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

Chapter: Chapter 7 - Examples of Business Cases

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Suggested Citation:"Chapter 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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 7 - Examples of Business Cases." 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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74 Previous chapters of this report provide detailed information on the steps necessary for air- ports to develop a business case for renewable energy. Business case examples provide enhanced context for illustrating the decision-making steps for renewable energy. Renewable energy provides unique benefits to organizations that use it. However, different types of organizations have different missions and different stakeholders and therefore have varying priorities including those related to using renewable energy. To highlight the diverse views of and approaches to renewable energy taken by different organizations and to provide tangible examples of how organizations have used renewable energy and developed their busi- ness case, the project team contacted organizations identified to be leaders in renewable energy. Their experiences are described below. The researchers identified organizations with a high penetration in renewable energy use pri- marily through the EPA’s list of top renewable energy users posted on its Green Power Partner- ship website.34 The researchers also contacted Ceres, a non-profit organization that advocates for corporate sustainability, and used information available in its Power Forward report.35 The researchers prepared an initial list of 10 organizations as potential examples including airports, an airline, a health care company, a higher education institution, and a corporate tech- nology company among others. Each organization was contacted and asked to participate in the report by providing some straightforward information about their renewable energy programs and the decision making that led to their development. While the initial list of 10 organizations changed based on ability to respond, information from a wide variety of organizations involved in renewable energy was collected and their development of a business case for renewable energy was documented. The following organizations agreed to participate (see Table 7.1). Each participant completed a general questionnaire and followed up with phone conversations to supply additional detail. While the examples may not be relevant to all readers, they demonstrate real world examples of why organizations pursue renewable energy and how that is accomplished. 7.1 Facebook Facebook (NASDAQ: FB) is an online social networking service headquartered in Menlo Park, California. With over one billion people around the world using Facebook, its greatest opportunity to effect environmental change is through the power and reach of the Facebook platform. Facebook is working to develop programs and initiatives that can enable and empower people on Facebook to get engaged in environmental issues and solutions. By enabling millions of people from diverse backgrounds to easily connect and share, Facebook can play a unique role in promoting efforts to achieve a sustainable future. C H A P T E R 7 Examples of Business Cases

Examples of Business Cases 75 Since its founding, Facebook has been committed to operating in a way that minimizes environ- mental impact while ensuring its long-term sustainability. Facebook recognized that its operations demand a significant amount of energy and that it has a responsibility to consume that energy in a sustainable way. Facebook’s data centers are its biggest energy consumers. In 2011, Facebook commenced the operation of a new data center based on an innovative set of designs that increased energy efficiency by 38%. Facebook’s vision for minimizing its carbon footprint is described at Facebook.com/green under the “carbon footprint” tab. Facebook is proud of its environmental record and it continues to look for ways to further embed sustainability into everyday business. Mission: Facebook’s mission is to give people the power to share and make the world more open and connected. Renewable energy action: Facebook made a public commitment in 2012 to strive toward 100% renewable energy. It has established interim goals, including 25% renewable energy by 2015, which it has met. It develops annual renewable energy plans and budgets that are imple- mented toward meeting those interim goals. To use renewable energy, Facebook is siting its facil- ities in places where the grid is powered by clean energy, and signing contracts with utilities and other energy providers to directly source clean energy. In an effort to increase the efficiency and long-term commitment of renewable energy purchasing by large corporations, Facebook was one of 12 signatories to the Corporate Renewable Energy Buyers’ Principles in July 2014, which was launched by the World Wildlife Fund and World Resources Institute. Facebook anticipates that participation in the Buyers’ Principles Project will enable it to meet its renewable energy commitments more cost-effectively. In addition, Facebook has installed 1.2 MW of on-site solar at its Menlo Park campus and is augmenting those facilities to provide approximately one-third of its headquarters’ on-site electricity needs (Figure 7-1). Table 7-1. Examples of business cases. Name Location Type Facebook California Corporate Great Falls Hospital New York Health Care Luther College Iowa Academic Outagamie Airport Wisconsin Airport San Diego Airport California Airport Southwest Airlines Texas Airline Figure 7-1. Hybrid solar installation at Facebook’s Menlo Park campus.

76 Developing a Business Case for Renewable Energy at Airports Primary driver: Facebook’s primary driver is sustainability and reduction of the carbon footprint. Supplemental drivers: The supplemental drivers are business and financial advantages associ- ated with long-term price stability and hedge, affecting change by greening the grid, and taking a leadership position as a company committed to sustainability. Planning and decision making: The program was led by the Director of Sustainability working with the Director of Data Center Energy. Initiatives were then brought to the Vice Presidents of the Data Centers and Engineering. Financing renewable energy: Facebook includes renewable energy purchases in its annual budget. The amount is set based on progress toward interim renewable energy goals. Lessons learned: The main lesson from Facebook’s experience is that while it wished to develop renewable energy on-site, it could not do so on the scale necessary to satisfy the large needs of data centers. Therefore, it determined that purchasing renewable energy from off-site locations was the best way to achieve its objectives. 7.2 Glen Falls Hospital Glen Falls Hospital is the largest hospital between Albany, New York, and Montreal, Canada, and a comprehensive health care system for New York’s Warren, Washington, northern Saratoga, Essex, Hamilton, and northern Rensselaer counties. In addition to its main acute care hospital campus, it operates 29 regional health care facilities, including health centers in the New York communities of Cambridge, Corinth, Granville, Greenwich, Hoosick Falls, Salem, Whitehall, and Wilton. As a not-for-profit hospital, Glen Falls Hospital provides a health care safety net for individuals and families from the immediate Glens Falls area to smaller, geographically remote communities tucked away in the heart of the six-million-acre Adirondack Park. Mission: Glen Falls Hospital seeks to improve the health of people in its region by providing access to exceptional, affordable, and patient-centered care every day and in every setting. Its fundamental values are: collaboration, accountability, respect, excellence, and safety, or CARES. Renewable energy action: Glen Falls Hospital purchased renewable energy from off-site sources through a power broker. Primary driver: Glen Falls Hospital seeks to provide a sustainable building environment where its patients are able to heal in a more holistic setting. Supplemental drivers: Glen Falls Hospital was incentivized to buy renewable energy by apply- ing for (and receiving) rebates from National Grid and the New York State Energy Research and Development Authority (NYSERDA). Planning and decision making: The opportunity to purchase renewable energy was first raised by their electricity provider. The vice president for Facilities and Real Estate took the lead on the initiative and coordinated with directors for Supply Chain and Finance. Once a price was determined and it was equal to or less than what the hospital was paying for traditional power, it was an easy “sell” internally. Financing renewable energy: The renewable energy purchase was self-financed as a replace- ment for the traditional electricity sources. Lessons learned: The decision that Glens Falls Hospital considered was closely aligned with the annual budget cycle. Their recommendation in such instances where an organization is

Examples of Business Cases 77 looking to purchase green power is to begin the financial investigations well in advance of the organization’s budget process. 7.3 Luther College Luther College is an undergraduate liberal arts college affiliated with the Evangelical Lutheran Church in America (ELCA) and is located in the town of Decorah in northeastern Iowa. Mission: “Luther is committed to a way of learning that moves us beyond immediate interests and present knowledge into a larger world—an education that disciplines minds and develops whole persons equipped to understand and confront a changing society. Luther is a place of inter- section. Founded where river, woodland, and prairie meet, we practice joyful stewardship of the resources that surround us, and we strive to be a community where students, faculty, and staff are enlivened and transformed by encounters with one another, by the exchange of ideas, and by the life of faith and learning.” Renewable energy action: As a leader in college campus environmentalism, Luther has made some serious commitments to renewable energy. When it was constructed in 2012, Luther’s solar PV array was the largest in Iowa. The 280 kW facility is installed on the north edge of the campus and powers Baker Village—an energy-efficient, all-electric student housing complex that uses geothermal energy for heating and cooling. This brings Luther’s total solar array count to three, and it now uses solar energy to completely power two facilities that house more than 120 undergraduates. Its wind turbine, erected in 2011 and shown in Figure 7-2, harnesses a sec- ond renewable energy source and supplies over a fourth of Luther’s power, dramatically reduc- ing its GHG emissions and enabling Luther to shrink its carbon footprint while it works toward its goal of carbon neutrality and other sustainability commitments. Primary driver: The primary driver was Luther’s Climate Action Plan, which is consistent with Luther College’s mission statement, which states, that Luther “practices joyful stewardship of the resources around us.” That said, long-term cost savings regarding energy expenditures have also been an important factor. Prior to 2008, energy costs were one of the most rapidly increasing costs in the college budget. Luther is expecting costs to rise again as its electric utility builds a new gas-fired power plant and passes the capital and fuel costs on to their customers. Supplemental drivers: The educational value of Luther’s renewable energy systems certainly was an important consideration. Luther wants to be a model and not a mirror. As an institution Figure 7-2. Luther College’s wind turbine on campus.

78 Developing a Business Case for Renewable Energy at Airports of higher education, it feels called upon to demonstrate the feasibility of renewable energy tech- nology and to demonstrate to its students that renewable energy can be good fiscal and environ- mental stewardship of their tuition dollars at the same time. Planning and decision making: The project was led by a faculty member at Luther who is also the chair of the Energy and Water Task Group of the Campus Sustainability Council, which was the primary driver behind the development of the renewable energy projects. None of the projects would have been moved along, however, without the consistent and firm support of the president of the college. Outreach with stakeholders was important for obtaining local approv- als and gaining input from the community. Luther held voluntary public meetings for the wind turbine project. The school also provided information about all the projects and the required public meetings. The wind turbine project required a special use permit from the Winneshiek County Planning and Zoning Commission and the Board of Supervisors. Luther also worked closely with homeowners near the turbine to provide key information, answer questions, and secure support. The solar PV projects have required a variance from the City of Decorah Plan- ning and Zoning Commission and the Decorah City Council. Financing renewable energy: Luther set aside $1.1 million in budget savings over 4 years to make an equity investment in the $3.2 million wind turbine project. Luther formed Luther College Wind Energy Project, LLC, and a C-corporation, Luther College Ventures, to tap various state and fed- eral incentives including a USDA Rural Energy for America Program (REAP) grant and a cash grant option available for a limited period under the American Recovery and Reinvestment Act. The balance was financed via a 33/67% mix of a zero interest loan from the Iowa Energy Center’s Alternative Energy Revolving Loan Program and conventional financing from a local bank. The project is also eligible for Iowa’s 476C wind energy production tax credit. As noted above, Luther is leasing the 280 kW PV array and is paying the lease payments with offset electricity purchase funds as well as with donations to the college to support renewable energy. The production from a new 820 kW array will be purchased based on a fixed price 10-year contract with the third party owner and operator of the facility. Neither solar PV option required any upfront cash investment by the college. Lessons learned: Luther College provided the following recommendations to organizations seeking to develop renewable energy projects on-site: • Connect the motivation for investments in renewable energy with the college’s strategic plan, • Maintain full transparency with the public and the Board of Regents, • Pay for high-quality professional studies, • Excercise dogged determinism, • Focus on the worst-case scenario for renewable energy resource assessment, • Expect utilities to move slowly in approving interconnection agreements and to raise other obstacles because such projects eat into their sales, and • Develop in-house expertise to conduct studies and economic modeling. 7.4 Outagamie Airport Outagamie County Regional Airport (ATW) is owned and operated by Outagamie County and serves Appleton and the Fox Cities communities. Based on 2014 flight operations, it was the fourth busiest airport in Wisconsin. The airport meets the air transportation needs of the community with four major airlines providing service to six major hubs—Chicago, Atlanta, Minneapolis, Detroit, Milwaukee, and Cincinnati. Several major corporations are also located at the airport, including Air Wisconsin, Gulfstream, Federal Express, and Airborne.

Examples of Business Cases 79 Mission: “The Outagamie County Regional Airport (ATW) is operated as a self-funded enter- prise. Fueled by a people-powered approach, ATW offers custom-tailored aviation solutions and service excellence from the ground up. ATW is a valuable asset to our community that continu- ously promotes aviation and fosters economic development by operating the most effective and efficient airport in Northeast Wisconsin.” Renewable energy action: ATW established a strategic goal to achieve a carbon net zero goal by 2030. It has since pursued a planning and implementation program to reduce energy use and install on-site carbon free energy generation consistent with its long-term carbon neutral objective. After completing a facilities assessment to direct its energy reduction measures in 2008, ATW used funding from the DOE under the American Recovery and Reinvestment Act to construct a 50 kW solar photovoltaic system and a solar thermal hot water unit on the roof of its terminal building. In 2011, ATW was awarded a grant from the FAA to develop a sustainability master plan to help it further plan for a variety of sustainability measures including implementation of energy projects toward its net zero strategic goals. In August 2013, it completed the construction of a general aviation terminal, shown in Figure 7-3, designed in accordance with LEED Platinum standards. The facility is equipped to achieve a net zero energy standard with electricity gener- ated from a 26 kW photovoltaic system and a ground source geothermal system providing 100% of heating and cooling needs. Primary driver: Aggressive county sustainability program which resulted in the creation of the strategic goal for the airport to achieve carbon neutral status by 2030. Supplemental drivers: As the policy was implemented initially through a facilities study and retro-commissioning program, ATW began to demonstrate the cost savings associated with energy improvements. As the airport developed its initial renewable energy projects supported by federal grants, the benefits of long-term stable and predictable energy costs began to be real- ized, which built support for future investments taking initial form in the LEED Platinum Gen- eral Aviation Terminal. Planning and decision making: The former airport director had a strong interest in energy reduction and related cost savings. As data was collected to demonstrate the financial benefits of energy investments, this was fed back into a program supporting new opportunities, including the construction of solar photovoltaic and thermal on the terminal roof. At this point, the air- port was gaining reputation as a leader in sustainability and energy conservation, which helped it obtain the sustainability master plan grant from the FAA in 2011. This process helped to institutionalize sustainability throughout the organization and when the LEED General Aviation Figure 7-3. Outagamie’s LEED Platinum General Aviation Terminal.

80 Developing a Business Case for Renewable Energy at Airports Terminal Project was conceived, the airport staff knew what questions to ask and which experts to work with to design a building that achieved aggressive sustainability goals in a cost-effective manner in the short-term. This would eventually result in long-term cost savings. Financing renewable energy: The airport has seeded initial projects through sustainability and energy grant opportunities from the federal government. It is now implementing improvements as part of its normal financing program, which includes FAA AIP grants, rates and fees, conces- sions, and county debt measures, where applicable. Lessons learned: The primary lesson from the Outagamie experience is that much can be accomplished when various government entities work together to achieve mutual goals. 7.5 San Diego Airport San Diego International Airport (SAN), owned and operated by the SDCRAA since 2003, was the 30th busiest airport in the United States in 2014 in terms of flight operations. It served just under 18.8 million passengers in 2014, the largest number in its history. It is the largest single-runway airport in the country. Mission: SDCRAA plans for and provides air transportation services to the region with safe and effective facilities that exceed customer expectations. SDCRAA is committed to operating San Diego’s air transportation gateways in a manner that promotes the region’s prosperity and protects its quality of life. Renewable energy action: The SDCRAA executed a lease and PPA with Borrego Solar to install 3.3 MW of solar at SAN. Under the agreement, Borrego will construct and operate the facility and the SDCRAA will buy all of the electricity output, estimated to be 5.3 million kilowatt hours (kWh), for a 20-year period. Depending on future electricity prices, the SDCRAA expects to save $3 to $8 million by locking in stable electricity prices from the solar project. The solar facility will interconnect to Terminal 2 with solar modules located on the roof of the terminal building, as shown in Figure 7-4, and on carport structures over the short-term parking area providing a supplemental benefit of shaded parking. An additional MW-size project will also be developed by Borrego over surface parking on the north side of the airport. The SDCRAA has also recently completed a 12 kV microgrid on the campus to feed the termi- nals and reduce energy bills. With the grid in place, most projects, including solar, can feed back into the airport’s system to support the entire campus rather than just the facility with which Figure 7-4. Solar photovoltaic on the roof of Terminal 2 at San Diego Airport.

Examples of Business Cases 81 the renewable energy system is associated. The goals are to “island the airport” (i.e., to operate independent of the grid) for a portion of the year and to stabilize energy use by 2035, when the airport is projected to maximize its capacity. The microgrid will be able to support a variety of power distribution and generation projects around the airport. Primary driver: Initially, renewable energy was driven by the financial and facilities mainte- nance division, who were working to control energy costs and provide continuation of opera- tions in case of outages like the one experienced in September 2011. Supplemental drivers: Sustainability, financial sustainability, and resiliency are the three core values of the SDCRAA’s sustainability program, which helps to maximize the airport’s ability to stay in place as long as possible. As presented to the board in a December 2014 meeting, the five overarching objectives of the solar project are: energy efficiency and conservation, energy independence, carbon neutrality, cost containment, and energy leadership. The airlines serving SAN were supportive of the renewable energy projects for two primary reasons: energy cost avoidance and the opportunity to maintain operational continuity during power outages. The September 2011 outage, which affected the San Diego region, was severely disruptive to airline and airport operations. Planning and decision making: A champion for the project came from the Financial Planning and Budget department, driven by the recognition that power costs were out of control. Initially, a lot of duplicative work was done in departmental silos. As decision making evolved, the process began coming together as departments began collaborating. As options were investigated, the Facilities Management, Facilities Development, Airport Design and Construction, and Envi- ronmental departments were also engaged. The SDCRAA Board was ultimately briefed on the program by senior management and voted to approve it. Staff members now believe that the Facilities Management group may not be the appropri- ate owner of the solar power system due to the focus on technology, data analysis, and active management for the solar system, which is not in alignment with Facilities Management’s typi- cal role. As a result, they hired a resource manager to work within the nexus of energy, finance, environment, and development, where staff sees the renewable energy system residing. SAN has decided that the best approach for their needs is to build generating capacity that meets forecast requirements for 5 years of the 20-year project. Financial underwriters are very cautious about this approach because of the overbuilding/overproduction in the early years and the potential that the forecast growth will not occur. SAN is considering storage options to make the early period more financially beneficial (by capturing all power generated). Staff expressed hope that the addition of storage batteries to the system would precipitate approval. Financing renewable energy: SAN had limited bonding capacity beyond the greenbuild program, so staff determined how to implement the renewable energy program outside of the SDCRAA’s capital. One benefit of entering into a lease and a PPA is that the airport does not need to capitalize the project, but rather can wrap the cost into its annual budget commitments. Financial analyses were prepared for three cases: an airport constructed and operated system, an airport constructed and third party operated system, and a third party constructed and operated system with a PPA. Because the SDCRAA needed the RECs from the project, their ownership needed to be a perquisite of any arrangement. The decision to pursue the PPA option was made to minimize current capi- tal expenses and staff increases, to stay within the airport’s core business, and in recognition that SDCRAA could not take advantage of the tax credits available to the private developer. The PPA also gave the airport ownership of RECs and any other environmental attributes. The Board expressed concern about the length of the agreement (20 years), which tied SAN to not only the power rate but also the requirement to preserve the facility location for that period.

82 Developing a Business Case for Renewable Energy at Airports Since space is quite constrained at the airport, this was more critical than it might be at other airports. The staff was able to offset this through buyback clauses in the PPA. Buyback clauses serve two purposes: to enable reclamation of the site for other development, if needed, prior to the 20-year term of the PPA and to upgrade the technology, should significantly better technol- ogy be available. SAN’s first negotiation for buyback resulted in some fairly high buyback figures. However, staff was more educated on the second round and realized that after the initial 7-year period, when the developer has realized the majority of profit, the buyback cost would be more reasonable. Subsequent and ongoing activities: Based on an overall analysis of the renewable energy objec- tive, the SDCRAA will include other technologies to balance out the airport’s power production. Of the 30 MW goal for renewable energy, a total of 8 MW of PV is about all the solar that they anticipate the system should have. An energy master plan is underway to assess other potential technologies, identify strategies to integrate energy use and generation, discuss financial impli- cations of decisions in this dynamic market, and provide guidance on implementing projects to meet the generation goals. This plan will help inform and go hand-in-hand with airport develop- ment planning. Planners need guidance on the timing of the various renewable energy elements and their relationship to land use and infrastructure development. SDCRAA has received inquiries from universities about the use of the airport’s renewable energy infrastructure as a research tool for predictive analytics. SDCRAA is discussing the idea of an energy steering group with external stakeholders that could provide guidance to the authority. Lessons learned: SDCRAA staff was interested in sharing their lessons learned so that others could approach the process more efficiently. Among the points made were the following: • Airports should understand as much as they can about the utility’s business and business structure for PPAs. Be aware that there are tariffs and standby charges on top of the power charge. Working with utilities can be challenging. It is beneficial to talk with other entities that have developed similar projects. • It is critical to project how much power the airport will need and, with an implementation plan, how many renewable energy systems the airport is able to develop to efficiently meet its needs. Airports should be able to show their baseline demand versus projected demand as their development plans are implemented to identify when, where, and how much energy generation should be deployed. • Consider power storage options so that all power generated can be utilized. It is highly beneficial to shave the peak power generation into storage. • The solar industry, and the renewable energy industry in general, is changing quickly. Acquisi- tions and mergers can eliminate companies and require modifications in contract documents to recognize new entities. Likewise, technology may change. An airport needs to deal with change in their long-term investments in renewable energy. • Airports need to reach out to other entities—universities and businesses—that have more developed renewable energy systems to understand the pros and cons, opportunities and constraints, and to learn from others. • A PPA means loss of control for the airport. Changes in the corporate structure of the devel- oper will require changes in the agreement with the airport. Changes in technology can mean changes in price for the airport making it difficult to determine when to execute. Siting the project and committing to the site for a long-term agreement may preclude other developments unless the system is bought out early. However, a PPA will result in predictability of pricing for the airport. • Energy never gets cheaper. Utilities have the power to play with the pricing of the commodity. Utilities also have long-term capital commitments for infrastructure that are repaid through rates.

Examples of Business Cases 83 • Keep everyone around the table. Plans must be integrated between airport departments. A holistic approach is necessary to understand the demand, timing, and financial consequences. • The authority structure helped to keep the focus on the airport’s goals and objectives only rather than approach the renewable energy program through the lens of a city department. The authority structure also helped foster collaboration. • A business analysis is needed on each alternative with the most current and accurate informa- tion available. This can be an iterative process that is updated as more information is devel- oped. At a minimum, the airport should assess return on investment, debt service impact, cash impact, and payback. • Airports need expert advice on technology and implementation. • Plans need to be updated regularly and sometimes frequently as conditions change. 7.6 Southwest Airlines Southwest Airlines (NYSE: LUV) is a Dallas-based airline that prides itself on its customer service. The company employs approximately 47,000 people and serves more than 100 million customers annually. Southwest is the nation’s largest carrier in terms of originating passengers boarded and operates the largest fleet of Boeing aircraft in the world to serve 94 destinations across the United States and six nearby international countries. Southwest is committed to its triple bottom line of performance, people, and planet. To Southwest Airlines, it’s about more than just doing the right thing. Southwest believes environmentally responsible decisions also make good business sense and continuously seeks new and better ways to further reduce impacts on the environment and to use resources responsibly. Southwest believes that purchasing green power provides a cost-effective opportunity to emphasize the company’s commitment to being a good citizen of the planet. Southwest is built on efficiency, which is the foundation of its envi- ronmental commitment and the key to its success and the sustainability of Southwest Airlines. Mission: The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Renewable energy action: Southwest purchases renewable energy in the form of RECs. In 2015, Southwest executed a 2-year commitment to purchase RECs to 50 million kWh of electricity to fulfill an estimated total use equivalent to 50% of the electricity needs of its headquarters, 70% of the electricity needed for the Training and Operational Support (TOPS) building, and 30% of the electricity needs of its Dallas and Houston facilities. Primary driver: The primary driver of Southwest is to offset its traditional energy usage and support the company’s environmental and climate change commitments. Supplemental drivers: The supplemental drivers are to demonstrate the company’s commit- ment to the efficient use of resources to the customers and stakeholders. Planning and decision making: The program was led by supply chain management who coor- dinated with the Facilities and Environmental Departments and the company’s Green Team. Company leadership ultimately approved the program. Financing renewable energy: Southwest executed 2-year contracts to buy RECs, which is a line- item cost in its budget in addition to its cost of electricity. It solicits bids from energy providers every other year to obtain the best market price for renewable energy at that time. Lessons learned: For entities that seek to purchase renewable energy from off-site sources, a reverse auction is a good process for obtaining competitive prices.

Next: Chapter 8 - Funding a Renewable Energy Project »
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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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