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Renewable Energy Development for Governments
An overview of the current state of the market
04/21/23
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
04/21/23
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• Can be faster, more effective • Can be a simpler decision making group• Avoids NIMBY• Help with permitting
04/21/23
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
04/21/23
VCsVCs
Land
SSG PositioningGovernment
EPCEPC
BankingBanking
PUCPUC
UtilityUtilityDeveloper
SSG RE
RE Project
Energy
$$
$$
$
Facilitatoror
Principal?
Tech entrepreneursTech entrepreneurs
04/21/23
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
Driver: Quadrennial Defense Review Feb 2010
04/21/23
Drivers = mandatesFederal Mandate Energy Topic Energy Performance Target
Energy Policy Act of 2005Electricity use for federal
government from renewable sources
• At least 3% of total electricity consumption (FY07-09), 5% (Fy10-12), 7.5% (FY13 +)
Executive Order 13423 Energy use in Federal buildings • Reduce 3% per year to total by 30% by FY2015 (FY2003 baseline)
Total consumption from renewable sources
• At least 50% of required annual renewable energy consumed from “new” renewable sources
Fleet vehicle alternative fuel use • Increase by 10% annually to reach 100% (Base line FY2005)
Energy Independence and Security Act of 2007
Total consumption from renewable sources
• 25% by FY2025 -”Sense of Congress”
Hot water in new / renovated federal buildings from solar power
• 30% by FY2015 if life cycle cost-effective
Fossil fuel use in new / renovated Federal buildings
• Reduce 55% by FY2010; 100% by 2030
Executive Order 13514 GHG emission reduction• DoD Goal: reduce Scope 1 & 2 GHGs by 34% by FY2020
• DoD Goal: reduce Scope 3 GHGs by 13.5% by FY2020
Net zero buildings• All new buildings that enter design in FY2020 and after achieve net zero
energy by 2030
Water consumption• Reduce consumption by 2% annually for 26% total by FY 2020 (FY2007
baseline)
Waste minimization • Divert at least 50% of solid waste & 50% of C&D waste by FY2015
National Defense Authorization Act, 2010
Renewable Fuels Use• Directs the Secretary of Defense to consider renewable fuels in aviation,
maritime, and ground transportation fleets.
Facility Renewable Energy Use • Produce or procure 25 % of the total quantity of facility energy needs,
including thermal energy, from renewable sources in FY202504/21/23
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
04/21/23
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
04/21/23
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
04/21/23
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
04/21/23
04/21/23
MARKET INFORMATIONIntelligence Gathering
04/21/23
Army Energy
We've got the LAND and the DEMAND!
04/21/23
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.
04/21/23
• 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
Background
04/21/23
2011 ADC WINTER FORUM | PAGE 17
Renewable Energy Project Potential
The Army prioritizes CONUS installations for Renewable Energy Development based on:
Resource potential State regulations 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
Army Installations 158Land Acreage 13,506,291Buildings 1+ Bsf
Army Installations 158Land Acreage 13,506,291Buildings 1+ Bsf
The Army currently receives 2% of its electricity from renewable sources**Does not include renewable thermal energy
Leveraging Private Investments
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)
Leveraging private sector investments is a strategy to advance efficiencies in an era of constrained resources.
04/21/23
The New Vision
The Energy Initiatives Office (EIO) Task ForceMISSION: 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
04/21/23
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
PlanningDivision
ExecutionDivision
Director
OutreachDivision
EIO Task ForceEIO Task Force
04/21/23
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.
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.
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
04/21/23
Army Chain of CommandSEC ARMY
ASS SEC ARMY (Installations Energy and
Environment)
DEP ASS SEC ARMY (Energy and
Sustainability)
EIO Director
ACSIMPolicy Guidance Budget
Regions
IMCOMLandlord - execution
Installations
Garrison Commander (COL)
DPW
Installation Commander (GEN)
04/21/23
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 15-MW 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.
04/21/23
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
04/21/23
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
04/21/23
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 KWHNELLIS 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 CommandSEC AF
Assistant Secretary of the Air Force for Installations,
Environment and LogisticsAFCECivil Engineering
AFCEEAir Force Center for Engineering
and Environment
AFRPAReal Property
Bases
Base Civil Engineer (COL)
DPW
Base Commander (GEN)
AFCESAAir Force Civil Engineering
Support AgencyEnergy Division -Facility Energy
Center
DEP ASS SEC AF (Energy)
MAJCOMMajor Commands
04/21/23
Department of NavyEnergy Program
Abstract from:
Association of Defense Communities
February 15, 2011
04/21/23
32
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
04/21/23
Navy Shore Energy Strategy
33
Increasing Energy Efficiency And Transforming Behavior Will Make Alternative Energy Goals More Attainable.
Increasing Energy Efficiency And Transforming Behavior Will Make Alternative Energy Goals More Attainable.
GovernanceGovernance
Leverage Technology
Leverage Technology
Embrace Sensible
Partnering
Embrace Sensible
Partnering
Transform Culture and
Behavior
Transform Culture and
Behavior
• Watch, Partner, Lead Framework to Assess New Technologies
• Watch, Partner, Lead Framework to Assess New Technologies
• All Echelons Look Externally for Win/Win Opportunities
• All Echelons Look Externally for Win/Win Opportunities
• Enabled by Technology• Individual, Command and
Functional Levels
• Enabled by Technology• Individual, Command and
Functional Levels
Strategic Communication
Strategic Communication
• Tactical Comms for Stakeholder Groups
• Overarching Themes
• Tactical Comms for Stakeholder Groups
• Overarching Themes
• Codified in 4100.5E• Coordinates
subordinate/supporting plans and guidance
• Codified in 4100.5E• Coordinates
subordinate/supporting plans and guidance
Energy Security and
Legal Compliance
Efficiency First
Navy Culture & Behavior
Renewable Energy &
Sustainability30% 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)
Actual and Planned Strategy Impact
Nav
y En
ergy
Con
sum
ption
(TBT
U/Y
R)
40
20
10
30
50% Consumption Reduction Projection
Current & Planned Renewable Energy Production
Reduce Consumption toSimultaneously Achieve Mandates
50
NDAA’10 25% Renewable Energy Mandate
EISA’07 30% Efficiency Mandate
PlannedActual
04/21/23
Energy Efficiency First 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
New Construction/ Major Renovations LEED Silver or equiv.– Energy/ water efficiency– Recyclable Materials– CO2 Emissions Reduction
Renewable & Sustainability
34
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
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
Strategy Details and Successes
04/21/23
35
Advanced Metering
Solar Wind
Waste to Energy
• 13MW China Lake• MCB Camp Lejeune
(up to 5 MW)• MCB Camp Pendleton
(2.8 MW)• Solar MAC SW, Hawaii (96
MW)
• 4 MW in Guam• 22 anemometer studies
underway
Alternative Energy Ashore and Net Zero Installations
Monterey Bay Rooftop Solar
MCLBBarstow
Total Installed: 5.7+ MWTotal Planned: 100 MW
Total Installed: 6+ MWTotal Planned: 4 MW
PlanningPlanning
• NAVFAC SW is exploring European and Asian best practices for ASN recommendations
• Spring 2011 – UCLA-NAVFAC SW Forum to discuss state of technology, partnership
MCLB AlbanyMay 2010 • DON has awarded 7,679
out of 14,211 electric meters in FY09 and FY10
• DON pursuing 95% tracking of all electricity
04/21/23
• Coso Facilities – China Lake, CA
– Operational since 1987
– 270MW Max net output
– Enough power to supply electricity to 180,000 homes
• Awarded NAS Fallon NV
– Plant Sized at 30 MW
• Exploring NAF El Centro (CA), MCAGCC Twenty-Nine Palms (CA), MCAS Yuma (AZ), NAS Fallon (NV)
NAVY I Power Plant NAVY I Power Plant
Drilling RigDrilling Rig
Navy Geothermal Power
36
Department of Interior
• Working with the Bureau of Land Management in exploring additional well sites
Geothermal Energy
04/21/23
Wave Buoy, HI
Tidal Turbine, Puget Sound
OTEC, Hi
• 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
Ocean Power
04/21/23
Navy Chain of Command
SECNAV
Assistant Secretary of the Navy for Energy, Installations and Environment
CNICCommander Naval
Installations CommandPlanning, Programming, Budget and Execution
CNIC Facility ManagementFacility Management (Management
and Administration, Installation Plans and Engineering, Collateral Equipment,
Real Estate)
CNICReal Estate
NAVFAC ESCNaval Facilities Engineering
Service Center
DEP ASS SEC N (Energy)NAVFAC
Naval Facilities Engineering Command
NAVFACRegions
NAV GPOGeothermal Program Office
NAVFACRegion
PW Energy & Utilities
04/21/23
39
OTHER POINTS
04/21/23
04/21/23
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.
04/21/23
LEGAL/REGULATORY ISSUES
Real Estate Authority
Power Purchase Authority
CBO Scoring
OMB Scoring
State Utilities Laws
04/21/23
Real Estate Authority
• Enhanced Use Leasing (10 USC § 2667)– Underutilized Assets– Up to 50 years– In-kind consideration
• But Also – Easements– 10 USC § 2668 (Fort Bliss –El Paso Desalination Plant)– 40 USC § 1314 (Air Force Academy – Photovoltaic Project)– 43 USC § 961– 10 USC § 2688
04/21/23
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
04/21/23
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
04/21/23
Private Sector On Base Generation FAR § 2922(A) WAPA Special Circumstances
Army Army Position: Applies to All Renewables
Fort Carson2MW Solar __________
17 years w/one 3 year option
Fort DetrickElectric Energy not sold __________
Fort IrwinSold off base to grid
Navy Navy Position:Applies to All Renewables __________
Navy Southwest40 MW Solar30 years
Air Force Nellis AFB14.2 MW Solar __________
Davis Monthan AFB14.5 MW solar __________
Edwards AFB3.5 MW solar
Indefinite Term with 1 year Termination
AF Position:Only Applies to Geothermal
Edwards AFBSold off base to grid
04/21/23