this is over a decade ago, our policymakers found that the early adopters to solar were affluent ratepayers, and they were concerned that this would leave the underserved ratepayers, the ratepayers who could least afford it, left supporting an aging grid infrastructure.

Financing strategies, such as tariff-on-bill programs, to overcome clean energy adoption barriers

And because of that, in 2013, they passed a bill to create the Hawaiʻi Green Infrastructure Authority. So our focus is on affordability and helping our underserved ratepayers, which we defined as low and moderate-income homeowners, renters, nonprofits, and small businesses, as defined by the U.S. Small Business Administration, providing them inclusive financing so that they can adopt solar and reduce their energy burden.

We do this by nontraditional financing. We don't take credit scores. We don't do debt-to-income ratios. We have innovative on-bill financing mechanism, which is part of the tariff that allows us to provide the financing. We get repaid by the energy that they save that they would have paid the utility.

So our priorities are clear. It's really on addressing the access to capital gap for ratepayers. It then did expand to other programs like small businesses under the SSBCI federal program. But again, our priorities are number one, whether it's energy or small business, it's addressing the access to capital gap.

David: So you mentioned inclusive financing and you talked about repayment on utility bills with the savings. Is this tariff on-bill financing?

Gwen: It's tariff on-bill financing, yes.

David: Wow, that's fascinating.

Gwen: Yes. And Minh, I just wanted to mention, EVs are important. We are trying to convert, you know, to electric vehicles also. It's no secret, we have one of the highest energy rates in the nation. We also have one of the highest gas rates in the nation. And so what we did with our financing is it doesn't make sense or it's almost neutral if a low and moderate-income household converts to an electric vehicle and has to buy the energy from the grid. It's going to be the same, sometimes even more expensive than buying gas. And so it makes sense only if they can fuel it with PV. And so we've changed our financing to accommodate ratepayers who are buying an EV or transitioning to an EV to allow for the additional load that the EV charging will cause.

Minh: That's an excellent point. And, you know, it allows me to segue into a program that LA County just won. It's called the Equitable Building Decarbonization Program. The county was awarded $329 million recently. Part of it is state money, but part of it is also federal money. And the goal of this program is to decarbonize between 11,000 and 13,000 housing units from single-family, multi-family to manufactured homes across the region, installing heat pumps, you know, and other energy efficiency measures in order to lower the energy burden for low-income residents, okay? And so this is a direct install program. It's free to the consumer, okay?

And we're going to be facing challenges under this program because when you shift away from natural gas to electricity and hopefully, the consumer also shifts away or over time shifts towards electric vehicles, their electricity usage will certainly go up, okay? It's going to be offset by lower natural gas or even gasoline usage, but the electric bill is going to go up, right?

And so one of the innovative things that we're trying to do there is pair them at the same time with other incentive programs around solar, okay? And so our hope is that we actually lower their energy burden as they transition towards, you know, lower emissions.

So I love the point that you made there, Gwen, about looking at the total energy burden, the total energy cost for those consumers, in particular, the lower-income residents.

The importance of partnerships and community engagement

Deb: Yeah. I would add too. I think that's great. And what we're seeing, for example, in some of the other island territories that we work with, integrating the battery storage aspect into the conversation is so critical and how that gets paid for. That certainly changes the financing of a project fairly significantly in some ways, depending on the level of storage you're looking for. And just thinking about and taking that kind of whole home or life aspect approach where you're thinking about weatherization through to distributed energy, EV, how that works in the consumer context.

And I think one of the challenges that we all face is making sure that you're meeting people where they are in their journey and based on their needs. And I'd love to say, you know, there's these 10 consumer archetypes, and we all fit into some of those, but it really is situational and making sure that the programs that are designed or the financing options that are offered can be flexible enough to kind of meet people's needs, particularly through the low-income and underserved communities.

David: Definitely.

Minh: And I would add that, you know, because LA County, my team is overseeing this large program, actually it goes beyond the borders of LA County. LA County has, you know, just under 10 million residents, right? But we're actually overseeing this program on behalf of the state for all of Southern California, from Los Angeles down to San Diego County, all the way on the eastern side of California, Imperial County, Riverside, San Bernardino County. And so it's a very large territory that we're covering.

And the only way we can achieve that is through partnerships. And we're partnering with, you know, trusted partners, community-based organizations locally in order to build that trust and to build that rapport with residents and meeting them where they are, you know, what Deb just mentioned. It's extremely important.

Gwen: You know, we work with... You know, my peeps, as I call them, are, you know, underserved ratepayers, low and moderate-income households. And so we go out and talk to them about our program because they often discount themselves from being able to afford solar. In Hawaii, solar is very expensive. It's between $50,000 to $75,000. And with their income, they're already discounting themselves saying they can't qualify. So, you know, we need to talk to them, answer their questions, and make sure that they understand that they can afford solar through our inclusive financing program.

David: You know, inclusive utility investment, tariff-on-bill financing, I typically think of that as a utility-led program. So it's really fascinating to hear you at the state level promoting that. Equitable Building Decarb sounds like a program I would typically hear a utility doing, so it's fascinating to me to hear that a county government is doing that.

The evolving role of state and local governments in leading affordable and impactful energy transition efforts

How do you guys see the role of state and local governments and public sector organizations in general evolving over the next 5 to 10 years with regards to the energy transition? Do you see your role increasing? Yeah, speak to me a little bit about that.

Minh: You know, my team operates a program called the Southern California Regional Energy Network, okay? And, I think, David, you're absolutely right. At least in California, and I don't have the perspective of other states here to share with you, but at least in California, for many, many decades, energy efficiency programs, energy programs in general, were operated by the utilities, okay? They were run through utilities and supported in large part by ratepayer dollars.

And those programs for many decades actually did a lot of good. I mean, you know, dating back from the '70s, from the energy crisis, you know, back then. You know, the appliance standards, codes, and standards, the work in energy efficiency had made California, at least, you know, a leader in terms of adopting energy efficiency and reducing the energy use per capita. Even though we have fairly high rates of...cost per unit of a kilowatt-hour, we actually have some of the most efficient homes in the nation, okay, because of the rules and regulations and the climate, quite frankly, that we are fortunate to have.

But, you know, the reality is utilities have been moving away from energy programs. They appear to be more focused on trying to increase their load base, right, through, you know, EV programs and other types of programs. And furthermore, the public utility commissions, you know, make sure that they try to make cost-effective decisions, right?

And so the challenge, of course, is that, you know, it's easier to market, it's easier to get more affluent customers and businesses to adopt energy measures, okay? They have the means to do that, okay? The challenge is, of course, reaching the hard-to-reach, the lower-income segments, who actually need those programs the most, because the energy burden that they have as a percentage of their income is actually much, much higher than more affluent individuals.

So what we are seeing in California, at least, is a trend away, the utilities away from these energy programs, because they may not be as cost-effective, okay? And so the burden, or the opportunity now is for local governments and other NGO types of organizations to administer these programs so that we benefit the lower and moderate-income residents.

David: Makes perfect sense.

Gwen: I totally agree. So, you know, I often say nothing happens without capital, right, whether it's public, private, or philanthropic. And so the private capital markets can take care of those, as Minh says, that are easy to finance. That's easy. They do that all day long. I think it's very important for government to come in and facilitate the harder-to-reach to provide them financing for that. You know, there's a...it could be grants, it could be financing.

You know, I'm a lender at heart. I prefer financing because that allows the state to use the same public dollar over and over again as it gets repaid. And that is, you know, definitely more prudent and a good fiscal policy in order to do that.

But what I love most about my job is being able to find a need, and if there is a need out there that is not being met, work with our policymakers to pass a law that can help us facilitate that, like we did with the C-PACER law that just passed, as well as the Solar Hui law.

Deb: Yeah. And I would just add, I think there's certainly, and Gwen, you know this better than all of us because you run the Green Infrastructure Authority, but we're seeing more organizations like that being formed across the country. Virginia is about to launch and is hiring for a green bank. And we've seen them in Pennsylvania and other states that we work in, and they're providing a little bit more flexibility and innovation than traditionally would come through a utility program or through, like, a very specific state energy office program.

And that, I think, coupled with a lot of the money that's getting flooded in the market, for example, through the Greenhouse Gas Reduction Fund and these new financing opportunities, education for CDFIs and smaller lenders, all of this coupled is really I think driving more of a role for the public sector entities in the clean energy transition, just because they are unlocking all these different opportunities for capital in different markets and sectors.

David: I wish we had, like, another 30 minutes because we're running up against our time. And this conversation is so fascinating. But I am going to take us to the last question that we ask on this podcast, which is, if you could do one thing to change the industry, no limits, what would you do? And Gwen, I'll start with you.

Gwen: Yeah, so I'm all about capital. I'm all about financing. If we could do another Greenhouse Gas Reduction Fund in the future, that would help us deploy more capital and get it out to disadvantaged communities and low-income households. That would be my wish.

David: Awesome. How about you, Minh?

Minh: Oh, my list is too long for one thing. This is a really hard one. And my perspective, like I said before, is going to be California-focused because that's where I live and I see the challenges that we face. But I do agree with Gwen, it's capital because it takes capital and oftentimes it takes decadal type of capital, right, for infrastructure. Some of these investments can be quite significant, like billions and billions of dollars. And the payback is going to take time, right? And so it's hard to pay for that all upfront and you need to finance that over time. The infrastructure investments are huge.

The transition that we're underway, just in the transportation sector, we built out gas stations over 100 years, we're trying to build out EV infrastructure network over the next 10, 15 years, maybe 20 years, okay, in order to transition our economies towards zero emissions. But it all takes capital to make all this happen. And we can't forget about the lower income segment. As we make this transition, the lower income segment is going to get left behind unless we proactively avoid energy redlining.

David: Excellent point. Deb, take us home.

Deb: Yeah. I would add what has to handhold with the capital finance, you need the capital to be able to promise and to offer things when you're going in and talking to communities or businesses, whoever. That marketing engagement, like, a really solid suite and best practices for how to do that well, to me, would be critically helpful. I think there are some resources that are out there, but as the space is evolving so quickly and the messaging is, in some ways, getting simpler and in a lot of ways getting more complex in the financing space, like, how to really do that well and effectively I think would be something that would massively move the market as a part of the transition.

David: Is that your magic wand?

Deb: You know, I spend a lot of time marketing, education, outreach. That's a lot of time explaining.

David: Awesome. I have to say I'm really in awe of you guys, what you're doing in I'll call it the private sector. I know it's state and local government, so that might be considered the public sector, but it's really inspiring. And hearing how you're leveraging the capital markets, the growing green banks, making sure that the underserved are served, it's awesome. So thank you, guys, for what you're doing. Thank you, all, for your time today, sharing your thoughts of what you're doing, your perspectives. It's been a treat for me to learn about it, and I really appreciate it.

Gwen: Mahalo.

Minh: Thank you.

Deb: Thanks very much.

David: Well, if you've enjoyed this conversation as much as I have, please share it with a colleague or a friend. It's one of the best ways for people to learn about this podcast, and we'd sure appreciate you liking and even subscribing to our podcast. Here's to the next "Energy in 30."