Obama Admin Calls for Boost in Federal Agency Buying Power

January 28, 2010

Courtesy of Environment and Energy Daily*

Dina Fine Maron, E&E reporter

Extending federal agencies' authority to sign long-term, public-private energy partnerships could be an important weapon in the battle to slash government energy use, an Obama administration official said yesterday.

Power purchase agreements, in which a private developer installs, owns, operates and maintains a renewable energy system on agency property and can then sell that energy back to the federal government, are an important tool for achieving energy savings, said Richard Kidd, program manager for the Federal Energy Management Program at the Energy Department.

"Through PPA's, agencies are able to use renewable energy at a known, long-term electricity price, offering a type of insurance against future price increases while incurring no up-front capital costs," Kidd said. In addition, the price is typically less than what the agency would have paid to the utility without a PPA, he told a Senate Homeland Security Subcommittee.

A typical PPA term length is 20 years, but only the Defense Department and power authorities are able to enter into PPA's beyond 10 years, Kidd said. The agreements provide a method for federal agencies to implement on-site renewable energy projects without up-front government financing.

President Obama issued an executive order in October that mandates federal agencies "lead by example" and take steps to improve sustainability by ramping up energy efficiency efforts, reducing waste, paring down petroleum consumption, conserving water, and leveraging federal purchasing power to promote environmentally responsible products and technologies.

The order required all federal agencies to craft 2020 emission-reduction targets for greenhouse gases within 90 days. Those agencies' goals are currently being reviewed by the White House's Council on Environmental Quality, and it plans to finish aggregating the numbers by next Thursday, said Nancy Sutley, chairwoman of the White House Council on Environmental Quality.

The federal government occupies nearly 500,000 buildings, operates more than 600,000 vehicles, employs more than 1.8 million civilians and purchases more than $500 billion per year in goods and services, according to the White House.

A large swath of those buildings -- 300,000 -- are spread across 507 DOD fixed installations, testified Dorothy Robyn, deputy undersecretary of Defense for installations and environment.

DOD's in-theater operations -- which make up more than two-thirds of DOD's energy costs -- are exempt from complying with Obama's executive order, because "providing immediate support for the warfighter must remain our highest priority" Robyn said. But DOD still sees itself as an important "testbed" for renewable energy technology since it has the research funds to invest in new kinds of energy technology.

"We won't be the leader when it comes to a lot of this technology ... but we'll be a testbed for next-generation technologies," Robyn said.

U.S. military installations currently depend on a power grid at risk of power disruption due to "natural disasters, cyberattacks and sheer overload of the grid," Robyn said.

But the Pentagon has not always met existing energy goals in the past.

The Government Accountability Office said in a report this week that DOD did not meet its federally mandated goal of using 3 percent of electricity generated from renewable energy in 2008 and overstated previous years of electric renewable energy consumption (E&ENews PM, Jan. 25).

Robyn said that competing missions and fuel goals sometimes "impede" DOD's sustainable energy efforts. "Security turns out to be a running theme" when trying to install renewable energy advancements, she said.

Last year, for example, an Air Force installation commander requested that the Interior Department withdraw permits for a nearby solar thermal plant because it would interfere with its radar system and other base operations (ClimateWire, Jan. 26). It is a "complicated issue" Robyn said.

To ensure accountability of all federal agencies to the executive order's targets, annual progress will be measured and reported online to the public by the White House Office of Management and Budget, Sutley said.

"We need to recognize that the payback period for some of these investments is longer than the one year budget cycle or the election cycle," Kidd added.

Copyright 2010 E&E Publishing, LLC. Reprinted with permission from Environment and Energy Daily.