Renewable Energy Development for
Governments
An overview of the current state of the market
3/21/2016
SSG RE Purpose and Mission
•
MISSION
–
•
•
•
The SSG supports a leadership role for United States businesses in the deployment of renewable
energy technologies by funneling investments funds into good projects and good firms by assuring
stakeholders of a positive outcome.
MARKET
– Independent Renewable Energy Power Production
– Start Up: Renewable Energy Power Purchase Agreements (PPA) for US governments
– Mature: Global RE PPA
OPPORTUNITY
– The US Federal government is sponsoring growth of a domestic renewable energy industry by
requiring Federal agencies to procure energy that is generated and consumed on site. There is no
significant existing business in this sector. Multiple barriers have to be overcome for success.
– The opportunity is to provide expertise to overcome these barriers so that governments can function
as early adopters of commercial and C round technologies and new business processes for RE
implementation.
THE SSG WILL CREATE AND CAPTURE UNIQUE INTELLECTUAL PROPERTY BY PERFECTING:
– Off-take Agreements: purchasing the energy
– Site: Providing long term land agreements for RE on government sites
– NIMBY: Government control of environmental permitting makes sites easier to permit
– Utility: A consistent approach that encourages utility participation
3/21/2016
BLUF
• There is an emerging opportunity (>$20BN)with Governments
to develop renewable energy power plants on spare land
– For the government
•
•
•
•
Helps meet their sustainability goals
Appropriate reuse of unused land
Makes money
Energy security
– For the developer
•
•
•
•
3/21/2016
Can be faster, more effective
Can be a simpler decision making group
Avoids NIMBY
Help with permitting
Early stage - The Federal Opportunity
• Mandated to develop RE projects
– DoD – NDAA 2010 requires 25%RE x 2025
– Executive Order 13514 – sustainability
• Evidence of a >$20BN funding requirement
– Very limited appropriated funding
– Stated goal almost all 3rd party financing
– Army $7BN, Air Force $8BN
• Problem
– They are not very good at it
– Lack of credibility keeps the top developers away
– PRICE
• The opportunity
– Be good at it, win early and stay ahead
3/21/2016
SSG Positioning
Government
Land
Energy
$
RE Project
Facilitator
or
Principal?
$$
SSG RE
$$
Utility
Developer
PUC
Banking
EPC
Tech entrepreneurs
VCs
3/21/2016
Driver: Quadrennial Defense Review Feb 2010
Energy Security – “assured access to reliable supplies
of energy and the ability to protect and deliver
sufficient energy to meet operational needs” – pg 87


DoD will
– promote investments in energy efficiency
– ensure that critical installations are adequately
prepared for prolonged outages caused by
natural disasters, accidents, or attacks
Balance energy production and transmission to
preserve test and training ranges and operating areas
needed to maintain readiness
“Energy efficiency can serve as a force multiplier, because
it increases the range and endurance of forces in the field
and can reduce the number of combat forces diverted to
protect energy supply lines…” – pg 87
3/21/2016
Drivers = mandates
Federal Mandate
Energy Topic
Energy Policy Act of 2005
Electricity use for federal
government from renewable
sources
Executive Order 13423
Energy use in Federal buildings
Total consumption from renewable
sources
Fleet vehicle alternative fuel use
Energy Independence
and Security Act of 2007
Total consumption from renewable
sources
Energy Performance Target
•
At least 3% of total electricity consumption (FY07-09), 5% (Fy10-12),
7.5% (FY13 +)
• Reduce 3% per year to total by 30% by FY2015 (FY2003 baseline)
• At least 50% of required annual renewable energy consumed from “new”
renewable sources
• Increase by 10% annually to reach 100% (Base line FY2005)
• 25% by FY2025 -”Sense of Congress”
Hot water in new / renovated federal
• 30% by FY2015 if life cycle cost-effective
buildings from solar power
Fossil fuel use in new / renovated
Federal buildings
Executive Order 13514
GHG emission reduction
Net zero buildings
Water consumption
Waste minimization
National Defense
Authorization Act, 2010
3/21/2016
Renewable Fuels Use
Facility Renewable Energy Use
• Reduce 55% by FY2010; 100% by 2030
• DoD Goal: reduce Scope 1 & 2 GHGs by 34% by FY2020
• DoD Goal: reduce Scope 3 GHGs by 13.5% by FY2020
• All new buildings that enter design in FY2020 and after achieve net zero
energy by 2030
• Reduce consumption by 2% annually for 26% total by FY 2020 (FY2007
baseline)
• Divert at least 50% of solid waste & 50% of C&D waste by FY2015
• Directs the Secretary of Defense to consider renewable fuels in aviation,
maritime, and ground transportation fleets.
• Produce or procure 25 % of the total quantity of facility energy needs,
including thermal energy, from renewable sources in FY2025
Development opportunities 5MW to 50MW
• Find federal government land
– 50 acres + non-excess but available
– Distribution or transmission access
– Quiet enjoyment!
• 2 transactions
– Lease agreement at fair market value
– Power purchase agreement at or below utility
• Export to grid encouraged
• Open to all technologies, but LCOE will dominate
3/21/2016
Power Purchase Issues
• Greatest revenue is customer avoided cost compared to utility
– Energy plus transmission and distribution
• System interconnection is important
• Larger systems require system impact studies
• Unregulated utility territory
– ISO membership requirements for PPA
– Market price of energy is fairly transparent
– Customer side - no export is easier
• Regulated territory
– NO power purchase agreements of significant size
– Deal with local utility is essential
3/21/2016
Opportunities
• Army
– McGeown potential conflict of interest
• 158 installations
• Air Force, Navy
– Enhanced Use Lease
• Department of Energy
• Lots of smaller ones
– Coast Guard, Reserves, National Guard
• Where else?
– Links with States, Cities etc.
– Overseas
3/21/2016
Finding a starting point for SSG RE
• Customer Opportunities
– Where do we have senior level contacts?
• Federal
• Other governments
• Utilities
• Technology Opportunities
– Emerging tech firms
• Financing
– Funds that need support
3/21/2016
3/21/2016
Intelligence Gathering
MARKET INFORMATION
3/21/2016
Army Energy
We've got the
LAND and the DEMAND!
3/21/2016
Army Power & Energy Program
• Three focus areas: Soldier Power, Vehicle Power, and Basing Power,
• Army Energy Facts
– The Army owns over 15 million acres of land within the U.S., of which
about 5 million could be used for buffering or RE infrastructure.
– The Army currently spends nearly $4 B/year on energy!
– Renewable energy is a growing industry and is good business that will help
the Army meet energy goals and mandates.
– The Army needs an additional 2.1 million MWh of RE and $7.1 Billion in
private investment to meet the goal of 25% renewable energy by 2025.
3/21/2016
Background
•
Army faces critical installation energy challenges – Achieving secure, reliable electricity supplies for a volatile, uncertain future
– Meeting federal renewable energy mandates
•
Renewable power mandate:
– 25% of energy consumption in 2025
– FY10 performance: 2% vs goal of 5%
•
Current decentralized
installation-level approach
is not meeting renewable
energy mandates:
– Garrisons lack expertise, resources and
financing for project development
– Army decision making longer than
private sector standard; deals harder,
transaction costs higher
– No clear focal point for Army-wide
execution and accountability
3/21/2016
Renewable Energy Project Potential
 The Army prioritizes CONUS installations for Renewable
Energy Development based on:





Resource potential
Army Installations 158
Land Acreage
13,506,291
State regulations
Buildings
1+ Bsf
Federal and State incentives
Payback periods and levelized cost of electricity
Regulatory considerations
 Through existing authorities the Army will leverage private
investment to install renewable energy




ESPC
EUL
PPA
UESC
2011 ADC WINTER FORUM | PAGE 17
The Army currently receives 2% of its
electricity from renewable sources*
*Does not include renewable thermal energy
Leveraging Private Investments
Leveraging private sector investments is a strategy to
advance efficiencies in an era of constrained resources.
Authorities from Congress (underutilized):




Energy Savings Performance Contracts (ESPC) – Implementation and financing of
energy efficiency projects out of energy cost savings
Enhanced Use Lease (EUL) – Use of non-excess Army land exchanged for In-kind
SRM projects
Power Purchase Agreement (PPA) – Energy projects installed on installations at
no-cost in exchange for long term agreements to purchase renewable energy
Utility Energy Service Contracts (UESC) – Service contract with utility provider
Other Authorities (well utilized):



Residential Community Initiative (RCI) – privatized housing
Privatized Army Lodging (PAL)
Utility Privatization (UP)
3/21/2016
The New Vision
The Energy Initiatives Office (EIO) Task Force
MISSION: Identify, prioritize and support the development and implementation of
large-scale, renewable and alternative energy projects – focusing on attracting
private investments and delivering the best value to the Army enterprise
GOALS:
1. Meet renewable energy federal mandates
2. Generate revenue and cost savings
3. Reduce greenhouse gas emissions
4. Contribute to achievement of Net Zero Energy
5. Increase energy security for installations
The EIO Task Force will make the Army the country’s leader in renewable energy by
leveraging our land and power consumption to attract significant private investment,
provides long – term price stability and enhances the energy security of our installations
3/21/2016
EIO Task Force Concept of Operations
• Stand up small dedicated task force on 15 Sept 2011
• Attract large-scale renewable power developers to invest up ~$7B
• Variable project development/management costs ~4% of
external capital raised – $28.4M/yr
EIO Task Force
Director
Planning
Division
3/21/2016
Execution
Division
Outreach
Division
Net Zero
 A Net Zero ENERGY Installation is an
installation that produces as much energy
on site as it uses, over the course of a year.
 A Net Zero WATER Installation limits the
consumption of freshwater resources and
returns water back to the same watershed
so not to deplete the groundwater and
surface water resources of that region in
quantity or quality.
Energy
Water
Waste
Integrated
Fort Detrick, MD
Aberdeen Proving
Ground, MD
Fort Detrick, MD
Fort Bliss, TX
Fort Hunter Liggett,
CA
Camp Rilea, OR
Fort Hood, TX
Fort Carson, CO
Kwajalein Atoll, RMI
Fort Buchanan, PR
Fort Hunter Liggett,
CA
Parks Reserve Forces
TA, CA
Fort Riley, KS
Fort Polk, LA
State-Wide
Sierra Army Depot, CA
JB Lewis-McChord,
WA
JB Lewis-McChord,
WA
OR ARNG
West Point, NY
Tobyhanna Army
Depot, PA
USAG Grafenwoehr,
Germany
3/21/2016
 A Net Zero WASTE Installation is an
installation that reduces, reuses, and
recovers waste streams, converting them to
resource values with zero landfill.
 A Net ZERO INSTALLATION is one which
applies an integrated approach to
management of energy, water, and waste to
capture and commercialize the resource
value and/or enhance the ecological
productivity of land, water, and air.
Army Chain of Command
SEC ARMY
ASS SEC ARMY
(Installations Energy and
Environment)
ACSIM
Policy Guidance Budget
IMCOM
Landlord - execution
Regions
DEP ASS SEC ARMY
(Energy and
Sustainability)
EIO Director
Installations
Garrison Commander
(COL)
3/21/2016
DPW
Installation
Commander (GEN)
Air Force RE
• 14.2-megawatts (MW) solar array 140 acres at Nellis Air Force
Base, Nev
• Davis Monthan AFB
– Davis-Monthan officials awarded SunEdison 14.5-megawatt
photovoltaic on 130 acres
– 35% of the energy needed to operate base facilities.
• Luke AFB with Arizona Public Service Company to build a 15MW solar on 100 acres. 50% of the base's energy needs
• Air Combat Command and Nellis AFB leaders have plans to
construct a 17-megawatt phase-two project in 2012 to add to
the 14.2-megawatt array built in 2007.
3/21/2016
Improving Energy Availability by Increasing
Renewable Energy Use
 2nd Largest Federal purchaser of renewable
energy
 Renewable energy represented nearly 6% of Air
Force energy consumption in FY09
 Operating 85 on-base renewable
energy projects on 43 bases, with 31
underway or planned for construction
 Working with industry to install 24 wind
turbines at Vandenberg AFB by 2014
 Planning to develop over 1,000
megawatts of on-base renewable
energy to meet 2025 goal
3/21/2016
Will Air Force meet installation energy goals?
• Energy Intensity: current AF budget for facility energy and water
projects will make it challenging to meet energy and water intensity
reduction goals , reactivate third party funding
– Most investments require 2yrs from contract award to realize
measureable energy savings due to contract and construction lag time
– Aggressive program in place to reduce overall square footage of facilities
to reduce maintenance costs; however, reducing square footage penalizes
the intensity metric
• Renewable Energy: high levels of investment necessary coupled
with limited cost-effectiveness of RE when compared to commercial
utility rates will make goals difficult to reach
– To meet solely by AF-funded capital would be in excess of $8B dollars
based on cost per MWh of recently-installed projects
3/21/2016
Air Force approach to RE energy projects?
• First Priority: Develop on-site renewable resources
– Direct AF investment thru Energy Conservation Investment Program
(MilCon set aside)
– Renewable Energy Power Purchase Agreements (PPAs)
– Utility/Third Party Funded
• Second Priority: Procure power from off-site renewable
resources delivered over the power grid
• Third Priority: Purchase Renewable Energy Certificates (RECs)
• Why not develop more on-site renewable energy?
– Would need to build out almost 80 Nellis sized projects to meet goal
(14MW solar array at $100M)
– Total cost for enough on-site projects nearly $8 billion
Top-10 on-base operational RE sites?
Tech
Status
Generation KWH
NELLIS AFB, NV
Solar Photovoltaic
Fully Operational
33,933
HILL AFB, UT
Landfill Gas
Fully Operational
15,113
F E WARREN AFB, WY
Wind
Fully Operational
8,725
ASCENSION
Wind
Fully Operational
7,095
TOLEDO ANG, OH
Solar Photovoltaic
Fully Operational
1,006
YOSEMITE AG, CA
Solar Photovoltaic
Fully Operational
942
CAPE COD AFS, MA
Wind
Fully Operational
821
JB MCGUIRE/DIX/LAKH
Solar Photovoltaic
Fully Operational
760
MARCH AFB, CA
Solar Photovoltaic
Fully Operational
732
LUKE AFB, AZ
Solar Photovoltaic
Fully Operational
596
Current in–progress RE projects?
Initiative
Source
Cap KW
AF Academy, CO
PV
6,003
Camp Perry ANG, OH
PV
150
Los Angeles AFB, CA
PV roof
225
AF Academy, CO
PV
550
Moron AFB, Spain
PV
1,100
Edwards AFB, CA
PV
3,500
Davis Monthan, AZ
PV
14,500
Future renewable energy projects?
Energy Source
# of Projects
Cap KW
Photovoltaic (PV)
10
45,160
Wind Energy
10
70,800
Waste to Energy
2
8,400
Landfill Gas
1
4,000
Biomass
1
25,000
PV Roof
2
1,263
USAF Chain of Command
SEC AF
MAJCOM
Major Commands
AFCE
Civil Engineering
Assistant Secretary of the Air Force
for Installations, Environment and
Logistics
DEP ASS SEC AF (Energy)
Bases
Base Commander
(GEN)
Base Civil Engineer
(COL)
DPW
3/21/2016
AFCEE
Air Force Center for Engineering
and Environment
AFCESA
Air Force Civil Engineering
Support Agency
Energy Division -Facility Energy
Center
AFRPA
Real Property
Department of Navy
Energy Program
Abstract from:
Association of Defense Communities
February 15, 2011
3/21/2016
Federal Mandates
•Key Legal Compliance Drivers
•30% Energy Efficiency Increase (in Mbtu/KSF) by 2015 (Energy Independence and
Security Act (EISA) 2007)
•25% Renewable Energy Production by 2025 (NDAA’10)
•Advanced metering and annual energy audits by 2012 (Energy Policy Act 2005
and EISA’07)
•20% decrease in NTV fleet fuel by 2015 and Alt Fueling stations (EISA’07)
•Analysis and plan to address vulnerability of critical assets (NDAA’10)
•SECNAV Shore Energy Goals
•50% Alternative Energy Ashore / 50% Net-Zero Installations by 2020
•50% decrease in Non-Tactical Vehicle fossil fuel consumption by 2015
•Improve Energy Security by identifying shore energy supply infrastructure
vulnerabilities
3/21/2016
32
Navy Shore Energy Strategy
Embrace
Sensible
Partnering
Leverage
Technology
Transform
Culture and
Behavior
Strategic
Communication
3/21/2016
Energy Security
and Legal
Compliance
Actual and Planned Strategy Impact
Efficiency First
• All Echelons Look
Externally for Win/Win
Opportunities
• Watch, Partner, Lead
Framework to Assess
New Technologies
• Enabled by Technology
• Individual, Command and
Functional Levels
• Tactical Comms for
Stakeholder Groups
• Overarching Themes
Navy Culture
& Behavior
Renewable
Energy &
Sustainability
30% Energy Efficiency
Increase by 2015
(EISA’07)
25% Renewable Energy
Production by 2025
(NDAA’10)
Advanced Metering
and Annual Audits
(EPAct’05, EISA’07)
Critical Assets Plan
(NDAA’10)
50
Navy Energy Consumption (TBTU/YR)
Governance
• Codified in 4100.5E
• Coordinates
subordinate/supporting
plans and guidance
Reduce Consumption to
Simultaneously Achieve Mandates
40
EISA’07 30%
Efficiency Mandate
30
20
Actual
Planned
10
Current & Planned Renewable Energy Production
2003
2014
Increasing Energy Efficiency And Transforming Behavior
Will Make Alternative Energy Goals More Attainable.
2025
33
Strategy Details and Successes
Renewable & Sustainability
New Construction/ Major Renovations
LEED Silver or equiv.
– Energy/ water efficiency
– Recyclable Materials
– CO2 Emissions Reduction
Integrated Technology Strategy
– Watch Industry-led tech and invest
when/where viable and mission allows
• Solar Energy (Ex: Ford Island PV)
• Wind Energy (Ex: SNI, Newport)
– Partner at all echelons to develop needed
technology w/ key stakeholders
• Smart Grid
– Lead development of mission critical and
game changing technologies
• Tidal and Ocean Energy RDT&E
• Innovative Geothermal
3/21/2016
Energy Efficiency First
Recapitalize Existing Infrastructure with
more energy efficient systems
– Energy Return on Investment
– Decision Model for Utility and Facility
Upgrades
Annual Energy Audits – Building level
assessments of opportunities
– 25% of Navy Covered Facilities/ year
– Added Base Renewable Energy analysis
Energy Security
– Energy Security Audit Program
Navy Culture & Behavior
Increased transparency at Individual,
Command, and Function Levels
– Resident Energy Conservation Program
Mock billing - 7.6% reduction over four
months
Technology Enabled
– 13,000 Advanced Meters (AMI) in place by
end of FY11
– NDW SmartGrid Pilot: Secure integration of
AMI w/ Utility and Facility management
systems
– Tailored Installation Goals for 50%
reduction as a Navy-Wide Goal
Link to Operations
– Identify even greater opportunities for
energy and cost savings beyond facility
upgrades
34
Alternative Energy Ashore and
Net Zero Installations
Total Installed: 5.7+ MW
Total Planned: 100 MW
Monterey Bay
Planning
Rooftop Solar
• 13MW China Lake
Solar
• MCB Camp Lejeune
(up to 5 MW)
• MCB Camp Pendleton
(2.8 MW)
• Solar MAC SW, Hawaii (96
MW)
Waste to Energy
MCLB Albany
May 2010
3/21/2016
Wind
MCLB
Barstow
Total Installed: 6+ MW
Total Planned: 4 MW
Planning
• 4 MW in Guam
• 22 anemometer studies
underway
Advanced Metering
• NAVFAC SW is exploring
European and Asian best
practices for ASN
recommendations
• Spring 2011 – UCLANAVFAC SW Forum to
discuss state of technology,
partnership
• DON has awarded 7,679
out of 14,211 electric
meters in FY09 and FY10
• DON pursuing 95% tracking
of all electricity
35
Geothermal Energy
Navy Geothermal Power
• Coso Facilities – China Lake, CA
NAVY I Power Plant
– Operational since 1987
– 270MW Max net output
Drilling Rig
– Enough power to supply electricity to
180,000 homes
• Awarded NAS Fallon NV
Department of Interior
• Working with the Bureau of Land
Management in exploring additional
well sites
3/21/2016
– Plant Sized at 30 MW
• Exploring NAF El Centro (CA), MCAGCC
Twenty-Nine Palms (CA), MCAS Yuma
(AZ), NAS Fallon (NV)
36
Ocean Power
• Ocean Power pilots to
demonstrate ocean
renewable energy
•OTEC – developing
designs and critical
components
•Wave Buoy – 3rd
generation buoy tied to
grid
•Tidal turbine –
undergoing
environmental review
prior to deployment
OTEC, Hi
Wave Buoy, HI
Tidal Turbine,
Puget Sound
3/21/2016
Navy Chain of Command
SECNAV
Assistant Secretary of the Navy for
Energy, Installations and Environment
CNIC
NAVFAC
Naval Facilities Engineering
Command
DEP ASS SEC N
(Energy)
Commander Naval
Installations Command
Planning, Programming,
Budget and Execution
NAVFAC ESC
NAVFAC
CNIC Facility Management
Naval Facilities Engineering
Service Center
Regions
Facility Management (Management
and Administration, Installation Plans
and Engineering, Collateral Equipment,
Real Estate)
NAV GPO
Geothermal Program Office
3/21/2016
NAVFAC
Region
PW Energy &
Utilities
CNIC
Real Estate
OTHER POINTS
3/21/2016
39
3/21/2016
Buy American
• New Buy American requirement for PV panels
– NDAA 2010, sec 846
– Any ESPC, UESC, Utility Service, land lead
– Ownership test
• Installed on DoD property
• Reserved for exclusive use of DoD for economic life of device
– Solar panel maker Solyndra today said that it will file for Chapter 11
bankruptcy protection, after failing to successfully compete against
lower-cost Chinese manufacturers. It is one of largest failures ever
suffered by venture capitalists, and a major black eye for a U.S.
Department of Energy that loaned the company more than $500
million.
3/21/2016
Real Estate Authority
Power Purchase Authority
CBO Scoring
OMB Scoring
State Utilities Laws
LEGAL/REGULATORY ISSUES
3/21/2016
Real Estate Authority
• Enhanced Use Leasing (10 USC § 2667)
– Underutilized Assets
– Up to 50 years
– In-kind consideration
• But Also – Easements
–
–
–
–
3/21/2016
10 USC § 2668 (Fort Bliss –El Paso Desalination Plant)
40 USC § 1314 (Air Force Academy – Photovoltaic Project)
43 USC § 961
10 USC § 2688
Power Purchase Authority
• FAR 41.103
– 10 year, renewable at government option
• Western Area Power Authority (DOE)
– At least 20 year authority
– Western states
• Energy Savings Performance Contracts (42 USC § 8287)
– 25 years
– But revenues only from savings
3/21/2016
Power Purchase Authority
• Utilities Privatization (10 USC § 2688)
• 50 years
• Cost effective requirement
• Utility Energy Service Contract
• 25 years
• Only local utility
• 10 USC § 2922(a) (formerly 10 USC § 2394)
• 30 years
• Requires Sec Def approval
3/21/2016
Private Sector On Base Generation
FAR
Army
§ 2922(A)
WAPA
Special Circumstances
Army Position:
Applies to All
Renewables
Fort Carson
2MW Solar
__________
Fort Detrick
Electric Energy not sold
__________
17 years w/one 3 year
option
Fort Irwin
Sold off base to grid
Navy Position:
Applies to All
Renewables
__________
Navy
Navy Southwest
40 MW Solar
30 years
Air Force
Nellis AFB
14.2 MW Solar
__________
Davis Monthan AFB
14.5 MW solar
__________
Edwards AFB
3.5 MW solar
3/21/2016
Indefinite Term with 1
year Termination
AF Position:
Only Applies to
Geothermal
Edwards AFB
Sold off base to grid