U.S. Coast Guard Finds Success with Collaborative Funding Method for Renewable Energy Project

Four U.S. Coast Guard sites in Puerto Rico are getting a $50 million green renovation for an investment of $13.8 million, thanks in part to a financing tool that embeds a Renewable Energy Services Agreement (RESA) within an Energy Savings Performance Contract (ESPC). The project marks the first time the financing structure was used by the U.S. government and allowed for green improvements to 35 buildings and 411 housing units at Sector San Juan, Rio Bayamon housing, Air Station Borinquen and Air Station Borinquen housing.

The project provides jobs for 270 workers to install over 2.89 megawatts of PV panels and implement multiple other energy conservation measures (ECMs). When complete, the systems have the potential to produce more than four million kilowatt-hours annually and redirect up to $1 million of annual energy spending from brown power to PV-generated green power. It will reduce GHG emissions and improve the reliability of its electrical distribution system. In addition, ECMs have the potential to produce more than five million kilowatt-hours and could result in up to $1.1 million in annual savings, including new cool roofs that will reduce the annual cooling load of the buildings by 3.9 billion British thermal units.

At the request of the Coast Guard, Schneider Electric developed the PV solution under the RESA, enabling third-party ownership of the renewable energy assets to capture various tax incentives and renewable energy credits. Since the federal government is a non-taxable entity, third parties are used to finance the project, own the renewable energy assets and monetize the credits. This financing structure enabled the extension of the renewable energy financing term from 10 years to 23 years, which complements the longer renewable energy paybacks.

Funding the investment for the photovoltaic (PV) systems also relied upon a $6.5 million U.S. Department of Treasury grant, which was set to expire on December 31, 2010.

“The high cost of electricity, coupled with the instability of the island’s utility grids and the aging condition of the local Coast Guard facilities, afforded a unique opportunity to be creative,” said U.S. Coast Guard Energy Program Manager Daniel Gore.

ECMs being implemented under the standard DOE ESPC indefinite-delivery, indefinite-quantity (IDIQ) contract include installation of variable refrigerant volume air conditioning, building automation system upgrades, lighting retrofits, solar window tinting and water conservation measures. For these ECMs, baseline and post-retrofit conditions were measured, which helped to provide savings and performance guarantees to the federal government for the full term of the 23-year contract.

Roof surfaces of 240 facilities were prepared for the solar PV panels — first through asbestos abatement and removal or relocation of roof-mounted equipment such as A/C condensers and solar hot water units — then replaced with cool roof technology. These roofs allow for reflectivity, improved drainage and additional insulation, which help alleviate chronic roof repair, maintenance and replacement issues while improving safety. The project provides each of the housing units with a 23-year warranty.

“Within the Coast Guard, this project is significant not only because of its scale, but also because of its scope. By targeting renewable energy installations, infrastructure upgrades, and energy conservation measures, the Coast Guard has successfully combined innovative technology with reduced maintenance burdens,” Gore said.

Gore continued, “By successfully executing this project, the Coast Guard expects to improve facility energy efficiency, increase renewable energy generation, stabilize energy expenditures in a high-cost market, improve energy security, and assist Puerto Rico with its own energy management goals.”

In mid-October, the installation at Air Station Borinquen was 75 percent complete and began producing electricity. The first PV systems at Rio Bayamon have since gone into production as well.

The project is the largest photovoltaic endeavor ever for the Coast Guard and is the largest ESPC that Schneider Electric has announced.

“One mission of the Coast Guard is to protect America’s waterways and shorelines, a duty that extends beyond law enforcement and rescue operations.  Just as the Coast Guard is relied upon to ensure the clean up of an oil spill, we want to be a leader in federal efforts to implement reliable sources of renewable energy.  While the Coast Guard budget rarely allows for major in-house project development, we have been able to advance this initiative through cooperation with industry and the use of alternative financing,” said Gore.

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