Renewable Energy on Institutional Property Webinar Series June through September 2014 www.ssfonline.org Public Private Partnerships August 21, 2014 SSF Archived Climate Solutions Webinar Series • Urbanization and Growth on a Finite Planet • International Environmental Security • National Climate Assessment Water Management • • Adaptation to Protect Security in a Changing Climate Roger Feldman • Renewable Energy on Institutional Property Andrews Kurth LLP www.ssfonline.org Edward Saltzberg The Security and Sustainability Forum . 1
Sign Up for Free SSF Membership To Access the Webinar Archives www.securityandsustainabilityforum.org Renewable Energy on Institutional Property Webinar Series Register at: www.ssfonline.org Energy Tab Archived Webinars in the Series June 2 nd – Renewable Energy Policy • • June 26th Webinar #1 – The US Federal Agency Market: Meeting Energy Reduction and Renewable Energy Mandates • July 10th Webinar #2 – Renewable Energy Technology Applicability July 24th Webinar #3 – The Effective Marriage of Renewable Energy and Energy • Efficiency in an ESCO Contract for Municipalities, and Educational and Hospital Campuses • August 7th - Webinar #4 – The Intersection of the Microgrid, Renewable Energy, and Storage • August 21st Webinar #5 – Public Private Partnerships (PPP) Registration Open • September 4th Webinar #6 – The Leading Edge of New Energy Efficiency and Renewable Energy Technologies Coming to the Market • September 18th Webinar #7 – Developing the RFP 2
SAVE THE DATE: January 27-29, 2015 at the Hyatt Regency Crystal City near Washington, DC www.ncseonline.org 3
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Series Sponsors 5
Moderator 6 Roger Feldman's practice at Andrews Kurth LLP, focuses on the project finance of all types of renewables and clean technology energy and environmental applications. He has previously chaired the project finance groups of three major international law firms. Roger's public service includes positions as the Deputy Administrator for Finance and Environment, U.S. Federal Energy Administration and with the White House Staff, U.S. Dept. of Defense (Systems Analyst) and the U.S. Environmental Protection Agency (Financial Advisory Board).
Meet the Panelists 7 Robert Johnson, CEO of Hannon and Armstrong, a firm that makes debt and equity investments in sustainable infrastructure projects. It focuses on profitable projects that increase energy efficiency, provide cleaner energy, positively impact the environment or make more efficient use of natural resources. John Ravis, is a principal with Scully Capital, which specializes in a broad range of investment banking and financial advisory services to domestic and international, public- and private-sector clients. John has over 19 years of experience in energy project finance and development as a lender, an investor, and as a developer. Seth Miller Gabriel, The Institute for Public-Private Partnership (IP3): Established in 1994, IP3, a Tetra Tech company, is a leading training provider and advisor to governments, financial institutions and public services providers in the growing international infrastructure marketplace. Seth is a leader in the industry and a former Deputy Executive Director of the National Council for Public-Private Partnerships (NCPPP), the only non-profit organization in the United States focused solely on the growth of the utilization of the partnership model.
Agenda 8 Introductions: Roger Feldman Overview: Roger Feldman Panel Briefings Robert Johnson, Hannon and Armstrong John Ravis, Scully Capital Seth Miller Gabriel, IP3 Panel Discussion Audience Questions (submit through side panel) (Please take the brief exit survey)
Successful Deployment of Renewable Energy on Government and Institutional Property: The Pivot Point for P3 Successes by Roger D. Feldman Andrews Kurth LLP rogerfeldman@andrewskurth.com Security and Sustainability Forum August 21, 2014 1:15 – 3:45 PM (ET)
Structure of Presentation I. Public-Private Partnerships: An Overview II. Renewables Procurement: DoD P3 Options III. Future Issues for DoD Procurements of Renewables IV. Keys to P3 Success: Risk Allocation Jeff Eckel, Hannon Armstrong Financing Terms John Ravis, Scully Capital Government Response Capacity Seth Gabriel Miller, Tetra Tech/iP3 10
I. Overview A. General Principles 1. The P3 approach is not a generic panacea. It is one means to combined provision of facilities; infrastructure-related services; management oversight 2. The P3 approach is pragmatic: the traditional public vs. private function “privatization” debate is more or less over 3. P3 drivers for governments are generally some combination of a. needs to overcome financial constraints b. obtaining specialized expertise 11
I. Overview B. Key Issues 1. Inevitable tensions result from using the P3 approach: source of capital and operating payments; risk; quality and quantity of service; cost controls 2. Additional complications arise when P3s are also intended to achieve new policy goals, such as: a. renewables purchase; b. renewables ancillary technology-forcing goals (e.g., storage; microgrids) 3. Key to Issue: need for firm cash flow to support all financing requirements for P3s (including those created by policy requirements) 12
I. Overview C. Government Procurement Strategies for P3 Acquisition of Renewable Energy 1. Procurement is the “Pivot Point” for resolution of these competing P3 concerns 2. P3s for renewable energy are only as good as the scope, ingenuity , flexibility and financeability made possible by innovative procurement strategies 3. DoD’s efforts to use P3s to achieve accelerated use of renewable energy are illustrative of these procurement strategies 13
Key Applicable Laws – An Overview I. II. DoD Renewables Procurement Options • The Target: 2010 National Defense Authorization Act – 25% of total facility energy use to come from renewables by 2025 • Overview: Renewable Energy Procurement for Military Installations: Renewable energy development project on military installations may be accomplished using one or more of the following general development approaches. FAR contracting (FAR Part 41, FAR Part 12) – commonly described o as a “PPA” and includes leasing of land for project sites (10 USC 2922a) [Arrangement for Third Party Supply] o Contracting with Utility Providers to Installations (40 USC 501) [Utility Privatizations] o Enhanced Use Leasing (10 USC 2667) [ Utilization of Real Property in Third Party Transactions] o Energy Service Contracts-UESC/ESPC (42 USC 8256; 10 USC 2915) [Shared Savings Arrangements ] 14
II. DoD Renewables Procurement Options Power Purchase Agreements – Arrangements for Third Party A. Supply (10 USC 2922a) 1. Provision and operation of a private energy production facility (on military land or private land) and the purchase of energy from the facility 2. Permits contracting for periods of up to 30 years Firm cash flow requirements – contract standardization 3. issues. [cf. Army--RESA] a. Certainty of revenue stream; access to additional revenue streams b. Treatment of non-performance; defaults and cures c. Termination, defaults, cures/relationship to private lenders 4. Third party provider may take advantage of third party tax and applicable benefits 15
II. DoD Renewables Procurement Options B. Utility Services Privatization (40 USC 501) 1. Utilizes general Federal government procurement authority for utility services Permits contracting “consistent” with state 2. statutory and regulatory authority for periods of up to 10 years – 50 years if justified by cost/benefit finding made in favor of Privatization, using existing electricity tariffs 3. Must comply with DoD competitive requirements -- Competition in Contracting Act (“CICA”) 16
II. DoD Renewables Procurement Options C. Enhanced Use Leasing of Federal Property (10 U.S.C. 2667) 1. Real Estate Characteristics a. Lease - Not Acquisition of land or interest in land; contracting or procurement b. Subject to Federal Acquisition Regulations (FAR) or Competition in Contracting Act c. Energy efficiency related contracting authority d. Permits outleasing of military lands for construction of energy production facility without the purchase of energy by the military 17
II. DoD Renewables Procurement Options EUL – Program Demand Drivers 2. a. Government Side i. Off-set declining Operation & Maintenance budgets via In-kind services or cash to the installation; avoid cost of maintaining of razing old buildings ii. Bring tenants who are synergistic with missions of installations iii. Supporting DoD Energy Initiatives e.g. 20/20 and EITF b. Private Side i. Markets for renewable energy resource-Solar, Wind Geothermal; inside the fence sales/sales to third parties “Federal Enclave” status/absence of State ii. Regulation iii. Potential Tax Advantage via PILOTs, TIFs 18
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