Department of Defense Requests Renewable Energy Industry Guidance for Power Purchase Agreements

08 Mar 2012

On February 24, 2012, the U.S. Army Engineering and Support Center (Army) released a Request for Information (RFI) soliciting comments (due March 23, 2012) on its draft Request for Proposals (RFP).  In the RFP, the Army seeks the procurement of $7 billion in energy produced from renewable and alternative sources for Army installations for up to 30 years.  Click here to view the RFI.  

Although the Army will not issue any awards until after it receives proposals in response to the final RFP, the RFI represents an important technological and business development opportunity for potential industry participants to shape the long term procurement process undertaken by the Army.  Interested parties will have the opportunity to influence the contracting and procurement process by outlining the various technologies available to meet the Army’s significant renewable energy commitments.

Based on the draft RFP, the Army proposes to purchase $7 billion in power generated from renewables (i.e., solar, wind, biomass and geothermal) through power purchase agreements (PPAs) for up to 30 years.  Because the Army intends to procure energy only through PPAs, the draft RFP indicates that the Army will not construct, own, or operate renewable generation facilities, and also states that no federal funds will be made available for construction, research and development, or other needs to support the build-out of new generation.  While the U.S. Department of Defense (DoD) has the authority to enter into contracts to purchase power for 30 years, the RFI states that the Army will propose initial contracts for 10-year terms.

This action by the Army is a piece of the long term commitment DoD has toward energy independence.  The RFI asks applicants to submit recommendations in the following five areas:  (1) Corporate Technical/Management Experience; (2) Financial Capability and Management Approach; (3) Past Performances; (4) Small Business Participation; and (5) Price. 

Ultimately, the Army’s RFP will be part of an overall effort by the DoD to increase its renewable energy procurement or production to at least 25% of total consumption by 2025.  As part of its efforts, the Army has established “net-zero” bases in the areas of energy, water and waste usage, meaning that it produces what it uses on its own facilities, and it has identified key geographic areas in the U.S. where such opportunities may exist.  Click here to view the map of the regions.

In addition to the Army, the Air Force and Navy have all set aggressive renewable energy goals and are considering various energy efficiency and renewable energy initiatives, with respect to electricity and fuel procurement and production, to reach those goals.  Thus, the Army’s efforts will likely be only one of several future requests by the DoD military departments for significant procurements.

Source: Van Ness Feldman

Industry Directory: US Department of Defense (DoD)

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