The U.S. Department of Defense (DOD) is the nation’s biggest energy customer, and it wants to cut its bills. The DOD’s armed services all have initiatives underway to reduce energy use and increase adoption of renewable technologies, in both overseas operations and at stateside bases. In one of the most ambitious efforts announced to date, the U.S. Army has started reaching out to private industry to speed up development of large-scale renewable-energy plants at its bases throughout the country.
Secretary of the Army John McHugh launched the new Energy Initiatives Task Force (EITF) at a press conference last August. With an aggressive goal of sourcing 25 percent of its energy needs from renewable resources by 2025 (up from 2 percent in 2010), Army leadership faces the challenge of implementing big-impact projects at a time of shrinking defense budgets. The EITF will work with private developers—-through energy services contracts, power--purchase agreements (PPAs) and other financial mechanisms—to encourage 10-megawatt (MW) and higher renewable installations on Army bases throughout the country, all with minimal government investment.
“Building large-scale renewable projects requires a set of skills that are not necessarily found at every army base or installation,” said Richard Kidd IV, the EITF’s director, at the group’s initial industry summit in November. He added that the task force would enable the Army to look strategically at opportunities across its entire portfolio of bases.
The EITF already has attracted significant industry interest. By the November summit, the group already had 21 projects entering investigative stages, according to executive director John Lushetsky. While not all proposed efforts will make it through vetting, Lushetsky said he has high hopes for projects that make it through the earliest review process.
“Our goal in the army is, for every four projects we put out there, three—or, even, all four—will get executed,” he said.
This effort follows an earlier announcement of pilot efforts at six U.S. Army bases to become net-zero-energy users by 2020, which means the facilities will produce as much energy as they use over the course of a year. Additionally, six bases have been targeted for net-zero water use and solid-waste production pilots, with the same 2020 goal (see “U.S. Army Embraces Net-Zero Energy”).
Combining the Army’s endeavors with those of other armed services will lead to significant investment over the next two decades. Pike Research predicts annual DOD spending on renewables will reach $10 billion by 2030. Pike estimates current total DOD energy spending at $20 billion, with 75 percent going for fuel and 25 percent for facilities and infrastructure.
The EITF’s first step is to create a project development guide that will outline the five-step process required to move an installation from initial due diligence through to operational management. This guide also will be available to base-level leaders, who may be able to use the handbook to develop smaller, 1- to 10-MW installations that fall below the task force’s current mission.
Under the various contracting approaches, private developers likely would make the initial, outright investment to build an installation. The Army then would agree to buy the new plant’s electricity output, potentially at a higher cost than current utility rates, which is a “fair and reasonable premium,” in the Army’s words.
“What is ‘fair and reasonable’ will be changing over time,” Lushetsky said. The change will occur as technology costs drop and traditional fuels become more expensive. The renewable energy credits such projects may generate can have market value and will be a part of contract negotiations.
At the November summit, Lushetsky announced that a model request for proposals for PPAs was planned to be released during the first quarter of 2012 by the Army Corps of Engineers’ Huntsville, Ala., office. The Army is using this first request for proposal, featuring a 30-year term for the PPAs, as a way to test its developing playbook. Planners also are using this effort to explore ways for small business to participate and how to structure bidding to ensure competitive pricing.
ROSS is a freelance writer located in Brewster, Mass. He can be reached at email@example.com.