Scouts Report SPIDERS Creeps Ahead: Latest on DOD Smart Grid Effort

Got a couple of scout reports on the progress of SPIDERS; let’s get up to speed. The Smart Power Infrastructure Demonstration for Energy Reliability and Security (SPIDERS) has recently (June 2012) begun construction for Phase One at Joint Base Pearl Harbor Hickam (JBPHH). In December I told you that it appeared that the US Army Corp of Engineers (USACE) were accepting some new technical ideas and applique of microgrid components along with novel architecture for an Enterprise solution from the Burns & McDonnell.  Burns & McDonnell has teamed with IPERC and have developed a new distributed control method for the operation of the microgrid.

Remember, for security, centralized is bad, distributed is good. Many have talked about intelligent power management, but what appears to be surfacing is a much more robust method that moves control from a centralized concept to a network.

The software is installed at the load and/or power source (generator, solar array, etc.) and determines the consumption requirements and the available generation to set priority based on the needs and available energy. This allows for fuel consumption optimization, while ensuring power to all critical loads. Furthermore, the intelligent software adapts to modifying environments and equipment changes in real time without human user interface and offers enhanced energy security. If the promise of this system is realized, then we are a step closer to achieving actual energy security. JBPHH is now a named area of interest and we will keep it under observation.  

  

SPIDERS Phase 2 was awarded on 22 June.  Details at FedBizOpps (search for W9128F12R0014).  Congrats to Burns & McDonnell on this $7M win. The following is the intel to date.    The objective of this phase is to:

• Demonstrate increased reliability for multiple critical and priority mission loads resulting from the interconnection of distributed electrical generation assets using the existing distribution network
• Increase endurance of diesel generated backup power through the use of renewable energy sources during outages
• Increase efficiency of diesel backup generators by implementing sophisticated control approaches across the microgrid system
• Operational risk reduction through strong focus on cyber security. 

Renewable energy in Phase 2 is expected to double which will emphasize the challenges of energy storage and load management. Their goal is to have an operational demo in Spring of 2013.  Need to get that contract let!

Phase III will be at Camp H.M. Smith, HI.  This will be the first DoD project to implement an Energy Surety Microgrid^TM for an entire military installation.  This type of microgrid is the trademarked product of Sandia National Labs which is operated by Lockheed Martin for the DOE.  It is supposed to include fully integrating Smart Grid technologies, distributed backup generation, renewable energy generation and storage.  Critical to the surety aspect is a cyber-defense with the ability to operate autonomously for extended periods during long-duration power outages.  This microgrid is supposed to include actual isolation switches and load management.

The SPIDERS program has its challenges, but getting this many folks from different branches of government, multiple industry partners and the utilities to do anything together is a monumental achievement. I salute the folks running this JCTD and all their cooperative partners.  It is far from perfect, but with so many other DOD energy projects facing fits and starts, this one continues to bull ahead.  Dan Nolan

50 Shades of Haze Grey: The Navy Biofuel Initiative Under the Defense Production Act

Here is another suggestion for those lazy, hazy days of summer that are now upon us.  The authors of great summertime bodice rippers over at the Congressional Research Service have served up another slice of beach reading with the publication of their new report: “The Navy Biofuel Initiative Under the Defense Production Act” .    

It starts with a bold adventure:

The Navy proposes to use authority under the Defense Production Act of 1950 (DPA) to develop a domestic industrial capacity to supply biofuel. In its FY2013 Congressional Budget Request, the Department of Energy (DOE) requested authority to transfer funds to the DPA Fund, offering the justification that it will support the MOU with the technical expertise to move pilot-scale demonstration projects to larger-scale production in support of the Navy's Green Fleet Goal. Agriculture, Energy, and the Navy expect to fund this initiative at $510 million in aggregate over three years.

It blends in history:

In the past, Congress has found it in the interest of national defense preparedness for government to assure that a domestic industrial capacity exists to produce fuel. Congress set aside the (now depleted) Naval Oil Reserves and Oil Shale Reserves to provide for the Navy's fuel requirements. Congress later promoted alternative fuel from coal through the U.S. Synthetic Liquid Fuels Act of 1944 to aid the execution of World War II, and to conserve and increase national oil resources. The act authorized the Secretary of the Interior to construct, maintain, and operate plants producing synthetic liquid fuel from coal, oil shale, and agricultural and forestry products.

 During the Korean War, the DPA authorized the President to have liquid fuels processed and refined for government use or resale, and to make improvements to government- or privately-owned facilities engaged in processing and refining liquid fuels when it would aid the national defense. In 1980, Congress amended the DPA to authorize the President's purchase of synthetic fuels for national defense.
 Most recently, the Energy Policy Act of 2005 directed the Secretary of Energy, in cooperation with the Secretaries of the Interior and Defense, to develop a program to accelerate the commercial development of strategic unconventional fuels, including but not limited to oil shale and tar sands resources within the United States. Except for exploiting the Naval Oil Reserve, policies that directed alternative fuel development for national defense interests have had to challenge newly discovered petroleum resources that presented clear economic advantages over alternative fuels.

And it concludes with a question we should well ask ourselves and anyone we know:   

An important policy question for Congress may be whether a domestic biofuel industry is necessary for national defense, and whether proceeding under the authority of the DPA offers the necessary stimulus. A domestic biofuel industry may satisfy concerns for a secure, domestic, alternative fuel source independent of unstable foreign petroleum suppliers. However, adding biofuel to the military's supply chain does not relieve logistical issues with delivering fuel to forward operating areas, where fuel supply issues have been more about vulnerability than availability.

Available as a E-Book from the link above, the report is much more reasonably priced than the 12-15% of DoD’s budget is directly related to the concern for oil in the Persian Gulf (2012 DoD budget (base+OCO) was $707B, with $85-$106B in annual expenditures that can be traced to our presence in the Gulf).  Even the $510M in Executive Branch money (not just DOD) is chicken feed as compared to the approximately 15-20% of the FY09 DOD budget that was used for protection of oil supply routes and infrastructure.  The average estimate of annual spending for US protection of maritime oil transit routes and oil infrastructure is $84B. For my Air Force who have said they will just wait until it comes down in price, I say, "take the plunge"!

So head out to the beach, slather on the sunscreen and cozy up to this titillating tome.  I am sure you won’t regret it!   Dan Nolan

My Summer Beach Reading: A Guided Tour of Federal 3rd Party Financed RE Projects

 In energy conference after energy conference this year, the question has been asked  “So how exactly are we, industry, supposed to develop large scale renewable energy projects at federal facilities using private capital?  Is there no guide???”.  Well, now all questions will be answered with the publication of the aptly named draft Federal Renewable Energy Guide: Developing Large-Scale Renewable Energy Projects at Federal Facilities Using Private Capital, by those crazy kids over at the Federal Energy Management Program and the Department of Energy.  And this is no edict handed down from on high.  Everyone who has complained about the lack of specificity will be able to remedy that, personally.  According to Boyan Kovaicic at FEMP:

In support of the Obama Administrations all-out, all-of-the above approach to developing every domestic energy resource, the Energy Department today announced the publication of the draft Federal Renewable Energy Guide: Developing Large-Scale Renewable Energy Projects at Federal Facilities Using Private Capital in the Federal Register for industry and agency comment. This Guide provides a project development framework to allow the Federal government, private developer, and financier to coordinate on large scale renewable energy projects that will help achieve the Federal renewable energy goals. This Federal renewable energy guide underscores the extensive effort by the Administration to increase energy from renewable sources.

The Guide for Developing Large Scale Renewable Energy Projects at Federal Facilities Using Private Capital is available in the Federal Register and is open to public comment until July 2, 2012. The Federal Register Notice contains specific questions from FEMP.  Please e-mail comments to FEMPLargeREGuide@ee.doe.gov.

Beyond providing a development framework, this Guide is intended to provide a general resource that will begin to develop the Federal employee’s understanding of the project developer’s operating environment and the private sector understands of the Federal environment. Because the vast majority of the investment required meeting the goals for large-scale renewable energy projects will come from the private sector, this Guide has been organized to match Federal processes with typical phases of commercial project development.

The Energy Department's Office of Energy Efficiency and Renewable Energy accelerates development and facilitates deployment of energy efficiency and renewable energy technologies and market-based solutions that strengthen U.S. energy security, environmental quality, and economic vitality. Learn more about how the Energy Department provides the services, tools, and expertise to federal agencies to help them achieve their federal energy management goals at the FEMP website.

I encourage you all to logon, download and critique the 94 page document.  Clearly, we are not the first to do so, given that this is version 5.23.  You only have until 2 July, so get cracking.  Thanks to David McGeown for this tip.  Keep the cards and letters coming!  Dan Nolan

Hockey Sticks, Ink Drops and Schlieffen: Two Approaches to a Gigawatt Goal

Not representative of anything other
than a tough row to hoe.  

This week I attended the Joint U.S. Army – U.S. Air Force Renewable Energy Industry Day held at the Crystal Gateway Marriott in Crystal City, VA.  The purpose of the conference was to:

“bring together government and industry leaders to discuss opportunities for public-private collaboration in renewable energy development.”

The low cost, high content event was attended by about 800 industry, utility and government professionals…and me.   I point out the low cost, because similar events, hosted by nongovernmental agencies, are in the four figure range to attend; nice if you are major player, but tough on the little guys.  Thanks, Army/AF!

It was good to see my friends from the Edison Electric Institute, the Southern Company and other utility, co-op and munis in attendance as well.  DOD’s energy effort requires the active participation by government, industry and utilities.  If you can’t create a win-win-win, then it is lose-lose-lose.  We can’t afford that outcome, financially, security-wise or environmentally. 

Before the conference,  I spoke with a number of the attendees and asked them what their expectations were.  To a man (and woman) the answer was more information on the much maligned Army/Huntsville RFP for Power Purchase Agreements.  From the Air Force perspective they wanted to know what the impact of the consolidation of the AFCESA, AFRPA and AFCEE into a “super Field Operating Agency” would be. 

I caught up with Deputy Assistant Secretaries for energy Kidd (Army) and Geiss (Air Force) as the conference was about to begin.  You would think that a former Soldier and former Marine would know better than to be within five meters of each other, where one interviewer could get you all, but there they were.  They were engaging and open and I hoped that set the tone for the day. 

Rather than a blow by blow, let me give you my impression of the two Services approach to the same goal: bring on 1 gigawatt (8760 gw-hrs?) of capacity, each, by  2016.  Given their current RE capacity, the graph of what must be brought on in capacity over time looks like a hockey stick.  So, how can they get there from here?

The Army has created a centralized scheme, with a carefully scripted approach.  I am reminded of a certain soup vendor from the TV show Seinfeld.  But remember, it was very good soup!   Huntsville District office of the Corps of Engineers will issue an RFP for Power Purchase Agreements which will be awarded to “all qualified proposers”.   This will be preceded by the publication of a list of Frequently Asked Questions (FAQ) based upon the some 900 comments provided from Industry to the draft RFP earlier this year.  The award of this Multi Award Task Order Contract (MATOC) is not a license to hunt.  It is a license to get in line for what is on the menu. 

The next phase in the Army’s program is to identify the projects themselves (the menu) and that is the mission of the Energy Initiative Task Force (AEITF).  The AEITF is evaluating 180 sites and 4 technologies to determine the right project to bring forward at the right time to be bid on the MATOC.  This means the ascent up the hockey stick is all on the AEITF.  The projects will be metered out a few at a time so that the TF is not overwhelmed by the anticipated interest by Congress.  They expect that, for each project, the “Congressionals” (inquiries from members of Congress) will take up ALL their time until answered.  Presumably, any base could bring forward a project, but those developed by EITF will most likely get the priority for the MATOC.  The submission of unsolicited proposals for other “good ideas” was highly discouraged. 

This approach is based upon a highly structured and closely controlled plan. The Army will take on the NEPA and land use issues and I bless them for that.  I assume they will be working with local utilities as well as the DOD Site Clearance Board to clear projects.     Industry, well, MATOC holders, must get in line, select the project from the menu, submit the bid, and move down the line.  Send in an unsolicited proposal and it is “No Soup for YOU!”.   One word of caution for the Government in this Schlieffen plan for energy: no plan survives first contact with the enemy.  Stay flexible.    

The Air Force is taking a different approach.  Theirs is a much more open, flexible and ambiguous. More the reverse ink drop in a bucket of water plan (many droplets coalescing to form the whole drop, rather than the drop spreading out).   Since the efforts of both Services are dependent on public-private partnerships, the AF is putting the onus on Industry.  Air Force Real Property Agency, soon to be part of a super FOA, has responsibility for enhanced use leases.  Those wacky guys at AFRPA want to hear Industry’s ideas; bring on the unsolicited proposals! The PPA necessary to support those kinds of deals will be facilitated by the AF, but it is up to Industry to make it work.  It was not clear if, like the Army, the AF would require the interconnect to be on their side of the meter to provide energy security.   

The AF will continue to surface opportunities through other 3^rd party financed deals like ESPCs and UESC, but those appear to be legalistic and centralized decision authority based process.  Their path up the hockey stick is not clear and the plan is to exercise existing authorities and past experience. Hmmm..could the Air Force use the Huntsville MATOC???  If so, the Army might have to add some ceiling to the proposed $7.1B.

The bottomline is that the USAF and USA are working hard to meet their announced goal of a gigawatt production each, but with very different approaches.  The Army might have reasoned that the fact that 800 people showing up was somehow related to the RFP and they needed to be ready to address questions, not kick the can down the road.  Even if they just had the top 10 FAQs ready to go, that would have been something.   The Air Force has a “business as usual” attitude with AFRPA serving the function of the AEITF and an installation level effort instead of a centralized methodology.  Still not sure how DLA-Energy fits into the scheme, other than do what they have always done, purchased energy for the Services.  Standardization of procedures would help Industry, but Title X will presumably get in the way and each Service will have its own way.  Title X and the lawyers might be the biggest challenge.    Don’t get tree’d by a Chihuahua.   Lawyers should work for you. 

Finally, how about some case studies?  The success of the one gigawatt goal for each Service using third party financing should be informed by past performance.  To quote a respected industry maven,” PPAs have been used by many federal agencies - analyze four or five case studies with Industry and address lessons learned; TTPs; and how to streamline decisions and actions. Ultimately, the EITF should get Congressional assistance to make PPAs a win-win-win and expand legislative and regulatory boundaries in a deliberate and disciplined approach”.  Seems a reasonable suggestion.  Maybe get some B-Schools folks to do the analysis or get the gang over at the EEI to help out.  Perhaps this has already happened and just has not been visible.

So our next named area of interest is the FAQs.  That will be the indicator of an imminent RFP.  But that is only the beginning of the process.  The production of the list of locations/technologies is the real call to action for Army projects.  Or just go to any Air Force base.  Your call.  Dan Nolan

REPORT! Looking for help on AEMR, 2012

For fans of the blog and for the rest that just stomach it, you know I occasionally get scout reports and questions from the field.  Got this from one of the scouts out there, wondering where the mandated DOD energy reports are.  I have not been able to dredge them up, so if any of you good folks out there have seen the reports published this year, please let me know.  And if they are classified.....Never Mind. Following is question from the field: "Seen the reports yet........"

10 USC § 2925 - Annual Department of Defense energy management reports
(a) Annual Report Related to Installations Energy Management.- Not later than 120 days after the end of each fiscal year, the Secretary of Defense shall submit to the congressional defense committees an installation energy report detailing the fulfillment during that fiscal year of the energy performance goals for the Department of Defense under section 2911 of this title.

(b) Annual Report Related to Operational Energy.-
(1) Simultaneous with the annual report required by subsection (a), the Secretary of Defense, acting through the Assistant Secretary of Defense for Operational Energy Plans and Programs, shall submit to the congressional defense committees a report on operational energy management and the implementation of the operational energy strategy established pursuant to section 139b  of this title.

Scout asks,  "120 days would be end of January, right?  So where are the reports for lastyear?  Last AEMR I saw was released in 2011, and based on 2010 data - so right now we're operating off of 2 year old data - (wonder if the OES was inpart based on 2 year old data..?)  Is that standard military protocol - to be 6 months late to Congress with year-old data?   Bueller, Bueller???"

Hope my crankiness is not rubbing off on others.........but do hope we get to see the data soon.  The AEMR is good intel for industry and if we are going to be on the team, we need the intel!  Look forward to your cards and letters and see you at the Army/Air Force RE Industry day tomorrow.   Dan Nolan

Army/Air Force Renewable Energy Fest

Time is short for those who have not signed up for the Joint U.S. Army – U.S. Air Force Renewable Energy Industry Day on 12 June.  There are only seats for 800, so hurry.  The reported purpose for the one day conference is to:

 “bring together government and industry leaders to discuss opportunities for public-private collaboration in renewable energy development.  Senior Army and Air Force energy officials will provide specific direction on each service’s renewable energy goals as well as the processes through which the Army and Air Force are seeking to establish partnerships with the private sector.   The event will serve as a forum for discussion of the approaches and technical challenges to overcome as the military and private sector work together to build renewable energy capacity and strengthen energy security.”

I am sure that everyone will be waiting with bated breath for information on the Huntsville PPA RFP, but since Huntsville is not on the agenda and, unless the RFP is released between then and now, I suspect no one on the agenda will address specifics.  At most, we will get a “due out date” for the RFP or at least an update on the 800+ comments made on the draft.  Hope springs eternal!

Personally, I would like to hear about what other RE opportunities will be available from the Army (things not covered by the AEITF 10 megawatt level of indifference) and how the reorganization of AFCESA and restructuring of third party financing decision authority in the AF will effects their efforts.  This conference is narrowly focused on RE so conservation and efficiency folks may not be well served.  As for microgrid folks, if you did not attend either of the military microgrid conference that bookended May, you missed out….at least until GovEnergy.   See you there!  Dan Nolan

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