assistant secretary of the army (installations, energy & environment) s ecuring a rmy i...

Assistant Secretary of the Army (Installations, Energy & Environment)

SECURING ARMY INSTALLATIONS WITH ENERGY THAT ISCLEAN, RELIABLE AND AFFORDABLE

Presentation by LTC Kevin J. Lovell, PMP To Washington, DC SAME Post

March 21, 2012


Agenda

2

- Strategic Energy Situation

- Army’s Energy Needs and Performance

- Army’s Sustainable Focus on its Utility Needs

- Energy Initiatives Task Force


The Last 11 Years…

3

Assistant Secretary of the Army (Installations, Energy & Environment) 4

Army Energy Consumption

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

Federal GovernmentUnited States U.S. Army

Energy Initiatives Task Force UNCLASSIFIED

DoD

1% 80% 23%

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

Facilities Vehicles & Equipment (Tactical & Non-tactical)

U.S. = 98,079 Trillion Btu

Fed Gov = 1,096 Trillion Btu (FY09)

DoD = 819 Trillion Btu

U.S. Army = 189 Trillion Btu

Assistant Secretary of the Army (Installations, Energy & Environment) Energy Initiatives Task Force UNCLASSIFIED 55

Path to 25% Renewable Energy by 2025 - Notional

Traditional Energy

Renewable Energy

Energy Efficiency

Renewable Energy

NDAA 2010:25% by 2025NDAA 2010:25% by 2025

EP Act 20057.5% by 2013EP Act 2005

7.5% by 2013

% R

enew

able

Ene

rgy

of T

otal

Ene

rgy

Army Energy Outlook

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

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

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


Army Energy Security

Implementation Strategy (AESIS)

Operational Energy - Initial Capabilities Document (ICD)

6

Strategic Overlook

Key Strategic Documents

CENTCOM Operational Energy

Documents

Tactical Fuel and Energy

Implementation Plan

Army Power and Energy White Paper

1 Apr 10

13 Jan0929 Jul 11

OE Campaign Plan

&

Army Campaign Plan

ACP 2012 (Draft)

Campaign Objective 2.0

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

2-8 Institutionalize Contingency Basing


Improve Energy Security and Sustainability

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

ACP 2012 (Draft)


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

2-8 Institutionalize Contingency Basing


Improve Energy Security and Sustainability

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

Draft 16 Aug 11

13 Oct 1019 Aug 10

CB Campaign Plan

TBP Dec 11

DICR’s and Joint ICD

24 Sep 10

22 Feb 11

19 Aug 1013 Oct 10

Leader Development And Training

Change Culture

Draft v0.2, 30 Jul 11

Army Operational Energy Campaign Plan

Operational Energy


Army Energy Initiatives Task Force

7

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

Energy Initiatives Task Force Unclassified

Secretary of the ArmyJohn M. McHugh


EITF Organization

Energy Initiatives Task Force Unclassified 8

Jon Powers, Director

John Lushetsky

Kathleen Ahsing, Director

Jeff Smith

LTC Kevin Lovell

Alan King, Director

Douglas Waters

Erich Kurre

Heidi HansenOffice of General Counsel

Executive Director

Planning Division Execution Division Outreach Division

Partnerships

Defense Logistical Command Department of Energy

Department of Air Force Department of Interior Department of Navy

National Renewable Energy Lab Pacific Northwest National Lab

U.S. Army Corp of Engineers

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


The EITF and the Army Campaign Plan


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

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

8-1 Adapt / Execute Installation Energy

Security and Sustainability

StrategiesACSIM

Achieve Energy Security &

Sustainability Objectives

ASA (IE&E)Staff Coordination: ACSIM

Core Enterprise: SICE


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)


EITF Enabling Authorities


Planning and Execution Process

“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

“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

“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 YearsCurrent: 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

“Getting a Binding Agreement”

Target: .5-1 YearsCurrent: 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

“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

“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

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 Guide that will detail the five phases of project development.



Prioritization & Slotting

600 Projects

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

Systematic Enterprise Approach


Intake ProcessIntake

Process

Phase 1Opportunity Identification

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

Suitability

Phase 1Opportunity Identification

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

Suitability

Previous Studies

Previous Studies

Our Evaluation Process

Phase 1 Opportunity Identification

Phase 2 Project Validation

Phase 3 Acquisition

Process

Phase 4 Construction

Phase 5O&M and

Closure

Phase 2Project Validation

Phase 2Project ValidationMOU

SignedMOU

Signed



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

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

Economic Benefits• In-kind revenue• Reduced/stable energy bills

Economic Benefits• In-kind revenue• Reduced/stable energy bills

Mandates• NDAA – 25% by 2025• EPAct – 7.5% renewable electricity

consumption by 2013• EO 13514– 34% GHG reduction by 2020

Mandates• NDAA – 25% by 2025• EPAct – 7.5% renewable electricity

consumption by 2013• EO 13514– 34% GHG reduction by 2020

24x7 supply for critical assets

Price Stability

Life Cycle CostDeployment Speed

Capacity Factor

Life Cycle CostDeployment Speed

Capacity Factor



Where is best potential for Large Scale RE?

96 Sites, 179 Opportunities(180 Sites Total)

Where could RE be cheaper than grid

power?

90 sites for wind39 sites for solar

10 sites for biomass

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

Security Tier

Where is Energy Security critical?

Where are other factors to consider?

•Additional off-take•Existing utility relationships•Access to transmission•Well defined environmental issues



PV SitesEstimated

Grid PremiumPohakuloa Training Area $ (0.28)Pupukea Paalaa Uka Mil Road $ (0.28)Fort De Russy $ (0.11)Makua Mil Reserve $ (0.11)Schofield Bks Military Reservation $ (0.11)Gerstle River Arctic Test Site $ (0.11)Aliamanu Military Reservation $ (0.11)Waianae-Kai Military Reservation $ (0.10)Kahuku Training Area $ (0.10)Fort Shafter $ (0.10)Tripler AMC $ (0.10)Kipapa Ammo Storage Site $ (0.10)USA Field Station Kunia $ (0.10)Wheeler Army Airfield $ (0.10)Helemano Military Reservation $ (0.09)Fort Hamilton $ (0.07)Fort Hunter Liggett $ (0.06)MTC-H Camp Roberts $ (0.06)MTA Camp Edwards $ (0.06)NTC and Fort Irwin $ (0.06)ITC Camp San Luis Obisbo $ (0.06)Sierra Army Depot $ (0.05)Defense Distribution Region West Tracy $ (0.05)Defense Distribution Region West Sharpe Site $ (0.04)Riverbank AAP $ (0.04)Parks Reserve Forces Training Area $ (0.04)Fort Ord $ (0.04)Hawthorne Army Depot $ (0.03)White Sands Missile Range $ (0.03)Presidio Of Monterey $ (0.03)Stones Ranch Military Reservation $ (0.03)Pinon Canyon $ (0.03)Fort Bliss $ (0.02)Watervliet Arsenal $ (0.02)Fort Drum $ (0.01)NG Camp Fogarty TS $ (0.01)Fort Huachuca $ (0.00)Fort Myer $ (0.00)HQBN Henderson Hall Arlington $ (0.00)

Biomass Sites Estimated Grid

PremiumTripler AMC $ (0.08)USA Field Station Kunia $ (0.07)Fort Hamilton $ (0.05)Kipapa Ammo Storage Site $ (0.04)MTA Camp Edwards $ (0.03)Fort Drum $ (0.03)Defense Distribution Region West Sharpe Site $ (0.02)Watervliet Arsenal $ (0.01)Parks Reserve Forces Training Area $ (0.01)Defense Distribution Region West Tracy $ (0.00)

Wind Sites 1 Estimated Grid

PremiumPupukea Paalaa Uka Mil Road $ (0.43)Pohakuloa Training Area $ (0.40)Makua Mil Reserve $ (0.21)Tripler AMC $ (0.20)Fort De Russy $ (0.20)Kahuku Training Area $ (0.20)Fort Hamilton $ (0.20)Fort Shafter $ (0.20)Waianae-Kai Military Reservation $ (0.19)MTA Camp Edwards $ (0.18)Aliamanu Military Reservation $ (0.18)Gerstle River Arctic Test Site $ (0.17)Black Rapids Training Area $ (0.16)NTC and Fort Irwin $ (0.16)Helemano Military Reservation $ (0.14)ITC Camp San Luis Obisbo $ (0.13)Stones Ranch Military Reservation $ (0.12)USA Field Station Kunia $ (0.12)Pinon Canyon $ (0.12)NG Camp Fogarty TS $ (0.11)Fort Drum $ (0.11)Wheeler Army Airfield $ (0.11)Schofield Bks Military Reservation $ (0.11)NG TS Ethan Allen Range $ (0.10)Defense Distribution Region West Sharpe Site $ (0.10)Fort Monmouth Main Post $ (0.09)Camp Perry TS (CTC) $ (0.09)Presidio Of Monterey $ (0.09)Kipapa Ammo Storage Site $ (0.09)HQBN Henderson Hall Arlington $ (0.09)Fort Bliss $ (0.09)Fort Myer $ (0.09)Riverbank AAP $ (0.08)Picatinny Arsenal $ (0.08)

Wind Sites 2 Estimated Grid

PremiumFort George G Meade $ (0.06)Defense Distribution Region West Tracy $ (0.06)Fort Dix $ (0.06)Tobyhanna Army Depot $ (0.06)Fort Lesley J McNair $ (0.06)MTC-H Camp Grayling $ (0.06)Fort Huachuca $ (0.05)Camp Grafton $ (0.05)Fort Bliss AAA Ranges $ (0.05)White Sands Missile Range $ (0.05)Fort Buchanan $ (0.05)Camp Dodge Johnston TS $ (0.05)Yakima Training Center $ (0.05)Fort Riley $ (0.05)Fort Ord $ (0.04)Fort Indiantown Gap $ (0.04)Fort Detrick $ (0.04)Iowa AAP $ (0.04)Walter Reed AMC Main Post $ (0.04)Charles E Kelly Support Facility $ (0.04)Fort Richardson $ (0.04)Camp Rapid $ (0.04)Detroit Arsenal $ (0.04)Lake City AAP $ (0.04)USA Adelphi Laboratory Ctr $ (0.04)Yuma Proving Ground $ (0.04)Military Ocean Tml Sunny Point $ (0.04)Fort A P Hill $ (0.03)NG Mead TS/FMS 06/UTES 02 $ (0.03)MTA Fort Wm Henry Harrison $ (0.03)Hawthorne Army Depot $ (0.03)MTCH Camp Guernsey $ (0.03)Pueblo Chemical Depot $ (0.03)Carlisle Barracks $ (0.03)MTA Camp Rilea $ (0.03)Kansas AAP $ (0.03)Defense Distrib Depot Susq $ (0.03)Tooele Army Depot $ (0.03)Sierra Army Depot $ (0.02)Marseilles (MTA Training Area) $ (0.02)McAlester AAP $ (0.02)CTC Fort Custer Trng Center $ (0.02)US Army Joint Sys Mfg Ctr Lima $ (0.02)Umatilla Chem Depot $ (0.01)Blossom Point Research Facility $ (0.01)MTC-H Camp Roberts $ (0.01)Fort Pickett, ARNG MTC $ (0.01)Stewart Annex $ (0.01)Camp Ashland $ (0.01)Newport Chem Depot $ (0.01)MTA Camp Crowder Neosho $ (0.00)Ravenna Training and Log Site $ (0.00)

RE sites potentially below grid-price


16

Project Risk Assessment Template

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

Energy Initiatives Task Force Unclassified

Project Risk AssessmentProject Risk Assessment

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

Mission/ Security

• 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?

Economics

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

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

Regulatory (Legal)

• 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?

Off-Take

• 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?

Integration (Technical)

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

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


Plans, integrates, awards, and administers contracts throughout the ARFORGEN Cycle supporting the Army Commands (ACOMs), Direct Reporting Units (DRUs), USARNORTH and other organizations

MICC

Sample of Key Renewable Energy Stakeholders, Their Relevance & Impact

Energy Initiatives Task Force UNCLASSIFIED 17

Renewable Energy Project

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

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

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

USACE

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

ASA (FM&C)

Provides environmental expertise to leaders, commands, Soldiers, and communities

Contracts for and oversees environmental analyses

AEC

Determines project compatibility with mission requirements

Army G-3/5/7

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

ACSIM / IMCOM

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

ASA (ALT)

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

DLA


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, DoD Siting 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

• 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


• 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

• 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

EITF Acquisition Approach


Solar, Wind, BioMass,

Geothermal Companies

Solar, Wind, BioMass,

Geothermal Companies

Qualified DevelopersQualified

Developers

Qualification/ Downselect

RE Project Opportunities

RE Project Opportunities

Project SpecificTask PPA Order

RE Project

PPA

RE Project

PPA

EITF Due DiligenceEITF Due Diligence

• SBA and Unrestricted based on Project Size

• $5B total ceiling for 30 years’ payments

QualifiedProjects

QualifiedProjects

Multi-Award Task Order Contract (MATOC)


• 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

[email protected]

(O):571-256-0509

Questions?



AMERICA’S ARMY:THE STRENGTH OF THE NATION

ARMY STRONGARMY STRONG

22Energy Initiatives Task Force UNCLASSIFIED