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1 | Energy Efficiency and Renewable Energy eere.energy.gov
NCPPP and the Association of Defense Communities:Federal Guidance on the Development of Energy Projects on Federal Lands
December 10, 2013
Timothy D. UnruhPhD, PE, CEM
Program ManagerDOE FEMP
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Agenda
FEMP RoleMission (1 Minute)Renewable Energy (1 Minute)
Federal Markets (1 Minute)Methods to Accomplish Projects ( 7 Minutes)
The Large-Scale RE Guide (15 Minutes)
AFFECT ( 3 Minutes)
Questions
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Mission
FEMP works with key individuals to accomplish energy change within
organizations by bringing expertise from all levels of project and policy implementation to enable Federal Agencies to meet energy
related goals and to provide energy leadership to the country.
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Works to increase the proportion of renewable energy in the Federal government’s energy mix
The program does this by providing:Web-based Knowledge and ToolsDirect Project Technical Assistance Interagency CoordinationRenewable Energy Guidance and Reporting Requirements
Direct Technical Assistance supports:Distributed-scale RE projects (smaller than 10 MWs) Large-scale RE projects (larger than 10 MWs)Renewables in green building construction or major
renovations
FEMP Renewable Energy
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Federal goals:7.5% of total electricity
must come from renewable electricity by 2013 and beyond
20% consumption of renewable electricity by 2020
28% reduction in greenhouse gas emissions by 2020
DOD goal: Produce 3 GWs of renewables by 2025
Federal Market for Large-Scale RE Projects
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Appropriations Energy Savings Performance Contracts (ESPC) Utility Energy Service Contracts (UESC) Enhanced Use Leases (EUL) Power Purchase Agreements (PPA) Federal and State energy incentive programs FEMP strives to:
Make performance contracting business as usual Develop the ESPC Enable program for small projects Automate processes, reduce process delays Consolidate project data Standardize documents
Methods to Accomplish Federal Facility Energy Projects
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Agency direct investmentMilitary Construction (MilCon) Sustainment, Restoration, and Modernization (SRM)Energy specific programs like the Energy Conservation
Investment Program (ECIP) RDT&E – demonstration and evaluation projects Cooperative agreements / Memorandums of Understanding
DOE/DoD MOUAFFECT grants
Appropriations
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Effective Use of Appropriations and Alternative Finance to Fund Energy Efficiency Projects, John Shonder, Oak Ridge National Laboratory, 2012
Study on Funding Sources
Each appropriation dollar used to fund short-payback ECMs reduces total investment by $2.83
Private financing possible
No private financing possible
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Energy Savings Performance Contracts (ESPC)
Purpose: Achieve energy savings & ancillary benefits Funding by any combination of private financing &
appropriated funds is authorized No agency payments until new equipment is
operating Cost savings are guaranteed to exceed payments Performance of energy conservation measures
(ECMs) is guaranteed ESCO is responsible for maintenance and repair of
installed equipment Measurement & Verification is required Maximum term 25 years
Agencies may not arbitrarily limit terms for their sites to under 25 years, per EISA 2007, Sec. 513
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Utility Energy Service Contract is a broad term for a collection of contracting mechanisms which allow utilities to provide to their Federal customers: comprehensive energy and water efficiency improvements; and demand reduction services
The Utility: assesses the opportunities designs and implements the accepted Energy Conservation Measures MAY provide financing for the project
The Agency repays the Utility: from appropriations at acceptance; or over time when projects are financed
May include energy, water and renewable energy measures
May be any size May include commissioning May not be available to all facilities Utility is a long term partner
Utility Energy Service Contracts (UESC)
$0
$500
$1,000
$1,500
$2,000
$2,500Increasing Investment in UESCs
Total Capital InvestmentPrivate Sector InvestmentFederal Sector Investment
Jan 1993 – Jan 2011
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Military authority under 10 USC §2667 Leverage assets that are currently available, but not excess to
military needs Short or long term leases of land and/or buildings Must receive full market value income or services in kind Must be of direct benefit to the United States, promote the
national defense and/or be in the public interest, and must be compatible with current and anticipated future military activities at the installation.
Generally must use competitive procedures to select a lessee for any lease. The leases provide the exclusive right to possess and use specified real property for a specified period of time in exchange for fair market value consideration.
Enhanced Use Lease (EUL)
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On-site renewable PPAs allow Federal agencies to fund on-site renewable energy projects without up-front capital costs.
A developer installs a renewable energy system on agency property with agreement that the agency will purchase the power. The developer owns, operates, and maintains the system for the life of the contract.
Agency benefits: No up-front capital costs Ability to monetize tax incentives Typically a known, long-term energy price No operations and maintenance responsibilities Minimal risk to the agency
http://www1.eere.energy.gov/femp/financing/power_purchase_agreements.html
Power Purchase Agreements (PPA)
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The Guide provides a general resource that: Develops Federal employee and private sector awareness
and understanding of each other’s operating environment, goals, language, and process
Creates a methodology to:Build strong business casesDefine and mitigate risksEstablish good project characteristics
So that the private sector will: Respond to the Federal competitive process Invest in and develop the projects
Introduction to the Large-Scale RE Guide
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DOE is applying the Guide in its implementation support to the DOE Pantex 11.5 MW ESPC wind farm
Army Energy Initiatives Task Force (EITF) has adapted much of the
process for Army-specific practice (the Guide is a companion document to the EITF process and internal Army guidance)
Committed to partnering with FEMP to meet 1 GW goal EITF supporting Fort Irwin (15 MW PV), Fort Detrick (15 MW
PV), Fort Drum (28 MW Biomass), and Fort Bliss (20 MW PV) projects
Navy Incorporated many elements of the Guide into its project
development process Looking for FEMP assistance to fine-tune its process
Use of the Large-Scale RE Guide
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Federal agencies and private developers both want to deploy significant amounts of large-scale renewable energy projects on Federal lands using private financing.
Federal perspective is often limited to the specific authorities granted by the law and regulations.
Private sector perspective often seeks do accomplish something that is not strictly prohibited by the law or regulations.
A Common Goal With Varied Perspectives
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TIME
Project DevelopmentFramework
Project Fundamentals
ID Opportunity Project Validation Project Acquisition Project Implementation Contract Management
Concept Approval
Acquisition Approval
NEPA
Solicitation
PPA
LUAAward Acceptance
Payments
Federal Agency
Market & Portfolio Analysis Pre-Development Development Construction Operations
ScreeningDeveloper
FinancialClose (FC)
CommercialOperation Date
(COD)
ID Opportunity
Market & Portfolio Analysis
Project Validation Project Acquisition
Pre-Development Development
ID Opportunity
Market & Portfolio Analysis
Project Validation Project Acquisition
Pre-Development Development
Project Fundamentals and Project Development Framework
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TIME
ID Opportunity Project Validation Project Acquisition Project Implementation Contract Management
Concept Approval
Acquisition Approval
NEPASolicitation
PPALUA
Award Acceptance
Payments
Federal Agency
Market & Portfolio Analysis Pre-Development Development Construction Operations
ScreeningDeveloper
FinancialClose (FC)
CommercialOperation Date
(COD)
ID Opportunity
Market & Portfolio Analysis
Project Validation Project Acquisition
Pre-Development Development
Site
Resource
Off-take
Permits
Technology
Team
Capital
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Iteration Iteration Iteration Iteration Iteration Iteration
Federal investmentin early stage development
Private investmentin later stage development
Tra
nsiti
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roce
ss (R
FP)
Identifiable stages
Common understanding of important
project characteristics
Government leads
investment to ID good
projects
Developer completes
and operates projectSolicitation and
developer selection
• Consistency = lower risk = attractive projects
• Iterative, disciplined process for investing
Common, Reliable, Repeatable Process
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TIMEMarket & Portfolio Analysis Development Construction Operations
ScreeningDeveloperDeveloper
ID Opportunity Project Validation Project Acquisition Project Implementation Contract Management
Concept Approval
Acquisition Approval
NEPA
Solicitation
PPA
LUAAward Acceptance
Payments
Federal Agency
Market & Portfolio Analysis Pre-Development Development Construction Operations
ScreeningDeveloper
Development Equity Construction Finance
Re-Finance orPermanent Financing
Financier
FinancialClose (FC)
CommercialOperation Date
(COD)
Federal Agency $
Project Finance: The Third Perspective
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Risk: An important driver of project development. The Guide acknowledges risk; a framework and process for managing projects in
a risk environment is introduced.
Pre-Development Development
ID Opportunity Project Validation Project Acquisition Project Implementation Contract Management
AcceptancePayments
Federal Agency
Market & Portfolio Analysis Construction Operations
ScreeningDeveloper
TIME
Development Equity Construction Finance
Re-Finance orPermanent Financing
Financier
FinancialClose (FC)
CommercialOperation Date
(COD)
Government $ Risk
Developer $Risk Construction $
Risk Asset $Risk
Solicitation
Unknowns
A Process that Acknowledges Risk
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Pre-
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Pre-
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Financier Developer
Federal Agency
Develop-
ment
Equity
Construction Finance
Re-Finance orPermanent Financing
Financier
Federal Agency $
FinancialClose (FC)
CommercialOperation Date
(COD)Development Costs
Capital Investment
Cash Flows and Tax Benefits
Year
Cash Flows in Time
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Section I: Language and Terms Section II: A Reliable Repeatable Development Process
The Commercial Process Project Fundamentals Project Development Framework
Section III: Application of Project Development by a Federal Agency - The Federal Process
Appendices
Guide Structure
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A New Opportunity for Agencies: AFFECT
Assisting Federal Facilities with Energy Conservation Technologies Will provide direct funding to Federal agencies for capital projects.
Agencies are expected to significantly leverage FEMP funds using agency-appropriated funds or alternative financing mechanisms (ESPC, UESC, PPA, etc)
Two topics Combined Heat and Power Renewable Energy
A Notice of Intent has been distributed widely. FEMP is offering technical assistance to all Federal agencies in anticipation of the funding opportunity to identify opportunities
Award Levels Target Award for CHP is $500K Total available funding: $5.0M (FY13 and FY14)
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AFFECT Schedule
Notice of Intent: July 9, 2013
FOA Issued: November 5, 2013
Submission Deadline for Letter of Intent: December 10, 2013
Submission Deadline for Full Applications: February 18, 2014
Expected Date for EERE Selection Notifications: April 29, 2014
Expected Date for Award Initiation: June 10, 2014
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Questions?
Federal Energy Management Program
Contact InformationDr. Timothy Unruh
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Backup
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Project Fundamentals
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Project Development Framework