By Mr. Stephen Baack (USACE)May 18, 2018
HUNTSVILLE, Ala. (May 18, 2018) -- Thanks to Huntsville Center's latest Energy Savings Performance Contracting task order award, Fort Huachuca, Arizona, is on track to receive a series of multimillion-dollar energy-savings upgrades to existing infrastructure -- all without the burden of upfront capital costs.
The Energy Division of the U.S. Army Engineering and Support Center, Huntsville, has awarded a task order to Schneider Electric for $23.8 million worth of infrastructure upgrades through the next 23 years.
The task order and associated capital investment will not only help modernize and replace aging infrastructure, but they are projected to reduce energy costs for the Fort Huachuca garrison by 23 percent, according to Jack Porter, chief of the Business Operations and Integration Division for the Fort Huachuca Directorate of Public Works.
Planned upgrades include programmable thermostats, lighting retrofits and controls, variable speed conversions for fans and pumps, demand-control ventilation, and an overhaul for the installation's 4-megawatt combined-heat-and-power system.
ESPC task orders are distinct in that they leverage third-party financing to fund energy-conservation measures. Because Army installations typically do not have funds budgeted for improvements on existing infrastructure, third-party financing is often the best fit -- and Fort Huachuca was no exception, said Jason Bray, ESPC program manager with Huntsville Center's Energy Division.
As part of the ESPC process, Huntsville Center maintains a list of energy-service companies, or ESCOs. The ESCO that secures the contract -- in this case, Schneider Electric -- is responsible for producing the upfront capital costs through a financier. The ESCO and financier are then paid from the savings generated by the energy-conservation measures the ESCO produces for the installation.
In the project development stage, Schneider Electric -- with the help of Fort Huachuca and Huntsville Center -- conducted a detailed feasibility study during which they established a baseline of Huachuca's utility spending and determined the post spends about $12 million annually on energy. Based on the planned improvements, Schneider calculated a projected savings of about $2 million.
"The contracting vehicle is set up so that the energy savings attained by the energy conservation measures are turned around and used to pay for the agreed-upon contract value for each year," Porter said. "This leads to a self-funded task order. This is certified by annual measurement and verification to ensure the savings are realized."
Furthermore, because it is a performance-based contract, the task order stipulates that ESCOs guarantee those savings. If an ESCO is unable to generate the guaranteed savings, and it is determined to be within their responsibility, then they do not get paid the shortfall, Bray said.
"If your typical utility bill was going to be about $1 million before implementation of this equipment, the ESCO may come back and say, 'Based on everything we're going to implement, we believe we're going to reduce your utility bill by 20 percent -- and we'll guarantee that we're going to save at least 18 percent,'" said Bray, using a hypothetical example. "Of that million dollars -- $180,000 -- that's what they have to guarantee for every year of that contract term."
For Fort Huachuca, this all translates to generating energy-conservation measures that help them meet the Army's and Department of Defense's energy directives.
High on Huachuca's list of priorities is fulfilling Army Directive 2017-07, which focuses on energy and water security. The directive outlines the requirements for energy and water security at Army installations, with a focus on ensuring critical mission capabilities are protected from disruption or degradation. This includes directing each installation to develop the capability of providing its own energy and water needs for at least 14 days.
For Fort Huachuca, this means setting up a microgrid to safeguard the installation's mission-critical infrastructure. Normally part of the installation's centralized grid, the microgrid could operate independently in a contingency.
Porter said before developing the microgrid, Fort Huachuca needed to secure access to a reliable generating asset that could restore power without help from the main power network. This process, known as a "black start," typically relies on diesel generators, but Fort Huachuca opted for a secure natural gas pipeline nearby.
Modernizing the post's combined-heat-and-power system is the next step. The system uses the same natural gas pipeline to supplement the heating and cooling of their main central plants. Porter said this is the most important and expensive item on the task order and will be the primary component in developing the microgrid and ensuring energy security for Fort Huachuca.
But maybe most important to the overall project, Porter said, is simple teamwork.
"Energy security is not an easy fix that can be done with one simple initiative," said Porter. "To gain full energy security for mission-critical assets there needs to be a diversification of contract vehicles and relationships. This involves our privatization system owner, through Schneider Electric, through the electric utility and through the natural gas utility.
"In essence," Porter added, "being collaborative brings Fort Huachuca to its goal in securing the critical missions on the installation. There's not one single piece that's going to give us energy security; it all has to work together."