Case Studies and Approach

Transcription

1 Incorporating Renewable Energy into Performance Contracts Case Studies and Approach Steven Spanbauer Energy Systems Group August 10, 2016 Rhode Island Convention Center Providence, Rhode Island

2 Agenda Proven Success Marine Corps Logistics Base Albany Marine Corps Support Facility Blount Island Contracting Opportunity Energy Service Agreements (ESA) The Art of the Possible 2

3 MCLB Albany: Landfill Gas to Energy CHP funded via ESPC LFG Electric Offset 11% LFG Natural Gas Offset 12% 2013 Energy Star CHP Award $20,460,945 Implementation Cost $1,722,380 Annual Savings Electric 41% Natural Gas 36% Renewable Energy = 23% Total Consumption Designed and Constructed Landfill Gas to Energy CHP Plant 1.9 MW of renewable electric power Up to 13.3 MMBtu/h of steam Proven island mode capable Dual Fuel Equipment (generator and boilers) Redundant Steam Production Installed two dual fuel (LFG/Natural Gas) boilers to burn excess LFG Developed infrastructure to support plant Construction of LFG compression anddehydration station at the county landfill Installed underground LFG and condensate piping system (3+ miles) Modified electrical feed to allow interconnection of the generator to electric grid Underground steam piping system connected to boiler plant Lighting and EMCS Upgrades Renewable ECMs > M&V Option B 3

4 MCLB Albany: Renewables Bundled with ESPC $20,460,945 Implementation Cost $1,722,380 Annual Savings Energy Conservation Measures Renewable Efficiency 21% 33% 79% 67% Landfill Gas to Energy CHP Plant Electrical Feed Modifications Renewable Efficiency Renewable ECM only = 14.1 year simple payback Renewable + Efficiency ECMs = 11.9 year simple payback EMCS Upgrades Two LEED dual fuel (LFG/Natural Silverstatus boilers to Gas) burn facility excess LFG Lighting Upgrades LFG Compression and Dehydration Station a Underground LFG and Condensate Piping (3+ miles) Connect underground steam piping to boiler plant 4

5 Solar funded via UESC at MCSF Blount Island $4,602,295 Implementation Cost $496,725 Annual Savings Solar Powered Pond Circulators (2 ponds) 10,000 GPM pumping capacity Backup battery system 3 day operation w/o sun Solar Thermal Delivers 84 mmbtu annually One collector system with twelve 10 x 4 flat panels One 500 gal storage tank, two drain back tanks with heat exchanger, controller sensors, pumps 40 kw Solar PV Fed directly into building electric distribution 240 Tons Geothermal (independent injection and extraction points) Building 104 Supplies 7 water source heat pumps Building 450 Used as the cooling source for a new magnetic bearing chiller Efficiency ECMs AMR, controls & motors, lighting, transformer, spray foam insulation, HVAC, UV lighting, compressed air system repair Performance Verification Method > IPMV Option A 5

6 Renewables Bundled with UESC at Blount Island $4,602,295 Implementation Cost $496,725 Annual Savings Energy Conservation Measures Renewable Efficiency 61% 39% Renewable 83% Efficiency 17% Renewable ECM only = 21.8 year simple payback Renewable + Efficiency ECMs = 9.3 year simple payback Automatic Meter Reading Solar thermal 40 kw Solar PV High efficiency lighting retrofits Controls and motors upgrades Spray foam insulation Solar powered pond circulators Transformer replacements Compressed air system repairs Geothermal energy systems HVAC upgrades & AHU UV Lights 6

7 Energy Service Agreements (ESA) Under ESPC/UESC Authority ESAs are a contract between supplier and the federal agency for the procurement of energy commodity Term is up to 25 years if executed under ESPC/UESC Subsidies help drive financial feasibility for larger renewable projects Federal tax incentives State tax credits, deductions and incentives Utility incentives Renewable system must be owned by tax paying entity to take advantage of tax incentives 7

8 Federal Tax Incentives Modified accelerated cost recovery system Accelerated depreciation over a five year period Straight line 20 percent double declining balance depreciation treatment Production Tax Credit Inflation adjusted per kilowatt hour (kwh) tax credit $0.023/kWh for wind, closed loop biomass, and geothermal energy resources $0.012/kWh for open loop biomass, landfill gas, municipal solid waste, qualified hydroelectric, and marine and hydrokinetic energy resources PTC expires for all non wind facilities commencing construction after 12/31/2016 Investment Tax Credit Significant tax credit to owners or long term lessees based on total cost of renewable project including equipment and labor Full value of ITC earned immediately subject to recapture for five year period 8

9 Investment Tax Credit Value and Expiration December 2015 amendment extended expiration dates For solar and wind, dates represent construction start For all other technologies, dates represent commercial operation Technology 12/31/ /31/ / / / / / Future Years PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat Hybrid Solar Lighting, Fuel Cells, Small Wind Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems 30% 30% 30% 30% 26% 22% 10% 10% 30% N/A N/A N/A N/A N/A N/A N/A 10% N/A N/A N/A N/A N/A N/A N/A Geothermal Electric 10% 10% 10% 10% 10% 10% 10% 10% Large Wind 30% 24% 18% 12% N/A N/A N/A N/A Source: DSIREUSA.ORG 9

10 Active Renewable State Tax Incentives 18 States with Active Renewable Related Tax Incentives 10

11 Active Renewable State and Utility Incentives 26 States with Active Renewable Related Tax Incentives or Rebates 11

12 Entering into ESAs under ESPC/UESC Authority IRS tax code and OMB language create potential conflict, which in turn creates unfavorable risk for the finance company. To qualify for tax credits The ESPC contractor has to sufficiently demonstrate that it retains the risks and benefits associated with ownership of the solar system The ESPC or UESC ESA must be service contract, not a lease 26 U.S.C (e) (4) disqualifies the Investment Tax Credit if the Government has an option to purchase, or may be required to purchase, all or a part of such facility at a fixed and determinable price (other than for fair market value). OMB M poses a problem Government must retain title to the installed capital goods at the conclusion of the ESPC or UESC ESA contract. 12

13 Entering into ESAs under ESPC/UESC Authority We request Treasury to take into consideration the language in OMB Memo 21 12, ESPC statutory authority under 42 U.S.C. 8287, the ESPC ESA contracting model DOE described in this Request, and ownership rules for tax consideration under 26 U.S.C FPCC Comments to DOE Federal Performance Contracting Coalition (FPCC) Comments to DOE submitted in March 2016 regarding Including Onsite Renewable Energy Generation under Energy Savings Performance Contracts Subsequent lobby efforts with Treasury, the White House and Department of Energy IRS Revenue Ruling Expect ruling to come out of the IRS on this issue soon, possibly end of this summer Anticipate that Government and Industry can keep the contractual structure for UESC and ESPC ESA as is and they can qualify for the tax credits with no burden of proof required for every single proposal submitted 13

14 The Future of Funding Renewable Projects Renewables Microgrid Generation Storage Resilience Vital Partnerships Federal Agency HQ Utilities Local Government Developers ESCOs Finance Companies 14

15 Challenges & Opportunities Challenges Savings streams energy savings may not cover costs in most regions Inability to utilize milcon funding Opportunities Quantifying mission security Deferred maintenance Identification of budget sources Future capital cost avoidance Operational savings normalizing Other innovative funding mechanisms 15

16 Thank You! Steven W. Spanbauer Senior Vice President, Federal Business Unit T: C: F: