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Army drafts RFP to attract renewable energy projects
Wednesday - 3/21/2012, 5:14am EDT
The Army says it has a plan to entice the private sector into building billions of dollars in renewable energy projects on its bases. Private developers would pay to build new projects the Army has scoped out for feasibility ahead of time. In return, the Army would be a guaranteed buyer of the power it produces under a preliminary solicitation the service just issued.
The release of the draft request for proposals marks six months since the Army stood up its Energy Initiatives Task Force, which focused on creating large renewable energy projects of 10 megawatts or more on Army bases.
Katherine Hammack, assistant secretary of the Army for installations, energy and environment (Army)
The Army wants industry to put $7 billion in private capital into building a mix of renewable energy projects on Army land. It's not so much an effort at greening the government, officials said, in the Army's case, it's about ensuring continuity of operations on Army bases in the event something happens to the public electric grid and getting that insurance without spending new money.
"Power grids are extremely vulnerable," said Katherine Hammack, the assistant secretary of the Army for installations, energy and environment. "Utility energy industries rank high on the list of potential targets by terrorists. They're also subject to natural disasters, as we've seen in recent months. We have to address these threats and make sure that the Army of tomorrow has the same access to resources as the Army of today."
Task force studied 180 facilities
Over the last six months, the task force studied 180 Army and National Guard facilities to decide where the potential for renewable energy is greatest. It's working with 15 bases to build large scale projects.
"Not all of those sites will necessarily be put out to bid, and that's a natural part of the project development process," said John Lushetsky, executive director of the task force. "But for the Army, for those projects that are put out to bid, I think the private sector can have confidence that these are real projects with real requirements, and they're ready to be put out to developers."
In the new solicitation, the Army envisions a two-step acquisition process under a multi award task order contract (MATOC). First, vendors would have to qualify as credible developers for big energy projects.
"This will allow us to select who we think are broadly qualified companies," Lushetsky said. "Once we've established that qualified list, we'll be in a position to issue task orders. Those task orders will then be competed for by that list of qualified developers."
Once a vendor wins a task order, they'll be responsible for owning and operating the renewable energy project for up to 30 years.
But the Army is promising there will be on-ramps and off-ramps to the multiple award contract. New vendors who didn't make the cut the first time around would be able to add themselves to the task order list. Others who came on in the first round, but didn't perform as the Army expected, could be kicked off.
"This is a similar approach to what DoD and the Department of Energy have undergone before," Lushetsky said. "But this is the largest and most extensive example we've had so far of using a MATOC for power purchase agreements."
Power purchase agreements are at the heart of the Army's new solicitation, and the rationale for why it thinks it can start to build energy security without spending any up-front cash.
Army is committed to buying renewable energy
Under the contracts, the Army will commit to buying some of the power the new renewable facilities produce — up to $7 billion-worth over the life of the contract. But since the renewables will be hooked up to the public electric grid, the companies also will be able to sell the power they generate to anyone else who wants it.
But there is one important exception: If the public power grid ever does go down, the energy generated by a renewable project will be walled-off from the rest of the grid and used by the Army base that hosts it.
"One of the things that assures energy security is the ability for a renewable energy system to continue to supply power to the base," Hammack said. "Should the utility side of the meter go down, we need to be able to continue to function. The next question is what portion of the base would you be able to provide power to? All of it? Part of it? That's where new technologies like microgrid and energy storage come into play. The ability of the existing infrastructure to support a microgrid or the need for additional infrastructure to support a microgrid are certainly things that are being considered."
The Army's not saying how many task orders it expects to award or how many companies it would like to qualify for the MATOC, but Hammack said the service is excited about the teaming prospects the deal might bring about, where consortiums of small companies combining expertise in various renewable energy fields might submit a single bid.
"We're seeing developers who are focused on wind, solar, geothermal or another single technology, but we're also seeing teams that could work in any of the technologies. We're excited to see the responses to the MATOC to see where the interest lies," she said.
The Army expects to release a final RFP later this spring. In the meantime, it's also preparing a renewable energy project guide to help industry plan its renewable energy projects on government land. The publication is due out by this summer. In May, the Army plans to conduct a large industry forum to update its renewable energy plans.