Meeting Federal Renewable Energy Requirements
Renewable Energy Working Group
To help Federal agencies decipher the complexities of renewable energy requirements, FEMP created renewable energy guidance on EPAct 2005 and E.O. 13423 issues. This guidance was developed in conjunction with the Renewable Energy Working Group (REWG). Created to provide a forum for Federal agencies and renewable energy industry experts to exchange ideas and information on renewable energy, the REWG is also charged with developing guidance on Federal renewable energy requirements.
The REWG includes more than 100 Federal agency representatives, DOE programs, and the renewable energy industry members.
The way renewable energy is counted toward Federal requirements influences how renewable energy should be treated in new construction and major renovation projects. It is important to have a fundamental understanding of Federal energy and environmental requirements, and the role of renewable energy in meeting successful compliance. This section details Federal renewable energy requirements and how renewable energy is credited.
- Energy Policy Act of 2005
- Executive Order 13423
- Energy Independence and Security Act of 2007
- Executive Order 13514
- Goal Summary
- Notice of Proposed Rulemaking: Energy Efficiency and Sustainable Design Standards for New Federal Buildings
- Notice of Proposed Rulemaking: Fossil Fuel Generated Energy Consumption Reduction for New Federal Buildings and Major Renovations
The following content is intended as reference only. It is recommended that Federal agencies refer to the full text of each law or executive order for more details. Links to these laws and executive orders are provided below.
Energy Policy Act of 2005
EPAct 2005 Section 203 defines "renewable energy" as electric energy generated from solar, wind, biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, municipal solid waste, or new hydroelectric generation capacity achieved from increased efficiency or additions of new capacity at an existing hydroelectric project. According to FEMP's Renewable Energy Guidance, hydrokinetic (or run of the river) also qualifies.
Section 203 of the Energy Policy Act of 2005 (EPACT 2005) requires the following amounts of total electricity consumed by the Federal government be supplied by renewable energy so long as it is economically feasible and technically practicable:
- Not less than 3% in fiscal years (FY) 2007 to 2009
- Not less than 5% in FY 2010 to 2012
- Not less than 7.5% in FY 2013 and thereafter.
For renewable energy to comply with the provisions of EPAct 2005, the purchase of renewable energy must be separate from normal energy purchases. Renewable energy that is part of the existing mix of electricity supplied by the local utility or that is used to meet state renewable portfolios standards does not count towards this goal.
In addition to EPAct 2005 requirements, some agencies have set higher standards. For example, the Department of Defense (DOD) National Defense Reauthorization Act of 2007 (revised in 2010) sets the goal that DOD must produce or procure of 25% of facility energy use from renewable resources by 2025. The Bureau of Land Management (BLM) has a production goal of 10,000 MW by 2015. EPAct 2005 and individual agency goals must be considered throughout all phases of new construction and major renovation projects for the renewable energy technologies being integrated to maximize credit agencies receive under various requirements.
It is important to note that EPAct 2005 has a bonus provision that allows Federal agencies to double count renewable energy if it is produced on site or on Federal or Native American land and used at a Federal facility. Biomass generation on Federal or Native American lands qualifies even in cases when fuel supply comes from other locations. The bonus provision applies to electric projects only and for new projects placed in service after January 1, 1999. It is important to note that to "use" renewable energy, in compliance with the law, means the agency must consume renewable energy to count it toward the goal.
Renewable electricity is not considered used if it is simply produced on a Federal site and sold into the utility grid without being connected to a Federal facility and offsetting some of its power requirements. The renewable energy certificates (RECs) for the power must be retained or traded for other RECs to meet the bonus provision.
It is important to note that EPAct 2005 is a goal that affects everyone. It only counts electric generation and agencies must use the renewable energy, not just have someone produce it on agency land. EPAct 2005 Section 203 defines renewable energy goals for the Federal sector in detail.
Executive Order 13423
Executive Order (E.O.) 13423 reinforces Federal renewable goals. Specifically, the order mandates that at least half of renewable energy used by the Federal government must come from new renewable sources (in service after January 1, 1999). Systems that are rebuilt, refurbished, or modified significantly at 80% or greater of original costs are considered "new."
Non-electric renewable resources (e.g., solar water heating, mechanical, daylighting, etc.) can be used to meet this requirement, but the entire EPAct 2005 goal must be met with renewable electricity. Thermal includes solar water heating, solar ventilation pre-heat, ground source heat pumps, biomass heating/cooling, ocean or geothermal thermal. Mechanical includes pumps driven by wind or qualifying hydroelectric.
While EPAct 2005 and E.O. 13423 are separate and contain their own set of requirements, the two do overlap. For example, new electric capacity counts toward both EPAct 2005 and E.O. 13423. New non-electric capacity counts toward E.O. 13423, but does not count toward EPAct 2005. Scenarios for meeting requirements of both directives are illustrated in the table below.
|Possible Options for Meeting EPAct 2005 and E.O. 13423 FY 2010 Renewable Energy Goals|
|One Possible Option||Another Possible Option|
|EPAct: 5% of electricity from renewables by FY 2010||5%||Electric||5%||Electric|
|E.O. 13423: 50% of renewable energy must be "new"||2.5%||Half of above electric is a "new"||0%||"New" electric|
|0%||"New" thermal, mechanical, daylighting||2.5%||"New" thermal, mechanical, daylighting|
|EPAct and E.O. 13423 goals met||Yes||Yes|
|Total renewable energy produced||5%||7.5%|
Energy Independence and Security Act 2007
The Energy Independence and Security Act of 2007 (EISA 2007) contains Federal requirements specifically directed at new construction and major renovation projects. It requires 30% of hot water demand in new Federal buildings and major renovations be supplied by with solar hot water equipment provided it is life-cycle cost effective or has a savings-to-investment ratio (SIR) greater than one.
EISA 2007 also requires fossil fuel consumption relative to 2003 to be reduced as outlined in the bullets below. Adoption of renewable energy technologies will play a critical role in achieving these reduction targets.
- 55% by FY 2010
- 65% by FY 2015
- 80% by FY 2020
- 100% by FY 2030
Executive Order 13514
E.O. 13514 establishes multiple regulations for new construction and major renovation projects under the Guiding Principles for New Construction and Major Renovations, which direct implementation of high performance sustainable building design, construction, operation management and maintenance, and deconstruction. A requirement within E.O. 13514 that is relative to renewable energy is ensuring all new Federal buildings, entering the design phase in 2020 or later, are designed to achieve zero net energy by 2030. While energy efficiency is key to reducing energy consumption within a structure, renewable energy is necessary to supply any additional electricity and thermal needs to achieve zero net energy.
E.O. 13514 requires agencies to reduce greenhouse gas (GHG) emissions, which translates into a need to reduce fossil fuel energy use. Renewable energy will help meet GHG reduction targets and requirements as they emit low or no GHGs. Guidance is available to agencies for establishing GHG baselines and target goals.
Federal Renewable Energy Goal Summary
The following chart summarizes Federal Renewable Energy goals:
|Regulation||Produce, Use, or Both||Requirement||Agencies Covered|
|EPAct 2005 Federal use goal||Use, Electric||
|E.O. 13423||Produce or Use, All renewable energy||50% of EPAct 2005 Federal goal from "new" sources||All|
|DOD National Defense Reauthorization Act of 2007||Produce or Use, All renewable energy||25% of electricity by 2025||DOD|
|EPAct 2005 BLM production goal||Produce, Electric||10,000 MW by 2015||BLM|
|EISA 2007 solar hot water requirement||Use, Solar water heating||30% of hot water needs in all new building or major renovations||All|
Notice of Proposed Rulemaking: Energy Efficiency and Sustainable Design Standards for New Federal Buildings
On May 28, 2010, the U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy (EERE) issued a Notice of Proposed Rulemaking (NOPR), 10 CFR 433 and 435. The NOPR was issued to implement provisions of the National Energy Conservation Policy Act (NECPA) as amended by EPAct 2005 that required DOE to establish revised performance standards for the new construction and major renovation of Federal buildings. In addition, provisions of EISA 2007 are considered.
The NOPR is applicable to new Federal buildings, which are defined as any building constructed by, or for the use of, any Federal agency, including buildings built for the purpose of being leased by a Federal agency, and privatized military housing.
It also applies to buildings undergoing major renovations, which are defined as changes to a building that provide significant opportunities for substantial improvement in the sustainable design elements covered in this rule, including energy efficiency and renewable energy. DOE also included in the definition of any renovation that exceeds 25% of the replacement value of the building is to be considered a major renovation.
Within the NOPR, sections specifically focused on renewable energy technologies exist. Although the final rule has not been issued, it is important to be aware of potential requirements that could impact projects. A summary of the applicable NOPR sections for new Federal commercial and multi-family high-rise residential buildings are:
433.4 (d) Solar Hot Water: Section 523 or EISA requires 30% of hot water demand in new Federal buildings or Federal buildings undergoing major renovations to be met by solar hot water heaters if life-cycle cost effective. DOE interprets Section 523 to include all hot water usage in the building, including hot water used for restrooms, janitorial closets, food handling facilities, and laundry facilities. Agencies should calculate the total hot water load for the building and then determine if it is life-cycle cost effective to use solar hot water systems to meet 30% of the annual demand.
433.6 (f) (1) Sustainable Design Principles for Siting, Design, and Construction; Renewable energy: Federal agencies must implement renewable energy generation projects on agency property for agency use when life-cycle cost effective.
435.2 Definitions: Major renovation means changes to a building that provide significant opportunities for substantial improvement in energy efficiency. This may include but is not limited to replacement of the HVAC system, the lighting system, the building envelope, and other components of the building that have a major impact on energy usage. Major renovation also includes a renovation of any kind with a cost exceeding 25% of the replacement value of the building.
New Federal building means any new building (including a complete replacement of and existing building from the foundation up) to be constructed by, or for the use of, any Federal agency. This includes buildings built for the purpose of being leased by a Federal agency, and privatized military housing. Criteria is being considered for leased buildings by limiting new leased buildings to occurrences where the Federal agency has significant control over building design (lease-constructs).
Extent Practicable: Actions need to be implemented unless an Agency determines that:
- Full implementation would prevent the building or facility from fulfilling a key design or function objective.
- Necessary products or materials cannot be commercially procured in timely fashion.
- Net increases in total project life-cycle costs are very large.
- Initial funding required to integrate features to comply with this rule exceeds 3% of total first costs.
Sustainable design principles will apply to the extent practicable for (1) buildings for which the Administrator of the U.S. General Services Administration (GSA) is required to submit a prospectus to Congress, and/or (2) a building or major renovation for which the construction cost is at least $2.5 million (in 2007 dollars adjusted for inflation). For buildings not fitting into these two categories, sustainable design principles would apply only to the extent they are life-cycle cost effective. To demonstrate life-cycle cost effectiveness, proposing agencies would be permitted to use one of four methods listed in 10 CFR Part 436:
- Lower life-cycle costs
- Positive net savings
- Savings-to-investment ratio (SIR) estimated to be greater than one
- Adjusted internal rate of return that is estimated to be greater than the FEMP discount rate
Notice of Proposed Rulemaking: Fossil Fuel Generated Energy Consumption Reduction for New Federal Buildings and Major Renovations
On October 15, 2010, DOE published a NOPR (10 CFR 433 and 435) to implement Energy Conservation and Production Act (ECPA) provisions as amended by EISA 2007 that require DOE to establish revised performance standards for the construction of all new Federal buildings, including commercial buildings, multi-family high-rise residential buildings and low-rise residential buildings. The NOPR specifically addresses the reduction of fossil fuel generated energy consumption in new Federal buildings and major renovations.
The proposed rule would revise Federal building energy efficiency performance standards for achieving reductions in fossil fuel generated energy consumption and clarify which building types are covered and excluded by the standards. Is also establishes a methodology for compliance, including calculation of the maximum allowable fossil fuel generated energy consumption based on building type and how fossil fuel consumption resulting from electricity usage should be considered.
EISA 2007 Section 433(a) directed DOE to establish regulations that revise Federal building energy efficiency performance standards originally defined in ECPA Section 305 to require public buildings to reduce energy consumption (based on a FY 2003 baseline) in graduated percentages ranging from 55% to 100% over a specified time period beginning in FY 2010 and ending in FY 2030.
In addition, for the purpose of definition, the NOPR is applicable to any building to be constructed by, or for the use of, any Federal agency. In a separate rulemaking, DOE is proposing that the term include buildings built for lease by a Federal agency and privatized military housing.
A major renovation is defined as changes to a building that provide significant opportunities for substantial improvement in energy efficiency. This may include, but is not limited to, replacement of the HVAC system, the lighting system, the building envelope, and other components of the building that have a major impact on energy usage. Major renovation also includes a renovation of any kind with a cost exceeding 25% of the replacement value of the building.
A section focused on renewable energy certificates (RECs) and power purchase agreements (PPAs) to help offset fossil fuel energy generated consumption is included within the NOPR. Although the final rule has not been issued, it is important for agencies to be aware of potential requirements that could impact projects.
A summary of the applicable NOPR sections for new Federal commercial buildings and major renovations includes:
To meet the maximum allowable fossil fuel generated energy consumption requirements, fossil fuel generated energy consumption could be offset with use of energy created from other sources, including renewable energy. DOE also recognizes there may be physical limitations to the amount of on-site renewable electricity that can be produced, and it may be more affordable in some cases for an agency to purchase electricity from centralized renewable energy generation facilities. As an example, ASHRAE Standard 189.1–2009 has an on-site renewable energy requirement but allows the use of RECs as an alternative to meet the requirement.
However, there are concerns that purchase of renewable energy generated electricity via RECs or direct PPAs may simply reduce the amount of renewable energy available for purchase by other entities within the U.S. and may not necessarily lead to an overall decrease in domestic fossil fuel generated energy consumption. In addition, unlike PPAs, RECs do not involve a long-term binding agreement and can readily be cancelled.
The use of RECs is being phased out by January 2012 as a way to meet the renewable energy consumption levels established under EPAct 2005 and E.O. 13423. Therefore, DOE is leaning to a preference of allowing PPAs with a long-term contract to count toward meeting the fossil fuel generated energy consumption reduction requirements, but not allowing RECs. Under this approach, agencies would be allowed to subtract the annual electricity generated by the renewable energy generation facility from the building's annual site electrical energy consumption. The building designer would use this quantity, the net site electrical energy consumption, when calculating the building's fossil fuel generated energy consumption. In effect, the PPAs would help agencies meet the fossil fuel consumption requirements.