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March 2014 - Bostonia's Peter Flynn Co-Authors White Sands Case Study for ACORE 2014 Industry Review

Peter Flynn of Bostonia Partners and Joseph Bonnin of Siemens Government Technologies recently co-authored a case study for the ACORE 2014 Industry Review of Renewable Energy for Military Installations. Below is an excerpt from "Renewable Energy Financing Under ESPC Authority at the White Sands Missile Range" and the full case study is available on page 32 of the ACORE 2014 Industry Review.

ESPC AT THE WHITE SANDS MISSILE RANGE: A SUCCESS STORY

In 2012, the U.S. Army Engineering and Support Center competitively awarded SGT an ESPC to implement various energy conservation measures (ECMs), including the installation of a 4.5 MW solar photovoltaic (PV) generating system for the USACOE at the White Sands Missile Range in New Mexico. The project was completed and commissioned in December 2012, and the PV system represents the largest system of its kind on U.S. Army land. The system will generate about 10 million kilowatt‐hours (kWh) of clean electricity annually – enough energy to meet the installation’s demand while providing an estimated annual savings of $930,000. The White Sands ESPC also allows customers to retain 100% of the solar renewable energy credits. In aggregate, the project will create total cost savings of approximately $44 million over the 25‐year contract term.

This project, a “first of its kind” transaction, was made possible through a strategic alliance between SGT and Bostonia, which provided third‐party financing, construction through operations, through the innovative use of an ESPC that included an Energy Services Agreement (ESA). Unlike a traditional ESPC, where assets are transferred to the government at project acceptance, this financing involved private‐asset ownership in order to monetize federal tax incentives, which in turn delivered the most economically viable financing structure for the project to the Army. This arrangement also shifted the risks of ownership from the Army to the private sector, including administration, maintenance, equipment performance, and long‐term operation of the project. Ultimately, the private sector is able to replace the Army’s fossil‐fueled energy use with clean renewable energy over a term of 25 years at a 31 Renewable Energy Project Financing: Improved Guidance and Information Sharing Need for DoD Project‐Level Officials. guaranteed production level and price, without any capital investment or risks associated with ownership.

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