Federal Loads
Ed Cannon, National Renewable Energy Laboratory
The U.S. government is the largest single electricity user in the country, consuming more than 55 million megawatt-hours (MWh) in fiscal year 2001. The Department of Defense alone accounted for nearly 30 million MWh. The electricity used each year by the federal government is roughly half that used by the entire nation of Turkey or The Netherlands. The table below lists the ten largest federal electricity users.
Agency MWh/year
Department of Defense 29,963,593 U.S. Postal Service 5,065,788 Department of Energy 4,818,348 Veterans Administration 2,938,108 General Services Administration 2,833,044 Department of Transportation 1,737,516 National Aeronautics & Space Administration 1,680,382 Department of Justice 1,245,700 Housing & Human Services 878,037 Tennessee Valley Authority 615,999
Source: Federal Agency Annual Energy Management Data Reports
In 2000, President Clinton issued Executive Order (EO) 13123 directing federal agencies to improve their energy efficiency and to use more renewable energy. Although the order stopped short of setting a specific goal for renewable energy, it did direct federal agencies to coordinate and establish an appropriate goal: 2.5% of each agency’s electricity will come from renewable sources by 2005. That goal is still in force because executive orders remain in effect during successive administrations, unless specifically superseded by new orders from the President. If we conservatively assume that total federal electric consumption will remain fairly constant through 2005, then 2.5% of that annual consumption would be about 1.38 million MWh. That’s roughly equal to the output from 525 MW of installed wind turbine capacity. This implies that, in addition to the already rapid growth in U.S. installed capacity, an additional 500 MW or more must be added just to meet EO 13123 goals. Despite the mandate of EO 13123, convincing individual agencies and their field operations to actually purchase electricity from renewable sources can be daunting. No additional funding was provided to the agencies to help them comply with the order. The EO does specify that agencies can apply the moneys saved by reducing their utility bills (e.g., through energy savings measures or utility price decreases). However, many agencies have already captured the “low hanging fruit” of energy savings and must rely on energy savings performance contracts (ESPCs) to identify and implement further savings measures. Most ESPCs are structured so that all or nearly all the energy savings are payable to the energy services contractor (ESCO) for several years to pay back the ESCOs investment, operating costs, and reasonable profits. In short, the savings are not immediately available to the federal agency to spend on renewable energy purchases. To comply with the executive order, agencies often find that they must divert money from their already limited budgets to pay any premium cost. Most agencies recognize the obligation to meet the 2.5% goal by 2005. Furthermore, they seem to be increasingly concerned about the need to act before 2005 to safely meet the goal in time. Recently, a few notable purchases of renewable energy were announced by federal agencies that had been reluctant to pay any premium for electricity; these purchases are most likely due to the looming deadline of the EO. The Defense Energy Support Center (DESC), which purchases energy primarily for the Department of Defense, and the General Support Agency (GSA), which purchases energy primarily for non-military federal agencies, have begun to routinely include renewable energy options in their electrical energy solicitations. When the electricity prices are presented to the customer agencies, those federal agencies can select from a range of renewable energy options depending on the funds available. In cases in which the new base price for electricity (i.e., the price not including premiums for renewable energy) is lower than on the previous contract, the resulting “surplus” in the electricity budget can be used to add renewable energy to the mix, as provided in EO 13123. DESC recently negotiated a contract in Texas in which the price of electricity for a 2-year contract with 5% renewable content was less than the price for a 1-year contract with no renewables. Tradable Renewable Energy Certificates (TRECs), or “green tags,” are often proposed as an easy mechanism to provide renewable energy to federal agencies in locations where renewable sources are not abundant or where renewable energy is not available from accessible suppliers. Although TRECs are conceptually valid—renewable energy is generated on behalf of the customer and the customer pays the associated premium cost of that renewable energy—some federal agencies find the concept fiscally problematic. These agencies believe that funds allocated for utility purchases can be used only for that purpose. TRECs are not literally utility electricity, since the energy is not specifically transported to the local area where the TRECs are purchased. As a result, these agencies have deemed it inappropriate to purchase TRECs with utility funds. One possible solution is to fund the TREC purchases from other funds, such as environmental funds. However, this workaround negates the beneficial provision in EO 13123 whereby agencies can apply utility savings to the purchase of renewable energy. A better solution appears to be working in concert with the agencies’ electricity suppliers to somehow bundle the TRECs with utility electricity so that the agencies receive a single bill for both. Most of the agencies that have objected to purchasing TRECs separately with utility funds have indicated that TRECs billed on the utility bill are no different than a renewable energy premium and are, therefore, acceptable. DOE’s Federal Energy Management Program (FEMP) assists federal agencies with meeting their renewable energy goals. FEMP representatives at DOE regional offices and at the National Renewable Energy Laboratory are available to aid federal agencies and installations in examining their renewable energy options and finding the best solution to meet their renewable energy goals.
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