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Renewable Energy Development for Governments

Renewable Energy Development for Governments. An overview of the current state of the market. SSG RE Purpose and Mission. Mission

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Renewable Energy Development for Governments

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  1. Renewable Energy Development for Governments An overview of the current state of the market

  2. 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. 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

  4. 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

  5. SSG Positioning Government Land Energy $ RE Project $$ Facilitator or Principal? SSG RE Utility $$ Developer PUC Banking EPC Tech entrepreneurs VCs

  6. 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

  7. Drivers = mandates

  8. 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

  9. 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

  10. 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

  11. 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

  12. Intelligence Gathering Market Information

  13. Army Energy We've got the LAND and the DEMAND!

  14. 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.

  15. 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

  16. 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 Installations158 Land Acreage13,506,291 Buildings1+ Bsf The Army currently receives 2% of its electricity from renewable sources* *Does not include renewable thermal energy

  17. 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)

  18. 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: Meet renewable energy federal mandates Generate revenue and cost savings Reduce greenhouse gas emissions Contribute to achievement of Net Zero Energy 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

  19. 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 Execution Division Outreach Division

  20. Net Zero • A Net Zero ENERGY Installationis 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 INSTALLATIONis 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.

  21. Army Chain of Command SEC ARMY ASS SEC ARMY (Installations Energy and Environment) DEP ASS SEC ARMY (Energy and Sustainability) IMCOM Landlord - execution ACSIM Policy Guidance Budget EIO Director Regions Installations Garrison Commander (COL) Installation Commander (GEN) DPW

  22. 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.

  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

  24. 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

  25. 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

  26. Top-10 on-base operational RE sites?

  27. Current in–progress RE projects?

  28. Future renewable energy projects?

  29. USAF Chain of Command SEC AF Assistant Secretary of the Air Force for Installations, Environment and Logistics MAJCOM Major Commands AFCE Civil Engineering DEP ASS SEC AF (Energy) Bases AFCEE Air Force Center for Engineering and Environment AFRPA Real Property Base Commander (GEN) AFCESA Air Force Civil Engineering Support Agency Energy Division -Facility Energy Center Base Civil Engineer (COL) DPW

  30. Department of NavyEnergy Program Abstract from: Association of Defense Communities February 15, 2011

  31. 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 32

  32. Navy Shore Energy Strategy • Codified in 4100.5E • Coordinates subordinate/supporting plans and guidance Governance Energy Security and Legal Compliance Efficiency First 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) Actual and Planned Strategy Impact Embrace Sensible Partnering • All Echelons Look Externally for Win/Win Opportunities • Watch, Partner, Lead Framework to Assess New Technologies Leverage Technology EISA’07 30% Efficiency Mandate Reduce Consumption toSimultaneously Achieve Mandates 50 • Enabled by Technology • Individual, Command and Functional Levels Transform Culture and Behavior Actual Planned 40 NDAA’10 25% Renewable Energy Mandate 30 Navy Energy Consumption (TBTU/YR) • Tactical Comms for Stakeholder Groups • Overarching Themes Strategic Communication 50% Consumption Reduction Projection 20 10 Increasing Energy Efficiency And Transforming Behavior Will Make Alternative Energy Goals More Attainable. Current & Planned Renewable Energy Production 33

  33. Strategy Details and Successes Renewable & Sustainability Energy Efficiency First Navy Culture & Behavior • New Construction/ Major Renovations LEED Silver or equiv. • Energy/ water efficiency • Recyclable Materials • CO2 Emissions Reduction • 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 • 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 • 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 34

  34. Alternative Energy Ashore and Net Zero Installations Total Installed: 6+ MW Total Planned: 4 MW Total Installed: 5.7+ MW Total Planned: 100 MW Wind Solar MCLB Barstow Monterey Bay Rooftop Solar Planning Planning • 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 Waste to Energy Advanced Metering MCLB Albany May 2010 • NAVFAC SW is exploring European and Asian best practices for ASN recommendations • Spring 2011 – UCLA-NAVFAC 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

  35. 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) Geothermal Energy Navy Geothermal Power NAVY I Power Plant Drilling Rig Department of Interior • Working with the Bureau of Land Management in exploring additional well sites 36

  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

  37. Navy Chain of Command SECNAV Assistant Secretary of the Navy for Energy, Installations and Environment CNIC Commander Naval Installations Command Planning, Programming, Budget and Execution DEP ASS SEC N (Energy) NAVFAC Naval Facilities Engineering Command NAVFAC ESC Naval Facilities Engineering Service Center NAVFAC Regions CNIC Facility Management Facility Management (Management and Administration, Installation Plans and Engineering, Collateral Equipment, Real Estate) NAVFAC RegionPW Energy & Utilities NAV GPO Geothermal Program Office CNIC Real Estate

  38. Other Points 39

  39. 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.

  40. Real Estate Authority Power Purchase Authority CBO Scoring OMB Scoring State Utilities Laws Legal/Regulatory Issues

  41. 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

  42. 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

  43. 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

  44. Private Sector On Base Generation

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