Why federal renewable mandates challenge U.S. utilities (and what they can do)

By Stuart McCafferty

By the end of 2013, the federal government’s 7.5% renewable energy consumption mandate will be in full effect for all federal installations. At least half of this renewable energy must come from NEW renewable resources. Some government agencies, such as the Department of Defense (DoD), have created even more demanding mandates, with renewable consumption requirements reaching 25% by 2025.

Coupled with the additional Energy Independence and Security Act (EISA) of 2007 requirements for reducing federal building fossil fuel consumption in half by 2030, utilities face a daunting challenge with one of their largest consumers having a legal obligation to use less traditional energy in staggering quantities.

The federal government accounts for approximately 56 terawatt-hours (TWH) of annual electricity usage, with over half that being DoD, according to the U.S. Department of Energy Annual Report to Congress on Federal Government Energy Management and Conservation Programs Fiscal Year 2007, January 27, 2010.

Department of Defense escalating renewable energy consumption requirements.

A back of the envelope calculation with 25% renewable penetration by 2030 shows an expected generation capability of over 14 TWH – assuming consumption remains flat. The government has frankly been a bit slow in responding to these mandates, but they are quickly gaining traction. The DoD is actively experimenting with renewable energy installations and has released RFPs at several military bases. Energy efficiency audits and improvements are being enacted at federal facilities everywhere. You cannot walk onto any federal campus these days without seeing public notices or active construction reducing consumption and/or increasing renewable energy production.

For utilities with federal customers that represent a sizeable chunk of their revenue stream, this creates both problems and opportunities. As government agencies add their own renewable generation and microgrid solutions, utilities must ensure these new systems play nicely with the utility network. By closely coordinating with these agencies through Power Purchase Agreements (PPAs), the utility can supplement its own power and ancillary service needs, which could offset much of the anticipated revenue losses. But, more profoundly, it offers progressive utilities the opportunity to work hand-in-hand with these federal agencies and help them meet the mandates by either supporting their efforts or meeting the renewable energy directives within their own networks. After all, there are no requirements forcing agencies to meet these mandates on their own.

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