By Michael McGhee, P.E.
Each year, the U.S. Army spends over $1 billion on installation energy and $85 million on potable water. However, most Army installations are dependent on public electricity, natural gas, and water utility systems, which are typically not located on the installation and are at greater risk of supply disruption. To help counter this risk, the Army has recommended critical infrastructure become “islandable,” or capable of supplying their own energy and water to support critical missions during an extended outage.
Energy resilience is vital to readiness. Maintaining world-class training facilities, the ability to project power or surge the industrial base, and command and control are mission objectives of Army installations. Mission success simply is not achievable without secure and resilient access to energy (and water).
By weaving together acquisition and real estate authorities and leveraging private investor interests, the Army Office of Energy Initiatives (OEI) is developing comprehensive energy resilience solutions that move installations toward becoming islandable while optimizing available resources and funding.
SECURING NEEDED RESOURCES
OEI serves as the Army’s central program management office for the development, implementation, and oversight of privately financed, large-scale energy projects. Using resources and authorities such as direct private investments, third-party financing, and direct appropriations, OEI can enable energy resilience efforts across the Army, combining them with industry resources and creating a union that complements both parties. Often, the final solution is a combination of some part of these three resource streams.
Direct Private Investment. OEI’s first preference for helping an installation move toward energy resilience is through direct private investment, where we collaborate with industry, leverage their investment plans, contribute Army value to the project, and share the resulting benefits. Often, the Army provides land and the utility or industry partner owns, operates, and maintains the energy infrastructure (and ensures the Army’s energy resilience needs are met). A similar arrangement, utilizing Power Purchase Agreements, consists of the Army purchasing energy generated from industry in return for on-site, on-demand access to power from resilient energy assets, either full-time or as needed during an outage or contingency.
Another method of collaboration with industry is through real estate outgrants, typically in the form of leases or easements. These outgrants allow private sector entities to develop, often through a competitive process, underutilized (but not excess) Army real property for purposes that are compatible with an installation’s mission. Private industry can potentially utilize Army land for the siting of commercial energy assets in exchange for providing the first right to power in the event of an electrical grid outage.
Performance-Based Contracts. OEI’s second preference is to “borrow, invest, and harvest.” Using performance-based contracts, installations can receive improved quality infrastructure, harvest energy savings to pay for the infrastructure, obtain resilience capabilities in the most financially prudent means possible, and obtain savings on utility costs where possible. Examples include Utility Energy Services Contracts and Energy Saving Performance Contracts. As an additional benefit, the Army utilizes private sector expertise to restore or upgrade energy equipment. Leveraged energy assets and services provide the Army with modernized infrastructure and pay upfront costs, which the Army repays over the course of the contract from the generated savings.
Traditional Appropriations. OEI can also use direct appropriations to enable installations to own, operate, and maintain assets associated with a resilience project. However, buying, operating, and maintaining infrastructure through appropriated funding is OEI’s third preference, due to challenges in balancing the Army’s extensive infrastructure capitalization and sustainment needs.
FINDING NEW SOLUTIONS
OEI projects have used an estimated $627 million of direct private capital investment in support of 11 operational projects—delivering more than 300-MW of production capacity. Several other projects are in the assessment, validation, or agreement phases. Although some are subject to final Army or regulatory approvals, once complete, 18 of 22 projects, either in operation or early consideration, will provide some islandable capability for critical missions.
For example, a project at Redstone Arsenal, Ala., completed in December 2017, includes the Army’s first privately funded, economically viable battery energy storage system. The 1-MWh/2-MWh battery system is coupled with a 10-MW on-site solar array. The project generates on-site, fuel-free power and stores a portion of that power to offset demand during peaks; this enhances energy resilience by adding diversity to Redstone Arsenal’s energy supply and adds operational flexibility for a future microgrid. A 27-year Power Purchase Agreement and a lease for approximately 114 acres was also included in the contract.
Similarly, the battery energy storage facility at Fort Carson, Colo., is the largest peak-shaving battery on an Army installation as of November 2018. The battery offsets the high-energy demands placed on Fort Carson’s power grid, especially during summer cooling season. The facilities reduce the garrison’s peak electric use by an average of 9 percent every month, saving approximately $525,000 a year.
At Schofield Barracks, Hawaii, a 50-MW multifuel plant/30-day microgrid generation plant is capable of providing three installations with 100 percent of energy requirements during a grid outage. Located above the tsunami inundation zone, the plant—constructed, owned, and operated by Hawaiian Electric— is equipped with “blackstart” capability, five days of on-site fuel storage, and 30 days of fuel storage on the island.
Ultimately, through a portfolio of authorities and resources, OEI has the flexibility to integrate multiple resourcing streams and “assemble” a final solution set that best suits an installation’s needs.
PARTNERING FOR THE FUTURE
Army installations provide direct support to our warfighters in both operational requirements and as power projection platforms. Secure and uninterrupted access to energy (and water) is essential to Army missions. Using concepts and capabilities from advances in distributed energy, smart grids, and storage technologies, the Army is reforming energy practices to attract private sector capabilities and capital to strengthen the regional power grids and equip energy systems with the best capabilities to withstand threats.
Today’s highly contested, lethal, and complex operating environment calls for diligent joint management of energy, water, and land resources. OEI continues to seek collaboration and engagement with industry to meet energy resilience needs while facilitating private investment objectives.
Michael McGhee, P.E., is Executive Director, U.S. Army Office of Energy Initiatives; firstname.lastname@example.org.
[This article first published in the March-April 2020 issue of The Military Engineer.]