The Army released a much-anticipated solicitation Tuesday that envisions buying $7 billion in renewable electricity from plants the service will ask industry to build on its bases.
The Army hopes to make awards under a multiple-award task order contract by the end of the year and start approving individual projects on military bases in 2013, officials said.
The Army, Air Force and Navy each have committed to producing a gigawatt of renewable energy on their respective bases by 2025, and the Army says it intends to put industry in the driver’s seat with its renewable energy push.
It doesn’t want to get into the business of owning or operating power plants. Instead, the plan is to offer up the real estate that companies will need to build solar, wind, biomass or geothermal plants. It’s up to the private sector to then come up with the money to actually build those plants, and the Army’s only commitment will be to buy the electricity they produce through power purchase agreements.
“We’ve been astounded by the interest in this,” said Katherine Hammack, the Army’s assistant secretary for installations, energy and environment.
A draft version of Tuesday’s RFP, released in February, brought back 900 comments from industry from around 130 companies.
“If that’s any gauge of response, we could have as many as or over 130 different companies who could bid on this RFP,” she said. But even if they win a spot on the indefinite-delivery/indefinite-quantity contract, those companies have no guarantee they’ll win permission to build any plants on Army bases. The intent of the new solicitation is to build a pool of companies with a track record of attracting investment capital and building successful renewable energy projects.
Hammack said the Army has no idea how many firms might eventually win a spot, but hopes to make awards under the multiple-award task order contract (MATOC) by the end of the year.
From there, firms will compete for task orders under that contract, an acquisition vehicle the Army believes will let it streamline the contracting process for energy projects on its bases.
Lt. Gen. Thomas Bostick, the commanding general of the Army Corps of Engineers, which is managing the contract, said the goal is to have as many companies as possible be part of the pool.
“Our intent is not to restrict competition but to open it and aggressively seek it out and ensure there will be mass competition,” he said. “Once we’ve received the proposals, we’ll be looking for all qualified, responsible offerors who could potentially receive a contract.”
The Army has a couple objectives with the renewable energy program. One of them is saving money. Hammack said the task orders the Army will issue will build-in protection against spikes in the prices of electricity that bases buy directly from the commercial electric grid. Those rates have surged up to 18 percent year-over-year in some locations, she said.
There’s also the issue of energy security. All of the task orders the Army will award will require that all of the energy under the contract be produced on a military installation. While firms will be able to sell some or all of the electricity onto the commercial power grid on a normal day, the base would have priority use of the power in the event of a disruption to the public electric grid.
“Right now, the power grid is aging and we have all seen increased interruptions which have affected our military installations,” she said. “We don’t always build them in garden spots around the United States. Some, like Fort Bliss [Texas], are at the end of the power line. This will give us energy security by having power produced on the installation that’s able to serve the base in case of power disruption.”
The Army is planning a pre-proposal conference sometime this month for bidders who are interested and is hoping to make its first awards under the multiple-award contract about 30 days after that, depending on the number of qualified proposals that come in. Hammack said the Energy Initiatives Task Force the Army created almost a year ago is already working to decide which renewable energy technologies will work on which installations, and based on that work, starting next year, the Army will start competing task orders for qualified companies.
The task force already has combed through the renewable energy potential of 180 Army installations across the U.S., including permanent Army bases and National Guard and Reserve centers.
“As part of that analysis, they’re looking at the natural resources that are available and matching that up with technologies,” Hammack said. “We then will proceed with an environmental analysis, identifying the amount of land available, identifying the amount of energy capacity we believe could be produced. That then would be issued as a task order to this qualified pool of bidders.”
Tuesday’s RFP release came a day after DoD and the Interior Department announced an agreement that’s designed to free up land on and around military bases for renewable energy projects. Roughly 16 million acres of land, mostly in the desert southwest, will be available for the construction of new renewable energy generating facilities as long as they do not interfere with military missions, officials said.
The arrangement has its roots in years of complex rearrangements of responsibility for federal lands. Under various acts of Congress, executive orders and agency regulations, Interior’s Bureau of Land Management has “withdrawn” millions of acres of land from public use and dedicated it to military purposes.
The interagency memorandum of understanding, signed this week by Interior Secretary Ken Salazar and Defense Secretary Leon Panetta includes no planning for specific projects, but the two departments said they would develop pilot projects for solar installations on withdrawn BLM land including Arizona’s Barry M. Goldwater Range and Yuma Proving Ground, and Fort Irwin in southern California.