The U.S. Air Force Academy in Colorado Springs ups its renewable energy production with a 6.0 megawatt on-site solar power plant.
The U.S. Air Force Academy near Colorado Springs has set its sights on becoming a net zero and carbon neutral operation. Its long-term goal is to produce as much energy — preferably from renewable resources — as it consumes on its 18,000-acre campus. In support of this goal, the academy received $18.3 million through the American Recovery & Reinvestment Act in 2009 to fund construction of a new on-site photovoltaic solar facility, its first venture into solar power.
To develop the project, the academy enlisted the aid of the local power company, Colorado Springs Utilities. The utility, in turn, retained Burns & McDonnell as owner's engineer, responsible for developing the solar facility's technical specifications, soliciting and evaluating proposals, and overseeing construction and performance testing.
In the beginning, planners thought the utility would contract with an outside firm to design and build the solar power plant. The keys would then be turned over to the utility, which would own and operate the facility.
There was a problem with this approach: A municipal entity, Colorado Springs Utilities doesn't pay federal taxes. It would not be able to take advantage of the federal tax credits, treasury grants, accelerated depreciation or other incentives available to private developers of renewable energy projects. The result? The project would cost more compared to projects developed by companies with an appetite for tax credits.
"Because of the solar project's high national visibility, it was important for the academy to maximize the amount of solar energy it produced," explains Bill Nixon, project manager for Colorado Springs Utilities. "We looked to Burns & McDonnell to find an effective way to leverage federal incentives to increase the amount of capital available for the project."
Another challenge: To structure the project in a way that ensured the academy received all of the benefits of the renewable power generated — and that the utility's other ratepayers bore none of the expense.
Burns & McDonnell's Denver-based project team collaborated with solar power and financial experts from the firm's Phoenix and Kansas City offices to investigate available incentives and alternate contracting strategies for the project.
"The best way to optimize the original $18.3 million grant was to work with a third party that could take advantage of the available federal tax incentives," explains Matt Brinkman, solar business unit manager for Burns & McDonnell's Energy Group. "The chosen vendor would construct, own and operate the solar power plant on the Air Force Academy's property and then deliver the power to the utility under a power purchase agreement."
In the request for proposals developed by Burns & McDonnell, respondents were asked to outline not only their design and construction plans but also their approach to using federal incentives to benefit the project.
Interest from the solar industry was understandably high. The project team narrowed the 22 original respondents to a list of six finalists. The proposal evaluation process included two major components, says Jeff DeWitt, Burns & McDonnell's Denver-based project manager. "We conducted not only a technical evaluation of the designs but also an in-depth financial analysis of energy costs over the life of the project."
The winning proposal came from SunPower Corp. of San Jose, Calif., which planned to take advantage of a 30 percent treasury grant and five-year accelerated depreciation. "Those incentives alone added about 40 percent to the value of the academy's direct project funding," says DeWitt. "That meant our vendor could build a much larger facility at no additional cost to the academy or the utility's other customers."
"The winning design, which includes nearly 19,000 solar panels, features a high-efficiency, single-axis solar tracking system that follows the arc of the sun during the day, when power use peaks," says Anika Hammond, Burns & McDonnell's field representative during construction. The tracking system increases the sunlight captured by an estimated 25 percent, compared to conventional solar panels.
The 6.0 megawatt solar power plant came online in July 2011 after an eight-month construction and startup effort.
The new solar facility supplies approximately 11 percent of the academy's power — with no additional out-of-pocket energy payments required by either the academy or Colorado Springs Utilities.
"Burns & McDonnell helped us negotiate a power purchase agreement that calls for the academy to receive the power generated at the solar power plant for the next 25 years," Nixon says. The cost of the power was prepaid using the bulk of the Air Force Academy's original $18.3 million grant. The use of federal incentives "made a huge difference," Nixon says. "We were essentially able to double the amount of power generated at the site."
The project also significantly increases the academy's use of renewable energy, allowing it to take a leap forward in its vision of becoming a net zero installation, Nixon adds.
Perhaps just as importantly, it demonstrated the value of a creative contracting strategy. "Though more complex than most project contracts, this solution allowed Colorado Springs Utilities to demonstrate that it's possible to successfully marry private enterprise with municipal and federal government," Brinkman says. "This is a case where every party wins."