Phoenix Convention Center • Phoenix, Arizona

Implementing Renewables Through Your Utility

Innovation Track 10 Partnering with Your Utility To Do Large-Scale Energy Projects

Chandra ShahNational Renewable Energy Laboratory

August 12, 2015

Energy Exchange: Federal Sustainability for the Next Decade2

• Federal Utility Partnership Working Group (FUPWG) - November 3 and 4 in Houston, TX

• UESC Workshop Nov. 5-6 after FUPWG (in Houston)

FUPWG and UESC Workshop

Energy Exchange: Federal Sustainability for the Next Decade

Presentation Overview

• Executive Order 13693 renewable goal overview

• Options for implementing renewable projects through your utility

• Important project considerations

• Utility coordination recommendations for all renewable projects

• Example projects

• Resources

Energy Exchange: Federal Sustainability for the Next Decade

Requirement Electric/Thermal Details

Renewable Goal Electric 10% FY2016-1715% FY2018-1920% FY2020-2125% FY2022-2330% FY2025 and thereafter

“Clean Energy” Goal(renewable & alternative energy)

Electric & Thermal 10% FY2016-1713% FY2018-1916% FY2020-2120% FY2022-2325% FY2025 and thereafter

Definition of “New” for Renewable Energy Certificates (RECs)*

REC definition states that “for the purposes of section 3(d)(iii) and (iv) of this order, were produced by sources of renewable energy placed into service within 10 years prior to the start of the fiscal year”

Executive Order 13693 “Planning for Federal Sustainability in the Next Decade” (March 2015)

*If project RECs are sold, replacement RECs must be purchased that meet the definition

Energy Exchange: Federal Sustainability for the Next Decade

• Revokes various EOs and Presidential Memos - including EO13423, EO13514 and December 5, 2013 Presidential Memo Federal Leadership on Energy Management

• Renewable Priorities (Section 3)(i) installing agency-funded renewable energy on site at Federal facilities and retaining corresponding RECs or obtaining equal value replacement RECs(ii) contracting for the purchase of energy that includes the installation of renewable energy on site at a Federal facility or off site from a Federal facility and the retention of corresponding RECs or obtaining equal value replacement RECs for the term of the contract(iii) purchasing electricity and corresponding RECs or obtaining equal value replacement RECs(iv) purchasing RECs

• Double Bonus Credit for renewable electric energy generated on Federal or

Tribal land/facilities (per EO13693 Implementing Instructions, p. 26)

Executive Order 13693 “Planning for Federal Sustainability in the Next Decade” (March 2015)

Energy Exchange: Federal Sustainability for the Next Decade

Utility Partnership OptionsGovernment Ownership• Utility Energy Service Contract (UESC) with renewable ECM, either stand-alone or

bundled with other ECMs• Project implemented using appropriations, in partnership with the utility

Private Ownership • Utility energy sales agreement • Federal agency hosts renewable project for utility use • UESC with private ownership of renewable ECM

– Must meet OMB title retention requirement

Notes• Fair consideration must be given to each serving utility • All renewable projects (regardless of implementation method) require close

coordination with the utility

Energy Exchange: Federal Sustainability for the Next Decade

Utility Energy Sales Agreement

• Contract with the serving utility – Utility (or renewable developer) constructs, owns, operates & maintains

an on-site renewable project and federal agency purchases the electricity – Utilize FAR Part 41 Utility Service (rather than the UESC authority)

• GSA authority• GSA areawide contract can be used

– Department of Defense can use 10 USC 2922a long term authority

• Contract should specify REC ownership (utility may want RECs for renewable requirement compliance) – If utility keeps RECs, then agency must purchase replacement RECs for

credit towards RE goal

• Renewable project owner can take advantage of available tax incentives

Energy Exchange: Federal Sustainability for the Next Decade

Hosted Renewable Project for Utility Use

• Utility develops renewable project at federal site for utility use, usually for renewable portfolio standard (RPS) compliance– Utility owns, operates and maintains RE project – Real estate agreement– Utility provides payment or in-kind consideration for use of land – In-kind consideration options include energy, RECs, a smaller

renewable project for agency use, electrical infrastructure, energy security benefits such as right of first refusal in case of grid outage

Energy Exchange: Federal Sustainability for the Next Decade

Partnering to Respond to Utility Renewable/REC RFP• Utility issues renewable/REC RFP• Site seeks industry partner to respond to RFP • Industry partner responds to RFP (may be joint bid with federal site)• Could be electricity contract and/or real estate agreement • Utility will own the RECs (replacement REC purchase required for E.O. 13693

renewable goal)• Examples: Brookhaven, Ft. Carson, NREL• Cons

– Tough to predict timing of utility requirements – Team must be ready to spring into action

Utility RFP Federal Site hosts third party owned and

operated RE resource

Developer constructs RE resource on Federal

land/building and sells RECs/renewable energy to

utilityRECs/renewable energy

Energy Exchange: Federal Sustainability for the Next Decade

Utility Partnership Advantages/Challenges

Advantages Challenges Utility and federal agency have

existing relationship

Investor-owned utilities are eligible for investment tax credit and possibly other tax incentives

Utility may provide electricity at a pre-existing tariffed rate

Utility involvement could streamline interconnection process and reduce associated costs. May result in other benefits such as no stand-by charges

Possible use of areawide contract

Utility may be interested in purchasing all or excess power

Relatively new contracting method

Third party ownership required for tax benefit

Public Utility Commission approval may be required

Some utilities may not be willing to offer this service

Energy Exchange: Federal Sustainability for the Next Decade

Project Considerationsand Utility Coordination

Energy Exchange: Federal Sustainability for the Next Decade

Project Considerations

• Site and agency approval requirements• Real estate agreement options include easement, lease or

license– Utilities generally prefer an easement – FAR Part 41.501c4 (52.241-5 Contractor’s Facilities), which provides

for a license, may be used

• Compliance with National Environmental Policy Act (NEPA), National Historic Preservation Act (NHPA), etc.

• Electrical considerations• Glint/glare if near an airport• Others

Energy Exchange: Federal Sustainability for the Next Decade

Utility Coordination (regardless of implementation option)• Contact the utility early in the process and periodically

throughout project development. Discussion topics include: – Interconnection process and requirements – application and study

requirements, the time required for study completion, costs (application fee, study fees, possible equipment upgrade costs) and the current queue for interconnection study completion

– Interconnection agreement – legal review template agreement early in process, contact FEMP for assistance

– Renewable system tie-in options– Available incentives – Applicable policies such as net metering, feed-in tariff, virtual net

metering/community renewables – Utility rate impacts – possible tariff change, standby charges, etc.– Demand charge impacts if project goes down

• Best to be very conservative with demand charge reduction estimates (10% recommended)

Energy Exchange: Federal Sustainability for the Next Decade

Example Projects

Marine Corps Logistics Base Barstow Wind Project

1.5 MW wind turbine $4.6 million cost financed by Southern

California Edison $6.1M total, minus $1.5M rebate

$515k annual savings 15 year term

Example: UESC (gov’t ownership)

Energy Exchange: Federal Sustainability for the Next Decade

• Partnership with Tucson Electric Power (TEP), who will fund, own and operate the approximately 22 MW DC PV project– Subcontract with industry partner E.ON for the system’s design,

engineering, procurement and construction management

• Utilizes existing GSA areawide contract

• TEP will provide electric service at Arizona Corporation Commission approved rates

• 30 year easement

Fort Huachuca, Arizona

Energy Exchange: Federal Sustainability for the Next Decade

• NEPA completed March 2014

• Interconnected with TEP-owned Fort Huachuca substation

• April 25, 2014 ground-breaking ceremony

• November 2014 operational

• http://www.armyeitf.com/downloads/fort_huachuca_factsheet.pdf

Fort Huachuca, Arizona

Energy Exchange: Federal Sustainability for the Next Decade

• 50 MW biofuel-capable plant at Army Schofield Barracks in Hawaii

• Partnership with Hawaiian Electric Company (HECO)– Construction, ownership, operation and maintenance of plant

and a 46 kV sub-transmission line to connect plant to HECO grid – 10.3 acre land lease – 2.5 acre interconnection easement on Schofield Barracks and

adjacent Wheeler Army Airfield

Schofield Generating Station Project

Energy Exchange: Federal Sustainability for the Next Decade

• Army benefits:– Help achieve Army goals of producing renewable energy on Army-

owned real property– Enhance energy security for Schofield Barracks, and adjacent sites

Wheeler Army Airfield and Field Station Kunia

• HECO benefits:– Quick-start facility – Help maintain grid stability– Contribute to grid reliability and continuity if:

1) Tsunami/other natural disaster, due to location away from the shoreline2) Man-made threat, since located within a secured military installation

– Progress towards Hawaii’s Renewable Portfolio Standard

Schofield Generating Station Project

Energy Exchange: Federal Sustainability for the Next Decade

• Environmental Impact Statement (EIS) in progress– Will satisfy both federal National and Hawaii Environmental

Policy Acts (NEPA and HEPA)– Will integrate National Historic Preservation Act Section 106

consultation and public participation requirements – January 17, 2014: Notice of Intent published in Federal Register– Jan. 17- March 2, 2014: Scoping period– April 24, 2014: Draft EIS issued – April 24- June 8, 2015: 45 day public comment period

• http://www.garrison.hawaii.army.mil/schofieldplant/

Schofield Generating Station Project

Energy Exchange: Federal Sustainability for the Next Decade

• BNL serves has PV array host• BP is solar project developer• 20-year contract between solar developer and utility for

purchase of 100% of output and RECs• 20-year easement between BNL and solar developer• In-kind consideration - small PV project & research • Peak capacity 32 MW AC, ground-mounted• Annual Energy Output 44 million kWh• 200 acres of land, ~160,000 panels• Crystalline solar PV modules• Energize date November 2011

DOE Brookhaven

Energy Exchange: Federal Sustainability for the Next Decade

• Partnership between NASA and Florida Power & Light

• MOU signed December 2007• EUL signed June 2008• 10 MW FPL-owned PV project

– Output feeds into FPL transmission system– Substation expansion required

• In-Kind Consideration - 990 kW NASA-owned PV – Based on appraised value– FPL construction– Output feeds into NASA-owned

distribution system

• 130 mph wind standard

NASA Kennedy Space Center and Florida Power & Light

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Project SummaryNellis AFB PV Array II

Hybrid Power Purchase Agreement and Enhanced Use Lease Local utility company (NV Energy) will build, own, and operate

solar PV array Anticipate 19 MW PV array on leased area of 122 acres

Will purchase approx 55% of total production at existing tariff rate All power will flow through the Nellis AFB Power not used by Nellis AFB will go to the grid

NV Energy will own/sell Renewable Energy Certificates (RECs) Contemplated lease (payment in kind) is secondary substation

Will afford Nellis with much needed energy resiliency/mission assurance by providing redundant primary electric feed to base

Will provide secondary output path to solar PV generating plant by two distribution feeders that will connect to existing substation

Lease signed 1 Mar 15

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Project SummaryNellis AFB PV Array II

Collaborative effort between Nellis AFB (99 ABW), Air Combat Command (ACC), Air Force Civil Engineer Center (AFCEC), and Air Force General Counsel (SAF/GCN) 99 ABW conducted National Environmental Policy Act process, gained

acceptance from with other agencies, and coordinated with NV Energy ACC evaluated economic viability, mission impact/encroachment issues,

and provided expertise for PPA AFCEC provided overall project oversight and served as liaison with

senior AF leadership for execution and scheduling AFCEC and SAF/GCN led real estate actions and lease development

Energy Exchange: Federal Sustainability for the Next Decade

FEMP Contacts and Resources

Energy Exchange: Federal Sustainability for the Next Decade

David McAndrew: 202-586-7722, david.mcandrew@ee.doe.gov Chandra Shah: 303-384-7557, Chandra.Shah@nrel.gov

GSA Areawide Contract Information: http://www.gsa.gov/portal/content/184635

FEMP Trainings: http://apps1.eere.energy.gov/femp/training/

FEMP Project Funding Web Site: www1.eere.energy.gov/femp/financing/mechanisms.html

Renewable Project Financing Mechanisms:http://energy.gov/eere/femp/financing-mechanisms-federal-renewable-energy-projects

UESC Resources (some information applicable to other utility partnerships): http://www1.eere.energy.gov/femp/financing/uescs_resources.html

Resources

Energy Exchange: Federal Sustainability for the Next Decade

Questions?