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Developing a Business Case for Renewable Energy at Airports (2016)

Chapter: Chapter 2 - Basis of Business Case

« Previous: Chapter 1 - Introducing a Renewable Energy Business Case
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Suggested Citation:"Chapter 2 - Basis of Business Case." National Academies of Sciences, Engineering, and Medicine. 2016. Developing a Business Case for Renewable Energy at Airports. Washington, DC: The National Academies Press. doi: 10.17226/22081.
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Page 18
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Suggested Citation:"Chapter 2 - Basis of Business Case." National Academies of Sciences, Engineering, and Medicine. 2016. Developing a Business Case for Renewable Energy at Airports. Washington, DC: The National Academies Press. doi: 10.17226/22081.
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Page 19
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Suggested Citation:"Chapter 2 - Basis of Business Case." National Academies of Sciences, Engineering, and Medicine. 2016. Developing a Business Case for Renewable Energy at Airports. Washington, DC: The National Academies Press. doi: 10.17226/22081.
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18 The basis for the business case is specific to each airport and its operational needs. It is essen- tial that airports prepare the basis for the proposed project from which all decisions flow. Building the business case starts from a broad perspective of how the renewable energy project fits into the overall objectives of the airport organization and narrows down to the execution of the renewable energy project. The four phases of developing the business case are vision, evalu- ation and selection, planning process, and project implementation. Individual aspects of each of the three phases are shown in the blue boxes in Figure 2-1 below. The following sections describe the key steps in creating the project vision shown in Figure 2-1. 2.1 Vision Statement At the outset of any airport project, staff needs to start by reviewing the airport’s broad vision and evaluating how the project supports that vision. This step is fundamental to confirming that the project concept has a strong foundation and alignment with the airport’s long-term development goals. The airport’s vision can be found in a variety of formats, especially where the airport’s mission is described (e.g., website, internal planning documents), both clearly stated and implied. From the vision, the need for the project can be prepared and communicated, and its alignment with the organization’s strategic goals described. The importance of developing a vision as part of a strategic plan to direct project implementation is described in ACRP Report 20: Strategic Planning in the Airport Industry.22 A vision statement, taken from the airport’s other planning activities, presents the purpose of the airport and its value to the public. The alignment of the renewable energy project with the airport’s vision will be developed on a case-by-case basis. However, a renewable energy project is likely to support goals associated with developing and operating a modern and efficient airport that will be capable of mitigating economic and environmental risks in the future. 2.2 Problem and Solution The business case must be based on a relevant problem that the proposed project will solve. Each airport will have a different objective that can be fulfilled by the renewable energy project as illustrated in Figure 2-2. An example is provided below. Problem: The airport is vulnerable to off-grid electricity disruptions and requires a diversity of on-site electricity generation source. Solution: A solar PV project designed to provide on-site electricity to key functional areas will enable the airport to operate safely and effectively in extreme external circumstances. Basis of Business Case C H A P T E R 2

Basis of Business Case 19 Figure 2-1. Business case for renewable energy flow chart. Figure 2-2. Business objectives that can be fulfilled by renewable energy.

20 Developing a Business Case for Renewable Energy at Airports Once a justification for the renewable energy project is identified as part of the airport’s stra- tegic goals, the lead staff needs to define the characteristics of the project. This process includes evaluating technologies and sites that are viable and can meet the airport’s needs. It also includes an initial financial assessment that addresses both public and private financing options. The con- cept of financial master planning is described in ACRP Report 49: Collaborative Airport Capital Planning Handbook.23 Based on available information at an early stage of the analysis, the finan- cial assessment should be sufficient to support a preferred project as well as alternatives worthy of additional consideration. It is also important at this time to communicate the project concept to internal stakeholders, namely management and decision-making staff, to make sure that they have thoroughly reviewed the early stage project plan and that it has their support. There are a number of critical aspects to developing the renewable energy project concept. One is identifying a technology that fits both the renewable energy resource and facility needs of the airport. For example, airports located in high elevation areas may be suitable for developing wind energy systems while airports considering the development of a new terminal may con- sider the opportunities associated with geothermal heat pumps. When evaluating the financing options, airports will want to understand the maturity of their state’s renewable energy industry, which may suggest that there could be interest from private investors. If the private market is not well developed, the airport may want to push forward with an FAA funding program, but should also consider how that might affect the funding of other airport projects. 2.3 Justification and Guiding Principles Next, the airport must confirm the justification for the project and develop its guiding prin- ciples. The purpose for preparing this information is to establish the primary importance of the project, which can be regularly referred back to when counter arguments are raised during planning and development. This core information about the reason for the project can be used throughout the project’s lifespan, from the earliest stages to build initial support to later in the project when many issues about the project have been raised. An example is provided below. Justification: Airports are not prepared for electrical grid disruptions and rely on a non- interruptible supply of electricity to operate safely and efficiently. Airports need to start making systematic investments in on-site power generation to ensure that they serve the public under a variety of conditions well into the future. Guiding principles: The guiding principles for the project are listed below. • Project will sustain long-term functionality of the airport, • Project will maximize cost-effectiveness to the extent practicable, • Project provides other social benefits by contributing to local public policy goals, and • Project is compatible with aviation operations and does not impact the safety or operations at the airport.

Next: Chapter 3 - Evaluation Criteria and Ranking Methodology »
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TRB's Airport Cooperative Research Program (ACRP) Report 151: Developing a Business Case for Renewable Energy at Airports provides instructions and tools to evaluate proposed renewable energy projects and their alternatives. The guidance may assist airports with making informed energy decisions that maximize financial, self-sustainability, environmental, and social benefits.

In addition to the report, a decision-making matrix contains criteria that can be used to evaluate a renewable energy project with a system for weighting each factor based on an airport’s particular objectives. A sample request for proposals and a sample power purchase agreement are provided for project implementation.

Spreadsheet Disclaimer - This software is offered as is, without warranty or promise of support of any kind either expressed or implied. Under no circumstance will the National Academy of Sciences, Engineering, and Medicine or the Transportation Research Board (collectively "TRB") be liable for any loss or damage caused by the installation or operation of this product. TRB makes no representation or warranty of any kind, expressed or implied, in fact or in law, including without limitation, the warranty of merchantability or the warranty of fitness for a particular purpose, and shall not in any case be liable for any consequential or special damages.

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