DLA Energy Panel: Energy Resiliency and Assurance U.S. Air Force Office of Energy Assurance Mr. Shawn Bennett, Senior Advisor 12 April 2017
Installation Energy Is Mission Critical AVIATION ~5,517 Aircraft INSTALLATIONS ~10M Acres of Land FACILITIES ~626M Sq Ft of Buildings RESOURCES ~$5.8B, 2.0B Gal Fuel, 57T BTUs 2
Energy Threats Compromise Missions 3
Energy Assurance through Innovative Resiliency OEA is an Air Force-wide central management office dedicated to project execution of strategic energy assurance initiatives. Mission: Deliver creative installation energy resiliency solutions to meet 21st century threats. 4
OEA Core Principles OEA drives projects that provide mission-ready installations with more resilient, cost-effective, and cleaner energy. OEA Core Principles: Resilient - enhancing energy assurance to maintain critical mission functions through unexpected power disruptions. Cost-effective - leveraging thirdparty financing and maximizing Air Force investments. Cleaner - diversifying energy generation for increased agility/resilience. 5
OEA Partners with Stakeholders Installations & Mission Owners Internal Air Force & Greater DoD Communities, State & Local Gov ts, & Private Industry Associations & Labs 6
MAJCOM Prioritized Approach High-Level Market & Regulatory Assessment OEA Project Development Periodic Testing Oversight Installation Engagement Data Collection Initial Site Visit Legal/Regulatory Vetting Site Permits Commissioning Testing Stakeholder Engagement Site Visit Vetting of Project Concept Acquisition Recommendation Solicitation of RFP Negotiation Final Coordination Brief Senior AF Leaders Project Charter Composition Final Due Diligence 7
Energy Assurance Analysis Framework Baseline Synthesize Potential Solutions Strategy Mission Interviews Mission Power Requirements Generation Energy Load & Billing Infrastructure Physical Energy Economic Market Infrastructure Coordinated Procurement and Funding Strategy External Existing/Planned Projects Load 8
Procurement and Funding Strategies Third-party Financing Land Outgrants PPAs ESPC/UESCs Solutions drive procurement strategies Partnerships Tenants Local Communities Utilities Programmed Funding* Research and Development Grants MILCON/SRM Funds ECIP *if available 9
Land Outgrants Installation provides (through lease or easement) land to developer who constructs asset, which may or may not have direct benefits to the installation. Benefits obtained through in-kind consideration (IKC) for land. Typical Project Scope Generation is sent to grid, with potential agreement to turn inward during an outage Contract Partners Installation Third-party financier/developer Utility New Partnership Terms & Guarantees 10 U.S.C 2667 allows leases of non-excess land for 5+ years if Secretary determines extended period is beneficial 10 U.S.C 2668 allows easements; Secretary sets advisable terms Costs & Funding Cash or IKC must equal or exceed fair market-value of land Statutory requirement for lease Air Force policy for easement If IKC is cash, at least 50% of proceeds stay with installation 10
Power Purchase Agreements (PPA) Installation enters into contract to purchase electricity from developer at a pre-determined price. Developer owns and operates asset, which is typically on installation land. Typical Project Scope On-site generation asset with direct energy consumption from the installation A long-term land lease agreement accompanies PPA Contract Partners Installation Third-party financier/developer Utility Public Utility Commission (may be required for approval/action) Terms & Guarantees 10 U.S.C 2922a provides for terms up to 30 years FAR 41 provides 1-10 year term, or indefinite 30 years Costs & Funding No up-front capital costs for AF Long-term set electricity price Developer able to monetize tax incentives and reduce cost Sale of RECs to reduce cost Developer responsible for project operation and maintenance 11
Energy Savings Performance Contracts (ESPC) Utility Energy Service Contracts (UESC) Installation enters into contract with ESCO/Utility to develop energy conservation measures financed by energy savings. Typical Project Scope Reduced energy consumption from ECMs; if generation asset is included it may or may not be connected to installation Contract Partners Installation ESCO/Utility arranges financing, designs, implements, operates, maintains and owns infrastructure improvements for ECMs New Partnership Terms & Guarantees Provides for terms up to 25 years Costs & Funding Cost savings pay for contract Third party can use incentives, tax credits, and rebates 25 Years 12
Energy-as-a-Service 13
Air Force Energy Business Model Vision Buy the Capability, Not Just the Commodity Ensure Air Force has power when, where and how it s needed so Airmen can focus on the mission Match need for efficient, effective operations with time, money and manpower resources necessary to achieve those priorities Strive for a more holistic view of energy assurance that eliminates silos and looks beyond planning for single points of failure 14
Energy-as-a-Service Definition Long-term arrangement with single entity to meet fence-to-fence electric power needs of an Air Force installation using necessary acquisition authorities This arrangement will comprehensively address: Operation of and investment in on-base electric utility system Procurement of supply Implementation of energy conservation measures 15
Energy-as-a-Service Lines of Effort Site Selection Conduct outreach for input and lessons learned Present concept to stakeholders and industry Concept Refinement Select pilot installation Develop energy profile for RFI Establish RFI objectives Outline evaluation criteria for responses Request for Information 16
Recap OEA is as an Air Force-wide central management office dedicated to project execution of strategic energy assurance initiatives. Each project opportunity must demonstrate improved resiliency and at least one of other two OEA core principles, cost-effective and cleaner. OEA seeks to partner with various stakeholders to structure projects that are mutually beneficial. There are multiple procurement and funding strategies that facilitate maximizing value of third-party deals. We are exploring Energy-as-a-Service, moving away from energy as a commodity and towards a single solution that addresses Air Force needs. 17
Questions 18
Contact OEA Mr. Shawn Bennett Senior Advisor Air Force Office of Energy Assurance CONNECT: Website: http://www.safie.hq.af.mil/programs/energy/oea Social Media: Air Force Energy Program @AFEnergy 19
Mission Assurance through Energy Assurance 20