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Renewable Energy as an Airport Revenue Source (2015)

Chapter: Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy

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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Suggested Citation:"Chapter 2 - Applying Evaluation Factors to Airport Renewable Energy." National Academies of Sciences, Engineering, and Medicine. 2015. Renewable Energy as an Airport Revenue Source. Washington, DC: The National Academies Press. doi: 10.17226/22139.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

31 Airports should consider a variety of factors when evaluating the type of renewable energy technology, its location on the airport, the size of the facility, and type of ownership most appro- priate to the airport business. These factors will help define a project concept that preserves airspace safety, avoids environmental impacts, and maximizes financial benefits. This chapter reviews the primary factors to consider associated with the project setting, airport characteris- tics, relevant public policy programs, ownership options, regulatory compliance, and safety and operation. The specific financial criteria used to evaluate the economic viability of the project are discussed in Chapter 3. 2.1 Project Setting The specific aspects of the project setting that should be considered when identifying a renew- able energy technology and a feasible site include the geographic location of the airport, existing infrastructure, and regulatory and policy context. 2.1.1 Physical Geography The physical location of the airport in the United States will help determine what renewable energy technologies are viable. Some renewable energy technologies are very site specific based on the availability of the renewable resource. Others are less so. The following is a snapshot of where renewable energy resources may be viable in the United States. 2.1.1.1 Solar Solar electricity will be produced any time the sun is shining and even under cloudy condi- tions. Because the sun shines everywhere, solar power can be produced anywhere. However, the amount of solar will vary based on the amount of sunshine that occurs in particular climates. Figure 2-1 shows the relative amount of solar power that can be produced by PV across the United States with the southwestern part of the country, shaded in red and orange, providing the greatest generation potential. The amount of solar resource is a fundamental factor affecting the cost effectiveness of solar; however it is not the only factor. Other factors that can vary across the country include the avail- ability of state incentives and strength of the demand for solar power, cost of installation, and cost of electricity. For these reasons, solar PV has been deployed quite broadly across the United States even in areas with a reduced resource potential. Conversely, concentrating solar power (CSP) constructed in large power plants requires maximum solar resources and abundant space and is primarily developed in the southwestern United States. C H A P T E R 2 Applying Evaluation Factors to Airport Renewable Energy

32 Renewable Energy as an Airport Revenue Source 2.1.1.2 Geothermal Geothermal resources have two diverging stories. True geothermal which taps hot spots in the earth is very site specific. Figure 2-2 shows the locations of geothermal resources in the United States with the best resource areas, shown in red and orange, occurring in the west with high concentrations in eastern California into Oregon and in Nevada and Idaho. As discussed in Chapter 1, true geothermal has primarily been developed for utility-scale electricity production in the southwestern areas of the country and is less cost-effective for airport applications. Ground source heat pumps are not particularly geographic specific. They utilize the con- stant temperature and storage capacity of the earth and therefore can be located throughout the United States. 2.1.1.3 Biomass The biomass power industry is closely affiliated with locations where organic material to fire the generation plants is locally available. For broad scale implementation, biomass fuel that is Source: National Renewable Energy Laboratory Figure 2-1. Photovoltaic solar resources of the United States.

Applying Evaluation Factors to Airport Renewable Energy 33 inexpensive enough to produce economically competitive electricity is located in areas with a timber industry and sufficient wood waste. Figure 2-3 show the availability of biomass resources, which includes wood waste, crop residue, and urban wood waste, across the United States. High concentrations of biomass depicted in red and purple are found in several different parts of the country in the west, midwest, southeast, and northeast. 2.1.1.4 Wind Wind power generation is very site specific. For every unit of wind resource, the amount of electricity produced is cubed. This means that incremental increases in wind speed produce exponentially more electricity. Figure 2-4 shows wind resources in the United States for utility scale wind turbines. Besides the abundant wind resources in ocean waters, the best wind resource in the United States occurs in the flat plains of the midwest displayed in purple, red, and orange where there are no landscape or vegetation features to obstruct the flow of wind. High elevation areas of the Sierra, Rocky, and Appalachian Mountain ranges shown in orange and brown also have strong wind resource as well as some coastal locations, most notably in Alaska and Hawaii. Source: National Renewable Energy Laboratory Figure 2-2. Geothermal resource in the United States.

34 Renewable Energy as an Airport Revenue Source 2.1.1.5 Hydropower Hydropower resources are strongly correlated to relevant water features. Conventional hydro- power is located along major rivers with significant changes in elevation contributing resource capacity. New run-of-the-river hydropower would be located on undammed river segments or downstream of existing dams. Tidal energy sites are specific to particular coastline features where strong currents occur and tidal range is large (i.e., northern latitudes in the United States). Wave resources are strongest on the west coast where weather patterns cross the Pacific Ocean unimpeded before coming ashore in North America. 2.1.1.6 Fuel Cells Fuels cells are catalyzed by a fuel source that must be transported to the fuel cell. Most fuel cells today operate on natural gas and future technology is anticipated to run on hydrogen. Because fuel cells do not depend on proximity to a renewable resource, their deployment is not geographically constrained. 2.1.2 Infrastructure Existing infrastructure networks will facilitate the development of new renewable energy projects. These networks include electric, gas, and surface transportation such as roads and Source: National Renewable Energy Laboratory Figure 2-3. Biomass resources in the United States by county.

Applying Evaluation Factors to Airport Renewable Energy 35 rail. While infrastructure enhancements in association with the energy project are technically feasible, the costs associated with incremental work is likely to adversely affect the economics of a project, and therefore sufficient existing infrastructure is preferred. 2.1.2.1 Electric All airports are connected to the electric grid by existing infrastructure which is sized to accommodate the amount of power demand from individual airport facilities. Large airports use more power and will have larger electrical infrastructure connections to the grid particularly at buildings like terminals where electricity demand is high. Smaller airports will have smaller infrastructure capacity. This highlights a potential complication with locating large renewable energy facilities on rural airports that have excess land available for leasing: the surrounding electric grid infrastructure may not be robust enough to accept power from a large renewable energy project, even off-airport, for transmission to off-site users. 2.1.2.2 Natural Gas Natural gas pipeline networks deliver gas to airports that use it for heating needs in central heating plants. Large regional pipelines bring the pressured gas from production sources and Source: National Renewable Energy Laboratory Figure 2-4. Wind power resources in the United States.

36 Renewable Energy as an Airport Revenue Source smaller distribution networks deliver it to consumers for heating and cooking. The existing capacity of natural gas networks can influence the amount of gas that can be supplied. Where infrastructure networks are constrained, like in the northeast, natural gas prices are elevated. Availability of natural gas may also be relevant where considering the siting of a stationary fuel cell project. 2.1.2.3 Roads and Rail Existing surface transportation networks are generally sufficient to support the construction of various renewable energy projects. The landside roadways necessary for passenger and cargo delivery are typically adequate for the type of generation and electrical equipment necessary for project construction. Wind turbine equipment with blades 150 feet long can require some specialized delivery and improvement needs should an airport be considering such an instal- lation. However, the most significant surface transportation delivery constraint for an airport renewable energy project is related to the regular delivery and storage of biomass feedstock to run a biomass generator. Airports are typically trying to limit landside congestion to improve the passenger experience and limit environmental impacts. The regular delivery of feedstock to fuel the biomass project will increase surface transportation and could have a negative impact unless deliveries are scheduled to occur during off-peak hours. 2.2 Airport Property Characteristics The physical attributes of the airport, its facilities and property, will have a strong bearing on what renewable energy technologies are technologically and financially feasible. Many large, urban airports consume a lot of electricity but lack open land for non-aeronautical uses. Rural airports, on the other hand, may have land available for a large development but do not have on-site electricity demand to consume the power or sufficient regional electricity distribution capacity to deliver power to other buyers on the grid. Some airports fall outside of these norms (e.g., Dallas-Fort Worth, Denver: large demand, lots of land). ACRP Report 43 describes specific renewable energy practices at small airports (41). This section reviews particular airport charac- teristics and how they could affect selection of renewable energy technologies and project sites. 2.2.1 On-site Energy Demand The amount of energy consumed on airport property is a fundamental factor in evaluat- ing renewable energy projects and their business structure. Airports that consume a significant quantity of electricity may also benefit from consuming the electricity produced by the renew- able energy facility. With a relative high on-site demand, the airport could serve that demand either by owning the project and off-setting demand that they had previously purchased from the electric grid or by agreeing to purchase all the power generated by the system from a third party owner. Airports that do not consume much electricity cannot be the buyer, which limits the develop- ment options to acting as a landlord for the facility. They could own and generate electricity for use on-site; however, the amount of electricity that could be sold back to the grid during low consumption periods and the value of that electricity will vary by state and the particulars of its net metering program. 2.2.1.1 Electricity Airports typically purchase electricity from utilities or power brokers either based on a regu- lated tariff rate or through contract purchasing. The electricity is supplied through a regional electric grid with customers using the supply as needed. The source of power generating electricity

Applying Evaluation Factors to Airport Renewable Energy 37 and the cost of the electricity varies by region and utility service territory. As an example, the northeast has become highly dependent on natural gas while the northwest receives much of its power from large hydroelectric dams and the midwest utilities utilize coal. Electricity is critical to airport operations powering operational systems, lighting, and in some cases heat and power. Typically airports do not generate any electricity on-site with the exception of some backup generators powered by diesel or oil on a short-term, emergency basis. With long-term trends of increasing electricity costs and improvement in lighting and energy system technologies, airports have reduced electricity consumption and realized cost savings in recent years through the deployment of more energy efficient appliances such as light emitting diode (LED) lighting. These improvements have received broad support due to funding from utility rebate programs and an overall short payback period of a matter of months. Constructing renewable electricity projects on airport property reduces the amount of elec- tricity purchased from the electric grid. The simple payback of the investment of an airport funded system is calculated by adding up each year’s annual savings in the value of the electricity generated by the system and therefore not purchased from the grid until the original investment is reached. Alternatively, an airport can purchase electricity produced by a privately owned sys- tem located on airport property and secure a relatively low and predictable price of electricity overtime that would represent an assumed cost savings when compared to the cost of traditional electricity supply that is subject to price fluctuations. Under a simplified variant, the private developer would sell the electricity to a non-airport customer and pay a lease payment to the airport—an annual source of revenue—for the right to occupy the land with a facility. 2.2.1.2 Heating and Cooling Heating and cooling can come from a variety of systems both on and off-airport. On-site systems include central heating and cooling plants fired by oil and natural gas that is delivered by truck and pipeline. Electric heat is not cost effective at scale but may provide supplemental heating and cooling. Heating and cooling systems are strongly affected by climate and ambi- ent weather conditions with some locations being heating dominated and others being cooling dominated. Like electricity, costs for heating and cooling, closely tied to the cost of fossil fuels necessary to power the facilities, have been escalating in cost when considering long-term trends and vary in source and price among regions of the country. Airports have looked at opportunities to invest in such efficiency practices such as weatherization measures to minimize heating and cooling costs. Implementing co-generation projects to generate electricity and capture waste heat to heat water for heating purposes represents a systematic approach to improving energy efficiency. Renewable thermal projects including true geothermal, ground source heat pumps and solar thermal all demonstrate options for producing heating and cooling through renewable energy sources. All renewable thermal options are on-site applications that can directly benefit the airport customer and are not readily available to off-site non-airport applications. As a result, renewable thermal projects are best configured as cost saving measures for reducing the airport’s demand for off-site energy sources. 2.2.2 Real Estate One of the airport’s most valuable assets is its land and buildings. These assets support the primary aeronautical purpose of the airport. However, some of the airport’s land may not be proximate enough to the existing airport infrastructure to be useful to its existing operations and future growth. Lands close to the airfield and outside of safety zones (e.g., noise buffer zones) may be suitable for renewable energy development when no other uses for the land are feasible.

38 Renewable Energy as an Airport Revenue Source Existing and proposed structures can support renewable generation and provide a ready-made platform to locate a facility. While all airports have land and buildings, the proportion of each will vary greatly among them. Airports, both large and small, in urban areas, tend to be land constrained. If land is avail- able, it will likely have a high value for development (unless constrained by FAA safety criteria) or may be held in reserve for airport expansion. Airports in suburban and rural areas are typi- cally more land rich and the value of that land for alternative development decreases with land use development density. The general characteristics of the airport provide some guidance for the types of renewable energy projects that may be most feasible based on the proportion of available land and build- ings. For example, rural airports may be targeted by energy developers for large scale solar devel- opment to feed the electric grid due to a low fair market value of the land that will keep the project costs (and thus the final electricity costs) down and more competitive. Conversely, urban airports may focus on integrating renewables into new construction and major renovation proj- ects to off-set on-site electricity costs. All airports can consider locating solar above surface park- ing for both energy and shelter (42). 2.2.3 Terrain The terrain or land features of most airports are relatively homogenous and consistent with minimizing airspace obstructions. These characteristics include a flat and wide open landscape. However, some airports have more open and managed airport land than others. Some airports may have excess land, but it may be physically distant from airspace obstruction issues and be in a forested condition. Other airports may be adjacent to water bodies that could provide some unique renewable energy attribute. All airports have some amount of managed airfield that must be maintained with low grow- ing vegetation and minimal uninhabited infrastructure that is consistent with airspace safety. Beyond these areas, airports have varying amounts and qualities of neighboring lands. Any land that is presently open and not restricted from future development by proximity to safety areas is likely to be designated for aeronautical uses and reserved for future airport expansion. For site constrained airports often in densely developed areas, the only viable sites for renewable energy may be those that cannot be developed for other purposes due to limitations on site access and proximity to aircraft including lands purchased as noise buffers. In such cases, airports need to be creative in assessing opportunities and may be able to identify revenue or cost savings associ- ated with renewable energy where few other options are available. Where land is more plentiful, siting options will be less restrictive. 2.2.4 Facilities and Vehicles As discussed earlier, renewable energy opportunities are closely linked to the amount and types of energy consumed on airport and the potential of replacing existing energy with on-site renewable sources. Therefore it is important that the airport understand the existing energy use of the airport’s facilities and vehicles to assess opportunities to utilize renewables. All airports have similar types of facilities but at different scales. Most airports have a central building that is either a terminal supporting commercial aviation or an administrative building where the airport conducts its business. Large airports will have both. Airports also have ancillary buildings (e.g., hangars) that they own and lease out to tenants as well as buildings owned and occu- pied by FBO (on land owned by the airport). Airports also have aeronautical systems in the airfield that consume small amounts of electricity that may be powered remotely with renewable power.

Applying Evaluation Factors to Airport Renewable Energy 39 All airports with habitable space will have on-site heating and cooling systems that draw off- site fuel for heating and electricity for cooling. Larger airports will have a central heating plant that burns natural gas or another fuel to heat multiple buildings at the airport. Landside and air- side vehicles typically run on conventional gasoline and diesel though some airports are working with their tenants to convert vehicles to cleaner burning fuels including natural gas and electric. 2.3 Energy Costs The cost of energy varies by region and is influenced by the dominant source of generation and the cost to produce the energy. This section reviews the factors that influence energy costs and the differences between conventional and renewable energy sources. 2.3.1 Conventional Electricity Conventional electricity has been supplied by large power plants and dispatched to the regional electric grid. The electricity is generated using coal, oil, and more recently natural gas as well as nuclear. Alternative combustion fuels have been utilized in recent years including biomass and waste incineration. Smaller scale combustion variants include landfill gas and most recently fuel created by anaerobic digesters that produce methane from food waste. A strong advantage with all of these combustion sources of electricity is that they provide constant supplies of electricity to the grid (as long as the fuel supply is not interrupted) keeping the grid stable. A disadvantage of the cost of power from combustion sources is strongly linked to the price of the fuel, which can fluctuate widely based on supply and demand and is expected to increase over the long-term as the finite sup- plies of fossil fuels decrease. Figure 2-5 presents electricity prices by state across the United States. In evaluating the existing cost of electricity for its PVWatts Program, the National Renewable Energy Laboratory (NREL) accesses information collected in 2012 from the U.S. Energy Infor- mation Administration (EIA) and Ventyx Research Inc. (43). How much are you paying for energy today? The existing price of power is an important factor in evaluating the cost effectiveness of renewable energy. For example–a 5 kW solar PV system on the roof of your house will cost about $18,000. The average annual household consumption of electricity is 10,908 kWh. After one year, a PV system in Connecticut where the electricity price is 19.87¢/kWh would have avoided electricity purchases from the grid of $2,167 resulting in a simple payback in 8.3 years. In Washington State where the electricity price is $8.66 ¢/kWh, the simple payback is 19 years. 2.3.2 Renewable Electricity Renewable sources of electricity have been historically dominated by hydropower which is concentrated in the eastern and western areas of the United States and is the only renewable energy source that provides uninterrupted power. Wind power technology has been advanced to the point that wind farms can produce as much power as a fossil fuel power plant though genera- tion remains intermittent due to changing weather conditions (i.e., intermittent wind resources). In addition, some solar PV and thermal projects are being built at a scale of regional power plants but these facilities are mostly confined to the southwestern areas of the United States. Most solar PV is at a scale that provides local supply to the grid or power to primarily meet on-site demand.

40 Renewable Energy as an Airport Revenue Source There are some true geothermal power plants that generate electricity for the grid but those are also localized to the southwest and western parts of the country. Other renewable technologies such as biomass, landfill gas, hydrogen, etc. are smaller in scale, providing local power. 2.3.3 Heating Heating costs are dominated by fossil fuel sources with fuel supplied to the site and com- bustion occurring locally. Fuel supplies vary by regions and include oil, natural gas, propane, biomass, and electricity. Co-generation units can be coupled with existing boilers to capture and store waste heat and utilize the heated water to maximize efficiency. Renewable sources of heating are primarily limited to ground source heat pumps, solar thermal, passive solar, and renewable source electricity. 2.3.4 Cost of Power Trends Historical analysis of the cost of power shows that energy costs have increased nationally as shown in Figure 2-6. Price also varies by region as shown in Figure 2-7. A finer scale analysis also shows that Figure 2-5. Electricity prices by state in the United States.

Applying Evaluation Factors to Airport Renewable Energy 41 there are spikes and troughs based on short-term changes in supply and demand. A recent example of this has been the advancements in shale fracking technology that increased natural gas supply in the United States dramatically until there was a glut of natural gas and development companies ceased drilling which led to scarcities and higher prices. Demand for energy also decreases during economic slow-downs that will produce short-term price stabilization and declines. The cost of electricity produced from renewable energy technologies has decreased signifi- cantly in recent years due to advancements in technologies and scale up of industries. This has been particularly true for wind and solar. A recent report released in September 2014 by the investment banking firm Lazard showed that the cost of solar and wind is currently cost com- petitive with conventional sources (44). Electricity produced from solar and wind (including Source: U.S. Energy Information Administration Figure 2-6. Historical power prices in the United States. Data source: U.S. Energy Information Administration Figure 2-7. Average retail price of electricity.

42 Renewable Energy as an Airport Revenue Source existing tax credit programs) on average was 5.6 cents and 1.4 cents a kilowatt hour, respectively, and compared to 6.1 cents and 6.6 cents per kilowatt hour for natural gas and coal, respectively. Without the tax credits, solar and wind was 7.2 cents and 3.7 cents, respectively. The report also showed that the levelized cost of solar had decreased by 80% over the past 5 years and wind had fallen 60% over the same timeframe. While this is good news for renewable energy advocates, solar and wind electricity generation remains intermittent unless combined with a storage capa- bility that at this time dramatically contributes to the cost of electricity produced. Renewable energy prices have come down: Denver Airport installed four separate solar installations between 2008 and 2014. Each was competitively bid reflecting market prices for solar at the time. The drop in price Denver paid for the electricity generated by solar from 2008 and 2014 shows how dramatically solar PV system costs have decreased. The year one price of electricity dropped by up to 45% from Solar I in 2008 to the Solar II in 2010. The potential decrease between Solar I and Solar IV (2014) is as much as 72%. See Case Summary 5.7. 2.4 Public Policy Programs Public policy has been enacted on the federal, state, and local levels to encourage the develop- ment of the renewable energy due to its broader societal benefits. The Database of State Incen- tives for Renewables and Efficiency (DSIRE) is a fundamental resource in collecting up-to-date information on incentives on a geographical and technological context (45). 2.4.1 Tax Credits Tax credits have been a fundamental public policy tool to incentivize many types of pri- vate sector activities that governments have sought to encourage. Congress approves tax credits for specific business sectors as part of budget authorizations and the Internal Revenue Service administers the programs and provides policy guidance on the implementation of programs. The two types of federal tax credits that have been directed toward incentivizing the increased deployment of renewable energy technologies are the PTC and the ITC. The PTC has been applied only to wind power and awards the tax credit for each kWh of electricity produced by a wind energy facility. As a result, the developer capitalizes the project and earns the benefit once electricity is produced, thereby reducing the cost of the electricity generated. Comparatively, the ITC applies the tax credit as a percentage of the investment value or cost to construct the renew- able energy facility. The ITC is most relevant to solar technologies but many other technologies are also eligible for the tax credit including fuel cells, geothermal, and tidal energy. Authorization of tax credits by Congress has been unpredictable. It has allowed tax credit pro- grams to expire and then be renewed for short-periods of time. This uncertainty has made it dif- ficult for private investors to rely on the availability of the tax credits on a project-by-project basis producing inefficiencies. As of the time of this publication, the PTC for wind has expired and the current ITC benefit, notably for solar, will be reduced from 30% to 10% after December 31, 2015. Broad scale tax credits applicable for airport renewable projects from state and local entities are rare though the interpretation of some tax laws like real estate taxes will likely have some impact on the financial costs of developing renewable energy.

Applying Evaluation Factors to Airport Renewable Energy 43 2.4.2 Renewable Portfolio Standards RPS are enacted by states to establish long-term renewable energy purchasing goals and man- date annual renewable energy purchase percentages by electric utility companies toward achiev- ing the long-term goal. The term RPS originates from legislation proposed in California and soon after adopted by other drafters of similar state legislation (46). While the design of state programs may vary, the essential idea of the RPS is the same. It requires electricity suppliers (or, alternatively, electricity generators or consumers) to source a certain quantity (in percentage, megawatt-hour, or megawatt terms) of renewable energy. They create a demand for renewable energy by necessitating its purchase or pay a penalty that is greater than any premium value for renewables established through a trading market. Many of these programs track renewable energy purchasing through the ownership of renewable energy certificates (RECs) as discussed in Section 2.4.3. The DSIRE website provides updated information on RPS Programs. Figure 2-8 shows the current states with an RPS and those with a Renewable Portfolio Goal. Figure 2-8. Renewable portfolio standards and goals.

44 Renewable Energy as an Airport Revenue Source RPS Drives Demand for Renewables: Denver Airport’s solar projects illustrate how the Colorado Renewable Portfolio Standard (RPS) creates a demand for renewable energy. For each project, Denver International Airport (DIA) leased land to a pri- vate developer and agreed to buy the power produced by the system. However, the price it paid was equivalent to or less than traditional energy sources and not enough to fund the system costs plus investor rate of return. Therefore, the project was dependent upon securing a contract from the utility-provider, Xcel Energy, for it to acquire the RECs. In accordance with state law which established the RPS, Xcel was required to deliver to its customers a certain percentage of its total electricity from renewable sources. It issued an RFP and selected projects based on the REC price offered. In winning the bid, the third party was able to sell the RECs to Xcel providing the additional revenue stream necessary to fund the development. See Case Summary 5.7. 2.4.3 Renewable Energy Certificates A renewable energy facility produces two distinct products: electricity and environmental attri- butes. The electricity product is the same as any electricity generating system as sources of electric- ity are not distinguishable once they are fed into the electric grid and used by customers. The value of the electricity is set by the spot market and through purchase contracts with varying terms. The environmental attributes consist of benefits associated with avoiding emissions such as mercury and carbon dioxide (CO2) that are produced from a conventional fossil fuel fired power plant. These environmental benefits can be packaged into a REC and sold separately from the electrical power as illustrated in Figure 2-9. RECs may also be referred to as Green Figure 2-9. A renewable energy certificate provides additional financial value.

Applying Evaluation Factors to Airport Renewable Energy 45 Tags, Renewable Energy Credits, Renewable Electricity Certificates, and Tradable Renewable Certificates. The REC is a way for regulatory entities to track buying and selling of renewable energy and credit the consumer of green power. RECs are most often sold on a per megawatt hour (MWh) basis typically through a multi-year contract. Airports that capitalize, construct, own, and operate renewable energy facilities create RECs as the electricity is generated. The airport can hold and retire the REC and credibly claim that it uses green energy to power the airport. Or it can sell the REC as additional revenue to help pay off its initial project investment and the buyer of the REC then has claim to the renewable energy purchase. The value of the REC will vary based on the REC market. Buyers of RECs include utilities that are required by state policy to provide a specific percent- age of the total electricity for consumption from a renewable source (see renewable portfolio standards discussion in Section 2.4.2). REC buyers also include governments, private corpora- tions, universities and hospitals that have made public commitments to purchase renewable energy as part of their corporate sustainability commitment. The list of the top consumers (both on-site generation and off-site REC purchases) of green power is listed on the U.S. EPA’s Green Power Partnership website (47). Who owns the green power? RECs provide a financial incentive that can be used to help fund a renewable energy project as illustrated in the case of Denver Airport. They also provide formal documentation of renewable energy utilization by the owner. An example of this comes from the San Diego County Regional Airport Authority (SDCRAA). It executed a PPA with Lindberg Field Solar 1 (LFS1) to buy the electricity from a solar installation built and owned by LFS1 at Terminal 2. As part of the PPA, SDCRAA also bought the rights to the RECs. SDCRAA wanted documentation that it owned the renewable energy attributes and provided additional compensation to LFS1 for that right. See Case Summary 5.18. FAA guidance related to projects funded under Section 512 of the FAA Modernization and Reform Act of 2012 prohibits the airport from generating additional revenue from RECs. How- ever, the guidance states that airports can give RECs to the utility in exchange for a discount on existing electricity bills (48). In the case where the airport does not own the renewable energy system but rather leases land to a private developer to construct, own, and operate the system, the private entity also owns the RECs. The developer will want to sell both the electricity and the RECs through a long-term contract preferably to a single buyer who wants to substantiate a green energy purchase by hold- ing and retiring the RECs. If a single buyer for both energy and RECs is not identified, these two commodities may be uncoupled and sold to two different buyers with the REC buyer being the official green power purchaser. 2.4.4 Grants Direct government grant to airports and other renewable energy partners have had an impor- tant effect on financing project development particularly in association with the federal stimulus program and the implementation of funding under the American Recovery and Reinvestment Act (ARRA). The reader will see reference to ARRA as a component for financing a number of the case summary projects that were implemented between 2009 and 2012. ARRA funds are no longer available and its role in helping to stimulate a private renewable energy market has been served.

46 Renewable Energy as an Airport Revenue Source The FAA has also provided funding for airport owned renewable energy projects under the VALE Program, which provides discretionary funding through the AIP for emissions reduction projects. Over the past few years, the FAA has focused on ensuring the funded equipment results in a direct air emission benefit on-airport, which makes some renewable projects clearly eligible (e.g., a geother- mal project replacing on-site central power plant) and others not eligible (e.g., solar PV supplying on-site electricity and replacing that provided by the grid and generated from an off-site source). This change has resulted in fewer solar projects obtaining funding under the VALE Program. As part of the FAA Modernization and Reform Act of 2012, the FAA was authorized under Section 512 to fund energy efficiency and renewable energy projects. The FAA’s shift in limiting solar funding under the VALE Program coincided with the new authority under Section 512 as a more appropriate funding mechanism. A handful of solar and geothermal projects have received funding under the program, though as of early 2015 the FAA has not yet released formal guid- ance on how airports can apply for the funds. Section 3.4, Funding Sources, and Table 3-9 provide additional information on grant pro- grams and eligibility requirements. Given the increased competition for energy and emission reduction grant funding and the uncertainty regarding availability of funding under Section 512, grants are likely the best option for airports located in states with limited renewable energy private markets. 2.4.5 Executive Orders The executive branch of the federal government can also direct policy and department bud- getary resources to effect policy. The Bush and Obama administrations both took actions that encouraged the development and purchasing of renewable energy by the federal government. Links to the Executive Orders are also found on the DSIRE website (49). President Bush signed Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management, on January 26, 2007 which mandated, among other things, that half of the renewable energy consumed by federal agencies in the 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 green- house gas 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. Under these policies, the FAA has been carrying out its responsibilities to meet the renewable energy targets under various executive orders and federal policy directives. 2.4.6 Net Metering Net metering is a term that refers to an energy user’s ability to generate on-site energy to sup- ply its needs and export some excess energy back to the grid when it is not being used on-site. Under federal law, electric utilities must allow customers the ability to net meter, although how much compensation the generator receives and the amount that can be exported back to the electric grid varies among state programs with some being comparatively lucrative to encour- age on-site generation and the ability to net meter while others are designed to discourage net metering. The concept of net metering is illustrated in Figure 2-10. Net metering programs that are favorable to on-site generation will compensate generators at the retail electricity rate (as opposed to the wholesale rate which does not include any mark-up)

Applying Evaluation Factors to Airport Renewable Energy 47 allowing them to reduce their net costs by a third to a half depending on the rate structure. They may also allow for an on-site system to supply a greater percentage of power compared to the on-site demand allowing for greater revenues. Utility programs that seek to limit net metering capacity and compensate at the wholesale rate note with some justification that the export of excess electricity is utilizing the grid without paying for entry (i.e., distribution costs which are the majority of the difference between wholesale and retail prices) and thus should pay only the wholesale rate. In cases where the on-site generation is likely not to reverse flow back to the grid because the new supply is a small percentage of the on-site demand (which might be the case at an airport), so called behind the meter projects can be quite cost effective because they limit the amount of electricity that needs to be acquired from the grid at the retail rate thereby providing the consumer with a cost savings benefit equal to the retail price of electricity. The economics of such an arrangement improves in regions of the country where the retail price of electricity is relatively high. Matching energy generation with on-site use: Wind power is a particularly valuable resource for net metering as power generation and on-site consumption are not particularly well matched as exemplified by the case of the wind turbine at Heritage Aviation in Burlington, VT. While a 24/7 operation, Heritage’s on-site electricity consumption is similar to most workplace environments with demand high during the day and low at night. Wind energy generation follows some sea- sonal and daily patterns but is more influenced by episodic weather fronts which can occur at any time of day. For Heritage, it draws electricity from the wind turbine when needed, but the power is also exported to the grid when on-site demand is low, like in the middle of the night. Heritage is paid for the electricity it supplies to the grid. Likewise, when the wind is not blowing, Heritage can take what it needs from the grid. Balanced out, Heritage gets financial value for all of the electricity produced by the wind turbine as a result of net metering policy. 2.4.7 Power Purchase Agreements The PPA, also referred to as a long-term contract, is generally the central and most important document in a third party owned renewable energy project because from it is where the major- ity of the revenue for a project is derived. PPAs are contracts that establish a commitment to Figure 2-10. How net metering works.

48 Renewable Energy as an Airport Revenue Source purchase power at a specific price over a specific term. PPAs are critical for privately financed power deals because they guarantee an annual revenue stream for the repayment of investors. The buyer of the electricity locks in a price for the electricity over a defined future period that provides known and stable electricity prices and also a hedge against volatile market prices that are forecast to increase in the future. While future prices are not known today, the year one price is often set at or below existing prices. Any time in the future when market prices exceed the PPA price, the electricity buyer will enjoy the differential as a cost savings. The potential downside for the airport is that short-term energy prices could go down below the PPA price. This is a risk to the airport in committing to the PPA; however, prior to commit- ting to a PPA an evaluation of historical energy costs should be evaluated along with future energy prices that are forecast to increase. Therefore, there is strong evidence to suggest energy costs will continue to rise and evaluating PPAs is still very attractive for airports from a business perspective. PPAs may also be issued in response to a so-called Feed-In Tariff or FIT. The FIT is a public procurement for energy that sets a price that will be paid by the utility for the energy. The FIT price varies by technology and reflects the actual cost of energy produced by a facility after all development costs and specified investment returns are factored in. FIT programs have been more widespread in Europe whereas U.S. policies have relied on tax credits and RPS mandates that utilize market approaches to calculate the cost of energy. One item particular to renewable energy projects is that the revenue stream for a project often consists of two distinct commodities that may be sold together or separately. These two commodities are energy and environmental attributes. These environmental attributes are some form of a renewable energy certificate (see Section 2.4.3). Environmental attributes may be an important revenue stream for a renewable project. Thus, it is important to note whether a PPA includes or excludes the sale of RECs with the power. A bundled PPA is one in which the seller is selling both the power and the environmental attributes, while an unbundled PPA includes sale of only the power. In an unbundled PPA, the developer may sell the RECs to a different purchaser under a REC contract. Indianapolis as an example: Indianapolis Power & Light (IPL) uses its Rate Renew- able Energy Production (REP) program as a means of purchasing renewable energy. The program operates like a feed-in tariff where IPL purchases the output through long-term contracts at a fixed rate. The minimum size of an eligible solar array is 20 kW and no larger than 10 MW. Solar generators receive $0.24 per kWh for facilities between 20 and 100 kW and $0.20 for solar arrays larger than 100 kW. Johnson Melloh Solutions, the third party owner of the solar farm at Indianapolis International Airport, obtained long-term contracts for two 12.5 MW Projects that are currently operating. See Case Summary 5.10. 2.5 Ownership and Operational Arrangements There are three primary ownership scenarios for airport renewable energy projects. They are airport owned, third party owned with airport as host, and third party owned with airport as power purchaser (50). Other lesser arrangements are airport owned with an equipment lease, utility owned with airport as host, and tenant-owned.

Applying Evaluation Factors to Airport Renewable Energy 49 2.5.1 Airport Owned Under existing conditions, the airport purchases electricity from the utility drawing on the grid as demand warrants. The utility sends the airport a monthly bill for the electricity it uses based on an accounting at the utilities electrical meter. This is illustrated in Figure 2-11. If the airport funded, constructed, owned and operated its own renewable energy facility, it would generate electricity from the system on-site and behind the meter. At times when the system generates more electricity than the building can consume, the excess electricity is sold back to the utility. At times when the building consumes more electricity than the system can produce, the airport purchases the required electricity from the utility. The meter records the amount of electricity draw from the grid and credits back excess electricity sold to the utility. This is known as net metering. The amount of electricity that can be sold and the value of that electricity (e.g., wholesale or retail rate) varies among states. However, the difference between what is bought and sold is the airport’s electricity bill (which could be a liability or an asset). This process is illustrated in Figure 2-12. The same general process can also occur when an airport installs an on-site heating system (e.g., ground source heat pump) that limits the amount of need for traditional fuel (e.g., natural gas) for heating purposes. Figure 2-11. Typical condition when airport buys electricity from the grid. Figure 2-12. Airport owned renewable energy system.

50 Renewable Energy as an Airport Revenue Source 2.5.2 Third Party Owned–Airport Host In a third party owned project, the airport leases out property (land or building) to a private developer who will construct, own, and operate the facility under a long-term lease agreement. Third party owned projects are particularly attractive in states where there is a strong solar power market and private entities are actively looking for development sites and green power purchas- ers. In these situations, development companies profit from solar developments primarily due to the ability to monetize the federal investment tax credit that is currently equal to 30% of the project installation cost, and a state market for renewable energy which directs utilities to pur- chase green power at a premium price. In the case where there is a third party owner and the airport is the host, the third party simply pays the airport an annual land lease payment for the right to operate the facility and it sells the power generated by the facility to an off-site customer. These agreements typically work where the fair market value of the land is relatively low and can be absorbed into the project finances while keeping the electricity price at a competitive level. The airport will continue to receive its electricity as it always has as illustrated in Figure 2-11. The third party will produce power and send it onto the grid and an off-site party will execute a PPA with the third party to acquire the electricity and the renewable energy certificates that are created by the generation of green power. 2.5.3 Third Party Owned–Airport as Power Purchaser In this variant, the project is structured as described earlier with the airport providing a long-term lease to a private entity to construct, own, and operate the facility. However, in this arrangement, the airport also executes a PPA which is a contract for the airport to purchase all of the power produced for a long-term period (usually 15 to 25 years) at specified annual rates. The PPA is a critical aspect of project financing because it guarantees a long-term revenue stream during facility operation that assures that investors will receive a return on their investment based on the established PPA price of electricity. The third party is particularly interested in developing renewable energy projects at airports because airports are a credit worthy long-term purchaser of energy. Figure 2-13 shows that the power is purchased by the airport to meet a por- tion of its demand and purchasing the remainder of the power from the electric grid. PPAs provide airports with two benefits: one that is assured; the other that is assumed. By purchasing power for the next 15–25 years, the airport is assured that its price of power will be stable and predictable. The primary benefit is that the PPA provides cost certainty and is a hedge or an insurance policy against episodic price volatility and long-term significant price increases. Figure 2-13. Third party owned with airport purchasing the system power.

Applying Evaluation Factors to Airport Renewable Energy 51 It is not a guarantee of long-term cost savings because the future price of electricity is not known. We know that electricity prices in the United States have increased 50% since 2002 as shown in Figure 2-6. Based on this history, it is assumed that prices will continue to increase and forecasts from the EIA predict electricity prices will increase annually by 0.4% over the next 10 years. However, there is no guarantee that this will occur. In its Interim Guidance on Energy Efficiency for projects that receive FAA funding under Section 512 of the Modernization and Reform Act of 2012, the FAA has added requirements associated with PPAs (51), specifically: • Does not include penalties should the solar system not produce a minimum level of power; • Reflects market rates for the electricity sold to the local utility provider; • Is either revenue neutral or financially net beneficial to the airport sponsor on an annual basis meaning the airport must receive at least as much financial benefit annually as the fair market value of the electricity sold. While third party (privately-owned) projects with PPAs are unlikely to require or demon- strate a need for FAA funding to the airport sponsor, it is possible that the FAA may seek to impose these requirements through its broader authority under grant assurances in approving ground leases. 2.5.4 Airport Owned Equipment with Private Lease One of the advantages of the third party owned structures is that the third party can monetize the tax benefits associated with the investment tax credit that cannot be accomplished by a non- tax paying entity like a government agency or non-profit organization. The savings associated with monetizing the tax credits can then be shared with the project partners through a lower power cost and lease payments as relevant. In this arrangement, the airport owns the project but leases the equipment from a private entity, which can also monetize the tax credits and pass those savings on to the airport in reduced lease payments. The airport owns the system and therefore reduces the amount of power it pur- chases from the grid as with the airport owned scenario discussed in Section 2.5.1. The benefit is that the airport does not need to capitalize the cost of the renewable energy facility equipment, only the installation cost, thereby reducing the overall installation costs compared with the con- ventional airport owned scenario. The trade-off is that it has the additional lease payment to make to the equipment holder and it will eventually make an investment to buy the equipment outright once the leasing company fully monetizes the tax benefits after year 6. Redding Municipal Airport in California structured its solar project as airport owned but with the equipment leased. This unique structure allows the airport to own the facility, yet work with a private leasing company that can qualify for tax credits and pass the savings on to the airport. See Case Summary 5.16. 2.5.5 Utility Owned with Airport Host Depending on how utilities are regulated within a state, utility companies may be owners of energy generation projects. The most common owners are utilities that are owned and oper- ated as part of the municipal government. It is generally feasible for a utility company to own a renewable energy generation facility that is sited on airport property. This type of arrangement is

52 Renewable Energy as an Airport Revenue Source more likely where the utility is owned by the municipality and generation sites for utility owned facilities are located on municipal property including the airport. Such an example of an airport solar project owned and operated by the municipal utility is in Figure 2-14. Where renewable energy generation is constructed, owned, and operated by the municipal utility on airport property, the utility and the airport likely have considerable flexibility in struc- turing the arrangement. The airport may just act as a host and pay its electric bills without any change as hosting the project particularly on a building rooftop that is not utilized for other purposes does not present a cost that needs to be off-set. In other cases, the airport may receive a reduced energy bill from the utility based on the output of the renewable energy facility. The municipal utility will develop such projects to provide its customers with a green power electricity mix, diversify its electricity supply sources, and provide a potential long-term savings from renewable energy. Irrespective of the compensation agreement with the utility, the air- port will obtain ancillary benefits associated with public exposure that the airport is generating green power. 2.5.6 Tenant Owned Airport tenants may seek to construct renewable energy projects on property or buildings owned or leased on airport property. As the tenant executes a contract to lease airport property, which contains the specific terms and conditions of the lease arrangement, the airport has con- siderable control over what the tenant can do and any compensation. Source: San Francisco International Airport Figure 2-14. Solar array at San Francisco Terminal 3. The 450 kW roof-mounted solar facility on the roof of Terminal 3 at San Francisco International Airport (SFO) is owned and operated by the San Francisco Public Utility Commission (SFPUC), which is responsible for providing power for municipal facilities and its customers. The SFPUC identified 19 municipal facilities for solar installations including SFO Terminal. It builds, owns, operates, and maintains these facilities to provide a solar product to its customers. Because the price of solar electricity is socialized across all system users, the airport pays the same rate for electricity used at all its meters.

Applying Evaluation Factors to Airport Renewable Energy 53 Renewable energy projects at tenant owned facilities are most common when new hangars and buildings are constructed. In some cases, the tenant includes the renewable energy project as part of an airport requirement that the new structure meet a sustainability standard typically communicated in airport policy associated with new construction. While renewable energy may not be specifically required, projects are often directed to meet a Leadership in Energy and Envi- ronmental Design (LEED) standard and on-site renewable energy generation may be one of the options that could be employed to help achieve the required standard. Because tenants typically pay their own electricity bills, the installation of a renewable energy project to off-set power purchased from the grid does not inherently provide a financial ben- efit to the airport. Airports could impose a fee for allowing the renewable energy system that does not adversely affect the project economics but provides the airport with a modest revenue source. However, airports that have a sustainability requirement on tenants may not be able to justify profiting from the requirement by adding a surcharge. There are a few tenant-owned renewable energy systems discussed in the case summaries (see BTV 5.5 and SAN 5.17). In each case, the airport supported the tenant’s pursuit of renewable energy but does not receive a specific financial benefit from the installations. 2.5.7 Community Solar Shared renewable energy arrangements allow several energy customers to share the benefits of one local renewable energy power plant. When the power is supplied strictly by solar energy, it is sometimes called community solar. The shared renewables project pools investments from mul- tiple members of a community and provides power and/or financial benefits in return. There are several different models for ownership including (1) utility-owned to provide a green product to their customers, (2) member-owned where a special purpose entity (SPE) builds and owns the facility and provides power to members or subscribers, and (3) nonprofit owned where donors fund the system. Figure 2-15 shows the opening of a community solar project located at Garfield County Airport in Rifle, Colorado. 2.6 Regulatory and Compliance Requirements Airports will need to assess the regulatory requirements and identify any permitting chal- lenges early in project planning as part of site selection and alternatives analysis. Particular sites may harbor sensitive resources or have a potential effect on airspace and require enhanced analy- sis and mitigation that could be costly and time consuming. These issues need to be considered early on in project development. The following section summarizes relevant primary regulatory issues. 2.6.1 National Environmental Policy Act Review The National Environmental Policy Act (NEPA) requires federal agencies to evaluate the environmental impacts of their actions and consider alternatives to mitigate potential impacts.

54 Renewable Energy as an Airport Revenue Source For all new projects at airports that require a federal action, a NEPA review must be conducted. Federal actions can include a change to the ALP, the issuance of a federal permit or approval, or the granting of federal funds. New airport structures would likely trigger an update to the ALP and therefore require envi- ronmental review under NEPA. However, a determination issued by the FAA under an airspace review is not considered a federal action and alone does not trigger a NEPA review. Any renew- able energy project must be reviewed under NEPA if (1) the airport receives federal funding or (2) there is a lease to a private third party. Sponsors and their partners file information on the project with the FAA to initiate their NEPA reviews. Sponsors of projects that are deemed to have a de minimus impact may file a form requesting a categorical exclusion or CATEX. Sponsors of projects that have greater impacts must file additional information on the project and the anticipated environmental impacts in the form of an Environmental Assessment or EA. The FAA may determine that the level of information submitted in the EA is not enough to adequately characterize impacts and prescribe mitigation and require the submission of a more detailed analysis as part of an Environmental Impact Statement or EIS. Solar PV projects previously reviewed under NEPA have received a CATEX. After con- sulting with the region or airport district office (ADO) about the project and environmen- tal issues, the sponsor will provide the FAA with environmental information to support a CATEX or EA. Past solar PV projects have received a CATEX from the region or ADO, supported by background documentation on the purpose and need for the project and any potential environmental impacts. Once the appropriate NEPA documentation is provided, the FAA will issue a Finding of No Significant Impacts (FONSI) concluding its responsibility under NEPA. Source: Garfield County Colorado Figure 2-15. Community solar project in Colorado. In June 2011, the Clean Energy Collective (CEC), a private renewable energy company, completed installation of a 858 kW community owned solar project at Garfield County Airport. The CEC leases the ground at the airport from Garfield County for the array. Its members/owners receive energy savings through a power purchase agreement with their serving utilities. The $5.1 million array contains 3,600 photovoltaic solar panels and occupies about five acres of county leased land.

Applying Evaluation Factors to Airport Renewable Energy 55 The Draft FAA Order 1050.1F includes a specific CATEX for solar and wind power (52). It reads as follows: Approval of an Airport Layout Plan (ALP), Federal financial assistance for, or FAA projects for: the installation of solar or wind-powered energy equipment, provided the installation does not involve more than three total acres of land (including the land needed for easements and rights-of-way associated with building and installing the equipment, and any trenching and cabling that would connect the installed solar or wind equipment to other parts of the airport or an existing electrical grid. Construction contracts or leases for this equipment must include requirements to control dust, sedimentation, storm water, and accidental spills). This CATEX provides additional direction to ADO’s for considering a CATEX for solar whereas past projects obtained a CATEX under designations associated with (1) minor expan- sions of existing facilities, (2) purchase, lease or acquisition of three acres or less of land, or (3) upgrading of building electrical systems. 2.6.2 Environmental Resources While renewable energy projects typically do not release any emissions (with the exception of biomass) or store any hazardous materials, potential environmental damage is limited to impacts associated with land development. Still, project sites may provide environmental ben- efits that are subject to regulatory review (see FAA Order 5050.4). The following natural resource impacts are among the areas that should be considered during a NEPA review and may require individual federal, state, or local permits. 2.6.2.1 Wildlife Habitat / Endangered Species Wildlife habitat on airports typically includes habitats for species that prefer a grassland envi- ronment. While the airfield environment is managed to be free of natural groundcover, shrubs, trees, and water bodies that provide structure for shelter, foraging, and reproduction of wildlife, it can attract a specific group of animals. Species that had to be considered during siting and design of past projects include burrowing owl, kit fox, and grassland birds. Some of these species may be listed for protection under federal or state endangered species laws. Should the airport decide to proceed with a project at a site where wildlife habitat may be impacted, the sponsor will need to characterize the extent of the habitat, demonstrate how the project will minimize impacts, and mitigate for any unavoidable damage. 2.6.2.2 Water Quality Impacts from Erosion and Sedimentation Construction projects disturb vegetation and soil and make it available to erosion caused by rain events. The footprint of land disturbance for solar projects is limited to posts that hold up the ground-mounted panels. However, construction vehicles needed to bring the panels and other materials to the site and install the equipment can cause temporary impacts on the land that must be managed to avoid erosion and sedimentation. The potential environmen- tal impacts of erosion will vary considerably by region depending on the time necessary to re-vegetate and stabilize disturbed areas. As an example, two years after construction of its Pena Boulevard Solar Project, DIA continues to maintain erosion control and actively re-vegetate lands disturbed by construction. 2.6.2.3 Wetlands Disturbance Wetlands are protected by federal and state environmental laws due to their broad benefits to wildlife and water quality. Projects that disturb wetlands or are proposed near wetlands may require the issuance of a wetland permit. The permit may require land stabilization to prevent against erosion and sedimentation. It may also require an assessment of alternatives to avoid and minimize impacts, and measures to mitigate unavoidable impacts. For Denver’s Pena Boulevard

56 Renewable Energy as an Airport Revenue Source Project, the developer connected two sections of the project by drilling and installing a cable underneath a wetland to avoid a physical impact from traditional trenching. 2.6.2.4 Cultural Resources Federal activities must comply with the National Historic Preservation Act. Many states also have historic preservation programs that may encompass additional areas. Solar projects pro- posed for the roofs of historic airport buildings may require approval to ensure that the solar panels do not adversely impact the historic value of the structure. Ground-mounted projects that disturb soils may need to conduct an archaeological study to ensure that below-ground historic resources are not impacted. 2.6.2.5 Hazardous Materials Hazardous materials are regulated by federal and state laws. Because solar panels do not employ hazardous materials, the use of them does not trigger an environmental review. How- ever, if a project is proposing to disturb land to construct a solar facility, the applicant may need to test the soil prior to any work to ensure that historic contamination is not released from the soil. Should preliminary testing suggest that soils may be contaminated with a regulated waste, it may be wise to avoid construction in that area for both environmental and economic reasons. 2.6.3 Local Zoning If an airport is subject to local zoning laws, development of a renewable energy facility at the airport may require that the developer obtain a variance under the zoning code. However, many state and local governments have adopted laws and ordinances that simplify the zoning permit- ting process for certain types of renewable energy facilities. 2.6.4 Airspace Safety Review The FAA’s Obstruction Evaluation / Airport Airspace Analysis (OE/AAA) Division under- takes aeronautical studies to assess the potential impacts of a project on air navigation. It dis- tributes the notice to representatives of the various FAA lines of business, including airports, technical operations, services, frequency management, flight standards, flight procedures office, and military representatives. Each division has the responsibility of providing comment on the potential impacts of a proposal on its area of authority and expertise. As an example, air traffic personnel is responsible for identifying whether the structure impinges on airspace; assessing effect on existing and proposed aeronautic operations, traffic control procedures, and traffic pat- terns; providing comment on mitigation opportunities including marking/lighting; identifying when negotiations with sponsors are necessary; determining when circulation is necessary and coordinating that process; collecting all comments; and issuing the determination. Technical Operations staff identifies electromagnetic and/or physical effects including the effect of sunlight and reflections on air navigation and communication facilities. Upon completing the aeronautical study and obtaining input from the various divisions and organizations involved in the review, the OE/AAA issues a determination on the proposed struc- ture or activity. If the project will not impact aviation, the OE/AAA will issue a Determination of No Hazard. If an impact is identified, the OE/AAA will issue a Determination of Presumed Hazard, the reason for the hazard, and changes that could be made to avoid the hazard. Unless the applicant agrees to the changes in writing, the Notice of Presumed Hazard will be re-issued as a Determination of Hazard as the FAA’s final determination on the matter. The determina- tion, however, is not a permit enforceable by law but is instead part of a notification process to identify potential hazards to aviation, require marking and lighting of potential hazards to

Applying Evaluation Factors to Airport Renewable Energy 57 minimize potential risk to aviation, and update aeronautical charts and flight procedures for pilots to avoid the hazard. In reality, however, a hazard determination is sufficient enough to deter project financing and underwriting due to the potential liability associated with the deter- mination. As an example, most utility-scale wind turbines rise greater than 200 feet above the ground and are subject to airspace review by the OE/AAA. The receipt of a hazard determination from the FAA for a proposed wind turbine is considered by project developers to be a fatal flaw thereby negating the project. Potential impacts of energy projects on aviation were reviewed in detail in ACRP Report 108: Guidebook for Energy Facilities Compatibility with Airports and Airspace. The following section provides a brief summary of the primary issues discussed in that report that are relevant to on-site renewable energy generation projects. 2.6.4.1 Physical Obstructions The FAA is responsible for guarding the National Airspace System (NAS) against intrusions that may impede safe use of airspace and airport resources. The FAA regulates such intrusions as obstructions (physical) or aviation safety hazards (non-physical). The FAA’s ability to regulate obstruction intrusions into the NAS is extremely limited, as it is restricted to monitoring the erection of obstructions (i.e., charting) and mitigating hazards by modifying aviation proce- dures. The FAA’s ability to enforce on-airport land use is based entirely on contractually based grant assurances, rather than regulations. However, off-airport land use regulations are largely at the discretion of local government. One of the primary means of protecting airspace on airport property, where the FAA has jurisdiction, is through the preparation of ALPs and Master Plans. The FAA and airports utilize Advisory Circular (AC) 150-5300-13A, Airport Design, to guide development on airport prop- erty and prepare the ALPs. For land uses off airport property, the FAA works with airports and their local communities to achieve conformance of existing and proposed natural and developed features to airspace protection criteria. Because protection criteria is well-defined for physical penetrations of airspace and less so for non-physical impacts, the criteria and guidance for land use planning can vary among project types. The following are examples of legislative and regulatory guidance to protect airspace and airport resources from unsafe intrusion: • Runway Protection Zones, as defined by FAA AC 150-5300-13A, Airport Design • Obstruction Height Zones, as defined by 14 CFR Part 77 and local zoning ordinances • The United States Standard for Terminal Instrument Procedures (TERPS), as defined by FAA Order 8260.3B • Land use controls, as defined by local zoning ordinances (new Land Use Compatibility, AC 150/5190-4A) All energy technologies (and other structures for that matter) have the potential to penetrate airspace depending on proximity to airports. However, any structure rising more than 200 feet above existing ground elevation penetrates the imaginary surfaces that define airspace and requires notification with the FAA. Utility-scale wind turbines currently in design and construc- tion are 400 feet or taller while CSP towers can also be over 400 feet. For other structures under 200 feet, a physical penetration to airspace could occur when the structure is located in relatively close proximity to an airport. These projects are reviewed by FAA under 14 CFR Part 77 and a determination is made on a case by case basis. The structural nature of energy technologies helps to define their potential to be compatible with airports and airspace. For example, large wind turbines are difficult to site near airports while low profile solar panels typically can be located so as to not penetrate the imaginary surfaces as illustrated in Figure 2-16.

58 Renewable Energy as an Airport Revenue Source 2.6.4.2 Solar Glare Glare is produced when light from a source or reflected from a surface impairs a receptor’s view. Glare impacts are assessed based on the sun’s position, the potential for a surface area to reflect light, and the sensitivity of a receptor to observe the glare. Sensitive receptors at airports include the air traffic control tower (ATCT) cab and aircraft on approach. Figure 2-17 illustrates how glare can interact with a sensitive receptor based on the movement of the sun. Impacts of glare in the energy sector have been primarily associated with solar power facili- ties including PV panels and CSP systems. Glare impacts from CSP systems are expected, as they use mirrors at centralized power plants, but glare impacts from PV installations may be unexpected, as they produce electricity by absorbing (rather than reflecting) sunlight. Solar PV is commonly being located on airport property to provide cost savings and produce alternative revenue for the airport. However, their close proximity to sensitive airport receptors such as the air traffic controllers and pilots on final approach has been verified as producing potential glare effects. Understanding of the potential impact of solar glare on airport sensitive receptors has expanded significantly over a short amount of time. When the FAA released “Technical Guid- ance for Selected Solar Technologies at Airports” in November 2010, there were fewer solar projects at airports compared to today and no reports of glare impacts. Glare was assessed primarily in a qualitative fashion and the authors recommended the development of model- ing tools to better address the issue. Eighteen months later, the glare incident at Manchester- Boston Regional Airport (MHT) focused the FAA’s attention on the potential safety concerns and within 6 months, a modeling tool was developed (53). Appropriate use of Sandia National Laboratories’ Solar Glare Hazard Analysis Tool (SGHAT) and coordination with the FAA will likely make siting and impact analysis more efficient and accelerate the approval of future solar projects. Additionally, while low-glare glass may not be an explicit project requirement, airports considering solar projects should request feasibility assessments for use of low-glare glass to mitigate glare in the requests for proposal (i.e., bid solicitation). Figure 2-16. Examples of structures that may impinge on airspace.

Applying Evaluation Factors to Airport Renewable Energy 59 2.6.4.3 Radar Interference and Rotor Wake Turbulence from Wind Turbines Because radar interference is most often caused by a physical barrier between a radar and a receptor (i.e., plane or airport) sending or receiving a radar signal, most energy technologies can produce an impact if sited too close to a radar installation. However, the greatest problem has been the construction of thousands of 400-foot tall wind turbines that have been located in radar communication corridors. The wind farms create radar shadows behind which the radar signal cannot reach, producing a “blind spot.” The rotation of the wind farm blades also creates a signal received by radars that produces clutter, degrading the effectiveness of the radar. These effects are illustrated in Figure 2-18. While some energy technologies have not been closely evaluated for potential impacts on aviation, this is not the case for wind energy. Due to its capacity to produce a significant amount of renewable energy and achieve public policy mandates for renewable energy, high demand to construct wind projects has forced aviation and military stakeholders to respond to encroach- ment on the NAS, garnering wind energy installations close scrutiny since at least 2006. In addition, wind turbines destabilize the air after it passes by the rotors causing turbulence or wake impacts. In wind farms, the turbines are spaced in part to limit impacts to downstream Figure 2-17. Illustration of geometric factors associated with glare on sensitive receptors.

60 Renewable Energy as an Airport Revenue Source wind turbines. The destabilized air or turbulence cannot be seen and can produce a safety hazard to particular aircraft including emergency medical helicopters and agricultural applicators. These issues can be of concern downwind of a single row of wind turbines or on the edge of a wind farm. The lesson of wind energy and aviation has been the need to compromise. Wind energy pro- vides important benefits for national security, economics, and the environment. However, air- space is a finite resource, central to supporting commercial and recreational aviation, emergency response, and military readiness. Project development is subject to a review process facilitated by the FAA and contributed to by the military and other government agencies with a variety of interests. Through that process, individual projects must demonstrate how they are avoiding and minimizing impacts on airspace and, if required, how they will mitigate for unavoidable impacts. The approval may be an opportunity to restrict airspace around the wind farm and protect airspace in areas where the supporting system needs improvement. After about 10 years of active dialogue on the matter, research and compromise will continue to be necessary. The DOE, FAA, Department of Homeland Security (DHS), and DOD have taken lead roles in this process, focusing on development of radar mitigation technologies that can be deployed throughout the country. Interagency coordination will be important for avoid- ing and mitigating potential problems early in the process. 2.6.5 Federal Airport Obligations Renewable energy projects must meet FAA procedures for airport design, planning, construc- tion, and operations as required for federally-obligated airports. Table 2-1 lists and summarizes legislation that obligates airports (54). Important considerations associated with proposed proj- ects include conformity with FAA grant assurances, consistency with the ALP, determination of fair market value for any third party property transfer, prohibition against revenue diversion, and consistency with local zoning. Figure 2-18. Wind turbines as physical obstructions to radar signals.

Applying Evaluation Factors to Airport Renewable Energy 61 2.6.5.1 Grant Assurances A federal grant assurance is a provision within a federal grant agreement to which the recipi- ent of federal airport development assistance has agreed to comply in consideration of the assis- tance provided. Any renewable energy project which receives FAA funding under the AIP must comply with the terms of the grant. These requirements are broad and provide FAA with direct oversight with all aspects of the project. The list of grant assurances for airport sponsors was updated in April 2014 (55). 2.6.5.2 Airport Layout Plan Airports engage in long-term facility planning by developing airport master plans and an ALP. An airport master plan is a comprehensive study of an airport that describes the short-, medium-, and long-term development plans to meet future aviation demand. In accordance with AC 150/5070-6B, master plans are developed through a collaborative process to engage the airport, agencies, businesses, and stakeholders in planning for the airport’s future. The purpose of the master plan is to identify critical issues related to the airport’s infrastructure and direct financial resources to address those issues. The ALP is then modified to include future infra- structure improvement projects identified in the master plan. Airports are beginning to recognize the potential for renewable energy and may wish to iden- tify possible future project locations in the master plan and potentially the ALP. Referring to the ALP is critical for both aviation compatibility and good renewable energy project planning. Airport sponsors should review the ALP to determine if future projects are planned that might interfere with sites appropriate for renewable energy. As specified in AC 150/5070-6B, an ALP depicts both existing and planned land uses and facilities at an airport. Grant Assurance No. 29 requires that an airport’s ALP depict the location of all existing and proposed non-aviation areas and of all existing improvements thereon, and each amendment, revision or modification of the ALP is subject to the approval of the FAA. The built environment typically shown on the ALP includes the outline of a building footprint or the limits of pavement. Surplus Property Act of 1944 (SPA), as amended, 49 U.S.C. §§ 47151-47153 Surplus property instruments of transfer were issued by the War Assets Administration (WAA) and are now issued by its successor, the General Services Administration (GSA). However, the law gives the FAA (delegated to FAA from the Department of Transportation) the sole responsibility for determining and enforcing compliance with the terms and conditions of all instruments of transfer by which surplus airport property is or has been conveyed to non-federal public agencies pursuant to the SPA. 49 U.S.C. § 47151(b). Federal-Aid Airport Program (FAAP) This grant-in-aid program administered by the agency under the authority of the Federal Airport Act of 1946, as amended, assisted public agencies in the development of a nationwide system of public airports. The Federal Airport Act of 1946 was repealed and superseded by the Airport Development Aid Program (ADAP) of 1970. Airport Development Aid Program (ADAP) This grant-in-aid program administered by the FAA under the authority of the Airport and Airway Development Act of 1970, as amended, assisted public agencies in the expansion and substantial improvement of the Nation’s airport system. The 1970 act was repealed and superseded by the Airport and Airway Improvement Act of 1982 (AAIA). Airport Improvement Program (AIP) This grant-in-aid program administered by the FAA under the authority of the Airport and Airway Improvement Act of 1982, 49 U.S.C. § 47101, et seq., assists in maintaining a safe and efficient nationwide system of public-use airports that meet the present and future needs of civil aeronautics. Table 2-1. Legislative programs obligating airports.

62 Renewable Energy as an Airport Revenue Source Facilities collocated with existing structures, such as an elevator shaft on the roof of a terminal building, are usually not depicted on the ALP as they are located within the footprint of the col- located structure. Without changing the footprint outline of the structure, the collocated facility does not constitute a change to the ALP and subsequently a federal action. While the need for plan updates will vary depending on the number and type of projects completed by airports, the airport is required to update the ALP if one has not been completed in several years. Grant assur- ances state that the sponsor must maintain an up-to-date ALP. In general, solar installations at airports are either collocated with existing facilities or installed independently on the ground. Concurrent use: A request from the airport sponsor to designate airport property as a “concurrent use” can be submitted prior to submitting a land release request. A concurrent use is the use of dedicated airport property for a compatible non- aviation activity while at the same time the property serves the primary purpose for which it was acquired. Examples of a concurrent use are road right-of-way easements, utility easements, and agricultural uses (FAA Order 5190.6B for more information). Chicago-Rockford Airport obtained a concurrent use determination for its project. See Case Summary 5.6. ALPs show various safety and planning zones established by the FAA and regulating place- ment of facilities. Zones are established based on distance to the runway or taxiway centerline or proximity to the runway end. Some zones closest to the runway are restricted to frangible structures required for airport operations (i.e., the object free area or OFA). Other areas restrict the height of structures with very low profile items potentially occurring closer to runways and taller structures limited to greater distance based on a defined distance to height ratio. The run- way protection zone or RPZ is a trapezoid-shaped area at the end of the runway established to restrict land uses for the protection of people and property. Given recent interest of airports in locating solar facilities in the RPZ to obtain some financial benefit from a portion of the airport property that is restricted from most other uses, the FAA issued Interim Guidance on Land Uses in the Runway Protection Zone in September 2012 (56). It requires airport sponsors to provide the FAA with an alternatives analysis for solar projects (and other specified uses) proposed in the RPZ to demonstrate why the facility cannot be located elsewhere on airport property. Unlike most other FAA approvals that are reviewed by the regional office, the RPZ alternatives analysis must also be submitted to and receive approval from FAA headquarters. Figure 2-19 shows the Converting Land to a Non-Aeronautical Use: Airports that seek to use land desig- nated on the ALP as aeronautical purpose for revenue producing, non-aeronautical uses such as a solar farm must request a waiver of aeronautical land use assurance from the FAA. The request must demonstrate that the land is not needed for current or future aeronautical use, will not impact airport operations, and that proceeds from the conversion are in accordance with FAA policy associated with revenue diversion. The FAA provides public notice of the waiver request in the Federal Register and accepts comments during a 30 day public comment period. Barnstable and Indianapolis are two airports that obtained waivers from the FAA to accommodate solar facilities leased to third party developers. See Case Summaries 5.1 and 5.10.

Applying Evaluation Factors to Airport Renewable Energy 63 location of a 2 MW solar facility at Fresno-Yosemite International Airport (FYI) constructed in 2008 and located partially inside the RPZ but outside the OFA. 2.6.5.3 Fair Market Value Land releases where land is leased to a private entity for a 15–25 year period to own and operate the facility are often necessary for renewable energy projects. In order for the sponsor to lease land for a non-aeronautical purpose (such as electricity generation), it must receive a formal approval from the FAA to ensure that the lease is in compliance with its obligation under FAA grant assurances. Referencing Grant Assurance No. 24, which requires a federally obligated airport to charge fees and rents that will make it as self-sustaining as possible, the FAA requires airports that have received AIP grants to charge “fair market value” for the lease of airport land and facilities for non-aeronautical uses. Thus, if a power company seeks to lease an unused tract of land at an airport on which the power company will locate a renewable energy project, unless the energy will be used by the airport itself, the power company must pay the airport fair market rent for such land. Such leases can be an important source of non-aeronautical revenue for airports that have large amounts of unused land, but airports must ensure that such facilities do not adversely affect the aeronautical uses surrounding them or foreclose future aeronautical devel- opment. (Note that renewable energy facilities typically have a useful life of 20–30 years, so that aeronautical development projected to be undertaken beyond such a period of time would not necessarily be inconsistent with development of a renewable energy project on the same portion of an airport.) In contrast, an airport that leases land or portions of a facility to be developed for a renewable energy project where the output will be used by the airport itself may be able to charge only a reasonable amount of rent (which may be none; see Grant Assurance No. 22 “Economic Nondiscrimination”), thereby lowering the overall cost of the project and, therefore, of the energy to be provided to the airport operator. Rents paid by a developer of a renewable energy facility at an airport will constitute airport revenue, which must be used only for airport Source: Fresno-Yosemite International Airport Figure 2-19. Location of solar project at Fresno-Yosemite Airport relative to RPZ.

64 Renewable Energy as an Airport Revenue Source purposes consistent with federal law (See 49 U.S.C. §§47107, 47133 and Grant Assurance No. 25, “Airport Revenues”). Determination of fair market value can be a difficult undertaking, and is subject to many fac- tors. Several of the Los Angeles Airport (LAX) rate cases have examined the question of deter- mining fair market value in the context of an airport and, although there has not been a clear resolution of these issues, it appears clear that use of “highest and best use” valuation to determine the fair market value of airport land is not acceptable for rate-setting purposes. It is reasonable for any such valuation to take into account the restrictions on use inherent in airport property. Importance of Obtaining FMV: In 2011, the FAA ruled that a solar installation at Glendale Municipal Airport was in violation of Grant Assurance 22 which grants FAA approval of aeronautical lands for non-aeronautical uses and requires fair market payment for use of that land. In 1999, the airport leased a 1.5 acre parcel of land to Arizona Public Service (the local utility) for $10 a year. The system, built in two phases, is rated at 172 kW of power. The FAA has notified the airport that it is in jeopardy of forfeiting federal grants averaging $150,000 per year unless the action is corrected. In order to insulate an airport from claims that it is impermissibly diverting airport revenue by charging a below-market rental rate, airports will often obtain an appraisal from a licensed third party appraiser of the fair market rental of the land to be leased. Such an appraisal will take into account the rents charged to other non-aeronautical tenants at the airport, if any, as well as rents charged for similar uses in areas neighboring the airport. Another means of determining fair mar- ket value may be to discount the value of the land to a developer of an alternative energy project over the term of the lease by first estimating the annual revenue to be generated by the project, then allocating a portion of the expected revenue to be generated by the project to the costs of developing and operating the facility, assuming a reasonable return (profit) for the developer, and allocating the remaining revenues to the land rental. Where an airport seeks to license or lease only a portion of a site, for example the right to locate solar panels on rooftops or the air rights above surface parking, the method of determining fair market value is even more difficult, espe- cially where there are few if any comparable projects in the surrounding area. In such cases, an economic value method may be the only reasonable means to determine fair market rental value. In cases where a land lease is necessary, the sponsor must submit documentation that describes, among other items, the airport’s obligations to the land based on how it was acquired, the type of land release request, justification for the release, demonstration that the airport will obtain fair market value in return for the release, and what will be done with the revenue that is generated by the release. The proposed action subsequent to the release must be shown to be in compliance with the ALP. In most cases, the FAA prefers that airport land not needed for aeronautical use be leased rather than sold so that it provides continuous income for airport purposes and preserves the property for future aviation usage so long as the future use is compatible with airport operations. Land acquired with AIP noise compatibility grant funds must, generally, be sold after the airport sponsor converts the land to compatible uses. The sponsor must submit to the ADO the request to change the ALP and update Exhibit A to show that the property will be used for non-aeronautical purposes. As stated previously, the FAA’s approval either to release property for use as a renewable energy facility or to concur with an appropriate lease of suitable airport property may constitute a federal action triggering a NEPA review that must be completed prior to FAA issuing a land release. Land lease values for representative airport solar projects are provided in Table 2-2.

Applying Evaluation Factors to Airport Renewable Energy 65 2.6.5.4 Revenue Diversion The AAIA established the general requirement for use of airport revenue that directed public air- port owners and operators to use all revenues generated by the airport for the capital or operating costs of the airport, the local airport system, or other local facilities which are owned or operated by the owner or operator of the airport and directly related to the actual transportation of passengers or property [Codified at 49 United States Code (U.S.C.) § 47107(b)]. Airports must demonstrate that any revenue generated on airport by renewable energy projects is used for airport purposes. 2.6.6 Electrical Interconnection Developers of renewable energy projects need to interconnect their project to the electric grid. These arrangements will differ depending on what type of renewable energy project it is. Utility-scale projects, i.e., large scale output projects, will typically enter into a large generator interconnection agreement with the applicable utility or system operator. To do this they will have to go through a series of studies (feasibility studies, system impact studies, and facility studies) to assess the impact of the project on the existing grid arrangements. These studies may indicate that upgrades are required to the existing transmission system to facilitate the renewable energy project coming on-line. Distributed generation renewable energy projects (i.e., projects that supply power directly to the customer such as a solar system on the roof of a terminal or parking garage) will not be required to go through such complex studies but will need to adhere to the “net metering” requirements of the applicable electric utility so that any power produced by the renewable energy project that is not used by the immediate customer can be sold back into the grid. Interconnection require- ments typically also seek to ensure that the renewable energy facility’s equipment is compatible with industry standards and provides appropriate safety standards, including allowing the renew- able energy project to be disconnected from the grid when downstream maintenance is required. 2.7 Operational and Safety Considerations There are a number of logistical issues that should be considered when planning for the opera- tions of a renewable energy project on airport property. Many of these are associated with the need to control access to secure areas of the airfield where projects may be located. There is training of both airport staff and contractors to ensure that appropriate access and security pro- cedures are followed. There are also particular renewable energy technology-related factors that airports need to consider and plan for during the operational phase. 2.7.1 Staff Training Airport staff will require some renewable energy related training to provide education on the operation of the technology and procedures for interacting with product support. In cases where Chicago-Rockford 2011 69 acres $160 / acre FAA Letter dated 5/2/2011 Denver II 2009 9.366 acres $352.34 / acre Denver City Council Approval, 8/19/2009 Denver IV 2013 12 acres $340.21 / acre Denver City Council Approval, 4/4/2013 Indianapolis (Phase II) 2014 76.592 acres $871.20 / acre FR - 9/16/2014 Indianapolis (Phase III) 2015 22.1 acres $5,342.98 / acre FR – 2/19/2015 Warren Field (NC) 2014 35.9 acres $1,200 / acre Press report Table 2-2. Published fair market value and land lease rates for solar projects.

66 Renewable Energy as an Airport Revenue Source the airport does not own the facility, some introductory training from the project developers about the facility and its operations will benefit the airport staff during the regular daily assign- ments. For example, it will be important to know how often project staff might be expected to visit the project site and what types of activities they may be undertaking so that there are not concerns about trespassing on airport property. In cases where the airport does own the facility, they will need to be much more informed about operations and maintenance and communication with the contractors and vendors and trusted advisors as they get up to speed on the operational logis- tics. All staff should receive some general education about the project and be referred to a project website so that they can share information on the project with industry colleagues and the public. 2.7.2 Technical Support Given the lack of familiarity with renewable energy technologies, airport renewable energy projects will require outside expertise to help operate and maintain the facility. Where the air- port owns the project, product support and contractors will work with airport facility staff to monitor operations, perform routine maintenance, and identify more substantial issues. Tech- nology providers will provide support based on the terms and conditions of any warranty. Air- port personnel will need clear information on who to contact and when for accessing technical support under a valid warranty. Other parties may also be active early in the operational phases including the Engineering Procurement and Construction (EPC) contractor to troubleshoot start-up issues and optimize system performance. In cases where a third party owns the facility, the airport will primarily need to know operations and maintenance activities as it relates to access to airport property and any other communication related terms of the land lease. 2.7.3 Security Airport security, as the travelling public knows, has intensified since 2001. Beyond the stan- dard procedures that travelers go through to board commercial aircraft, there are a myriad of training and access procedures required for airport personnel and contractors to access specific areas of the airport including locations where renewable energy facilities might be located. Air- ports need to plan for transit by project partners from the public street to secured areas both dur- ing installation and for long-term operations and maintenance procedures. This includes early communication with project partners about the level of training necessary to acquire badged access and regular procedures necessary to gain access without incident. Security may also affect the time of day that the project site can be accessed so limitations on access need to be commu- nicated early and incorporated into the access plan. 2.7.4 Warranties Technology and performance warranties have been an important part of renewable energy development as they provide assurances that renewable energy professionals and technology pro- viders will remain engaged in the project in the early stages to ensure that the technology performs as promised. Technology providers will offer standard warranties on renewable energy products backed by a standard level of technical support. Owners can purchase extended warranties to provide additional levels of surety. Warranties can be structured in different ways. As an example, solar panel manufacturers will provide both a term of performance such as 25 years coupled with an annual level of performance for each year of operation typically expressed as a degradation rate (industry standard is 0.5% loss of efficiency annually). 2.8 Evaluation Factors Matrix An evaluation factors matrix has been developed to facilitate consideration of the various ele- ments of decision-making described earlier. The description of the evaluation factors is included as Table 2-3 and the Evaluation Factors Matrix is included in Table 2-4.

Compatibility/Aviation Safety The degree to which the technology is compatible with aeronautical activities. Some technologies are generally more compatible than others. Compatibility may be achieved through site specific design and analysis. Environmental Impact The degree to which the technology may result in environmental impacts either during construction or operations. While environmental impacts may be avoided or minimized, the potential for impact translates into lengthy permitting. Ease of Operation and Maintenance Different technologies have different requirements for routine operations and maintenance (O&M). The relative ease of O&M depends on the ease of access to the site, extent and frequency of activity, and type of equipment needed. Natural Energy Potential Technology selection is closely aligned with the availability of natural energy. For some technologies, the lack of available renewable energy will be a fatal flaw. For others, it will be a primary factor in technology selection. Ease of Interconnection The renewable energy project will need to physically connect to the existing electrical system. Where the proximity to sufficiently sized components is close and available, costs to interconnect can be reasonable and limited. Installed Cost of Electricity All other factors being even, some renewable energy technologies produce electricity more efficiently and cost-effectively than others. Site specific conditions, such as distance to interconnect, would be identified in the future. Public Policy Incentives Public policy incentives vary among technologies and political jurisdictions. Incentives from the federal government are available regardless of location. State incentive programs have concentrated markets within particular state lines. Power Purchase Agreements Power purchase agreements (PPA) are contracts that parties can enter into to buy and sell electricity and enhance project financing. Some state laws prohibit PPAs which is a fatal flaw for certain types of projects and structures. Operations & Maintenance Cost O&M activities vary among technology types. The cost of O&M is one that must be carried through the life of the project and is a fundamental cost consideration even if the work is contracted out. Potential for Revenue/Savings Accounting for the factors listed above, the potential for a project to produce revenue or energy cost savings can be assessed. If the project goals are entirely financial, no other factor will influence decision-making on the project. Table 2-3. Description of evaluation factors for renewable energy projects.

Compatibility/Aviation Safety 3 2 3 2 3 2 Environmental Impact 3 2 2 2 3 2 Ease of Operation and Maintenance 3 2 3 2 3 1 Natural Energy Potential 3 2 3 2 3 1 Ease of Interconnection 3 2 3 2 3 2 Installed Cost of Electricity 3 2 2 2 1 1 Public Policy Incentives 3 2 2 2 2 2 Power Purchase Agreements 3 3 1 1 2 2 Operations & Maintenance Cost 3 2 2 2 2 1 Potential for Revenue/Savings 3 2 2 2 1 1 * Value applied to each evaluation factor to achieve the renewable energy technology objective High = 3, Medium = 2, Low = 1 Table 2-4. Evaluation factors matrix.

Applying Evaluation Factors to Airport Renewable Energy 69 The matrix presents the primary factors necessary to assess the viability of the airport renew- able energy opportunity. Ten factors have been identified. There are other factors that should also be considered including modernization of the electrical infrastructure for redundancy and resiliency, and public relations benefits that are not specifically identified. However, as the pur- pose of the research is revenue generation and cost savings, the factors associated with renew- able energy that are not quantifiable have not been included in the matrix. (The project scope identified the following specific evaluation factors: operational considerations, safety consid- erations, regulatory compliance requirements, environmental issues, capital and maintenance costs, funding sources, incentives, benefit/cost, and return on investment. We considered each of these and have captured them in the 10 factors presented.) In Table 2-4, a value associated with each factor has been applied to six renewable energy technologies that have been developed at airports or may be in the future. The value is based on a high/medium/low scale with 3 representing high, 2 medium, and 1 low. The matrix provides a screening level assessment to help the reader identify the technologies and factors that are of high value, and those that are of low value, and the specific factors that contribute to that value. [It is important to note that the values are tied to quantifiable financial benefits and may not represent other “green” benefits of pursuing renewable energy.] While the applied values do not consider site-specific issues and thus are a screening exercise, the matrix more broadly informs the reader about the key factors necessary to evaluating airport renewable energy, and provides initial technology selection context. 2.9 Decision-Making Process This section presents some decision-making tools to help the reader evaluate renewable energy technologies and project types using the evaluation factors described above. Two types of tools are provided: a decision-making checklist and process flow charts. 2.9.1 Decision-Making Checklist A decision-making checklist has been provided in Table 2-5. It is a focused inventory of the 15 items critical to evaluating a renewable energy project and the corresponding action steps neces- sary for collecting the required information. The information in the checklist is required regardless of the eventual renewable energy technology selected; however, the interpretation of the informa- tion collected will vary based on technology. The information collected by the user who is working through the checklist will be specific to the airport location as energy policies vary among states and utility service territories and the viability of a renewable energy technology will be particular to the project site and potential locations. Unlike the evaluation factor matrix which is a generic screening instrument, the checklist forces the reader to focus on site-specific considerations. 2.9.2 Process Flow Charts Two process flow charts are provided to aid in project development. The first provides guid- ance in evaluating appropriate renewable energy technologies. The second provides guidance on exploring project structure and funding. 2.9.2.1 Renewable Energy Technology A series of process flow charts is provided to facilitate the decision-making process for evalu- ating the viability of particular renewable energy technologies. There is a flow chart for each technology provided in Figures 2-20 through 2-24. The technologies presented are solar PV, wind, geothermal, biomass, and other (fuel cells, hydrokinetics, and waste-to-energy).

1 Review renewable energy resource information for your region and determine which resources may be viable Find Maps available online from the US Department of Energy 2 Review public policy incentives available in your state and locality and determine the value of the incentives Contact your state energy office or public utility commission 3 Determine if power purchase agreements are allowed in your state Contact your state energy office or public utility commission 4 Determine the value of net metering credits in your locality Contact your state energy office or public utility commission 5 Determine the market value of Renewable Energy Certificates Contact your state energy office or public utility commission 6 Find out if your utility is obligated to purchase renewable energy and, if it is, see when the next bid to purchase renewable energy will occur Contact your utility or an official with the public utility commission 7 Determine if you are located in an air quality non-attainment or maintenance area and therefore eligible for a VALE Grant from the FAA Consult your EPA Green Book of non-attainment areas and contact your FAA regional office 8 Determine if you have met eligibility requirements for grant funding under AIP Contact your FAA regional office 9 Become familiar with your electricity bill and obtain information on the monthly cost of energy over the past 12 months Obtain information from a facilities or accounting department 10 Review your ALP and determine candidate sites for a renewable energy project based on your preferred technology Obtain ALP from airport planning department 11 Assess the airspace compatibility of the candidate sites based on your preferred technology Contact the FAA Obstruction Evaluation Office 12 Determine the viability and relative ease of interconnecting the renewable energy project at candidate sites based on existing utility infrastructure system Contact the airport facilities department 13 Determine if the proposed project site has any potential environmental issues that could prolong or complicate the permitting process Contact airport planning office or state office of mapping 14 Obtain an estimate for installed cost of project for initial financial assessment Contact state energy office or the appropriate industry organization 15 Determine viability of available airport funding from tax exempt bonds Contact airport financial office FINAL ACTION: Prepare a project concept and initial financing plan and present it to internal decision-makers Table 2-5. Decision-making checklist.

Applying Evaluation Factors to Airport Renewable Energy 71 Figure 2-20. Solar PV process flow chart.

72 Renewable Energy as an Airport Revenue Source Figure 2-21. Wind process flow chart.

Applying Evaluation Factors to Airport Renewable Energy 73 Figure 2-22. Geothermal process flow chart.

74 Renewable Energy as an Airport Revenue Source Figure 2-23. Biomass process flow chart.

Applying Evaluation Factors to Airport Renewable Energy 75 Figure 2-24. Other technologies process flow chart. Readers can readily move through the flow chart and answer questions to determine if a particular renewable energy technology may be feasible, given a specific project location. Each technology section starts with a map to identify if the project site is located in a geographic area supporting (naturally and politically) a renewable energy resource. The flow chart also provides direction for determining if other project structures and factors may be in place to support a viable project (that is, there may be sufficient renewable energy resource, but the project must

76 Renewable Energy as an Airport Revenue Source Figure 2-25. Goals and objectives flow chart. be developed in a specific way to be viable). The flow chart focuses on the four technologies that have had the greatest success being developed at airports, while also touching on, in less detail, four additional technologies that are being developed in non-airport environments. 2.9.2.2 Renewable Energy Project A second series of flow charts (Figures 2-25 through 2-31) is presented to guide the airport’s decision-making process based on its individual goals and objectives. Renewable energy can meet a variety of primary objectives from lowering utility costs to advancing emergency pre- paredness. The reader can select the priorities most important to their situation and proceed through the flow chart to identify a technology and structure that meets their needs.

Applying Evaluation Factors to Airport Renewable Energy 77 Figure 2-26. Evaluation considerations flow chart.

78 Renewable Energy as an Airport Revenue Source Figure 2-27. Lower utility costs decision tree #1.

Applying Evaluation Factors to Airport Renewable Energy 79 Figure 2-28. Diversify revenues decision tree #2.

80 Renewable Energy as an Airport Revenue Source Figure 2-29. Diversify energy sources decision tree #3.

Applying Evaluation Factors to Airport Renewable Energy 81 Figure 2-30. Emergency preparedness decision tree #4.

82 Renewable Energy as an Airport Revenue Source Figure 2-31. Green goals decision tree #5.

Next: Chapter 3 - Conducting Financial Assessments of Airport Renewable Energy »
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TRB’s Airport Cooperative Research Program (ACRP) Report 141: Renewable Energy as an Airport Revenue Source explores challenges airports may anticipate when considering renewable energy as a revenue source. These considerations include the airport’s geography and terrain, infrastructure, real estate, energy costs, public policy, regulatory and compliance requirements, tax credits, sponsor assurances, ownership, impacts to navigation and safety, security, staffing issues, and many others. The guidebook also includes detailed financial information on the cost and performance of projects that have been implemented by airports.

The guidebook also includes an appendix available online that provides sample a request for proposals.

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