Lion Taming and Arrogant Checkbooks: E2S2 in New Orleans

Not actual panel event.

Just returned from the NDIA-sponsored Environment, Energy Security and Sustainability (E2S2) Conference in New Orleans.  The Big Easy is a great place for a conference. At 7 P.M., the streets smell like stale beer and desperation. By 11, they smell like ambrosia and opportunity. I recommend you stay away from submariners and Sazeracs.

The conference itself was divided into three tracks and I attended the one on Energy Security. Vendors displayed their wares in about one quarter the space previously used and, although the organizers said attendance was up, the impact of a dwindling DOD budget was evident. This caused one industry participant to ask about the drop in attendance, “Is the industry losing interest or patience as the military struggles to make progress?”  If what appears to be happening is actually happening, government will never be able to achieve its mandates. It sorely needs industry.

There were numerous informational briefings, but not a lot of new information.  There was a promise that the Huntsville RFP would be on the street in six-to-eight weeks (Dr. Robyn) and the Army announced that it has finally gotten its Initial Capabilities Document for Operational Energy through the Joint Staff.  I first mentioned this in a post in October 2010.  Only a couple of more years until the actual Requirements are placed on the Acquisition Community to fulfill. 

One of the comments by the Army's COL Paul Roege was about a concept for something called “energy informed operations”.  The idea is that technology is a facilitator, but behavior is the sure way to energy efficiency and conservation.  I believe this to be true.  My experience with the Power Surety Task Force was that, after we implemented energy savings measures at FOBs, rather than take the savings, commanders were able to bring other facilities online (MWR, GreenBeans, etc.) with the energy they had now “freed up”.  This is Jevons paradox which states that a technology process that increase efficiency tends to increase the rate of consumption of that resource.  My energy guru, Amory Lovins dismisses the assertion that “energy efficiency generally triggers economic growth that devours its savings”, but the concept of behavior as the ultimate efficiency certainly is valid.

The best discussion that I attended was moderated by PaulBollinger of Boeing. Mr. Bollinger is a former DepSec Army and Air Force for energy, so he knows the system. Paul described his mission as:

To engage in an interactive discussion on the issue of 3rd party financing for renewable energy projects. The issue is that the military is not moving forward as quickly as the industry and, perhaps, the military would like.   

I say moderated much in the way a lion tamer “moderates” big cats with whip, chair and pistol.  In this case, the cats were government and industry representatives.  For the Government’s side: Honorable Terry A. Yonkers, Assistant Secretary of the Air Force for Installations, Environment and Logistics; Honorable Katherine Hammack, Assistant Secretary of the Army for Installations, Energy and Environment; and Tom Hicks, Deputy Assistant Secretary of the Navy for Energy.  From industry: Mr. Dave Buemi of Suniva, Mr. Scott Foster of Hannon Armstrong (finances infrastructure technology) and Mr. Baird Brown from the law firm of Drinker Biddle.

Although Mr. Brown spoke about utilities, there was no representation from that community on the panel. Pity. Without the utilities present, government and industry can chat, but they are only two legs of the stool.  Bollinger kept the big cats in line and provoked a lively discussion.  Judging by the occasional exasperated looks on the faces of the participants, I would say it went beyond lively.

Mr. Bollinger’s opening comments are worth including here because I think they frame the vital questions about how the Services will achieve the SecDef’s pronounced goal of three gigawatts of renewable energy by 2025.  Third party financing requires equal participation by industry, government and the utilities.  If a win-win-win situation cannot be created, it will be lose-lose-lose.  Here are Paul’s opening questions:

• From a renewable energy company perspective the issue is: who will hold the contract and who will finance the work? 
• From the finance companies' perspective the issue is whether they want to use their money to fund federal projects which are delayed, with contract language uncertain, and the details on how this will work quite murky. Is this a good risk and will they make any money?   
• From the utilities perspective they are asking themselves, so…you want me to help you reduce the energy consumption of our largest customer, introduce large amounts of renewable energy that could make the grid more volatile and you want me to pay for any excess power you generate, and this adds value to our shareholders in what way? 
• Of course this never happens because the PUC regulations won’t allow 3rd party financiers to build renewable energy projects without the approval and most likely, the partnership with the 3rd party. (Author note: See 3rd-Party Solar PPA Policies) 
• Except for Nellis AFB, most if not all energy projects have been small on military bases.  How can we break out of this paradigm and still have our sanity and make money doing it?  Will microgrids be considered part of the solution or will they continue to be the poor stepchild waiting for adoption?
• How do renewable energy projects compete against conventional power that is some cases is subsidized by the local community?

Each panelist got two minutes to say their piece.  Mr. Yonkers seemed to wonder why industry was dragging its feet on energy projects.  When industry folks challenged that assertion, Mr. Yonkers allowed that AF people at lower levels were not performing to standard, so his intent was to pull the authority to execute third party agreements to his level.  I can’t think of an example where elevating decision making authority has ever expedited a process, but I am sure there is one.

Despite this, each of the government reps allowed how things would go much better if the authority for PPAs could be pushed down from the Service Secretaries to their Ass't Sec level.  Agile organizations decentralize decision making and hold people ruthlessly accountable.  Seems like this would be a useful model for DOD.

 

Bollinger’s droll and acerbic moderation provided for an informative discussion that could have gone on for hours. The organizers had placed question cards on each seat and microphones for question from the gallery, but no time was available. Paul asked all of the questions. The bottom line is that the questions Mr. Bollinger asked in his opening remain open. DOD is the only institution that can set the conditions for success, but it must give up what I call the arrogance of the checkbook.  “I write the check, you dance to my tune.”

DOD is not writing the checks; they are simple buying the energy the utilities would sell them regardless.  Until DOD actually places a value on energy security, figures out how to decentralize decision making (ask Petraeus) and finds a way to work with the utilities in a cooperative manner, third party financing will only work within a very narrow set of circumstances. The southeast will continue to be a waste land for renewable energy and industry will continue to be frustrated with DOD’s unwillingness to recognize an altered state in how it must do business.   Dan Nolan

Fools Paradise and Arguing with Idiots: More Obstacles in DOD Road to Energy Security

Inhofe Slams DOD for Thinking Ahead

I believe that America has the opportunity, capability and financial wherewithal to lead the world in the production of alternative forms of electricity and fuel.  We already lead the world in energy storage R&D and a concerted effort by government and industry could push us into the lead in other areas, just as it did with electrification and information technologies.  But now, shortsighted politicians (I used to call them political leaders, but they have lost the right to that sobriquet) are not only attempting to strangle that baby in the crib, they want to turn back the clock.

DOD is doing R&D on biofuels to determine their impact on their mobility systems and as well as the ability to sustain domestic training operations with a substitute for petroleum.  They are doing it because they are required by law.   The current energy policy is expressed in two laws (EPAct 2005 and EISA 2007) and two executive orders, (13423 and 13514). They provide sufficient guidance for DOD to create strategy, operational direction and tactical instruction. These, along with the National Defense Authorization Act of 2007 require DOD to have target purchase, by 2022, of cellulosic ethanol - 16 billion gallons; biomass based diesel - 5 billion gallons; and other biofuels - 15 billion gallons.   Not so fast, says the right Horrible Senator from Oklahoma.

In an article in Forbes magazine, Senator James Inhofe (R-OK) blasts SecDef Panetta for ensuring that DOD follows the law.  Sen. Inhofe accuses Panetta of wasting money on expensive fuels while the President is  gutting the DOD by a half trillion dollars over the next ten years. I might be wrong, but I seem to recall that that was an effect of Congress’ failure to trim $1.2 trillion from the Fed budget, which invoked the sequestration clause, also penned by Congress.  Gee, Senator, if you and your 99 buddies in the upper house could have issued a budget at all in the last three years, perhaps we could be having a more enlightened discussion.  Unfortunately, we cannot.

The version of the NDAA 2013 that came out of the House Armed Services Committee contained provisions to prevent DOD from investing in and deploying low-carbon, renewable fuels. This turns back time.  I am sure that will make Senator Inhofe very happy, much the way it would Hugo Chavez and Mahmoud Ahmadinejad.  But othersare not so pleased.

Nine former flag officers have written to Senators Levin and McCain to express their views on this effort.  In their opinion:

We have to find new sources of fuel. As long as the United States is beholden to global energy prices, our country is vulnerable. The Air Force and Army are increasing the fuel efficiency of the vehicles we use to fight, transport troops, and provide support. The Navy is investing in advanced biofuels programs that will enhance its power-projection capability. The Marines are operationalizing common assets like wind and solar power to decrease energy vulnerability. These initiatives have been undertaken in partnerships with American firms and are creating jobs for American workers.

Some Members of Congress, however, oppose these critical programs. They choose to waste time by advocating policies that have already proven to be failures and attack the military for investing in prudent measures that will save lives. Taking control of our energy future would mean preventing future conflicts around the world and protecting Americans here at home.

It is time to secure America with clean energy. All of our civilian leaders must match the military’s commitment and stop putting partisan politics ahead of good policy. We call on Congress to support the Department of Defense as it invests in clean, domestic, alternative sources of energy for the sake of the security of the United States of America.

Since the opposition to DOD’s efforts seem to be coming from the political party that professes to defer to the Generals in matters pertaining to the military, it should be relatively easy to, well, defer to the Generals.  Go ask Generals Marty Dempsey and Ray Odierno what they think.  I am sure ADM Greenert as well as Generals Amos and Schwartz will give you their professional opinions as well.

 

 Nicole Lederer, Co-Founder of Environmental Entrepreneurs (www.e2.org) has called upon her constituency to petition their Senators to oppose this action and to allow DOD to take the prudent action necessary to secure their mission essential energy requirements. As a fellow entrepreneur, the market that DOD represents is enticing. Their commitment will improve the technology, increase private investment and drives down the cost.  Think microprocessor.  Their change in behavior could impact the society at large.  Think racial and gender equality.  What is at risk here?  Worst case scenario is we identify a dead end path for economic investment.  The upside?  The Saudi Arabia of biofuels. 

If anyone knows the cost for operating a U.S. Navy Battle Group in the Straits of Malacca for a day, please pass that along to me.   Right now, Japan and China feel assured in their access to oil because the U.S. insures it.  If they do not get oil, America’s economy suffers, so we have to insure their access.  What if we develop the technology to create drop in replacement biofuels that we can license to Japan and China?  Worst case scenario?  China steals it and exploits it.  Upside?  Petro-dictators can no longer buy off political dissidents with the profits you and I put in their pockets.  Ever wonder why there was no Arab Spring in Saudi Arabia?

It is quite possible that I am living in a fool’s paradise, where all men and women have a sense of loyalty, duty, respect, selfless service, honor, integrity and personal courage.  The dysfunction of our government, the shortsightedness of business and the lack of commitment from our populace to pay the price of civilization will not dissuade me from my Pollyanna view of the world.  But at some point, I will stop arguing with idiots; they just drag you down to their level and beat you with experience.  

For all who are headed to New Orleans next week for the NDIA Environment, Energy Security and Sustainability Conference, see you there.  Dan Nolan

Farrell says Stay the Course on DOD Energy Diversification

With the rash of stories this past year on failures of US solar companies, the lack of speedy adoption of electric vehicles, and the boom in un-conventional natural gas and oil, occasional readers of the DOD Energy Blog might wonder whether renewables and energy efficiency have lost some of their luster for operational and facilities energy applications.

Well, the June edition of National Defense leads with a piece called "New American Oil Boom: "Will it Slow DOD's Renewable Energy Momentum?" which convincingly refutes the idea that energy leaders have taken their eye off the alternative energy strategy ball. National Defense magazine has long had a strong focus on energy matters, thanks to the leadership and insight of its President, retired USAF General Larry Farrell.

Reminding us of how tightly bound the DOD remains to oil, Farrell says:

When speaking of petroleum, independence is a myth, regardless of where it comes from. The fact is that, for transportation energy, there is no diversity of supply or source.

And looks a few years into the future:

Diversity has strengths of its own. The current positive situation of domestic supply will last a few years at best — perhaps out to 2030 or so. At some point global demand and increasing difficulties to get supplies will catch up. 

Concluding with a vote of confidence that DOD leadership is still on point on energy strategy:

We have the gift of time to address the problem. Knowledgeable leaders in the Defense Department realize this. It is unlikely that they will slacken their efforts to bring solutions to operational capability. There really is no other choice. 

I believe Farrell's observations and conclusions are correct, but Dan and I would be happy to hear if you see things the same way.  Andy Bochman

Not Just the Good News: Wisdom from the Air Force Energy Express and Endless Observations

Air Force Energy Assessment Team, Jan 2010

Over the past few months, the Air Force Facilities Energy Center (AFFEC)  has provided a running review of current Air Force energy efforts in the form of the very excellent Energy Express. AFFEC is a wholly owned subsidiary of the AF Civil Engineering Support Agency (AFCESA) and handles all AF energy related issue  If you haven’t read the Energy Express (EE), they are available here.  It has recently gone from a quarterly to monthly publication and serves an audience of military, industry and utilities partners.  A couple of interesting articles in the last few months caught my eye and I recommend the magazine to all interested in DOD energy.

In the February issue there was a brief mention of the AF’s Sustainable Infrastructure Assessments (SIA) that are ongoing.  The purposed of the SIAs are twofold.  One is to meet the requirement for quadrennial assessments of all real property for energy status and, two, is to establish a priority for investment.  The Air Force is getting help from the Army Corps of Engineers (COE) on the process.  What peaked my interest  is that, since the AF recognizes that it will have to use third party financing to achieve their energy conservation goals and that those vehicles usually involve a no cost energy assessment in order to determine the energy saving measures (ESMs) to apply, is the AF wasting money and delaying the start of projects by going through the SIA process?  Does the COE have the same expertise (and cost) as commercial entities that do this for a living? If the government is paying itself to perform government mandated energy assessments, have we created a self-licking ice cream cone?  The article implied that the AF and COE would be conducting the level 2 audits, but a quick query to the staff at EE affirmed that the COE was only helping in the contracting for companies to do the audits (whew!).  Still, are there going to do dual audits?

The May issue has a piece on the gap between operational energy and facility energy.  At our large “forward operating bases” we really do not have operational energy or facility energy; we have LOGCAP energy.  A recent survey by AFCESA at Al Udeid  Air Base in Qatar found that the enduring base was paying a variety of rates for its electricity, from $.07 to $.49 a kilowatt hour.   (A base designated as enduring can use military construction dollars instead of expeditionary funding to pay for infrastructure development.)  Besides the disparate rate structure, the AFCESA team noted that individual window AC units could be replaced, saving millions annually.  They also recommended spray foam and other thermal insulation for many of the large tension fabric shelters that require environmental control.   These are all brilliant recommendations….. just as they were in January 2010.

January 2010 was when the Air Force Energy Assessment Team outbriefed the Vice Chief of Staff of the Air Force on the results of the operational energy assessment done in theater earlier that month.  Many of the recommendations made by the AFCESA could have been quoted from the AFEAT’s report…or the Marine Energy Assessment Team report….or the Power Surety Task Force Report….or...    

Last month I received a call from a friend of mine who had just returned from theater where he was doing an assessment of Army operational energy.  I reeled off what he had found before he began talking.  The findings continue to be the same,  as are the recommendation.  I am assuming someone in the Assistant Secretary of Defense for Operational Energy Plans and Programs has pulled copies of all these reports, collated the like observations and has told the Service, “Hey, this has already been observed; just go fix it!”.   I would truly like to believe that. 

I believe in measuring a hundred times so that I only have to cut once.  That being said, at some point you have to shoot the engineer and build the bridge.  Perhaps this is just a case of Doubting Thomas, but at some point we need to stop the studies and demonstrations and just build the bridge.  

My point was, (and I did have one), the AFFEC Energy Express is an excellent publication (way to go, Jennifer and Amy!) and I highly encourage the other Services invest in a similar communications tool.  It is a great way to spread the good ideas among engineers, but an even better means to enlighten commanders.  When the commander at Edwards AFB discovered that they had overpaid their electric bill by $3.67M (March 2012) and sought redress, I am sure other commanders (if they read the Express) would be going over their light bills with a fine tooth comb.  I salute the AF for doing the dirty laundry in public and not just telling the many good stories they could.   A smart man learns from his own mistakes; a wise man from the mistakes of others.  Dan Nolan

Get Smart: Grid Definitions, Affordability and Cutting Demos

Stop. Go get a cup of coffee and then get comfortable. This one is a bit of a ride. Part rant and part observation, it is, as Andy B would say, an overlong review of the most recent conference on smart microgrids in development and demonstration by DOD. Comfy? Good.

I attended the TTC sponsored Military Smart Grids & Microgrids Conference in Arlington, VA. The goal of the meeting was to ” bring together the key planners and technical experts who are leading the way in developing military smart and microgrid systems”. Mission accomplished. Lots of fascinating presentations on the engineering, cyber security, care and feeding of a smart microgrid. What is a smart microgrid you might ask? TCC describes it a “localized groupings of power generation, storage and load management units”, but, please feel free to continue to ask.