On 24 August 2011, the Defense Logistics Agency – Energy, on behalf of the Army, released a Request for Information, “concerning on-site, immediately adjacent or opportunities on other private lands for any type of renewable energy supply to serve the total existing and future electricity load at US Army Garrison, Fort Drum.”
According to the RFI, the load at Fort Drum appears to be a maximum demand of 27 MW. This follows on the heels of several RFIs from the Air Force Civil Engineering Support Agency (AFCESA) and nine from Fort Bliss, Texas for a variety of renewable efforts. The Fort Drum RFI states:
"The Army, acting through the contracting office of DLA Energy is requesting information concerning…… any type of renewable energy supply to serve the total existing and future electricity load at US Army Garrison, Fort Drum. Current contract authorities allow the Department of Defense to enter into contracts up to a maximum term of 30 years for the provision and operation of energy production facilities on real property under the Secretary's jurisdiction or on private property and the purchase of energy produced from such facilities".
When an RFI is issued, industry has to determine if they will spend their business development dollars responding to the request. Small businesses feel that they must respond in order to get their technologies on the table. With multiple RFIs out there, this can strain already constrained resources (have you tried to get a small business loan lately?). The opportunity for up to a thirty year power purchase agreement is gold when talking to financial institution and that coupled with sound technology and a good business plan should make raising money for this effort relatively easy.
For industry, it is a critical decision process and the need to prioritize is great. For DOD to achieve its very aggressive goals it must use 3rd party financing and this means that industry and financial institutions must be comfortable with the business case for each opportunities. One of the reasons the Army formed the EIOTF was to work on these large renewable opportunities.
So, when one of the scouts out there came across an article in the Watertown Daily Times it caused a bit of confusion. Seems the local Public Services Commission approved a request by ReEnergy Holdings LLC, Latham, to buy the on-post power plant at Fort Drum from United States Power Fund LP. According to the Daily Times, “If the deal closes, ReEnergy Black River LLC — a subsidiary of ReEnergy Holdings — will convert the 50-megawatt plant from coal to biomass fuel, primarily wood chips, but also tires and solid fuels, according to the petition it filed with the PSC on April 22.”
The local Congressional Representative William L. Owens, D-Plattsburgh, was interviewed and indicated that this effort is the continuation of “deal previously approved to sell the plant to Catalyst Renewables, Dallas”. He also said this was an effort to take Drum off the grid. DASA, E&S Richard Kidd indicated that there was no intent currently to “island” Fort Drum. Senator Schumer also pledged his support. Apparently this acquisition has been going on for some time and has excellent Congressional support.
The plant will lease the property from Fort Drum and sell power to the installation according to the article. This appears to be a classic enhanced use lease with power purchase agreement. Of course it is not clear if it is an enhance use lease or for how long the PPA would be.
The confluence of these two events causes questions. Did DLA-E not know about the conversion and sale of the on post power plant? Is the purchase of the plant and conversion an option for this RFI? I have made inquiries to the EIOTF and to DLA-E, however, (due to Irene, I assume), have not heard back from the Army or DLA. I did speak with a gentleman in the ASA, IE&E office who played down the importance of the supposed sale of the power plant affecting the RFI. He indicated that the power plant might be part of a proposal.
That might be news to ReEnergy Holdings LLC, Latham, since they already have approval from the PSC to buy the plant. Their parent company, ReEnergy Holdings, LLC appear to be well place to do this, having purchased the 22-megawatt Lyonsdale Biomass Facility in Lyons Falls in Lewis County, NY earlier this year. ReEnergy Holdings was started by a private equity firm, Riverstone Holdings, which was founded by former Goldman Sachs Global Energy and Power Group graduates. ReEnergy also purchase an Ohio based cogeneration plant for $61M this year, so somebody has figured out how to make this work!
Bottomline, the RFI process is costly in time and effort. It is important for the government to get the best information possible, but there has to be an indication of an ROI for industry in the effort. Not sure about this case. Dan Nolan
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