National Academies Press: OpenBook

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

Chapter: Chapter 5 - Engaging Internal and External Stakeholders

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Page 48
Suggested Citation:"Chapter 5 - Engaging Internal and External Stakeholders." 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 49
Suggested Citation:"Chapter 5 - Engaging Internal and External Stakeholders." 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 49
Page 50
Suggested Citation:"Chapter 5 - Engaging Internal and External Stakeholders." 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.
×
Page 50
Page 51
Suggested Citation:"Chapter 5 - Engaging Internal and External Stakeholders." 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.
×
Page 51
Page 52
Suggested Citation:"Chapter 5 - Engaging Internal and External Stakeholders." 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.
×
Page 52
Page 53
Suggested Citation:"Chapter 5 - Engaging Internal and External Stakeholders." 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.
×
Page 53

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48 The business case provides a justification for a proposed project or undertaking based on its expected commercial benefit. The business case must be credible and convincing to internal and external stakeholders or its likelihood for success will decrease. The primary project stakeholders for an airport renewable energy project are shown in Figure 5-1. This chapter summarizes the internal and external stakeholders that must be engaged as part of the renewable energy project development, their interests in a renewable energy project, and the extent of their influence in facilitating a successful project. 5.1 Internal Internal stakeholders in this overview are considered entities that are involved in day-to-day airport operations. They include the airport authority, FAA, airlines, and tenants. 5.1.1 Airport Authority The airport authority is the staff and organizational structure responsible for managing the airport. The composition of the airport authority varies widely based on the size and ownership of the airport but generally includes staff with a designated leader and a board of overseers with a chairperson. Staff conducts planning and operations of the airport including budgeting to ensure that the airport fulfills its mission and serves its customers in conformance with its obligations to the FAA and affiliated local governments. The airport staff meets regularly with its governing authority to review activities and budgets and to gain formal approval of the actions necessary for the sound operation of the airport. Engagement with the airport authority on a renewable energy project, as with any airport initia- tive, is critical to ensure that the project is consistent with the airport’s strategic plan and is deter- mined to be part of the long-term interests of the airport. Engagement within the airport authority should start at a focused point at the earliest stages of the project with a few key staff members to define the project and assess its business case. If the focus team determines that there is a strong business case for the project, then the concept will radiate out in stages to involve other staff and eventually the governing authority. In many cases, the governing authority will inquire about the viability of the business case for a project and direct staff to investigate further and report back. Once the governance and upper levels of airport administration become involved in the discus- sion, it is important for the other stakeholders, beyond the airport administration, to be engaged. 5.1.2 FAA The FAA has a broad oversight of activities at federally obligated airports to ensure safe and efficient air transportation and to protect the long-term viability of the air transportation system. Engaging Internal and External Stakeholders C H A P T E R 5

Engaging Internal and External Stakeholders 49 For renewable energy projects, the FAA’s involvement focuses primarily on the preservation of airspace, protection of aeronautical uses, oversight of property rights and value, and authoriza- tion of federal funding.31 Airports should initially contact their FAA representative at the airport district office. The discussion should begin with appropriate planning staff to confirm that the project is consis- tent with the master plan and the airport layout plan and that it does not obstruct the future development of aeronautical uses. At the same time, the air traffic division should be consulted about the location of navigational aids and the proximity of the project to Federal Aviation Regulations Part 77 surfaces to determine that the project will not negatively impact airspace safety. If a lease is being considered, the FAA property division should be engaged about the lease approval process and the procedures for documenting fair market value for any lease. For FAA funding through AIP, VALE, or the Section 512 Program, the airport will need to discuss its ACIP and include the renewable energy project in its ACIP when filed annually with the FAA regional office. 5.1.2.1 Policy Considerations The executive branch of the federal government under both the Bush and Obama administra- tions took actions that encouraged the development and purchasing of renewable energy by the federal government. These actions have affected airports and the FAA. President Bush signed Executive Order 13423: Strengthening Federal Environmental, Energy, and Transportation Management, on January 24, 2007, which set goals including that half of the renewable energy consumed by federal agencies in a fiscal year come from new renewable energy sources and that agencies generate energy on-site to the extent feasible. President Obama signed Executive Order 13514: Federal Leadership in Environmental, Energy, and Economic Performance, on October 5, 2009, which required federal agencies to assess GHG emissions and set sustainability targets. The president issued a follow-up memorandum on December 5, 2013, which provided additional direction for federal agencies and specified that 20% of all energy consumed by federal agencies should come from renewable sources. Figure 5-1. Airport renewable energy project stakeholders.

50 Developing a Business Case for Renewable Energy at Airports On March 19, 2015, President Obama signed Executive Order 13693: Planning for Federal Sustainability in the Next Decade, which includes more specific energy efficiency and renewable energy requirements on federal agencies. The targets for clean energy for building electric and thermal energy that must be met through alternative and renewable sources are listed in Table 5-1. Under these policies, the FAA has been carrying out its responsibilities to meet renewable energy targets under various executive orders and federal policy directives while also ensuring that these projects do not negatively affect airspace operations. The FAA has regulatory author- ity to ensure that renewable energy projects abide by relevant legislation and adhere to certain evaluation criteria. Moreover, as many energy technologies have evolved in recent years and the installation of certain technologies (e.g., wind, solar, geothermal) has increased significantly, the FAA is continually updating review requirements. Stakeholders must be aware of recent developments to ensure compliance. 5.1.2.2 Grant Assurances When airports accept federal funding from FAA sponsored programs, they must agree to grant assurances. AIP provides grants to airports for funding projects. Within the funding mech- anisms are grant assurances to ensure that the airport is using the funding consistent with the AIP funding obligations as contained in the latest version of FAA Order 5190.6, Airport Compliance Manual. For example, AIP grant assurances include public procurement for services, the buy American clause, and the use of airport revenues. As part of grant assurances, FAA could impose monitoring requirements and has the right to conduct on-site compliance inspections. If there is no FAA grant funding because the project will be implemented by a third party. The grant assurance review will be conducted as part of the FAA’s review of the property rights transfer. 5.1.2.3 Planning The renewable energy project concept will initially require input from planning professionals internal to the airport. They will review the type of technology proposed, alternatives for siting relative to the master plan, and consistency with existing and future infrastructure. The planning group will be familiar with other projects that have been undertaken at the airport, along with issues that have arisen in project planning and construction. Their input can be used to verify the potential fatal flaws of the project such as conflicts with the AIP and master plans, potential sensitivity to navigational aid interference or glare impacts, and environmental impacts. 5.1.2.4 Funding AIP is the primary source of funding for many planning and development projects at public-use airports. Renewable energy projects are funded by the FAA through AIP, VALE, or Section 512 Table 5-1. Alternative and renewable energy annual targets for federal agencies. Fiscal Year Clean Energy FY 2016 10% FY 2017 10% FY 2018 13% FY 2019 13% FY 2020 16% FY 2021 16% FY 2022 20% FY 2023 20% FY 2024 25% FY 2025 25%

Engaging Internal and External Stakeholders 51 of the FAA Modernization and Reform Act of 2012. These funding mechanisms typically cover 75% of the eligible costs for large or medium hub airports and up to 95% of eligible cost for a small primary, reliever, or general aviation airport. Improvement projects related to airport opera- tions, enhancing safety, and environmental concerns are typically eligible for AIP grant funding and will generally receive a higher priority than renewable energy projects. Nationally, grant requests exceed AIP fund availability, and the FAA evaluates requests for funding based on national priorities and objectives. Renewable energy projects proposed for funding under AIP and Section 512 will be competing with funding requests for runway and terminal improvement projects, making competition for scarce funds challenging. VALE funding [through the AIP funds and passenger facility charges (PFCs)] is also available for renewable energy projects that offset locally generated emissions at airports located in EPA-designated maintenance or non- attainment areas. VALE funding is allocated from discretionary funds, and grant proposals are evaluated against other types of projects that are designed to reduce air emissions at the airport (i.e., gate electrification, hybrid vehicles). 5.1.3 Airlines Airlines are the biggest tenants at Part 139 certificated airports. They provide a large revenue stream to the airport which is used to operate the airport and sustain amenities to its passengers. For commercial service airports, airlines must be consulted on projects that may affect their rates and charges. Airlines evaluate the short-term financial benefits of such investments and deter- mine whether cost savings will be provided. Investments in reducing emissions at an airport could also benefit the airlines. An example would be upgrading the infrastructure at the gates to include pre-conditioned air (PCA) and ground power units (GPUs), which provide heating and cooling for the aircraft while parked at the gate. These units allow the aircraft to minimize use of the auxiliary power units (APUs) thereby saving fuel costs for the airlines and reducing emissions at the airport. Airlines may also benefit if an airport implements a renewable energy project that mitigates the impacts of development that the airlines support. For example, installing PCA and GPUs to reduce emissions may support future environmental approvals to construct additional gates needed for airline growth. Near-term benefits and paybacks on investment may be more likely to garner air- line support than projects with longer-term returns. This is a function of the difference between the agile airline business model and the more long-term development planning of an airport. Airlines also contribute to discretionary funding through taxes on airline tickets, fuel usage, freight, and international departures. One example is the Airport and Airway Trust Fund (AATF), which is another mechanism FAA uses to fund airport improvement, airport repair, and con- struction and maintenance of air traffic control systems through airline taxes as mentioned above. Therefore, airlines have a vested interest in airport improvement projects and are a potential airport funding partner for renewable energy where the airline could benefit from reduced elec- tricity costs. 5.1.4 Other Tenants Other tenants also are affected by infrastructure upgrades and are vital to the revenue stream of the airport. These tenants include concessions, rental car operators, third party parking opera- tors, fixed based operators (FBOs), corporate entities with hangars, hotels, gas stations, and con- venience stores. Tenants, both aeronautical and non-aeronautical, should be informed about a proposed renewable energy project as part of the regular tenant communication programs imple- mented by the airport. These tenants will be interested in proposed airport improvements and how they may affect their businesses as well as the potential for any rate increases in future lease

52 Developing a Business Case for Renewable Energy at Airports agreements. Tenants may also be interested in partnering with the airport on a renewable energy project if such a project can provide a mutual benefit. 5.2 External Stakeholders in renewable energy projects at airports are not limited to airport tenants (i.e., internal stakeholders) but include groups outside of the airport that can be affected by the project. Renewable energy projects can produce a positive impact for the community by con- tributing to the local economy and creating jobs while also reducing local air emissions. Local governments and agencies are equally interested in renewable energy projects since they generally share the same policy and goals of reducing GHG emissions that contribute to climate change. 5.2.1 State and Local Government A number of different state and local government agencies may be interested in the proposed renewable energy project depending on the airport’s location and political geography. Most air- ports are a division of municipal, county, or state government or are a separate regional or state authority. Regardless of the specific governing structure, the sister agencies of the airport will be most affected by the activity, particularly if they participate in intergovernmental coordination such as the implementation of master planning and shared public policy goals. Those that are most relevant to a renewable energy project include sustainability, renewable energy generation, and GHG emission policies. Other government agencies may be part of the approval process. Examples include natural and cultural resource agencies authorized to review and approve development projects and their potential effects on wetlands and historic resources. Meeting with agency rep- resentatives early in project planning will help avoid any permitting fatal flaws and build support where alignment with government policy goals can be demonstrated. 5.2.2 Utilities Utilities, as owners and managers of the electrical distribution network, are key stakeholders for any electricity generation project. They should be consulted at the project’s earliest stages of planning and will be required to make a final approval of the project once commissioned and put into operation. Any electric generation project that interconnects with an existing electrical system that is physically connected to and is served by the electrical grid must be designed in accordance with National Electric Code standards and is subject to oversight by the utility owner. This is funda- mentally an issue of safety and compatibility to protect the grid and the people who are manag- ing it. The generation system may at times export electricity to the grid and therefore must be designed with a voltage shut-off control accessible by grid managers should they need to tempo- rarily prohibit passage of electricity to perform maintenance on the infrastructure downstream. Some generation projects may also require the design and construction of new infrastructure to deliver the electricity to the existing grid. The infrastructure may be proposed and funded by the developer (e.g., airport and its partners), but once constructed the infrastructure will become an asset owned and managed by the utility. For these reasons, the airport should engage the utility in a collaborative manner throughout the project. 5.2.3 Flying Public The airport is a gateway for all sorts of residents and visitors that generally comprise the fly- ing public. While airport users are predominantly focused on getting through the airport with

Engaging Internal and External Stakeholders 53 limited delays and using available amenities to make the best use of down time, the airport also provides a broader experience to travelers. It is in the airport’s competitive interest to be the best experience possible. As part of the broader context of this research, it was noted that there is a broad positive appeal for renewable energy as technologically advanced and good for the future. Airports that have implemented sustainability programs that include renewable energy have sought to locate projects in areas that are widely visible to travelers as long as the areas fit other compatible sit- ing criteria of the airport master plan. Airports also incorporate public education displays about sustainable designs and have constructed electricity generation kiosks about renewable energy projects that have been constructed. At such kiosks, the public can see in real time how much elec- tricity the airport’s facility is producing and the environmental benefits accrued in cars removed from the roadways or trees planted. While members of the general public are not likely to be detailed reviewers and commenters on an airport’s renewable energy project, informing them about a proposed project demonstrates the airport’s leadership, forward-thinking mindset, and commitment to sustainability. 5.2.4 Community Airports convene regular public meetings to discuss airport activities and authorize future work as necessary. Airport sponsors can use these regular meetings to introduce renewable energy project concepts and provide status reports throughout the project life during planning, con- struction, and operations. These meetings will afford the airport a high level of transparency and help identify any issues that may be raised by neighbors, tenants, or other affected or interested parties. As questions or issues are raised, the airport can respond to the issues either immediately, by answering the questions, or at a future meeting should additional research be required. Public engagement will help to solidify support for the project. Engagement with local community groups may often be addressed adequately through the regular airport public meetings. However, in some circumstances, the airport may choose to engage these groups through separate meetings to ensure that their members are sufficiently informed about a particular airport project or activity. In other instances, individual meetings may be arranged after some initial level of information exchange occurs at the regular airport meeting to expand the level of outreach. Typically, renewable energy projects are not likely to cause a concern for neighbors given their relatively non-obtrusive nature. A utility-scale wind turbine proposed on airport land is a logical exception, given its large size, and might warrant additional outreach depending on its proximity to residential areas. Other external stakeholders such as environmental groups may have interest in the proposed renewable energy project. These groups may be interested in particular resource impact issues (e.g., birds and wind turbines) or carbon mitigation benefits of the project. Involvement of these external groups will depend on the type of renewable energy project and the airport’s relationship with the public or organization. Understanding public sentiment on previous renewable energy and sustainability projects in the community will help the airport shape its message.

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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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