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Securing Army Installations with Energy that is Clean, Reliable and Affordable. Presentation by LTC Kevin J. Lovell, PMP To Washington, DC SAME Post March 21, 2012. Agenda. Strategic Energy Situation Army’s Energy Needs and Performance Army’s Sustainable Focus on its Utility Needs

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slide1

Securing Army Installations with Energy that is

Clean, Reliable and Affordable

Presentation by LTC Kevin J. Lovell, PMP

To Washington, DC SAME Post

March 21, 2012

agenda
Agenda
  • Strategic Energy Situation
  • Army’s Energy Needs and Performance
  • Army’s Sustainable Focus on its Utility Needs
    • Energy Initiatives Task Force
army energy consumption
Army Energy Consumption

United States

Federal Government

DoD

U.S. Army

1%

80%

23%

  • Facilities
  • Vehicles & Equipment
  • (Tactical & Non-tactical)
  • FY10 Highlights
  • $2.5+B Operational Energy Costs
  • $1.2 B Facility Energy Costs
  • +64% fuel costs in Afghanistan - not counting cost to deliver and secure
  • +$400 million increase in fuel costs expected in FY11 across DoD in Afghanistan

U.S. = 98,079 Trillion Btu

Fed Gov = 1,096 Trillion Btu (FY09)

DoD = 819 Trillion Btu

U.S. Army = 189 Trillion Btu

Sources: Energy Information Agency, 2010 Monthly Energy Review; Agency Annual Energy Management Data Reports submitted to DOE's Federal Energy Management Program (Preliminary FY2010)

UNCLASSIFIED

slide5

Army Energy Outlook

Path to 25% Renewable Energy by 2025 - Notional

Energy Efficiency

Reaching Army energy goals will require significant number of large scale renewable energy projects

Traditional Energy

Renewable Energy

NDAA 2010:

25% by 2025

  • Major Issues for Army Large Scale Renewable Energy Projects
  • Declining Budgets/Incentive Leverage
    • Need for third party financing
  • Specialized Expertise
    • Requires financial, regulatory, environmental, and real estate expertise
  • Enterprise Strategy
    • To define the most efficient path to reach Army goals

Renewable Energy

EP Act 2005

7.5% by 2013

% Renewable Energy of Total Energy

Army Progress: .5% in 2011 from 168 different projects

UNCLASSIFIED

5

strategic overlook
Strategic Overlook

Key Strategic Documents

OE Campaign Plan

Army Campaign Plan

13 Jan09

29 Jul 11

Army Energy Security Implementation Strategy (AESIS)

Operational Energy - Initial Capabilities Document (ICD)

Army Operational Energy

Campaign Plan

TBP Dec 11

CENTCOM Operational Energy Documents

Draft 16 Aug 11

Army Power and Energy White Paper

24 Sep 10

&

Tactical Fuel and Energy Implementation Plan

ACP 2012 (Draft)

Campaign Objective 2.0

Provide Facilities, Programs & Services to Support the Army and Army Families

2-8 Institutionalize Contingency Basing

Campaign Objective 8.0

Improve Energy Security and Sustainability

Major Objective 8-2 Enhance Operational Energy Effectiveness & Operational Sustainability

Draft v0.2, 30 Jul 11

1 Apr 10

CB Campaign Plan

Contingency Basing

Campaign Plan

Leader Development

And Training

Change Culture

22 Feb 11

13 Oct 10

DICR’s and Joint ICD

19 Aug 10

13 Oct 10

19 Aug 10

Operational Energy

army energy initiatives task force
Army Energy Initiatives Task Force

Energy Initiatives Task Force (EITF) established by the Secretary of the Army on September 15, 2011.

  • EITF serves as the central management office for partnering with Army installations to implement cost-effective, large-scale, renewable energy projects, leveraging private sector financing.
    • Projects greater than 10MW
      • Will coordinate with installations for 1-10MW opportunities
      • Potential for projects that exceed Army requirements
    • Solar, Wind, Biomass/WTE and Geothermal technologies
      • Potential to support resource validation, environmental permitting, regulatory approval and other project requirements
    • Will use DoD land-use and third-party financing authorities
  • Potentially over 1 GW of projects to satisfy Army requirements.

Secretary of the Army

John M. McHugh

Unclassified

eitf organization
EITF Organization

John Lushetsky

Executive Director

Heidi Hansen

Office of General Counsel

Kathleen Ahsing, Director

Jeff Smith

LTC Kevin Lovell

Planning Division

Execution Division

Alan King, Director

Douglas Waters

Erich Kurre

Jon Powers, Director

Outreach Division

Partnerships

U.S. Army Corp of Engineers

Defense Logistical Command

Department of Energy

National Renewable Energy Lab

Pacific Northwest National Lab

Department of Navy

Department of Air Force

Department of Interior

Note: The EITF reports to the DASA IE&E (E&S), Mr. Richard Kidd, IV

Unclassified

the eitf and the army campaign plan
The EITF and the Army Campaign Plan

Achieve Energy Security & Sustainability Objectives

ASA (IE&E)

Staff Coordination: ACSIM

Core Enterprise: SICE

8-1 Adapt / Execute Installation Energy Security and Sustainability Strategies

ACSIM

The EITF is leading efforts to deploy large scale renewable energy projects in fulfillment of ACP Objective 8-1

Unclassified

eitf enabling authorities
EITF Enabling Authorities

The EITF will leverage existing Army authorities to meet sustainability and renewable energy goals:

  • Utility Energy Services Contracts (10 USC 2913)
  • Enhanced-use Leasing (10 USC 2667)
  • Easement authority (40 USC 1314)
  • Acquisition of Utility Services (FAR Part 41)
  • Power Purchase Agreements (10 USC 2922a)
  • Energy Savings Performance Contracts (42 USC 8287 )
  • Cooperative Agreements (31 USC 6305)
  • Sale of electrical power from alternative energy and co-generation facilities (10 USC 2916)
  • Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace (FAR Part 23)

Unclassified

planning and execution process
Planning and Execution Process

The EITF is producing a process for developing large-scale renewable energy projects that is clear, consistent and transparent. This process will be described in a Renewable Energy Project Development Guidethat will detail the five phases of project development.

  • “Identify and Prioritize Opportunities”
  • Target: 90 Days
  • Conduct GIS Screening to ID installations w/ RE potential
  • Analyze maturity of effort
  • Assess top level economics
  • Identify sites on installations w/ master plans
  • Visit installation and confirm data on sites
  • Assess Environmental and Operational Issues
  • Conduct Go/No Go Assessment
  • Prioritize sites in portfolio on Army RE goals
  • Sign MOU with installations
  • “Developing an Opportunity Into a Project”
  • Target: 90-180 Days
  • Conduct initial legal and regulatory review
  • Initiate NEPA assessments
  • Provide full Economic Case Analysis (ECA)
  • Coordinate Off-Take and other Stakeholder Input
  • Define Real Estate strategy
  • Define System Integration approach
  • Assess Mission Operation and Security Impacts
  • Obtain Required Approvals and Clearances
  • Define Acquisition Approach
  • “Getting a Binding Agreement”
  • Target: .5-1 Years
  • Current: 1-3 Years
  • Develop Acquisition Requirements and Evaluation Criteria
  • Solicit Proposals from Industry
  • Select “Highest Ranking Offeror”
  • Obtain Required Approvals and Clearances
  • Finalize Business Arrangements
  • Award Contract or Execute Lease
  • “Constructing Assets; Structuring Services”
  • Target: 1-3 Years
  • Monitor and Enforce performance, quality, schedule and warranty commitments
  • Structure and Implement Support Service Agreements to Developer
  • Structure and Account for Lease Payments or In-Kind Consideration
  • Structure and Account for Power Purchase Payments
  • Structure and Implement Service Agreements with Developer
  • Structure REC transactions and accounting mechanisms
  • “Managing the Operation and Transition to Closure”
  • Target: 10-30 years
  • Track PPA Payments
  • Track REC management
  • Conduct enforcement of performance, quality, and warranty commitments with operator
  • Conduct validation of O&M activities vs O&M plan/schedule (case by case)
  • Manage Counterparty Risk (credit monitoring)
  • Develop transition/maintenance/de-commissioning plan
  • Update installation energy plan

Current: 1-3 years

Unclassified

slide12

Our Evaluation Process

In tandem with the “enterprise view”, we are constantly responding to ideas coming from industry and installations

Phase 1 Opportunity Identification

Phase 2 Project Validation

Phase 3 Acquisition Process

Phase 4 Construction

Phase 5O&M and Closure

Systematic Enterprise Approach

Previous Studies

Phase 1

Opportunity Identification

Screening and Prioritization based on Mission, Regulatory, Legal, and Economic Suitability

Phase 2

Project Validation

Prioritization & Slotting

600 Projects

MOU Signed

Intake Process

Unclassified

a balanced approach
A Balanced Approach

EITF seeks to create a balanced pipeline of opportunities that will serve three driving principles

  • Energy Security
    • Surety (access)
    • Survivability (resilience)
    • Supply (alternative sources)
    • Sufficiency (adequacy for missions)
    • Sustainability

24x7 supply for critical assets

Price Stability

Life Cycle Cost

Deployment Speed

Capacity Factor

  • Mandates
    • NDAA – 25% by 2025
    • EPAct – 7.5% renewable electricity consumption by 2013
    • EO 13514– 34% GHG reduction by 2020
  • Economic Benefits
    • In-kind revenue
    • Reduced/stable energy bills

Unclassified

slide14

Systematic Enterprise Approach

We have screened the entire Army enterprise to identify a strong bench of opportunities

Where is Energy Security critical?

Where is best potential for Large Scale RE?

96 Sites, 179 Opportunities

(180 Sites Total)

Security Tier

  • Where are other factors to consider?
  • Additional off-take
  • Existing utility relationships
  • Access to transmission
  • Well defined environmental issues

Where could RE be cheaper than grid power?

90 sites for wind

39 sites for solar

10 sites for biomass

Unclassified

project risk assessment template
Project Risk Assessment Template

Project Risk Assessment

Mission/ Security

  • How does project enhance energy security on Installation?
  • What are the possible impacts to Installation operations?

Project Risk Factors are reviewed on a weekly basis to identify roadblocks and key issues for successful project development

Economics

  • What is the estimate of the baseline capital cost?
  • Have all other development costs been included?
  • What is the value of any REC’s?
  • Is resource validation required? What is the status?
  • What is existing utility rate and alternative tariffs?
  • Does Economic Case Analysis (ECA) show cost savings for Army considering current and project utility rates?

Real Estate

  • What is the approach and what authority is being used?
  • What are issues to obtaining required BLM agreement?

Regulatory (Legal)

  • What are the regulatory limits for interconnection, net-metering?
  • What is the status of getting required PUC approvals?

Off-Take

  • How much does installation use now and is this sufficient to consume all electricity?
  • If power is to be sold off the installation, have off-takers been identified?
  • What is the status of state RPS to drive demand?

Integration (Technical)

  • What are the technical issues to connect to grid (e.g., substation, line capacity, etc.)?
  • What is the status of required interconnect or flow studies?

NEPA

  • What are the major NEPA issues?
  • Who will implement NEPA and what is the timeline?

Acquisition

  • What is acquisition strategy and timeline to implement?
  • What performance risks are there with the developer or other partners?

Unclassified

sample of key renewable energy stakeholders their relevance impact
Sample of Key Renewable Energy Stakeholders, Their Relevance & Impact

ACSIM / IMCOM

DASA (E&S) & (I&H)

USACE

  • ACSIM: Review Reports of Availability for consistency with DA requirements for those outgrants on Army-controlled military real property requiring approval by higher authority. Approves distribution of funds from EUL
  • IMCOM: Coordinates and processes EUL Actions. Ensures EULs are recorded and documented in the RPI. Recommends distribution of funds from EUL
  • Through Chief Appraiser, establishes appraisal standards, ensures certification of DA appraisers, and reviews or delegates review of contractor or staff prepared appraisal of real property
  • Contracts for Environmental Baseline Surveys
  • Oversees Report of Availability
  • Administers lease compliance, in-kind considerations, and REC/Utility bill management
  • DASA (E&S): To determine Army Facilities energy policy
  • DASA (I&H): Chairs Real Estate Business Clearance Process and provides policy, programming and oversight for the full lifecycle of real estate programs and actions

AEC

ASA (ALT)

Renewable Energy Project

  • Provides environmental expertise to leaders, commands, Soldiers, and communities
  • Contracts for and oversees environmental analyses
  • Provide our Soldiers a decisive advantage in any mission by developing, acquiring, fielding, and sustaining the world's best equipment and services and leveraging technologies and capabilities to meet current and future Army needs

Army G-3/5/7

  • Determines project compatibility with mission requirements

MICC

ASA (FM&C)

  • Formulate submit and defend the Army’s budget to the American people; provide timely, accurate and reliable information to enable leaders and managers to incorporate cost considerations into their decision making
  • Plans, integrates, awards, and administers contracts throughout the ARFORGEN Cycle supporting the Army Commands (ACOMs), Direct Reporting Units (DRUs), USARNORTH and other organizations

DLA

  • Leader in DoD’s efforts to supply the military services with alternative fuel and renewable energy solutions

UNCLASSIFIED

rapid improvement event accomplishments
Rapid Improvement Event Accomplishments
  • Validated the current state process
    • Including documented DLA and USACE acquisition timelines for ESPC, UESC, and PPA awards
  • Answered outstanding issues (use of commander’s site license, RGB purview, OMB scoring, DoDSiting Clearing House, Phase 1 data sources
  • Created dialogue amongst different stakeholders and socialized the need to centralize processes within the EITF to generate 1 project per quarter
rapid improvement event next steps
Rapid Improvement Event Next Steps
  • Distribute Executive Summary and After Action Report of Session Recommendations
  • Adjust process maps to reflect recommendations
  • Incorporate recommendations into draft of Project Development Guide
  • Distribute draft of Project Development Guide to participants for review and comment
eitf acquisition approach
EITF Acquisition Approach

Multi-Award Task Order Contract (MATOC)

  • The EITF will develop a multi-pronged acquisition strategy that can provide required flexibility beyond the Task Force term.
  • We expect to utilize multiple contracting offices, potentially including the Army Corp of Engineers and Defense Logistics Agency, as well as DOE contracting authorities (WPA, BPA, TVA).
  • The EITF anticipates leveraging a Multi-Award Task Award Contract (MATOC) for PPA’s being developer through USACE-Huntsville.
    • Draft RFP was issued for comment on February 24, 2012

Solar, Wind, BioMass, Geothermal Companies

  • Qualification based on demonstrated experience to develop and finance RE projects
  • 3-5 Companies per Technology
  • Initial 3 year contract with 1 year options
  • On-Ramp and Off-Ramp Provisions
  • Target release of 3Q12

Qualification/ Downselect

Qualified Developers

RE Project

PPA

Project Specific

Task PPA Order

Qualified

Projects

  • SBA and Unrestricted based on Project Size
  • $5B total ceiling for 30 years’ payments

EITF Due Diligence

RE Project Opportunities

Unclassified

questions
Questions?
  • If you have questions or want to do business with the Army’s Energy Initiative Task Force, please register at
  • WWW.USARMYEITF.COM

Or contact:

LTC Kevin J. Lovell, PMP

Kevin.J.Lovell4.mil@mail.mil

(O):571-256-0509

Unclassified

slide22

ARMY STRONG

UNCLASSIFIED