Stoel Rives FAQ on the Army's $7B RFP for Renewable Energy

Source:  Legal News Alert from the Stoel Rives Energy Development Law Group, March 14, 2012.

The U.S. Army Engineering & Support Center issued a draft request for proposals for renewable and alternative energy.  The proposal is for $7 billion in funding.  The attorneys have prepared the following FAQ on the draft RFP.

Q1: Is this the actual RFP?

A1: No. It is only a draft. The Draft RFP can be found here. The Army is accepting comments until March 21, 2012. Comments can be submitted via the ProjNet website here.

Q2: When will the Army issue the final RFP and what form will it take?

A2: The Draft RFP does not set a date for release of the final RFP, which will take the form of a Multi-Award Task Order Contract (the “MATOC/Final RFP”). For those unfamiliar with the MATOC process, it is very important to understand four fundamental things: (1) the MATOC will not likely offer the opportunity to bid on any specific project (i.e., a “seed project”) because the Draft RFP covers multiple technologies, (2) the Army will grant multiple awards under the MATOC, (3) awards granted under the MATOC give awardees the right to bid on individual Task Order contracts issued by specific facilities for specific projects (e.g., a Task Order for a 10 MW solar PV project at Joint Base Lewis-McChord in Washington), (4) parties that are not awardees in the MATOC process may not bid on these Task Orders. Thus, a developer must be an awardee under the MATOC/Final RFP in order to have the right to bid on individual project development opportunities. Before issuing the MATOC/Final RFP, the Army will need to complete its review of all of the comments that it receives by the March 21 deadline. At some point after the MATOC/Final RFP is published, the Army will host a pre-proposal conference in Huntsville, Alabama where participants will hear presentations regarding the program, the scope of work, contractual considerations, and small-business considerations.

Q3: Is the Department of Defense really mandated to procure 25% of its electricity from renewable resources by 2025?

A3: No. Section 2852 of the National Defense Authorization Act of 2007 (Pub. L. No. 109-364) codifies the Department of Defense’s (“DoD”) voluntary goal to produce or procure 25% of its total electricity consumption from renewable energy sources by 2025. This is not a Congressional mandate; however, the DoD is taking the goal very seriously. On August 10, 2011, the office of the Assistant Secretary of the Army for Installations, Energy & Environment (“ASA IE&E”) issued an information paper announcing the formation of the Energy Initiatives Office Task Force (“EITF”). The job of the EITF would be (and now is) to serve as the central managing office for large-scale Army renewable energy projects. In that information paper, the Army estimated that an investment of up to $7.1 billion over the next 10 years would be required to procure 2.1 million megawatt-hours (“MWh”) annually to meet Army goals and federal mandates, and to provide enhanced energy security. The Draft RFP is the next step in meeting those objectives.

Q4: What quantities of generating capacity, in installed megawatts (“MW”), is the Army looking to procure through power purchase agreements (“PPA”) or equivalent contracts in each of the four categories (wind, solar, biomass, geothermal)?

A4: The Draft RFP sets out specific quantities of power, in total kilowatt-hours (“kWh”) that the Army intends to procure through each of four types of contracts: (1) Solar PPA, (2) Wind PPA, (3) Biomass PPA, and (4) Geothermal PPA. The Draft RFP also states that applicants are to assume the period of performance of those contracts is 30 years. If the proposed procurement quantities are to be delivered over 30 years, and assuming a range of capacity factors for each technology type, we anticipate that the total installed MW of each to fall somewhere in the following ranges:

Technology

Porposed
Procurement
(kWh)

Assumed Capacity
Factor

Projected Total
Installed Capacity
(MW)

Solar

1,500,000,000

12-18%

31.7 – 47.6

Wind

9,000,000,000

20-40%

85.6 – 171.2

Biomass

19,000,000,000

40-50%

144.6 – 180.8

Geothermal

8,000,000,000

60-70%

43.5 – 50.7

We note that the total procurement quantity (37.5 million MWh), if delivered in equal amounts over 30 years, would yield an annual procurement of 1.25 million MWh. This number is slightly more than half of the annual procurement that the ASA IE&E, in its August 10, 2011 information paper, estimated would be required to meet the Army’s renewable energy needs.

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