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

Chapter: Chapter 3 - Evaluation Criteria and Ranking Methodology

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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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Suggested Citation:"Chapter 3 - Evaluation Criteria and Ranking Methodology." 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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21 Airports that have identified a problem and a solution and developed the guiding principles behind the solution must next vet the solution and its alternatives to determine that there is a business case for proceeding. As with the methods of science, a theory is proposed and then tested. In this case, the airport has identified a potential solution to a problem based on a limited amount of information. It must now test the credibility and feasibility of the solution as the best approach to the problem and in doing so develop its business case for the project. In this chapter, a vetting process, which is central to evaluating the business case for renewable energy, is provided. The first step is a fatal flaw analysis to ensure that the most fundamental aspects of the renewable energy solution at an airport are satisfied: can the project be safely located at the airport; is there sufficient natural resource available at the airport to generate renewable energy; and is there infrastructure and capacity to deliver the renewable energy to the consumer? The second step is an evaluation of the project and its alternatives. The evaluation criteria necessary for assessing the advantages and disadvantages of the renewable energy solution are categorized under four primary headings: economic, self-sustainability, environmental/social, and other. The final step is the introduction of a weighting and ranking system and a decision-making matrix, which systematically assesses the business case for renewable energy and the traditional alternatives. The matrix creates a framework to account for the inherent values of renewable energy projects in supporting the long-term interests of stable, large-scale government infrastructure projects. The matrix is provided in the accompanying CD-ROM and can used to input values for specific proj- ects and generate results to rank the projects being considered. The matrix is not only useful for generating values for ranking and comparing projects, but it also lists the types of data needed for evaluating projects and can be used to direct the data collection program to support fact-based decision making. After vetting the project and its alternatives through the evaluation process, the airport will have built its business case either for renewable energy or a traditional alternative. 3.1 Fatal Flaw Analysis A fatal flaw analysis is an initial screening assessment to make sure that the fundamental aspects of a project can be satisfied and to support the investment of additional resources. For renewable energy projects at airports, the proponent must ensure that the airport and the renewable energy project can coexist and prosper without conflict. The primary factors in the fatal flaw analysis of a renewable energy project are airspace compatibility, natural resource availability, and infrastructure capacity. 3.1.1 Airspace Compatibility Airports must operate safely and efficiently to satisfy their mission and also be successful as businesses. At the most basic level, an airport must ensure that all activities within its control C H A P T E R 3 Evaluation Criteria and Ranking Methodology

22 Developing a Business Case for Renewable Energy at Airports (and that of the FAA, which is responsible for overseeing a safe and efficient national airspace system) are compatible with airports and airspace. Airspace impacts include tall structures that could penetrate the airspace and obstruct safe air transit, structures and activities that disrupt the radars and other communication systems needed to safely and reliably transit through the airspace, and any other activities that might negatively impact pilots and their aircraft. ACRP Report 108 provides a thorough review of energy technolo- gies that can have a negative impact on airports and the airspace if they are not sited appropri- ately.24 Tall structures associated with renewable energy that can impinge on the airspace include modern wind turbines, concentrating solar power towers, and transmission towers necessary to deliver power from the generator to the consumer. These structures, because of their size, can also block radar communication signals, which are of particular concern to flight training exercises and military readiness. When siting smaller structures on airport property, including ground-mounted solar arrays, planners must keep in mind the location of various ground-based radar and other navigational aids used by pilots. Siting projects to avoid airport communication interference is critical to ensuring safe operations at the airport, though it is not a fatal flaw to the technology. The height of structures is one of the reasons why solar PV is more compatible than wind turbines, as shown in Figure 3-1. Glare from solar panels is another type of airspace compatibility issue that has become familiar to solar energy developers and airport hosts. Glare on controllers in the air traffic control tower can have a significant negative impact on their ability to perform their jobs, and all solar project proposals on an airport property must assess the potential impact of glare. Glare to pilots on final approach to landing at the airport must also be evaluated and its impact minimized. Glare is typically not a fatal flaw for project siting as it can often times be mitigated through alternative project designs, but it may render a particular site on an airport either technically or financially not feasible and require a search for an alternative site. Airspace impacts can also result from thermal plumes associated with energy cooling systems that may be a component of a renewable energy system (e.g., concentrating solar power, biomass). Figure 3-1. Physical penetration of airspace from renewable energy technologies.

Evaluation Criteria and Ranking Methodology 23 However, concentrating solar power is unlikely to be sited on an airport property unless a tech- nological breakthrough is achieved and airport biomass projects are limited in number and scale. Electromagnetic interference has also been identified as producing a potential negative effect on radar although problems have not been documented. 3.1.2 Natural Resource Availability Renewable energy technologies are fueled by natural resources whose availability will vary based on geographic location and proximity to specific resources. If an airport does not have sufficient renewable energy resources to produce power efficiently, this is considered a fatal flaw and the renewable energy project cannot proceed. Resource availability is a generic term that varies among different renewable energy technolo- gies. For example, solar resources are stronger in Arizona than in Alaska. However, every airport has some sunshine which solar PV technology can convert to electricity, though the efficiency in production due to the amount of sunlight will impact project economics. Alternatively, the ability to generate hydropower requires a water source and without a water source hydropower is not feasible. Between the solar and hydropower examples, wind power is “technically feasible” in most places because the wind blows at some time as evidenced by the airport wind sock (see Fig- ure 3-2). However, the emergence of a robust wind power industry is based on the ability to produce electricity efficiently. As power production from wind increases by the cube of wind speed, incremental increases in wind result in substantive increases in power. As a result, wind turbines have increased significantly in size (modern turbines are 500 feet tall) and they are located in high wind areas (the Midwest Plains and ridgetops), which has increased generation efficiency. Biomass will be most cost-effective in regions where there is a robust forestry industry that produces low cost waste wood as a fuel in close proximity to biomass plants. Geothermal comes in two forms: true geothermal and GSHPs. Power generating resources associated with true geothermal are very site-specific and rely on proximity to areas where the Figure 3-2. Wind sock seen at airports.

24 Developing a Business Case for Renewable Energy at Airports heat from the earth’s core is expressed at the earth’s surface. Conversely, GSHPs use the constant temperature below the earth’s surface (∼ 50°F) to extract relative coolness in the summer (and replace it with the hot air above) and then extract the previously stored hot temperatures in the winter for heating and replace it with cool temperatures from above. While GSHPs perform best where seasonal ambient temperatures are more extreme, they are feasible most anywhere because the temperature underground remains constant. 3.1.3 Electrical Infrastructure Capacity Energy projects are typically reliant on infrastructure, like the high voltage power lines shown in Figure 3-3, to obtain fuel or distribute the power generated. Truly renewable projects provid- ing on-site power demonstrate the feasibility of unplugging from the grid. In reality, renewable energy projects are sized in accordance with the on-site energy demand profile to limit reliance on grid-supplied power and maximize long-term savings from avoided energy purchasing. Most commercial airports are large consumers of power and therefore are served by an existing electrical infrastructure network with capacity to supply the energy needed. Smaller airports in rural areas may not have sufficient electrical infrastructure capacity to support a renewable energy genera- tion project without significant upgrades that can be expensive and quickly make a project not cost-effective. Even large airports with existing electrical capacity to the terminal building may have insufficient infrastructure in areas away from the terminal that are suitable for locating a project. Infrastructure capacity is not necessarily a fatal flaw but will quickly influence if a project location or a particular site on property is likely to be cost-effective. For some airports, this will Figure 3-3. Airports purchase electricity from the electric grid.

Evaluation Criteria and Ranking Methodology 25 exclude the renewable energy option when compared to conventional alternatives. For others, it will simply limit the number of options that are feasible on property. 3.2 Evaluation Criteria Projects that pass the fatal flaw analysis are then evaluated to assess the advantages and dis- advantages of the renewable energy solution being proposed. The evaluation criteria, which form the basis for the decision-making matrix, are described below. 3.2.1 Economic All organizations must operate within a budget where they can generate revenue and pay for costs while making investments at the same time for the long-term sustainability of the organi- zation. Resources are limited, requiring managers to make decisions about expenses. As a start, managers assess the cost of the project, funding sources available, financing options, and metrics to determine costs and benefits. This simple financial analysis forms the baseline for any busi- ness case. All projects should start at the visioning stage with a general approach to financing the project [e.g., Airport Improvement Program (AIP), bonds, private partner] that can be tested and refined as the project concept and the business case are developed. It is important to note upfront that the pure economics of any energy project will change over time as a result of dynamic mar- ket energy prices, changes in the cost to install renewable energy, refinements in the understand- ing of project costs, and the overall political and economic conditions at the time. The following are some of the financial concepts important to establishing the business case baseline and how they are expressed. 3.2.1.1 Project Cost Metrics The airport can use a number of financial metrics to assess project cost. The most straight- forward measure is the simple payback where the airport makes an investment to get the project started and it recovers costs during the project operations and at some point achieves its payback (usually after some years). As a simple example, a person may pay $10 more for an energy- efficient light bulb that saves on electricity consumption; the cost of the electricity avoided accrues until the person has saved $10, which is the payback period. For a light bulb, the payback period can be as little as three months depending on how often the light is used. The analysis becomes more complicated for longer payback periods since assumptions need to be made for the cost of buying electricity from the grid that is avoided in future years, which is not known and is dependent on market prices for electricity. [Most forecasts use a 3% annual increase, which accounts for a long- term average over 20 years but does not account for the year-to-year (and seasonal) variability that can result in short-term fluctuations.] Total cost of ownership is another commonly used measure which includes the cost to develop and activate the project as well as the cost to operate and maintain the project throughout its life cycle. For renewable energy projects, operations and maintenance costs tend to be relatively low because (1) there are no fuel costs (with the exception of biomass feedstock) and (2) some systems require few moving parts and have warranties for the life of the project (e.g., solar panels typically have a 25 year warranty). As with simple payback, the total cost of ownership analysis must account for energy savings from the cost of buying power from the grid that is avoided, which requires assumptions for future cost of electricity. Rate of return is what an investor might expect when investing to capitalize a project and then earning an annual profit from the production and sale of the energy to a buyer. The return represents annual income from the investment, and the return assumes that the investor will later recoup some portion of the investment in a sale of the project. As airports typically accrue financial benefit from the cost savings, the simple payback and total cost of ownership measures tend to be more representative of an airport’s roles and uses.

26 Developing a Business Case for Renewable Energy at Airports 3.2.1.2 Availability of Grants An airport’s ability to access grants to offset its own total contribution to the project is an important factor in evaluating the pure cost-effectiveness of a renewable energy project. Reducing capital investment will shorten the simple payback period when full project cost recovery can be attained. For example, renewable energy projects funded under the VALE Program between 2009 and 2011 received an AIP grant for 75% to 90% of the total project cost. Without these grants, it would have been difficult to justify the long paybacks (20 to 30 years) but with the grants, the 3 to 6 year paybacks were very favorable, given that operations and maintenance costs for the project life would be low. With FAA energy grants now transitioned to the Section 512 Program, the effect of the grants on the cost-effectiveness of the renewable energy project is unchanged. However, unlike VALE, which was a specific set-aside program, the airport will need to forego funding other projects that may be central to airport infrastructure if they choose to fund the renewable project. 3.2.1.3 Availability of Tax Credits and Renewable Energy Certificates As discussed elsewhere in this report, the cost-effectiveness of renewable energy projects is strongly linked to government policy and incentives including tax credits and RECs. Federal tax credits for renewable energy in the form of production tax credits (PTCs) for wind power and investment tax credits (ITCs) for solar and other technologies have helped to catalyze private markets. These tax credits are authorized by Congress and are allowed to expire, which has resulted in market instability. However, the overall decrease in cost of development and the value of other incentive programs (e.g., demand for RECs) could stimulate private investment to a point where tax credits are no longer necessary to make a project economical. At the time this report was being prepared, there was a significant amount of solar development activity as developers were look- ing to get solar projects in service by the end of December 31, 2016, when the ITC would decrease from 30% to 10%. At the same time, the wind industry has been developing projects without the surety of a PTC since December 31, 2013. The instability in the renewable energy tax policy increases the potential risk to private capital minimizing policy effectiveness. Separately, the demand for RECs helps create a demand for renewable energy, which is cur- rently being implemented on a state-by-state basis because of the absence of a federal law. If an airport builds, owns, and operates its own renewable energy project, purchase of the RECs that the project creates (owned and held by the airport) can provide an additional source of revenue to help the airport pay off the project. 3.2.2 Self-Sustainability Airports that receive FAA funding are required to operate in a manner that preserves their long-term self-sustainability. This principle is fundamentally associated with an airport’s rates and charges structure whereby the airport is responsible for aligning fees with its costs to main- tain its facilities and services. It is also related to decision making that recognizes the role of airports as a vital component in the transportation network. Airports, as stable and long-lived organizations, are able to maximize the life-cycle benefits of renewable energy to support their business self-sustainability objectives. 3.2.2.1 Electric Supply Reliability and Emergency Preparedness If the power goes out, then all commerce and activity ceases. As society increasingly relies on technology and digital information, the importance of uninterrupted power is even more evident. While many airports have back-up power in the form of diesel generators and batteries to serve critical functions at the airport in case of a disruption in power supply, greater planning is being directed to improve the reliability of the airport’s electrical supply.

Evaluation Criteria and Ranking Methodology 27 The need to invest in reliability and back-up systems has become more evident in recent years relative to the effects of severe storms and international terrorism. Superstorm Sandy was an example of how national investments in population centers along the country’s coasts are increas- ingly becoming more and more vulnerable to severe storms and the potential complexities of sea level rise. Many large commercial airports are located on coastal locations exposed to ocean storms, and infrastructure improvements to adapt to changing climatic conditions are being considered. Such improvements need to consider the option of generating power on-site and investing in microgrids so that airports can serve as critical infrastructure and remain operational during regional events and also to preserve the continued operations of airport businesses at risk of disruption. Enhanced reliability is achieved through investments to augment and diversify supply, increase the diversity and capacity of delivery options, and improve control and management systems. Investments to modernize the on-site grid will minimize business risks associated with power disruptions and could be achieved, in part, with renewable energy generation. 3.2.2.2 Price Stability and Cost Control Electricity and heating/cooling costs are typically affected by the cost of fuel. For electricity, power is supplied through the electric grid by large power plants fueled by coal, natural gas, and oil. Some areas of the country have a large portion of electricity supplied by nuclear plants, while the Pacific Northwest has a significant amount of hydroelectricity. Heating costs are affected by the prices of natural gas, propane, oil, and electricity. In most parts of the country where power is derived from fossil fuels, the cost can vary dramatically from season to season and year-to-year as well as by geography. A good illustration of this is natural gas that fuels both utility-scale electric power plants and commercial and residential heating, as shown in Figure 3-4. In the mid-2000s, natural gas was in lower supply and more expensive than the other burning alternatives such as coal and oil. Environmental regulations were requiring new power plants to be built with Figure 3-4. Natural gas fires large electric power plants and building heating systems.

28 Developing a Business Case for Renewable Energy at Airports cleaner burning natural gas, which led to broad increases in electricity prices across the country. Soon thereafter, hydraulic fracturing (“fracking”) technologies for extracting oil and gas locked in shale deposits became commercially cost-effective, resulting in a domestic oil and gas boom. The increased supply drove down electric prices across the country. New England was an excep- tion to this because it had a high demand for gas but constrained infrastructure to deliver it from production areas in the central United States. The oversupply in natural gas has produced a glut whereby there is no incentive to increase drilling capacity. This will likely result in a correspond- ing decrease in supply and an increase in prices, which will start the whole cycle over again. One of the benefits of renewable energy is that the total project cost over the life of the project is principally in the initial start-up. Costs of operation and maintenance are relatively low and highly predictable. As a result, the total project cost can be reliably predicted and funded by a stable price of electricity produced over a 20 to 25 year period. Airports can either obtain this stable electricity price by executing a long-term contract to buy the output from a private facility or by building their own project and funding it through long-term bond payments that are at or less than the existing cost of electricity. When they are able to lock in electricity prices at a set and reasonably stable rate over a long-term period, airports can more accurately budget to those energy costs and not have to react to unpredictable and uncontrollable annual costs. 3.2.3 Environmental/Social Environmental laws enacted over the past 50 years have improved the quality of life and expanded business opportunities in many areas. Tourists ply the waters of urban harbors that were not long ago the dumping grounds for city residents. Greater participation of communities around such projects has also expanded the social benefits. Yet, these investments had short- term effects on the proposed development activity that had to pay for past problems and invest in protection to prevent future problems. Similarly, airports of the future are at risk of constraining growth if they do not make envi- ronmental investments to mitigate the potential environmental impacts of that growth. The fol- lowing environmental and social benefits from renewable energy projects are easily identifiable and the environmental and social investments have made a direct financial benefit to society. However, assigning a specific economic value for these environmental and social investments to a single project is difficult. Each airport will place a value on these factors when developing their renewable energy business case and this can be achieved by assessing the information provided below and applying site-appropriate weighting when using the decision-making matrix. 3.2.3.1 Reduction of Greenhouse Gases GHGs including carbon dioxide and methane are known to trap heat in the earth’s atmosphere and enhance the warming of the earth. Many public policies, business commitments, and changes in individual behavior have led to reductions in GHGs, yet carbon levels in the atmosphere continue to rise. Airports, through their work with affiliated local government agencies and in partnership with the industry and the federal government, are taking actions to reduce their con- tribution of GHGs. Implementing renewable energy programs, either through the construction of on-site renewable energy facilities or through commitments to purchase renewable energy from off-site sources, are credible and measurable ways in which airports are taking action despite the complexity of calculating the local benefits of such actions. 3.2.3.2 Reduction of Environmental Risk and Liability As airports seek growth to meet demand, augment their business, and contribute to a regional economy, they are at risk that their growth plans will be constrained by concern about

Evaluation Criteria and Ranking Methodology 29 environmental impacts. Airports are more routinely responding to this challenge by incorporat- ing sustainability elements as a central part of their development programs. Generally, sustain- able design is considered to come at a premium upfront cost, but with returns through cost savings over time. The same is true for renewable energy. However, as the focus of environ- mental protection further pivots away from reuse and recycling (as those goals are attained and maximized) toward reducing carbon emissions, there will be a need for all airports to generate their own sources of clean power. Airports that take such actions in the near-term will avoid the risk that environmental regulation will slow down expansion plans due to a lack of on-site clean energy. 3.2.3.3 Achievement of Public Policy Goals Airports are often part of a larger government network that has established goals and even mandates associated with environmental protection. Airports must be able to respond to such directives and demonstrate the achievement of public policy goals. While, in some markets, there may be no specific economic value to the airport in doing so, attaining goals related to clean energy usage will be critical to the long-term stability of the airport business. 3.2.3.4 Mitigating Community Impacts Communities near airports are often active participants in the day-to-day actions of the air- port. Because airports have a relatively large effect on the surrounding community as a result of aircraft activity and its visibility, airports are often challenged to meet the demands and interests of the surrounding community as well as to show a positive contribution. Renewable energy has a broad appeal and most polls show that people support its adoption. The development of a renew- able energy project or the purchase of renewable energy on the open market can have a direct and positive impact on an airport’s relationship with its neighbors. 3.2.4 Other In addition, there are other criteria that address logistical issues associated with energy gen- eration projects. As with some of the less quantifiable criteria, many of these criteria cannot be fully incorporated into a generic business case and require local analysis. However, they should be reviewed and considered as part of the project formulation to ensure that the final design measures positively with each criterion. 3.3 Weighting and Ranking System A primary objective of this research is to develop a weighting and ranking system that can be used by airports when evaluating the business case for renewable energy. A unique feature of the weighting and ranking system is that it allows airports to attribute value to both easily iden- tifiable financial measures as well as sustainability factors. Sustainability factors offer broader benefits to the airport business because they include community participation and are a critical component of the regional infrastructure network. The result is a decision-making matrix, which is provided in a digital spreadsheet format for use with this report. The evaluation criteria, which form the basis for the decision-making matrix, are categorized under four fundamental headings: economic, self-sustainability, environmental/social, and other. Section 3.2 describes how these factors provide benefits to airports. Chapter 6 presents a model business case to show how the decision-making matrix can be used. The following section describes the system.

30 Developing a Business Case for Renewable Energy at Airports 3.3.1 Basis and Customization 3.3.1.1 Criteria The matrix includes four criteria that airports can use to evaluate renewable energy projects and their alternatives and generate a score for each project evaluated. • Economic • Self-sustainability • Environmental/Social • Other Economic information provides the critical baseline for any business, including an airport’s needs for understanding requirements and sources of financial resources. The self-sustainability component recognizes the airport’s position as a stable and long-lived facility with the need for investment to support its position as critical infrastructure and as a long-term business enterprise. The environmental and social attributes recognize the airport’s position as an agent of govern- ment and its role as a leader and a team player in the community of stakeholders. In addition, there are other factors that cut across all three areas which are specific to its position as a federally- obligated entity. 3.3.1.2 Required Information Before the matrix can be a decision-making tool, it is first a process for identifying required data necessary for informing the business case. Some of the information it requires, such as whether the project is consistent with the master plan, will be readily at hand or known to airport staff. Other information, such as the cost of electricity, will require coordination with other departments at the airport or within the broader government administration. Other data will require outside expertise from energy consultants and local advocates. The data collection effort can also develop a comprehensive network of stakeholders who will have an interest in the project. As informa- tion is collected, the matrix will more accurately produce results that are reflective of the airport’s situation and interests. 3.3.1.3 Customization to Airport Goals The matrix provides the airport with a structure for evaluating renewable energy projects and alternatives including key criteria and a system for generating results based on desired attributes. Because each airport will have different goals and objectives and points of emphasis in pursuing energy projects, the matrix is meant to be customized by the airport. For example, if an airport has a strong public policy mandate from its governing authority, the airport can increase the points attributed to that factor. Or, if the airport is in the process of developing a climate adaptation plan, the airport will want to increase the value of ranking associated with reliability and resiliency. 3.3.2 Evaluation Criteria The evaluation criteria included in the weighting and ranking system and decision-making matrix are summarized below. Refer directly to the matrix that accompanies this report to follow the discussion and the use of the matrix. 3.3.2.1 Economic There are seven factors in the economic criterion. • Capital cost: This is simply the total cost to construct the project from conception to commis- sioning. As a start, the National Renewable Energy Laboratory provides example costs, which are provided for use by readers in Chapter 6.

Evaluation Criteria and Ranking Methodology 31 • Capital cost leveraging: This factor provides value to options that can attract public and private partners. • Operations and maintenance costs: This factor considers the potential burden the project may place on the airport for system operations and maintenance. • Life-cycle costs: This factor addresses the potential costs throughout the project life from cradle to grave. • Revenue enhancements: If a project is able to provide the airport with a revenue source, addi- tional points are gained. • Benefit/cost: Value is measured based on the perceived benefits versus costs. • Energy costs: The change in the cost and stability of energy from the project is afforded weight- ing value. 3.3.2.2 Self-Sustainability There are four factors in the self-sustainability criterion. • Meeting energy demand: There is value to the airport infrastructure in generating and supplying power on-site. • Continuation of business resiliency: The energy project adds value to the airport if it can continue to produce power even when regional sources are disrupted. • Mitigation for proposed development actions: The project has added value if it mitigates potential impacts of future airport development, thereby facilitating infrastructure expansion to accommodate future growth. • Enhancement of future opportunities: If the project can foreseeably open up new opportuni- ties at the airport by demonstrating innovation that may be replicated in the future, it could receive additional points. 3.3.2.3 Environmental/Social There are six factors in the environmental and social criterion. • Local or regional environmental or sustainability goals: If the project will help the airport achieve goals and policies it has set in the areas of environmental impacts and sustainability, it will receive enhanced weight. • Permanent job creation: Projects that create jobs receive widespread value. • GHG emissions: Projects that result in a decrease in GHG emissions will receive higher value. • Air quality impacts: Beyond GHG pollutants, projects that avoid other air pollutants will also be favored. • Enhances customer experience: Should the airport perceive that the proposed project will be received positively by visitors to the airport, additional weight will be gained. • Consistency with airport’s sustainability plan: Should the airport have in place a sustainability plan and the proposed project is a component identified in the plan for implementation, it will obtain additional value. 3.3.2.4 Other There are four factors in the other criterion. • Consistency with master plan: Projects that are consistent with the master plan will show that the airport has long considered the need for the project and that it works in harmony with the airport’s primary mission. • Ease of implementation: Projects that are expected to be developed in a relatively straightfor- ward manner without any pitfalls will be preferred. • Impact due to construction: Should the project be perceived to have potential complications during construction, it will not receive additional weight.

32 Developing a Business Case for Renewable Energy at Airports • Project risk: Where project risks are identified, these will be noted in the ranking assessment. The level of risk perceived can be accounted for in the weighting. 3.3.3 Review Options and Select Approach The ranking system should be used to evaluate both renewable energy and non-renewable alternatives. Each project type should be run systematically through the matrix. Where insuf- ficient information is available, follow-up research should be conducted. In this way, the matrix can be used to develop the business case for renewable energy and if the case cannot be made, the alternative approach can be selected.

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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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