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33 As renewable energy projects become more prevalent and desirable, it makes sense to consider and include them into the capital planning and decision-making process at airports. Planning for renewable energy projects, like other airport capital projects, allows an airport to identify and respond to opportunities to develop such projects when physical requirements, strategic objectives, capital availability, policies, and other circumstances make the projects desirable and viable. All airports have basic capital needs that they must plan for including planes, runways, terminals, and parking, as depicted in Figure 4-1. Renewable energy must align and be consistent with these basic needs. Early capital planning often consists of master plans or similar comprehensive planning docu- ments such as land use plans and, more recently, sustainability plans. These documents typically have a longer-range outlook and consist mostly of broad concepts for capital development. Similarly, the business case for a master plan is usually focused on the overall plan and its ability to meet the airportâs goals without overburdening the users by its cost. The early plans provide a critical foundation for the subsequent airport capital improvement plan (ACIP), which is more detailed and usually includes schematic level concept development, operational and construction sequencing plans, refined cost estimates and schedules, and environ- mental analysis. The business case for ACIP projects requires additional detail in order to provide the justification needed to garner stakeholder support. This chapter first addresses considerations for incorporating renewable energy projects into higher-level master planning, and then discusses how these broad plans are further developed during capital improvement planning. 4.1 Master Planning Ideally, an airport should address the need for evaluation of renewable energy projects, similar to other major capital development needs, as part of an initial planning effort such as a master plan. This would document conditions and identify variables to set the framework for future detailed planning, including business case formulation. As with other capital development plan- ning, the airport sponsor should consult various departments and stakeholders regarding the desired outcomes for proposed renewable energy planning in conjunction with developing the goals and objectives and prior to engaging a planning team. This will result in a more accurate scope, focused planning team expertise, and more successful analyses. As stated in FAA Advisory Circular 150/5070-6B, Airport Master Plans: An airport master plan is a comprehensive study of an airport and usually describes the short-, medium-, and long-term development plans to meet future aviation demand. The goal of a master plan is to pro- vide the framework needed to guide future airport development that will cost-effectively satisfy aviation demand, while considering potential environmental and socioeconomic impacts. C H A P T E R 4 Integrating Projects with Planning and Decision Making
34 Developing a Business Case for Renewable Energy at Airports As such, the master plan is typically a high-level study that frames the current conditions, anticipated activity changes, and opportunities to accommodate those changes. Master plans define the intent, anticipated improvements, and phased development that embody the long- term vision of the airport. Therefore, incorporation of renewable energy elements within a mas- ter plan provides a logical context to long-term energy and sustainability goals. Focused planning related to specific areas of interest or need is common in master plans and renewable energy logically could be one such focus area or could be discussed as part of a sustain- able master/management plan. As an airportâs demand for energy grows, it becomes natural to incorporate an evaluation of potential renewable energy projects. However, because renewable energy projects have an impact on land use and the potential to affect operations if they are not planned and implemented carefully, planning takes on a larger focus than that allowed by the traditional master plan and its analysis of power adequacy. Typical areas of analysis in a master plan include airfield and airspace, terminal, roadways and ground access, parking, support facilities, air cargo, general aviation, utilities, land use, fueling, and environmental considerations. Renewable energy could be addressed under a new categoryâenergy, which would encompass analysis of energy for the entire airport campus or specific focus areas. It would not be a stand-alone category but would support and envelop all other areas of analysis. 4.1.1 Existing Conditions The inventory portion of a master plan captures the existing conditions at an airport to support the subsequent analyses. Information typically collected in the master planning processâland use, topography, environmental setting, airfield critical areas, and utility infra- structure to name a fewâwould be used in the analyses and business case for renewable energy. However, additional information, specific to potential renewable energy projects, will be required. The airport diagram, an example of which is provided in Figure 4-2, shows the primary aero- nautical infrastructure that must be considered when siting and designing the renewable energy project. For renewable energy projects, the scope should include an exploration of the existing energy system and future needs as well as the local/regional setting and energy/sustainability policies. Also, more specific information is needed regarding electrical utilities, rates, and infrastructure. Figure 4-1. Basic infrastructure needs of airports.
Integrating Projects with Planning and Decision Making 35 The airport and its planning team will need to answer the following questions to obtain information needed specifically to support a business case for renewable energy projects: â¢ Does the regional setting lend itself to certain types of renewable energyâsolar, wind, geothermal, wave/tidal? â¢ What is the cost of power and the rate structure paid by the airport? â¢ What other sustainable initiatives have been undertaken at the airport or in the region? What regional sustainable energy initiatives are underway or establishedâwind farms, capture of gas flaring, solar farms, reuse of waste products from waste water treatment facilities, geothermal? â¢ What policies does the local utility have for interconnection to the power grid? â¢ Has the local power authority developed other renewable power sources? If so, are there poli- cies in place for development and some technical expertise within the utility to coordinate an airport installation? â¢ What energy conservation policies are in place or anticipated in the future that would direct or support implementation of renewable energy projects? Does the airport or governing author- ity have a vision statement for renewable energy or sustainability? â¢ Is excess land (outside the âmission-criticalâ areas) available for non-aeronautical renewable energy uses? Are there height and use restrictions associated with those tracts? Are there line- of-sight or glare (in the case of solar) concerns? â¢ What infrastructure is in place that could support a renewable energy project? Are substations nearby for interconnection? Figure 4-2. Airport diagram showing fundamental components of aeronautical infrastructure.
36 Developing a Business Case for Renewable Energy at Airports â¢ What is the reliability history of the power grid serving the airport; what number and duration of outages has the airport experienced in the last five years? Are there other projects underway by the utility to remedy the situation? â¢ What is the air quality status of the region? Is the airport in an attainment or non-attainment area? While it may not be possible to capture all data required for a later business case analysis, a study of the existing conditions should endeavor to document as much as possible along with the sources for future follow-up. 4.1.2 Demand/Capacity Analysis and Facility Requirements Typically in an airport master plan, demand is a function of passenger, aircraft, and cargo activity. Renewable energy projects may reflect increased power needs associated with these activities but may also be independent of such activity and be based on other considerations such as reliability of power, cost savings, environmental policies, or social factors. The objective of the demand/capacity analysis is to determine when and how much of an improvement is needed within the planning period, or in other words, to justify any future improvements and identify timing of need. Because there may be some elasticity of need in imple- menting renewable energy projects, it is important to document the variables that are considered in the analysis. To help define demand and requirements, planners should consider (1) the state of the power grid and standby power, (2) the potential risks of outages and consequences due to outages, (3) the potential growth in activity that would result in increased power demand, (4) whether land that is currently available for renewable energy projects would still be available in future years, and (5) whether renewable energy projects could be incorporated into other future projects (e.g., solar panels on the roof of a garage or future building). Quantifying questions may include: â¢ Are the power supply and standby power adequate and reliable at the airport? Would a micro- grid (a local energy system capable of balancing captive supply and demand resources to maintain stable service within a defined boundary) provide significant benefits to maintain system integrity? â¢ What is the continuation plan in case a natural, or any other, disaster affects the power grid? Would it be enhanced by a renewable energy source? â¢ What other factors that could create demand for power and support renewable energy sources, such as terminal, other tenant facilities, maintenance/operations, off-airport functions, exist? â¢ At what point would a renewable energy project be needed and/or supported? Is additional power required to meet peak or more frequent demand periods? Would the project help mitigate other development impacts and provide benefits beyond just the generation of power? 4.1.3 Preferred Alternatives and Preferred Concepts The priority of planning in an airport master plan is to first consider those elements that are critical to the mission of the airport: airfield and airspace, the terminal complex, ground access, cargo, general aviation, parking, fueling, and support facilities. Elements needed for the growth of aviation override other uses. Renewable energy projects that need open land could be consid- ered only after aviation needs were satisfied. Projects that would be incorporated into existing or proposed facilities, such as roof-mounted solar panels, could be considered within the alterna- tives for terminals, garages, and other structures.
Integrating Projects with Planning and Decision Making 37 The alternative planning process develops preliminary alternatives (concepts) to meet the projected demand, screens the alternatives (through rounds of qualitative and quantitative evaluations), and refines the concepts to reach a recommended preferred alternative. Typi- cally this is done for the primary elements of the airport first, that is airfield and terminal areas, and then the process is repeated for the secondary elements. For instance, a second round of evaluations may focus on developing concepts for replacement and growth of air- line support facilities displaced by terminal or airfield expansion. As the analysis progresses, preferred concepts for the individual elements would be integrated into an overall recom- mended development plan. Renewable energy concepts should be defined in terms of their ability to meet power demands or the reliability requirements, their physical requirements, and the general timing in which they would be needed. Using these factors as a basis, planners can further define: â¢ Siting of the facility, which includes physical location and constraints, including airspace, visual obstructions for pilots, access for operators, topography (related to cost to prepare the site), and proximity to fuel source (biomass); â¢ Potential energy generation in terms of overall load and variability; â¢ Proximity to substation or grid integration point and challenges to making a connection; â¢ Potential environmental impacts and benefits associated with implementation in accordance with FAA Orders 1050.4 and 5050.4 and the NEPA (discussed further in Section 4.1.5); â¢ Utility engagement (Will size, configuration, or location of the renewable energy project change engagement policies? Is there a benefit to scale?); â¢ Utility rate structure and regulations; â¢ Potential risks to implementation, pricing, and other factors; â¢ Public sentiment/public policy; and â¢ Other types of projects including conventional energy alternatives that could satisfy the demand. Renewable energy projects that require stand-alone land and facilities could be stand-alone elements in the analysis while those that are incorporated into other elements are addressed as part of those elements. Concepts should be developed with the business case and evaluation criteria in mind to enable a thorough evaluation and comparison of alternatives that support the business case. The evalu- ation criteria presented in Chapter 3 can serve as a guideline for tailoring the evaluation crite- ria and measurements to correlate with the focus of the airport and the information available. Selected criteria may be used for preliminary screening to cull a larger list of options into a few superior concepts. A variety of initial alternatives may be identified. As alternatives are evaluated and screened, some will drop out while others will be further developed and subject to additional evaluation and screening to determine the best options to fit the needs of the airport. These will become part of the preferred concept of development. Projects will need additional environmental analysis before development. Planners should discuss environmental considerations and provide documentation of alternatives considered as well as the renewable energy criteria and evaluations that lead to a specific concept recom- mendation. Coordination with the FAA Airports District Office will help determine the level of environmental analysis required. Renewable energy projects have varying compatibility, permitting, and environmental con- siderations when sited on or near an airport. Table 4-1 identifies some of these that should be explored and evaluated when planning for a renewable energy project.
38 Developing a Business Case for Renewable Energy at Airports 4.1.4 Implementation and Financial Planning Implementation planning and the plan of finance for master plans essentially form the business case of the master plan, and are intertwined and generally performed in concert. The implementa- tion plan assigns timing to the individual projects that make up the preferred alternative to create a recommended development plan. Timing is initially based on demand and interrelationship of the various projects. The plan of finance is performed to prove the financial feasibility of the set of projects proposed in a master plan, given assumptions about revenue streams, project funding, and project costs. It analyzes the capital costs, timing of projects, sources, and uses of funds. As such, the timing and phasing of projects is typically adjusted based on the availability of funding for overall financial commitments. Renewable energy projects would be factored into the implementation plan and plan of finance with all other master plan and capital projects. Analysis is performed at a high level, generally addressing the near-term elements (1 to 5 years) in more detail than the mid-term (6 to 10 years) or long-term (11 or more years) elements. The analysis is based on the budgetary cost estimates and assumptions developed for individual projects in the master plan. Typically there has been no architectural or engineering design performed to further define the projects. The financial analysis may assume a range of activity growth to determine revenues and relies on reasonable assumptions regarding the use of state, federal, and other potential grant funds to leverage airport funds. So, while the financial plan tests the reasonableness of the development program proposed by the master plan, much more specificity should be developed as a precursor to the implementation of any of the master plan projects. The same would be true for a renewable energy project proposed in a master plan. In defining implementation planning, development projects are subdivided into phases. Enabling of subsequent projects supporting the renewable energy project would be identified, further defined, and slotted into the schedule with dependencies noted. A high-level cost estimate would be prepared for each element or phase of the projects. Timing for implementation of traditional master plan projects is based on demand triggers, such as the number of annual passengers, volume of peak-hour passengers, annual operations, or peak-hour operations. Triggers for renewable energy projects may not be as specific if the Type of Project Airport Compatibility Considerations Permitting Considerations Solar Reflection impacts to pilots. Should be sited on land not needed for aviation purposes. Are existing structures able to accommodate installations? Can future structures incorporate solar installations? FAA Form 7460-1 â Notice of Proposed Construction or Alteration FAA Land Lease Review (if third party project) NEPA Categorical Exclusion Wind Height of wind generator will be limited based on Federal Aviation Regulations Part 77 and other surfaces. Avoid sites that impede operation of navigational aids. FAA Form 7460-1 â Notice of Proposed Construction or Alteration NEPA Categorical Exclusion Geothermal Heat Pumps Avoid sites in which structures may impede operation of navigational aids. FAA Form 7460-1 â Notice of Proposed Construction or Alteration NEPA Categorical Exclusion Biomass/Biofuels Siting so that plumes from generation do not create a line-of-sight issue for air traffic control tower. Stack height will be limited based on Federal Aviation Regulations Part 77 and other surfaces. Avoid sites in which structures may impede operation of navigational aids. FAA Form 7460-1 â Notice of Proposed Construction or Alteration NEPA Categorical Exclusion Table 4-1. Airport compatibility and permitting.
Integrating Projects with Planning and Decision Making 39 project is not needed to meet immediate energy demand but is proposed to reduce overall cost and improve reliability. Timing of those types of projects may be tied to the availability of fund- ing, including rebates, loans, and grants. Alternately, a project that would be installed in conjunc- tion with a traditional project, such as solar panels on top of a proposed structure, would be tied to the timing of that structure. The solar installation cannot be implemented prior to garage construction but ideally should be constructed concurrently or, in some cases, subsequently. Planners need to develop a realistic schedule for all of the elements of a renewable energy project, as would be done for a conventional project. These include the environmental process and approvals, procurement, permitting, design, implementation/construction, commissioning and activation, and the generation of power. Timing data can be gathered from other airports that have pursued similar projects, utilities that are partnering on the project or other agencies, the planning teamâs experience, and industry publications or other publications. Assumptions for timing should be documented in the planning study, along with a discussion of risks or uncertainty associated with each step. Procurement methods should be considered in terms of schedule and desired project out- come. Typically, because of the technology involved, a conventional design-bid-build (DBB) method would not be chosen for the delivery of a renewable energy project. For a renew- able energy project, like some other conventional projects, the owner may want to evaluate the technical experience of the proposerâs key personnel, understand the technology options being offered, review the proposerâs business practices and past performance, and weigh other factors that would be included in the solicitation to select a provider that gives the owner the âbest value.â Timing should consider that request for qualifications/request for proposals (RFQ/RFP) would be used to solicit design, construction, or operation services, or a combination of these. RFQs are used for professional services only, where a qualifications-based (rather than price based) selection is expected. RFPs are used where price is a consideration for selection or the consideration for selection. Procurement and delivery options are discussed in more detail in Section 4.2. Project costs should include capital costs (land acquisition, design, construction, commis- sioning, and activation) and operational costs (maintenance, renewal, and major replacement) through the projected economic life of the facility (i.e., the life over which the project can per- form the function for which it is intended. Anticipated income generated from power sales, ground leases, or other revenues, should also be estimated. Master plan cost estimates are prepared at a high level because the details of the project are not fully defined. For instance, while the square footage and general functional areas of a terminal building may be described by a master plan, detail on the structure, finishes, and other elements are not defined. The details of a proposed renewable energy project may be similarly vague at this point. In the case of a terminal, further program definition and design would be needed to refine the details and costs. For a renewable energy project, further detail could be developed as part of a planning or preliminary design study supporting the business case analysis. Although the scope of the master plan seldom allows for the development of the detailed metrics described here, by documenting all of the knowns, unknowns, and assumptions within the master plan documentation, subsequent studies can build upon the master plan work. The plan of finance will determine the sources from which the capital and O&M costs will be drawnâwhether they are for capital improvements or are operating funds or capital renewal funds as well as the cost centers to which revenues and costs are assigned. The plan of finance will consider the use of rebates, grants, or loans; whether a portion of the construction will be funded by others; potential revenues lost during development; and the timing and amount of revenue
40 Developing a Business Case for Renewable Energy at Airports generated after the project is operational. For renewable energy projects, consideration should also be given to the impact on monthly energy costs after the project becomes operational. As the renewable energy project is being refined in concept throughout this phase, an initial quantification and qualification of the non-monetary benefits should also be undertaken. These may include: â¢ Creation of permanent jobs for the airport staff and in the community, â¢ Potential of the project to mitigate the impact of other proposed projects whether directly through offsetting environmental impacts or indirectly through the creation of goodwill as well as community and stakeholder support, â¢ Improvements to air quality (which could be quantified through modeling) and reduction in GHG emissions, â¢ Improved electrical grid efficiency and reliability resulting in improved business continuation for the airport in case of outages, â¢ Potential for economic development or collateral development because of the implementa- tion of the project, â¢ Customer experience enhancement, and â¢ Leadership in sustainability and the ability to meet local or regional sustainability goals. While the scope of work for planning may not allow full quantification or discussion of these factors, the identification of non-monetary benefits will support subsequent environmental and business planning as well as stakeholder outreach. 4.1.5 Environmental Considerations Environmental considerations associated with renewable energy project planning should be integrated into every step of the planning process. Planning will be used as the basis for envi- ronmental analyses, so an understanding of environmental analyses is required. Developing the information needed to support the analyses will make the most efficient use of time and airport funds. A clear definition of the projectâs purpose and the airportâs need for implementing the project are keys to the success of the environmental process. Environmental analyses are generally conducted subsequent to planning. Findings of the planning process inform the level of environmental analysis needed. There are a number of âfederal actionsâ that trigger the implementation of environmental analyses. These include the FAAâs conditional, unconditional, or mixed approval of: â¢ Federal funding for airport planning and development projects, including separate funding plans and specifications for those projects; â¢ New or changed airport layout plan; and â¢ An airport sponsorâs request to release airport land from a federally-obligated, public-use airport when the land would be used for non-aeronautical purposes, including entering into long-term leases. For environmental analyses, the airportâs project would be identified as the âproposed action.â It would be assessed against a no-action alternative as well as other reasonable alternatives. For guidance on environmental processes, airports and planners can use the current version of FAA Order 1050.1, Environmental Impacts: Policies and Procedures and the associated Environmental Desk Reference (EDR), and FAAâs Office of Airports Supplement Order 5050.4, National Envi- ronmental Policy Act (NEPA) Implementing Instructions for Airport Actions and its associated EDR. These Orders and EDRs provide a discussion of the FAAâs requirements for implementing NEPA and the Council on Environmental Quality (CEQ) regulations, and clarify requirements to facilitate timely environmental reviews.
Integrating Projects with Planning and Decision Making 41 Airports that are under a state block grant program must comply with the environmental requirements of the state, if using state funding. The FAA may participate with the state in the review of environmental processing and, in that case, the provisions of FAA Orders 1050.1 and 5050.4 will apply. It is a good practice to coordinate early with the FAA on proposed development projects, whether for conventional or renewable energy. The airport sponsor can explain the projectâs scope, need, and anticipated timing while the FAA can provide guidance on environmental and agency coordination requirements as well as federal funding opportunities. The airport spon- sor will gain insight into the project approach, including potential refinements to the project to minimize environmental impacts. This coordination will help the airport develop and implement an appropriate environmental process strategy. Understanding site impacts and the potential alternatives to minimize those impacts will also help streamline the environmental process. Planning should inventory and consider site impacts, documenting whether there are known environmental sensitivities on a site such as wetlands, cul- tural resources, or threatened/endangered species. In addition, projects affecting floodplains may require special agency coordination, analysis, and permitting. Early identification of these factors will improve the understanding of risks to implementation and the timing and costs associated with the implementation. It will also aid in determining the appropriate level of environmental analysis. Preliminary coordination with local, state, and federal agencies during the planning pro- cess may allow environmental planners to streamline the review processes during environmental scoping, and identify key decisions that each entity will need to address. Planning should recognize both state and federal policies that may affect implementation. Some states have regulations that require state environmental review for some projects in addition to federal review. Recognition of this may allow the state and federal processes to be performed simultaneously. Levels of NEPA processing for federal actions at airports include: â¢ Categorical Exclusion (CatEx). CatEx are approved for the actions that do not normally have the potential for individual or cumulative significant impacts on the human environment, per FAA Orders 1050.1 and 5050.4. CatEx processing can occur quickly with appropriate documentation and coordination with FAA. Depending on the complexity of the project and prior coordination with FAA, approval could be obtained in a few weeks or a few months. â¢ Environmental Assessment (EA). Prepared under FAA oversight, EA is a âconcise documentâ that describes the purpose and the need for the proposed action, identifies reasonable alterna- tives including a no-action alternative, and assesses expected environmental impacts. It should allow the responsible FAA official to determine if either an Environmental Impact Statement (EIS) is needed due to significant environmental impacts or a Finding of No Significant Impact (FONSI) can be issued. It also needs to comply with the applicable special purpose laws and requirements and identify any permits, licenses, and other approvals or reviews that apply. The timing for completing an EA is longer than that of a CatEx. Depending on the complexity of the project and prior coordination with FAA, the analysis could be completed in as little as 3 to 4 months after initiation. For a project which would have some impact, it could take a year or longer. The investigation and coordination done during the planning process should provide the airport with a reasonable understanding of the time frame anticipated. â¢ Environmental Impact Statement (EIS). An EIS is prepared by the FAA for the project when one or more environmental impact(s) for a proposed action would be significant and mitigation measures would not reduce the impact(s) below significant levels. While it is unlikely that a renewable energy project would trigger the need for an EIS, the project may be part of a larger group of projects considered in an EIS. An EIS generally requires several years to complete. Some, for very complicated projects, have taken a decade to complete.
42 Developing a Business Case for Renewable Energy at Airports The City of Rockford identified the Chicago-Rockford International Airport (RFD) as a suit- able location for a city-hosted solar facility given the large amount of underused land on airport property. It identified a number of potential sites at RFD and assessed each for suitability. The City was awarded federal stimulus money from the DOE through the American Recovery and Reinvestment Act, which triggered an EA. As part of the EA, the City prepared an alternative analysis to demonstrate that the preferred site was the least environmentally damaging alter- native. Figure 4-3 shows the three primary sites evaluated. In 2012, the airport completed the construction of a 3.6 MW project at the preferred location. Consultation with the FAA Orders and the FAA Airports District Office in the airportâs FAA region will identify the appropriate course of environmental action and provide the airport with a direction on the focus and timing of the environmental study. Timing and cost of implemen- tation must include allowances for the environmental analysis needed for project approval. For renewable energy projects in which the environmental process may be drawn out, availability of Figure 4-3. Solar sites evaluated at Rockford Airport.
Integrating Projects with Planning and Decision Making 43 funding sources should be verified to ensure that assumptions are still valid given the anticipated timing of implementation. 4.2 Capital Improvement Planning ACIP further develops the conceptual master plan into a better defined development plan consisting of a project or series of related projects needed to meet the overall objective. This phase of planning would provide information needed to finalize the business plan, gain required stakeholder support, and prepare the project/program for design and/or procurement. Planning can be performed in conjunction with the environmental process if timing is criti- cal. Or, programming could be initiated after the environmental process is completed if some type of mitigation or a significant change were expected to be incorporated into the project due to the environmental analysis findings. However, the airport should not make a significant change to the project that could affect the environmental impacts after the environmental process is complete. 4.2.1 Review/Update Project Assumptions During the capital improvement planning phase, the following elements of renewable energy projects would be defined, or if initially defined with the planning process, they would be reviewed and updated: â¢ Electrical generation and performance goals; â¢ Site selection and siting issues (glare, reflectivity, airspace clearances); â¢ Further evaluation of alternative sites or project parameters, if needed; â¢ Major elements of the project(s) including enabling projects; â¢ Permitting and regulatory requirements, including preliminary agency approvals based on consultations; â¢ Procurement methods for each project element; â¢ Costs, benefits, and revenues, including capital costs, O&M costs, and decommissioning/ salvage or renewal costs; â¢ Financial structure of the project, including draft PPAs and public entity funding arrange- ments, if any; â¢ Project/program timeline; â¢ Overall and individual project budgets, including contingency allowances; â¢ Understanding of operational impacts during construction, if any; and â¢ Commissioning and activation plan outline. This information will allow the airport to request formal approval from its governing body (city, state, or authority) as well as obtain airline approval. 4.2.2 Identify Funding Options Assumptions made in the financial portion of the master plan would be re-evaluated and updated in this phase of project planning, which would reassess funding options available at the time that the project is to be implemented. Because renewable energy incentives, grants, and tax credits vary from state to state and both federal and state opportunities change frequently, the airport should update and confirm funding assumptions. If some time has passed, additional incentives or tax credits may be available which could improve feasibility or timing.
44 Developing a Business Case for Renewable Energy at Airports With an update on funding, the structure of project financing should also be re-evaluated. Questions to consider may include: â¢ Does the business case support airport ownership or private ownership? â¢ What funding options are available for the airport versus a private entity? â¢ What is the window of opportunity for funding sources? Do some expire before the project can be initiated? Are other sources anticipated in the timeframe of the project? â¢ What criteria are attached to public or private ownership in terms of project development, procurement, construction, and operations? â¢ What impact on airport staff (both numbers and expertise) would the project create? â¢ If private, what lease terms are appropriate? This may entail benchmarking practices at other airports and/or consultation with FAA. â¢ How does the project fit into the airportâs capital improvement plan? Is there financial capac- ity? Do overall funding requirements necessitate accelerating or delaying the project? Chapter 8 describes the funding options for projects including airport-owned and funded arrangements and third party owned and financed structures. 4.3 Implementation Private partners must be identified, evaluated, and selected through a public procurement or bid process. An open and transparent bidding process is necessary to ensure that the airport engages the most qualified private partners at the best price, given the type of procurement process most applicable. A central premise of public procurement is maintaining the publicâs confidence in a fair and open bidding process. Keys to this process include preparation of the bid or proposal documents that provide a clear description of the goods and services required, the selection criteria and standards to be used, and the process to be followed. The airport will then follow the procurement process it has outlined including distributing the bid opportunity broadly, accepting questions and providing answers to all interested bidders, selecting a bidder using the established selection criteria, and negotiating a contract with the selected bidder. Procurement vehicles and processes are described both in ACRP Legal Digest 16: Procurement of Airport Development and Planning Contracts25 and ACRP Report 87: Procuring and Managing Professional Services for Airports.26 There are a number of different goods and services that may be procured for a given renewable energy project, and airports need to select the appropriate procurement process. Initial investiga- tions associated with site and technology selection may be completed as a consulting service. The airport may seek a turnkey contractor to engineer, procure equipment, and construct the facility based on an internal design prepared by the airportâs engineer. Or the airport may seek to enter into a contract with a private party who will engineer, procure, construct, own, and operate the facility through a long-term lease agreement, which may also include a contract to purchase elec- tricity. Each procurement package and process must be developed to conform to the airportâs contracting intent. As noted previously, the conventional DBB method of procurement is not appropriate for renewable energy projects due to the technology aspects. In addition, the funding options selected may direct that the system be developed by a public or private entity to take advantage of financial incentives. During implementation planning, final decisions should be made on the procurement method that best suits the goals and objectives of the airport and the project. Common delivery methods used for conventional projects include: â¢ Competitive Sealed Proposal. The competitive sealed proposal is a method used for selection of technology and conventional project providers in which both price and qualifications are
Integrating Projects with Planning and Decision Making 45 considered. Proposals may be based on 100% designs or somewhat less complete designs; however, the scope should be well developed. Firms can be interviewed and the selected firm can enter into negotiations with the owner to adjust the price of the work based on negotiations. Selection can take 1 to 2 months longer than the traditional DBB selection. â¢ Construction Manager at Risk (CMR). CMR selects a general contractor that is on-board during the design phase to work with the designer and owner to identify streamlining and cost savings. The CMR is responsible for completing the construction work, hiring sub- contractors working to an agreed upon price and schedule. Use of CMR may increase the design time and fee due to the collaborative approach. The CMR is typically paid a negotiated amount for design collaboration and a negotiated fee based on construction cost for the construction of the project. The selection can be a multi-step process through solicitation, interviews, selection, negotiating, and contracting, taking an additional 4 to 6 months. A CMR approach might be used in an overall program in which a renewable energy project is included. There are also several types of public/private partnerships, which may be undertaken for both conventional and renewable energy projects. These include: â¢ Operate and maintain. The public entity contracts with a private partner to operate and main- tain the project. The airport would maintain ownership of the project as well as responsibility for financing and the collection of revenues. The airport would also be responsible to manage the project. An example of this would be an airline consortium that operates and maintains jet bridges or baggage systems for an airport. Services would be procured prior to completion of the project so that the operate and maintain contractor can engage in commissioning, activation, and training prior to the project becoming operational. â¢ Operate, maintain, and manage (OMM). OMM is similar to the operate and maintain model, but it includes private management of the project. The airport would retain ownership, finan- cial responsibility, and revenue collection. The private partner could invest capital in the project, which would be balanced by savings in efficiency. Services would be procured prior to completion of the project so that the OMM contractor could engage in commissioning, activation, and training prior to the project becoming operational. â¢ Design, build, operate, and maintain (DBOM). In this method, a contractor integrates the design and construction responsibilities with operation and maintenance of the facility through the contract period. The airport would secure the financing and retain the operating revenue and risks as well as ownership of the project. The DBOM providerâs detailed knowl- edge of the projectâs design, construction, and technology elements allows them to create a tailored maintenance and operation program. Procurement is accomplished through an RFP process in which submittals are reviewed and ranked, firms are interviewed, and the selected firm enters into a contract with the owner. Preparation and evaluation of proposals is quite detailed; therefore, the procurement would add 4 to 6 months to the traditional selection process. â¢ Design, build, finance, operate, and maintain (DBFOM). This method resembles the DBOM process; however, the provider takes on the responsibility of financing the project and collecting revenues. Future revenues are leveraged to cover the cost of construction and financing. This type of procurement is used frequently by departments of transportation, toll road authorities, transit agencies, and local governments. There is a wide variation in contract terms in DBFOM projects and a variety in how the financial responsibilities are transferred to the private sector provider. The procurement process is similar to that for the DBOM. State and local laws govern the types of procurement methods that can be used by public entities. The airport should evaluate available methods along with the pros and cons of each to determine which best meets the airportâs needs for each renewable energy project.
46 Developing a Business Case for Renewable Energy at Airports In some cases, a private party may approach an airport to lease land to develop a renewable energy project. In this case, the airport may not need to follow a competitive procurement pro- cess, as the situation would be similar to a general aviation developer requesting to lease land for hangar development. Regulations governing ground leases would be followed. However, the airport may also negotiate the purchase of energy from the project through a PPA that sets a price over the contract term. PPAs are discussed in more detail in Chapter 8. 4.4 Permitting The permitting stage is where the detailed project concept developed with stakeholder input during the planning phase is filed with regulatory agencies for formal approval. Primary permit- ting steps include filing applications with the FAA for airspace and NEPA reviews as well as those associated with other federal, state, and local authorities. The FAA and other agencies should be apprised of issues in the planning stage which will allow for changes to be incorporated in order to avoid any pitfalls that might slow up approvals during permitting. In addition, applica- tions necessary for AIP funding need to be filed if applicable to ensure that project funding can be obtained consistent with the proposed project schedule. The permitting process for airport projects is also summarized in Improving the Quality of Airport Projects.27 Permitting of renewable energy projects on airport property requires close coordination with the FAA to address the primary issues during the planning phase. Each energy technology and the associated construction activities require review for airspace impacts, notably physical penetra- tion of the Part 77 surface and potential glare impacts from solar projects. Most renewable energy projects have received a categorical exclusion under NEPA due to the limited amount of envi- ronmental impact. The exception would be if a project is located in an environmentally sensitive location, like those having sensitive natural resources. State and local permits are also expected to be limited but would be dictated by the sensitivity of the project site. An effective planning process will have identified and excluded sites with environmental and cultural resource values. More information on the siting and permitting of energy projects is included in ACRP Report 108: Guidebook for Energy Facilities Compatibility with Airports and Airspace.28 4.5 Construction The construction phase begins with the development by the contractor of a construction process and a schedule which can be used by the construction team to designate responsibilities, commu- nicate expectations, and identify milestones. The airport project manager will use the plan to track construction progress. Regular meetings will be identified in the plan to formalize coordination and tie each meeting to the project schedule and expected progress. Throughout the construction period, compliance with regulatory approvals must also be checked and confirmed, and periodic stakeholder engagement exercised to maintain communication with interested parties, particularly affected tenants and neighbors. Upon project completion, the contractor will run through the commissioning process to demonstrate that the facility has been installed in accordance with speci- fications, and that it will prepare an operations plan to direct oversight during the initial operation stage. Chapter 5 in ACRP Report 49: Collaborative Airport Capital Planning Handbook addresses construction best practices.29 Construction activities for renewable energy projects should not be substantively different from typical airport projects with the exception that some contractors may not be as versed in airport construction procedures as contractors for airport projects generally are. Regardless, airport staff manages the training process, and all contractors, irrespective of past experience, should be equally trained at the time of construction (Figure 4-4).
Integrating Projects with Planning and Decision Making 47 4.6 Operations Once the facility has been formally commissioned, it enters the operations phase. While com- missioning validates that the facility has been constructed and is operating per specifications, there are many factors associated with airport energy use and environmental conditions that might require that the operations of the facility be adjusted during the early operating phase to optimize its performance. Contracts are structured such that the manufacturer and installer continue to be involved during the early operations phase to ensure that the facility operates as specified. Service contracts will also be put into place to guarantee technical support to the airport for a longer oper- ating term. Chapter 5 in ACRP Report 49: Collaborative Airport Capital Planning Handbook also addresses operations best practices and important aspects of project close-out.30 In conjunction with the assessment of system performance, the airport will also want to publicize its accomplish- ments associated with developing the project through press releases and educational information on the airportâs website. Because the equipment associated with renewable energy projects is relatively specialized, it is important that airports execute contracts for technical support and for staff training to ensure that the airport has the capabilities to address problems effectively. In addition, experience with geothermal heat pumps has shown that performance of the system changes substantially over the year depending on changes in seasonal weather. Airports need a complete year of operational experience before they can optimize performance and maximize the financial benefits of the geothermal system. Such operational experience has been less critical for other technologies. However, with any new system, glitches are not uncommon, and it is important to have staff and third party contractors, who are trained and available, recognize the problems and act on a solution to minimize operational and financial impacts. Figure 4-4. Airport staff training energy contractors.