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Guidebook for Developing a Comprehensive Renewable Resources Strategy (2019)

Chapter: Chapter 4 - Pillars of a Successful Renewable Resources Strategy

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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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Suggested Citation:"Chapter 4 - Pillars of a Successful Renewable Resources Strategy." National Academies of Sciences, Engineering, and Medicine. 2019. Guidebook for Developing a Comprehensive Renewable Resources Strategy. Washington, DC: The National Academies Press. doi: 10.17226/25433.
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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.

25 This chapter provides an overview of key elements that must be considered when beginning to develop a renewable resources strategy. These elements, which include administrative, fiscal, and technical considerations, represent the pillars upon which a successful strategy can be built—akin to the legs of a stool (Figure 6). This chapter first presents sections on each of these considerations as they primarily relate to renewable energy, followed by a section relating these considerations to other, non-energy, renewable resources. Administrative—Renewable Energy and the Airport Planning Process Airports are complex public organizations requiring large capital expenditures, and as such they have collectively established a systematic and deliberate planning process for charting future development plans. This process is partly the result of FAA program requirements for federally obligated airports as a condition of funding allocation associated with its Airport Improvement Program (AIP) and approved Passenger Facility Charges (PFCs). In addition, local authorities typically need to approve matching funds at public hearings and in accordance with local codes and bylaws. The planning process can be divided into three primary areas: ALP, airport master plan, and CIP. Important factors associated with the review of renewable resource projects that are addressed during the development of the airport master plan or complementary planning processes are environmental, sustainability, and energy. A comprehensive renewable resources strategy must be developed within this planning framework to be successful. Airport Layout Plan The ALP is the fundamental airport planning tool for defining existing conditions and iden- tifying future opportunities. FAA requires that an approved ALP and all requests for funding presented to them be consistent with the ALP before receiving authorization. Airports can designate areas of airfield on the ALP for renewable energy uses. Typically, such designations are supported by other studies such as those associated with an airport master plan, investigations to confirm a project’s compatibility, and an understanding of technical and financial feasibility. Renewable energy projects are classified as non-aeronautical uses, so if an airport intends to situate such a project in an area designated for aeronautical uses, it will need to request a change in usage designation from aeronautical to non-aeronautical. The ALP process is further described in the documents listed in the references section of this guidebook. C H A P T E R 4 Pillars of a Successful Renewable Resources Strategy

26 Guidebook for Developing a Comprehensive Renewable Resources Strategy Airport Master Plan An airport master plan, which may include the ALP process, is a comprehensive study of an airport. It describes existing conditions, forecasts future aviation activity, and presents short-, medium-, and long-term development plans to meet the forecasted demand. Given the uncertainty in forecasting future economic activity, airport master plans are “living” documents that require regular updating to reflect changing conditions. The airport’s renewable resources strategy can be addressed in detail in the airport master plan under sections related to environment, energy, and sustainability. The airport may also present a broad vision of sustainability in the airport master plan or focus on sustainability and energy issues in separate plans. Capital Improvement Plan FAA maintains a national Airports Capital Improvement Plan (ACIP) to identify and prioritize critical airport development necessary to support the National Airspace System. The ACIP also serves as the basis for distributing annual FAA grant funds under the AIP. The ACIP process and the financial analyses associated with ALP and the airport master plan are all important for determining potential funding sources for all airport projects. For renewable energy projects, funding sources may include alternative financial structures, such as private-public partnerships, which can enable airports to join forces with executives from the private sector to develop non-aviation projects. In practice, however, many renewable energy projects are completed without engaging in the CIP process. Sustainability Plan In 2010, FAA began issuing grant funding to airports to develop sustainability plans under its Sustainable Master Plan Pilot Program. The pilot program initially awarded funding to 12 airports to help them integrate sustainability into their long-term master planning. Some of the recipient airports developed standalone SMPs separately from their traditional airport master planning process, and others incorporated SMPs into their general airport master plans. In both cases, FAA’s objective was to help airports to develop a framework for a sustainability plan and a process for preparation and implementation. The initial plans included topics Figure 6. Successful renewable resources strategy. Source: The Cadmus Group LLC.

Pillars of a Successful Renewable Resources Strategy 27 associated with energy and waste that most directly correlate with renewable resources. However, in general, reducing consumption was prioritized over increasing the use of renewables. Additionally, airports may incorporate “green” or environmental purchasing practices into their sustainability plans. This means that the airport commits to buying goods and services that improve public health and safety, reduce pollution, and conserve natural resources. In fact, Seattle-Tacoma Airport adopted an Environmental Purchasing Policy in 2009 and is dedicated to having these environmental considerations factor into the purchasing practice equally with other factors like price, availability, and performance. Though FAA is no longer offering funding to support the development of sustainability plans, many airports continue to develop them on their own and find them to be useful. Strategic Energy Plan Strategic energy plans (SEPs) are a natural outgrowth of sustainability planning. While energy is only one component of airport sustainability, it is particularly central to the economics and operations of an airport. Energy is the second largest airport expenditure after personnel, representing 10–15 percent of operating budgets (Lau et al., 2010). Opportunities to decrease consumption through efficiency improvements and reduce long-term costs by using renewables are especially attractive. Although FAA has published guidance on sustainability, it has not issued guidance regarding SEP development. It is using other methods to encourage airports to establish an energy use baseline from which to implement and validate the effectiveness of future energy improvements. As part of the 2012 FAA Reauthorization Act, Congress provided FAA with specific authority to use AIP funds for energy efficiency projects. Funds may be used to prepare energy audits to establish a baseline and identify future improvements, as well as to implement improvements that have been proposed as a result of an audit. This mechanism has encouraged airports to develop SEPs to identify projects and reduce energy expenditures. Airports are also using SEPs to plan for other airport operation disruptions that result in significant economic loss and hinder the airport’s role in moving people out of harm’s way. Perhaps the best example was an event in September 2011 when the southwest United States experienced a regional electricity disruption, and San Diego International Airport was without power for a 5-hour peak operating period. Following that experience, airport staff began explor- ing the development of a microgrid that would protect the airport from future grid disruptions. This effort was wrapped into a more comprehensive SEP. The renewable resources strategy would complement both the SEP and the sustainability plan. Aligning Renewable Resources and Airport Planning Processes Determining which of the planning processes apply to a renewable resource project can be a challenge and requires good internal communication among airport stakeholders. In general, large projects that require substantive changes in airport layout, operations, or facilities will require correspondingly high levels of scrutiny and integration with other airport activities. Table 5 presents examples of which planning processes may apply to different types of renew- able resource projects. Planning for New Airport Facilities and Major Renovations Airports are required to keep their ALPs updated as a condition for receiving FAA AIP funding. They may also request AIP funds to develop a more detailed airport master plan to demonstrate

28 Guidebook for Developing a Comprehensive Renewable Resources Strategy forecasted airport demand and the infrastructure improvements necessary to accommodate future activity. In developing the airport master plan, airports evaluate critical aeronautical infrastructure as well as supporting systems, including energy infrastructure. While an airport may pursue directed AIP funding under Section 512 for energy audits, the airport master plan is the initial step in identifying projects requiring detailed study. Renewable resource projects may be initially identified as part of this process, to be explored in greater detail later under a SEP, Section 512 study, or through a public-private partnership with an energy services company or technology developer. Traditional airport facilities funded through the AIP include terminal buildings, hangars, administrative buildings, runways, taxiways, perimeter fencing, navigational aids, parking lots and garages, roadways, and vehicles. Renewable resources can be integrated into some of these infrastructure types (e.g., solar on a hangar roof) but not all (e.g., runways). New buildings, such as terminals, offer multiple opportunities to integrate renewable resources in part because they are the central location where resources are consumed. New terminals are being developed with sustainability representing a core design component to showcase the unique character and future-oriented perspective of the city and region. Other airport buildings like hangars and public safety buildings offer similar opportunities while demand- ing fewer resources. Renewable energy projects that can be included in the design of new airport buildings or major renovations include solar PV, ground source heat pumps, and building-integrated wind turbines. Solar PV modules can be fused into the building design, or simply added to rooftop space that would otherwise be unused. The solar modules absorb light and other weather elements and have been shown to prolong the useful life of building rooftops. Airport Planning Process Renewable Resource Project Airport Layout Plan Airport Master Plan Capital Improvement Plan Strategic Energy Plan Sustainability Plan Airport O&M Activities 1. Rooftop Solar PV System on an Existing Building 2. Program to Compost Food Waste with an External Vendor 3. Large Ground-mounted PV Array on Existing Green Space 4. Water Source Geothermal Project for Cooling and/or Irrigation 5. Alternative Transportation Fuels for Airport Fleet 6. Aeroponic Garden Inside Airport to Provide Food to Internal Restaurants 7. Green Rooftops 8. Airport Wastewater Reclamation Facility for Treatment of City Water 9. On-Site Apiary Operated by an Outside Non-Profit Organization Table 5. Airport planning process.

Pillars of a Successful Renewable Resources Strategy 29 The following are examples of renewable resources that have been planned in conjunction with new facilities in order to enhance operations and improve efficiency: • Solar PV projects are ideal for placement on canopies installed in parking areas. Such projects provide a platform for generating electricity with the added benefit of covered parking. Canopy projects have been integrated into new surface lots and on the top deck of parking garages. These projects can be integrated into existing facilities, but integrating them as part of the new parking facility construction minimizes cost and the construction activity associated with tearing up pavement to bury electrical lines. • Ground source heat pumps are not as easy to integrate into building features, because they must be incorporated into the building’s heating and cooling system. These facilities are composed of subterranean wells that can be flexibly sited near the building that needs heating and cooling. However, the mechanical components must be located in the building’s central utility area, and the air distribution system must be compatible with the system. There is at least one known instance of ground source heat pumps being introduced into an existing terminal as part of a major renovation. • Building-integrated wind turbines can be incorporated into building design, but they typically generate little energy and more often serve as a symbol of sustainability. • Rainwater capture systems can be incorporated into airport building designs to provide non-potable water. Such a system entails a collection method, underground cisterns, and associated plumbing to store the non-potable water and deliver it to the appropriate endpoints, such as toilets, vehicle washing stations, and landscaping. Airports may consider incorporating renewable goals and strategies into their sustainability plans. Renewable resource projects can be used to achieve sustainability planning objectives. The goals of airport sustainability are closely aligned and can overlap with the goals an airport will set in its renewable resources strategy. These may include environmental consciousness, economic efficiency, and/or customer and community satisfaction. Sustainability plans and renewable resources strategies can both be fully incorporated into the airport master plan. Airport sustainability plans utilize baseline assessments of environmental resources and community outreach to determine sustainability objectives and identify oppor- tunities for community support. Airport managers can incorporate an assessment of existing renewable resources into that baseline to better inform planning activities. Making this connection upfront eliminates the need for two separate documents and enables stakeholders to see the overlap in renewable resource and sustainability goals, and the ways to achieve those goals. For example, the Newark Liberty International Airport SMP focuses on sustainability goals and highlights the airport’s dedication to GHG emissions reductions through measures includ- ing renewable energy (The Port Authority of New York and New Jersey, 2012). This airport has even integrated the investigation of renewable energy installations as part of its sustainable design initiative. Planning for Existing Airport Facilities Airports can also add renewable resource projects to their development plans for existing facilities. Many of the project types listed above are also suitable for existing building upgrades, although some—such as ground source heat pumps and rainwater recapture—may be impractical and not cost-effective, because they must be closely integrated with the building design. As described above, the airport master plan is a comprehensive document that describes exist- ing conditions, forecasts future aviation activity, and presents short-, medium-, and long-term development plans to meet the forecasted demand. Some renewable resource projects should be aligned with existing airport planning and development, because they require detailed planning

30 Guidebook for Developing a Comprehensive Renewable Resources Strategy and infrastructure development. For example, if an airport designates a portion of its land for growing biofuels to partially replace aviation fuel, that land must remain undeveloped during the project planning. In addition, a variety of stakeholders and an extensive planning process would need to be involved. This project would affect parts of the airport master plan and ALP. Alternatively, smaller, less resource- and time-intensive renewable resource projects could be incorporated more seamlessly into an airport’s existing airport master plan and may not require updates to the plan. Because the airport master plan is a “living” document that should be regularly updated, renewable resource projects and goals can be incorporated into the airport’s overall planning and added to the accompanying ALP. Renewable resources can be added to airport master plan sections on environment, energy, or sustainability. Denver International Airport recently reviewed and revised its airport master plan to extend through 2030. As the 18th busiest airport in the world and sixth busiest in the United States, Denver’s commitment to sustainability and leadership in environmental stewardship is a great example of the integration of renewable resources with general airport planning. The updated airport master plan incorporates multiple environmental initiatives, including recycling, alternative fuel use, management of the deicing process, and wildlife and wetlands management. The airport master plan commits the air- port to continued growth that will incorporate sustainable principles “every step of the way” (Denver International Airport, 2012). One of the benefits of solar PV is that it can be readily merged into the existing airport landscape and does not require significant alterations to existing infrastructure. Solar panels can be positioned on existing building rooftops or parking facilities (using canopy structures) or in unused airfield areas that are otherwise underutilized. Some airports have added single wind turbine generators to provide electricity to existing buildings. Because taller wind turbines capture more wind, they are often incompatible with airspace safety, however micro-siting has enabled a few airports to identify compatible locations on airport property. Installing a new solar array in an underutilized area of airfield is just one example of the measures an airport can take to introduce new technology in a manner consistent with the ALP and airport master plan and compatible with the long-term operation of the airport. Biomass boilers are another example; a boiler can be co-located with an individual building or connected to a campus of buildings through a central utility plant. It must be designed to facilitate the transport and management of the biomass feedstock. An airport could further optimize its use of renewable resources by growing the feedstock on airport property. Some airports have integrated composting operations with existing facilities. This approach can take the form of a centralized facility that collects, manages, processes, and reuses organic materials from throughout the airport, or it can take the form of decentralized compactors located near individual buildings where organic material is generated, often from food waste. Typically, haulers pick up the organic waste and send it to off-site locations, but it is possible for airports to reuse the organic material on-site. In either case, the success of the program is measured by the volume of organic material collected. Airports can use existing sustainability plans to guide renewable resources goals and projects that can aid in meeting short-, medium-, and long-term sustainability goals. Nashville Inter- national Airport—a participant in the FAA Sustainable Master Plan Pilot Program—developed a plan that included implementation of a water source geothermal project to meet the airport’s cooling and irrigation needs. In March 2017, this project at Nashville International Airport received an award for its performance in resource allocation, leadership, and climate impacts through reduced emissions (APWA, 2017).

Pillars of a Successful Renewable Resources Strategy 31 Denver International Airport’s SMP was published in August 2013 and covers a long list of categories in its sustainability baseline, including air pollution, water quality, energy, and GHG emissions (Ricondo and Associates, Inc., 2013). While the plan does not specifically mention all renewable resources, it does commit the airport to an increased reliance on renewable energy and sets corresponding goals. The revised plan is likely to include specific goals for individual renewable energy resources. Integrating Renewable Resources into Airport Operations Some airports maintain master airport O&M documents and typically update them on a regular basis with the party responsible for each operation in the airport. Alternatively, each department may have its own O&M plan. In any case, when developing a renewable resource project, the airport must assign responsibility for the various parts of the project. For example, planning and designing a solar PV system will necessarily involve multiple parties. The airport operators will need to consult with decision-makers, engineers, electricians, and the local utilities. The next section will further explain the procurement and request for proposal (RFP) processes. Typically, before a solar project receives approval, the airport will need to have financing mechanisms in place or at least in development. Airport accountants and lawyers will be involved to ensure that contracts—such as consultant and third-party owner contracts—are written and executed appropriately. Various ownership structures are addressed in subsequent sections of this guidebook. Contracts should include a plan for O&M and identify who is responsible for ensuring the system works properly, who conducts necessary repairs, which department will maintain the system (if it is owned by the airport), and other details. Additional training may be necessary for the staff with designated responsibilities. Note that renewable resource projects may differ in their exact processes, but assigning responsibility for project success is paramount. Procurement of Renewable Resources Airport staff members have a deep understanding of planning and operations at airports. Some airports have facility managers who oversee the airport infrastructure, including that related to energy systems. However, these facility managers require outside technical consultants to conduct airport planning and engineering, as well as contractors to construct new infrastructure. When those projects are approved by FAA, they receive federal funding. Spotlight: Hartsfield-Jackson Atlanta International Airport The Atlanta Department of Aviation is embarking on a revision of its SMP. The SMP includes a proposed Energy Park at Hartsfield-Jackson Atlanta International Airport (ATL) that would incorporate multiple renewable and alternative energy options at currently unused sites, including anaerobic digestion to create biogas, enclosed composting, and the generation of biofuels using the waste from anaerobic digestion. As of the 2015 plan, more than 13,000 pounds of waste was “green waste” used for mulching and composting. In March 2016, the airport released an RFP to construct an on-site composting and recycling facility—the “Green Acres ATL Energy Park”—that will repurpose, reprocess, and recycle at least 90 percent of domestic municipal solid waste generated at the airport.

32 Guidebook for Developing a Comprehensive Renewable Resources Strategy To facilitate project planning and development, airports secure airport planning and engi- neering services to help with preparing and documenting funding requests for submittal to FAA, developing planning documents, and managing construction by other entities. These contracts are prepared in accordance with FAA’s AC 150/5100-14E—Architectural, Engineering, and Planning Consultant Services for Airport Grant Projects. They typically lead to the selection of a consulting team or multiple consulting teams that are able to provide services once projects are approved by FAA. Referred to as “on-call contracts,” they typically cover a five-year period, and the airport is expected to assemble a consultant team that can be ready to work on a project as soon as the funding is authorized. When preparing solicitations for new consultant teams, it is important to consider expertise in renewable resource planning projects. Many airport consultants possess this expertise or secure it by assembling teams of specialized firms. On the planning level, airport staff may possess sufficient experience to cover the early logistics of renewable resource planning. However, as planning progresses into more detailed studies, including energy audits, the airport may require deeper expertise that must be secured through additions to an existing team or through a separate solicitation. When an airport’s planning project transitions into a construction project, the airport will need to solicit the services of a renewable resource development company. The airport may also require specific energy expertise to prepare an appropriate scope of work and request for qualifications (RFQ), because an RFQ that is not well written will result in bids that do not support the airport’s objectives. The consultant can prepare an RFQ as appropriate to the type of project the airport wants to pursue. If the airport will own and operate the project, the RFQ will be for an engineering, procurement, and construction firm. If the RFQ specifies only the primary design, the energy performance contractor will propose a so-called turnkey project including final design and installation. If the RFP addresses the project scope only by specifying the goals and objectives, bidders will likely propose a “design-build” project where the airport and its consultants work with the contractor to finalize the design and potentially make changes during construction to optimize the project. Design-build is often appropriate for complicated infrastructure projects, and it may be appro- priate for certain comprehensive renewable resource programs. The airport may intend to work with a private partner who can build, own, and operate the facility. For such arrangements, the airport will advertise an RFQ for related services. At a mini- mum, the RFQ should authorize the selection of a company to lease airport property associated with the renewable resource project. It may also authorize the airport to purchase goods and services produced by the facility. As an example, for a renewable electricity project, the bid process would end in the selection of not only a lease holder, but also a contract or PPA to enable the airport to purchase the power produced by the project, for a specific price, over a defined time period. FAA approval of these contracts is required even if no FAA funding is involved, so the airport must be sure that such projects meet FAA planning requirements (e.g., an up-to- date ALP) and review standards, such as the airport receiving fair market value for a lease or a comparable financial transaction (e.g., price of power). Fiscal—Airport Ownership and Funding of Renewable Energy One of the most discussed aspects of a renewable resources project will be its financial cost. In this section, the guidebook discusses concepts related to costs, incentives, revenue, and ownership models for various types of renewable resources.

Pillars of a Successful Renewable Resources Strategy 33 Ownership and Operational Arrangements There are three primary ownership scenarios for airport renewable energy projects. Such projects may be airport-owned; third-party owned with airport as host; or third-party owned with airport as power purchaser (Barrett et al., 2015). Lesser arrangements include airport- owned with an equipment lease; utility-owned with airport as host; and tenant-owned. In general, smaller renewable projects that directly serve the demand of the airport will be airport-owned and airport-funded. Larger utility-scale facilities may be capitalized, built, owned and operated by a private third party to maximize financial incentives. Each ownership arrangement is addressed below. 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 the utility’s electrical meter. This scenario is illustrated in Figure 7. If the airport funds, constructs, owns, and operates its own renewable energy facility, it relies on electricity from the system on-site and behind the meter. When the system generates more electricity than the building consumes, the excess electricity is sold back to the utility. At times when consumption exceeds on-site production, the airport purchases additional electricity from the utility. The meter records the amount of electricity drawn from the grid and credits back excess electricity sold to the utility. This system 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 8. 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 need for traditional fuel (e.g., natural gas) for heating purposes. 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 agree- ment. 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 purchasers. In these situations, development companies profit from solar developments, Figure 7. Airport buys electricity from the grid. Source: ACRP Report 141, 2015.

34 Guidebook for Developing a Comprehensive Renewable Resources Strategy primarily because they can monetize the federal investment tax credit—which funds as much as 30 percent of the project installation cost—and state renewable energy markets that direct utilities to purchase green power at a premium price. In cases where a third party is the 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 7. The third party will produce power and send it to the grid and an off-site party will execute a PPA. Third-Party Owned—Airport as Power Purchaser In this scenario, the project is structured as described above 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, which ensures that investors will receive a return on their investment based on the established PPA price of electricity. Third-party developers are particularly inter- ested in developing renewable energy projects at airports because airports are a credit-worthy long-term purchaser of energy. Figure 9 illustrates how an airport may purchase renewable power to meet a portion of its demand and purchase 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 to 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. In its Interim Guidance on Energy Efficiency for projects that receive funding under Section 512 of the FAA Modernization and Reform Act of 2012, FAA has imposed additional requirements associated with PPAs, specifically the following (FAA, 2012): • 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, and Figure 8. Airport-owned renewable energy system. Source: ACRP Report 141, 2015.

Pillars of a Successful Renewable Resources Strategy 35 • Does either revenue neutral or financially net beneficial to the airport sponsor on an annual basis mean that the airport must receive at least as much financial benefit annually as the fair market value of the electricity sold. While third-party projects with PPAs are unlikely to require or demonstrate a need for FAA funding to the airport sponsor, it is possible that FAA may seek to impose these requirements through its broader authority under grant assurances when approving ground leases. Airport-Owned Equipment with Private Lease 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 purchases from the grid as with the airport-owned scenario discussed above. Under this arrangement, 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 conventional airport-owned scenario. The trade-off is that the airport has to make an additional lease payment to the equipment holder and it may eventually make an investment to buy the equipment out- right once the leasing company fully monetizes the tax benefits after year 6. Utility-Owned with Airport Host Depending on how utilities are regulated within a state, utility companies may be owners of energy generation projects including those sited on airport property. This type of arrangement is more likely when the utility is owned by the municipality and generation sites for utility-owned facilities are located on municipal property, such as airports. 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 structuring the arrangement. The airport may simply act as a host and pay its electric bills as usual since hosting the project may not incur costs that need to be offset (e.g., if the project is hosted on a building rooftop that would not be used otherwise). 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 derive a potential long-term savings Figure 9. Third-party owned with the airport purchasing the system power. Source: ACRP Report 141, 2015.

36 Guidebook for Developing a Comprehensive Renewable Resources Strategy from renewable energy. Irrespective of the compensation agreement with the utility, the airport will gain ancillary benefits, such as public good will, by generating “green” power. Revenue Streams and Cost Savings from Renewable Energy Projects Increasingly, airports are looking for creative ways to utilize their assets to generate alter- native revenue sources and achieve significant cost savings. When it comes to renewable energy, most of the financial benefits are accrued through cost savings rather than through revenue generation. Cost savings are more applicable to airports because they consume lots of energy and investments in renewable projects typically result in an offset to energy operating costs. The primary method for airports to raise revenue through renewable energy projects is by entering into a property lease with a private renewable energy developer. A second possibility discussed below is a surcharge on a tenant-owned system. The revenue stream for renewable energy projects often consists of two distinct commodities that may be sold together or separately. These two commodities are (1) energy and (2) environ- mental attributes, which include RECs. 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 providing both the energy and the environmental attributes, while an “unbundled” PPA includes sale of either the energy or the environmental attributes. A summary of several cost-saving and revenue-generation options are described below. On-Site Generation Energy Savings Energy savings are achieved by avoiding existing costs. The amount of savings depends on the cost of existing energy. As an example, islands like Hawaii have very high energy costs due to the need to import fuel from great distances and using a renewable source to replace existing costs can quickly become cost-effective. However, future costs are dependent on future commodity prices of fossil fuels, which are difficult to predict. When an airport builds and operates its own renewable energy system, the power it generates supplants electricity (or fuel for heating or transportation) previously purchased from the utility. The value of the energy no longer purchased from the utility represents a cost savings to the airport. The savings accumulate over time to a point where the value of the savings equals the cost of installing the system. This is customarily known as the simple payback period. Once the system is paid off, the energy that is produced on-site is nearly free with the exception of any O&M expenses which tend to be small for renewable technologies. Sale of Net-Metered Electricity Net metering refers to the utility’s purchase of surplus electricity generated by the renewable energy system. The purchase may come in the form of a credit on the utility bill or a check in the mail. Because the generator made an investment to build the renewable energy system, the value of the electricity sale can be considered a cost savings that is used to calculate the payback period. While the value of the sale on a kilowatt-hour basis will vary depending on the particular state and its net metering policy, the utility is obligated to purchase the surplus electricity. Therefore, the net-metered power will produce a cost savings to the generator. Property Lease A land lease for a renewable energy facility on airport property is not particularly different from any other land lease agreement. The airport must assess the fair market value of the land

Pillars of a Successful Renewable Resources Strategy 37 and demonstrate to FAA that it is receiving fair market value compensation through the lease. Renewable energy developers will seek to keep their costs down to ensure that the electricity produced can achieve a market rate. As a result, the best locations for siting projects on airfield lands are those sites with few other development alternatives such as noise com- promised lands or areas with height restrictions due to close proximity to the airfield. Lease values for renewable energy projects are often comparable to those obtained for agricultural leases and significantly lower than for other types of development such as commercial or industrial tenants. It is important to note that airports that lease land for a renewable energy project and receive only a lease payment in return do not have a credible claim to using renewable energy to power the airport. The party that executes a PPA to buy the energy has a valid claim to the green power produced and owns the RECs to document that claim. However, the public at-large is unlikely to recognize this distinction and the airport will likely benefit indirectly from public perception that it is using renewable energy. Tenant Surcharge Tenants may lease airport buildings or construct and own a building through a long-term lease arrangement with the airport. In either case, the tenant is typically responsible for paying its own utility bills and the airport is not involved in these transactions. In cases where the tenant wishes to install a renewable energy project on a building it owns or adjacent to a building it occupies, it seeks to do so to gain a long-term financial benefit from renewable energy. It may be possible for the airport to assess a fee for allowing the deployment of the renewable energy system without discouraging the tenant from proceeding with the project; however, the revenue generation would likely be relatively small. Sale of Renewable Energy Certificates Owners of renewable energy facilities generate both energy and RECs. The value of the electricity, or heating fuel, is determined by the spot market price or a pre-set price in a bulk purchase contract. RECs accrue for both on-site generation and net-metered electricity. The value of the REC is also set by market demand from REC buyers. The REC buyers include utilities that are obligated by law under a renewable portfolio standard to procure renewable energy by purchasing RECs, and institutions whose constituents demand that green power be purchased from a voluntary market (e.g., corporations, universities, health care providers). The sale of the RECs, like the sale of surplus electricity, can be used to pay off the investment that was necessary to build the renewable energy facility, resulting in a cost savings. However, current FAA guid- ance states that RECs created by projects funded with AIP funds associated with Section 512 of the FAA Modernization and Reform Act of 2012 cannot be sold to generate revenue. The airport can give the RECs to the utility in return for lower electricity rates. As noted previously, the sale of RECs transfers credit for the renewable energy to a third party who seeks to document and verify its purchase and therefore, the seller of the REC releases the claim to renewable energy to the purchaser. Power Purchase Agreements 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. PPAs are contracts that establish a commitment to purchase power (e.g., from a solar PV project) at a specific price over a defined term. The buyer of the electricity (e.g., the airport or a tenant) locks in a price for the electricity over a defined future period, which provides the buyer predictable and stable electricity prices, as well as a hedge against volatile market prices that are forecast to increase in the future. While

38 Guidebook for Developing a Comprehensive Renewable Resources Strategy future prices are unknown, the year 1 price is often set at or below existing prices and any time in the future when market prices exceed the PPA price, the electricity buyer will enjoy the dif- ferential as a cost savings. In many cases, PPAs are able to offer a rate that is consistently below the price of existing “utility” power and locked in at a known rate. The potential downside for the airport is that short-term energy prices could go down below the PPA price due to changes in fossil fuel commodity price. This is a risk to the airport in committing to the PPA; however, prior to committing to a PPA an evaluation of historical and expected future energy costs should be completed. PPA terms tend to be more favorable for larger, less complex, systems but can also be effective for bundles of smaller (e.g., rooftop) systems. Funding a Renewable Energy Project The financing options available to sponsors of airport renewable energy projects include those that are traditionally available to airports as well as those that are available to government entities. Based on an analysis of the potential funding sources for renewable energy projects, the options summarized below were found to have the greatest potential for use by airports. These options should be explored by the airport during the planning stages of the project to determine what combination of sources best suits the project’s needs and fits within the airport’s financial structure. A more detailed discussion around funding renewable energy projects and building the business case can be found in ACRP Report 151. Funding options are primarily driven by the level of airport stake in the project. If the airport seeks to capitalize, develop, and own the project themselves, it will pursue one set of options. If it seeks to partner with a private developer as owner, other financing options will become relevant. Therefore, an initial discussion of basic ownership arrangements is a necessary precursor to exploring options for airport renewable resource financing. Table 6 presents typical renewable resource technologies and ownership models and how they are financed. Airport Funding Options There are several opportunities for capital funding for renewable energy projects available to airports, from federal government incentives to local and state incentives. Currently, most federal incentives for renewable energy projects are part of the Internal Revenue Code, so public entities that have no tax liability, such as airports are ineligible. These tax incentives can reduce Table 6. Funding for renewable resource ownership models. Technology Ownership Funding Comment Solar PV (on-site use) Airport FAA AIP, bonds, annual budget More cost-effective where existing electricity prices are high Solar PV (off-site grid supply) Third party developer Tax Credits, PPA More cost-effective where state offers solar incentive programs Solar Thermal Airport VALE, annual budget Most often funded by grants as demonstration project Wind Airport FAA AIP, annual budget Most often funded by grants as demonstration project; however, may be interest from a private developer Biomass Airport, Third party Various Typically located in forested regions where wood waste fuel source is cost- effective Ground Source Heat Pump Airport VALE, annual budget Typically incorporated into the design of a new building or a major renovation

Pillars of a Successful Renewable Resources Strategy 39 installed project costs by well over 40 percent for a private owner. The ability of private owners to access tax incentives is one reason for the frequency of private ownership of renewable energy projects on public lands and buildings. In addition to federal incentives, there may also be state and local incentives available to air- ports. One source of incentives by state is the Database of State Incentives for Renewables and Efficiency (DSIRE). Incentive programs change frequently, so airports should regularly examine the programs in their areas. Airports can also employ funding mechanisms typically used for capital improvements on an airport including FAA AIP funding (primarily discretionary funds), approved PFCs, and revenue bonds. Each of these programs has specific requirements and processes. Airport Improvement Program Grants for Eligible Projects at Airports. AIP provides grants to eligible projects at airports in the NPIAS for the purpose of planning and improving public-use airports. Funds from these grants are divided into two separate categories, entitlement grant funds and discretionary grant funds. Projects eligible to receive funding under AIP generally include those that enhance air- port safety, capacity, security, or address environmental concerns. Each project type requires the airport to contribute local funds to match a portion of the federal contribution. The current version of FAA Order 5100.38D—The Airport Improvement Program Handbook provides guidance on all aspects of AIP. Zero Emissions Vehicle and Infrastructure Program. The FAA Modernization and Reform Act of 2012 created a new Airport Zero Emissions Vehicle and Infrastructure Pilot Program. This pilot program allows FAA to award AIP funds for the acquisition of zero emissions vehicles at an airport and for making infrastructure changes to facilitate the delivery of energy necessary for the use of these vehicles. These could incorporate renewable energy charging options for airports. Section 512 Section 512 of the FAA Modernization and Reform Act of 2012 added a program that encouraged public-use airport sponsors to assess energy requirements in order to accelerate the adoption of energy-efficient airport power sources. Energy efficiency projects include those related to heating and cooling, base load, backup power, and power for on-road airport vehicles and ground support equipment, as well as solar PV projects. FAA has prepared the Draft Guidance on Increasing the Energy Efficiency of Airport Power Sources 2017, which includes information on energy assessments/audits and energy efficiency/renewable energy projects. The most recent draft guidance is included in FAA’s Order 5100.38D—The Airport Improvement Program Handbook. VALE The VALE Program is designed to reduce all sources of airport ground emissions and is one of the noise and environmental set-asides in AIP. It has dedicated and separate funding from other airport projects funded under AIP. Through VALE, airport sponsors can use AIP funds and PFCs to finance low-emission vehicles, refueling and recharging stations, gate electrification, and other airport air quality improvements. VALE funding had been used for renewable energy technologies such as geothermal at Portland, Maine; Duluth, Minnesota; and most recently at South Bend Regional Airport in Indiana and Boise, Idaho. Solar PV projects are not eligible. Further, VALE funding is only available for commercial service airports that are located within nonattainment or maintenance areas.

40 Guidebook for Developing a Comprehensive Renewable Resources Strategy Tax-Exempt Bonds Airport operators in the United States are overwhelmingly state or local governmental entities with the power to issue debt on a tax-exempt basis, thus reducing their financing costs. There- fore, the airport can often finance renewable energy projects that will benefit only the airport itself, such as a solar facility where the power generated will be used entirely by the airport, with the proceeds of tax-exempt bonds. However, where the power is to be co-mingled with that provided by a private third-party utility or “sold into the grid” through a net metering arrange- ment and applied to reduce the airport’s overall cost of energy, use by the third-party may prevent airports from applying for tax-exempt financing. Another cost-saving alternative may be for an airport operator to finance the purchase of a specified output of a renewable energy project over a period of years with the proceeds of tax-exempt bonds. Such an arrangement is only available to an airport owner that is consid- ered a “utility” acquiring such output for its “retail electric customers” within its “service area.” However, some airports are treated under local law as a wholesale utility providing retail electrical service to its tenants at the airport. Thus, such an airport could contract for a guaranteed delivery of power (such as 80 percent of the expected output of a rated facility), over a specified period (such as 20 years), pre-pay for such energy with proceeds of tax-exempt debt, resell such elec- tricity to retail customers within its service area (such as the airport), and the developer could use such funds to pay costs associated with developing the project. Tax Incentives for Private Partners In the United States, the renewable energy industry typically makes use of the various tax credits to decrease development costs and provide more economical electricity. The primary programs overseen by the Internal Revenue Service are the production tax credit (PTC) and the investment tax credit (ITC). The PTC provides a tax credit for each kWh of electricity produced by a facility. The ITC is a credit on project investment and therefore is preferred as it can be realized based on project construction rather than operation. The ITC has been set at 30 percent of qualifying expenditures though the incentive is decreasing over time. Solar, wind, fuel cells, and geothermal are all eligible for tax credits at different rates and under specified schedules. Often, developers of renewable energy projects cannot use these credits themselves as they do not have enough taxable income to offset with the tax credit. Therefore, renewable energy projects typically attract investment from larger financial institutions as joint venture partners that can use the tax credits and effectively monetize their benefit. While federal incentives for renewable energy are available regardless of geographic location in the country, many states have also passed legislation to encourage the consumption of renew- able energy and build a renewable energy industry. Some states have incentivized local renewable energy development projects by requiring utilities to purchase a minimum annual percentage of the electricity it sells to customers in the form of renewable energy, thereby creating a separate market for renewable energy. These programs are referred to as renewable portfolio standards. Under these programs, the utility buys the renewable energy at a premium or pays a penalty. Some states have also created a market demand for RECs, including specific levels for solar, which are called SRECs. Other federal, state, and local tax incentives are available to renewable energy developers to improve project economics including accelerated depreciation under the federal tax code, and real estate tax relief at the state and local levels. All of these public policy measures provide private companies with an increased economic incentive to pursue project development. Utility Rebates and Incentives U.S. DOE offers rebates and incentives for renewable and efficient energy development to businesses and individuals. State and local governments may also offer utility-related rebates and

Pillars of a Successful Renewable Resources Strategy 41 incentives. Sponsors can find details on the specific rebates and incentives that are available in their area by visiting U.S. DOE’s DSIRE. The rebates and incentives change frequently, so airports should investigate opportunities early in the planning stages and verify that these options are still available as project planning proceeds. Bonds and Loans Clean Renewable Energy Bond (CREB). These funds require the approved project sponsor to issue bonds, which provide a credit of 70 percent of the full allowable interest rate. The amount of funding available through CREBs changes annually, based on congressional allocation. Qualified Energy Conservation Bond (QECB). These are qualified tax credit bonds that enable state or local governments to borrow money at attractive rates to fund energy conservation projects. Bonds are subsidized by the U.S. Treasury, which provides a credit of 70 percent of the full allowable interest rate. Funding through QECBs is dependent on congressional allocation, and can change annually. For example, Congress allocated $3.2 billion for 2015. Based on guidance provided by the U.S. DOE, both bond programs have the same term limits, bond rates, and assurances (U.S. DOE 2010). These are as follows: • Coupon rates are negotiated with the buyer like any other bond program. • The bond term limits are set by the U.S. Treasury Department on a monthly basis. Also, the Treasury Department has a maximum coupon rate that is eligible for tax credit. This is called the tax credit rate and is also set on a monthly basis. (To see the current prevailing rates go to https://www.treasurydirect.gov/GA-SL/SLGS/selectQTCDate.htm.) • Issuer sells taxable bonds and pays a taxable coupon semi-annually to the investor. • All bond proceeds generally must be spent within 3 years or used to redeem bonds at the end of that 3-year period. Issuers must have a binding commitment with a third party to spend at least 10 percent of the bond proceeds within 6 months of the issuance date. • Only 2 percent of the bond proceeds can be used toward cost of issuance. If issuance costs are higher, the balance of these costs must be funded from other sources. • Davis Bacon prevailing wage laws do not apply to issuer employees but do apply to contracted labor. Financial Planning in Master Planning FAA AC 150/5070-6B—Airport Master Plans, provides guidance under Chapter 12, “Financial Feasibility,” for preparing a pro forma cash flow analysis that projects the airport revenues, O&M expenses, existing and new debt services, and other non-operational revenues related to the project. Financial feasibility is applied throughout the planning process with an emphasis on covering the local cost through airport cash flow. Many of the points addressed in the financial feasibility process are applicable to renewable energy projects. The advisory circular highlights five points that should be addressed and can apply to renewable projects. • Consider alternatives strategies for financing the project to minimize dependence on federal and state aid. The airport master plan should include the investment requirements and the benefits of the project so that the airport sponsor can make decisions on availability of funds and public investment priorities. • High activity commercial airports are usually self-sufficient and generate enough revenue to support revenue bond financing for capital improvements through setting rates, fees, charges, airline use lease agreements, and other operating agreements. Other smaller use airports

42 Guidebook for Developing a Comprehensive Renewable Resources Strategy which do not generate the revenue of larger airports need to supplement bond financing with federal aid to various degrees. • In conducting the pro forma cash flow analysis, focus should be on the 3- to 5-year period that coincides with the CIP. Emphasis should also be placed on the first 10 years of development, with a discussion on the 10- to 20-year timeframe in broader terms. Projects in the later years are deemed to have a more neutral cash flow and priorities for airports’ capital improvement projects may change as the airport master plan is updated. • Valuing construction expenses, operating revenues, and O&M costs in current year dollars may be an option in evaluating the financial feasibility of the project. • Other options may be to increase the capital cost of the project from current year dollars to the year in which the project is expected to start construction. However, inflationary impacts must be included in the projection of revenues and O&M expenses along with increases due to operational factors. Keep in mind that a sensitivity analysis may be necessary to assess the financial risk of the project especially where PFCs or revenue bonds are being greatly relied upon in the CIP. As discussed earlier, airports are under pressure to improve their financial conditions and maximize revenues through increase in concessions, airline, and non-aeronautical revenues that correlate closely with renewable energy projects. The non-aeronautical revenue generator provides airports the best opportunity to establish new types of lease revenues while also controlling the future use of the land. While these types of arrangements are favorable to the airport, airports should be aware of any restrictions that could be placed on these types of activities by grant assurances and PPA. Benefit-Cost Analysis A benefit-cost analysis (BCA) should also be conducted as part of the airport master plan. FAA announced policies in 1994 that establish the requirement for BCA to demonstrate the merit of capacity projects for which airport sponsors are seeking AIP discretionary funds. FAA interprets capacity projects to include those involving new construction or reconstruction of airport infrastructure intended to accommodate or facilitate airport traffic. FAA policy requiring BCA does not apply to projects undertaken solely, or principally, for the objectives of safety, security, conformance with FAA standards, or environmental mitigation. BCA must be prepared for projects with capacity projects requesting AIP funds of $5 million or greater or any capacity project requesting a letter of intent from FAA. BCA is used to justify the spending of public funds administered under the AIP program, which has historically been funded through taxes imposed on aviation system users. As such, all benefits and costs affecting the aviation public or directly attributable to aviation must be considered and evaluated in the BCA. Such benefits may include benefits realized in the form of monetary gains (e.g., lower operating costs), reductions in non-monetary resources (e.g., personal travel time), or mitigation of environmental impacts. Therefore, BCA considers not just cash benefits and costs but also greater benefits of the proposed action on the flying public. Types of benefits from aviation projects include increase in capacity and reduction in delays, improved safety and security, achievement of design standards, enhanced environmental benefits like noise reduction, and improvements to inter-terminal transportation. Evaluating renewable energy projects in the context of BCA can be challenging given the strong emphasis on demonstrating that the benefits directly accrue to the aviation system and public. Renewable energy projects can provide immediate environmental benefits. They can also provide financial benefits in the form of cost savings over the long-term; however, payback

Pillars of a Successful Renewable Resources Strategy 43 periods can be longer than for other energy cost-saving benefits associated with improved energy efficiency. Renewable energy can also be part of a plan to modernize the grid, provide redun- dancy and resiliency, and establish greater power reliability during unforeseen events. These types of benefits have been gaining some credence recently in the wake of the increased fre- quency of hurricanes and coastal storms. Technical—Engineering and Feasibility Considerations for Renewable Energy In addition to considering the financial, ownership, and administrative aspects of developing renewable resources at an airport, it is also important to consider the physical constraints that may limit the available renewable resource options. Examples of physical constraints that might impact project feasibility include: • Space. Many renewable resources require substantial amounts of land, roof space, or inte- rior space. It is important to consider which areas of the airport are eligible for a renewable resources project and suitable for the types of projects under consideration. For example, an airport with existing development plans for all their open ground space may not be a good fit for a ground-mounted solar PV array. • Existing Utilities. Airports, despite all of the planning involved in their creation and operation, were not always developed with renewable resources in mind. As such, it is important to evaluate the existing infrastructure to determine whether on-site generation is compatible with the existing electrical system at the airport. Upgrading an electrical service can significantly increase the cost of an otherwise simple project. Understanding that reality ahead of time will help planners better prioritize efforts, or include such upgrades in the airport’s long-term planning processes ahead of developing on-site generation projects. • Available Resources. Many renewable resource projects are intended to take advantage of natural resources like local biomass, incident solar radiation, or wind. Before seriously considering a project, it is advantageous to do an initial assessment of whether the airport has access to suitable resources. The following sections summarize the constraints associated with the primary renewable energy technologies deployed at airports. Renewable Heating and Cooling Solutions Ground Source Heat Pump Several airports have installed ground source heat pumps at new terminals and other large airport buildings with a heating and cooling load. The following steps should be considered when evaluating such a system on airport property: • Airports should review geological and groundwater maps to understand the subsurface characteristics of potential sites. • Airports should review the climate of the surrounding area. Ground source heat pumps are a good choice in areas that have seasonally extreme conditions necessitating a heating load in winter and a comparable cooling load in summer. • Airports should work with mechanical engineers to evaluate the feasibility of the system either as a component of a new building or for a major renovation. • FAA’s VALE Program has been a viable funding option for ground source heat pumps. The airport should determine if it is eligible for a VALE grant, if considering such a system.

44 Guidebook for Developing a Comprehensive Renewable Resources Strategy Biomass Biomass can provide building heating in areas where there is an adequate supply of cost- effective feedstocks. However, biomass units are only ideal in climates with a significant heating load. Airports should consider the following issues when evaluating a biomass heating system: • Discuss with a state forestry and agriculture agency the availability and cost of biomass feedstocks. • When considering a building heating system retrofit project, work with mechanical engineers to determine if a biomass system is compatible with the existing ventilation system. • For existing and new buildings, make sure there is adequate area for delivery, storage, and building transfer of feedstock. • Discuss with state regulators early in the process any specific issues related to air quality control. Renewable Electricity Solutions Solar Photovoltaic (PV) Solar PV is generally compatible with airports because of its modular design, which can be adapted to the existing landscape and its low profile, which does not present an obstruction to aircraft. While the amount of sun, and therefore the amount of electricity produced, varies among climates, solar PV can generate electricity almost anywhere, which is not true of other technologies. However, before proceeding with a solar project, an airport should consider the following factors: • If the site under consideration is designated for aeronautical uses, the airport will need to update the ALP to include a change of use request. • Building-mounted projects require a structural analysis of the building to ensure that it can physically accommodate the solar PV system. • Ground-based units, while relatively low profile compared to other airport structures, must be evaluated relative to the Part 77 imaginary surfaces that define airspace. • As part of early site selection, a glare study must be performed to ensure that the project will not cause glare to impact sensitive airport receptors. • Many states have public policies in place to incentivize energy projects. Airport operators should review DSIRE to determine availability in their states. Wind Power Wind power is more difficult to site near airports because turbines are very tall and encroach on airspace. Projects that have been constructed successfully considered the following technical factors: • Any wind project must collect on-site wind data to inform a feasibility assessment. An airport may have on-site information based on its historic weather record, but it is best to obtain data at the height of the proposed turbine. This requires the installation of a meteorological test tower. • The ALP should contain plan sheets showing the height of the Part 77 imaginary surfaces surrounding the airport. An airport can use these plans to determine the maximum structure height at any location on airport property and to determine where a wind turbine can be constructed while not penetrating airspace. • Wind turbines must be located away from the line-of-sight between navigational aids and the air traffic control tower or aircraft to avoid communications systems interference. • The wind turbine must not produce flicker impacts on the air traffic control tower. The airport must use a shadow flicker computer model to confirm.

Pillars of a Successful Renewable Resources Strategy 45 • Stakeholders should be involved early in the process and assured that wind turbines have been constructed safely at other airports. Energy Storage The broad application of energy storage technologies for airport applications remains rela- tively new, though notable examples have been deployed, such as the microgrid at Burlington International Airport. In general, airports should consider the following steps when evaluating the feasibility of a possible energy storage project: • Review utility power outage history and assess risks related to severe weather events; • Review electricity costs and assess the relative contribution of demand charges to overall costs (Facilities with “peaky” load profiles may provide good fits for energy storage systems, which can trim high peaks and drastically reduce demand charges); and • Evaluate whether energy storage can enhance the value of on-site generation, such as shifting solar-generated electricity to a more lucrative time-of-use rate, to produce more revenue. Larger energy storage systems can frequently be deployed as containerized, standalone systems that, from the outside, resemble large truck trailers. These containers house batteries and control systems such as the fire suppression systems and monitoring systems. Other types of storage systems can be placed indoors, on rooftops, or near key electrical infrastructure such as substations. In addition to batteries, energy storage includes the following other forms: • Flywheels. Utilities sometimes use these very responsive devices for applications such as frequency regulation, but they are not commonly seen at airports. • Thermal storage. This technology can provide substantial HVAC savings by using inexpensive electricity to create an excess of ice, which then is used for cooling during peak/high-cost utility rate periods. • Pumped storage. By using inexpensive electricity or excess on-site generation to pump water or compressed air into a storage container, an airport can store such energy for later use. In a pumped water application, for example, the water is pumped into an elevated storage tank and later released to operate a generator and supply electricity. When considering deployment of energy storage systems, it is important to consider local permitting and regulatory requirements. As this is a relatively new technology, some jurisdic- tions may not be familiar with energy storage systems and may impose significant engineering and permitting costs before issuing approval. Renewable Transportation Solutions Renewable fuels (e.g., biofuel, landfill gas) for ground transportation vehicles can provide more cost-effective options using local suppliers in a mature market. These markets may occur where states provide incentives to increase development of biofuels or where high existing fuel prices make alternative fuels comparatively more economical. All markets are supported by requirements on refiners and fuel exporters under the RFS. Where large landfills are located near airports, energy companies have developed landfill gas markets and may engage airports as reliable customers. To take advantage of the market for renewable fuels, airports can do the following: • Research the state’s biofuel market by contacting the state’s department of energy, • Prepare an internal benefit/cost analysis of initial investments necessary to support the airport’s biofuel objectives, and • Contact airlines and ground transportation companies about potential synergies for collabo- rating on an alternative transportation fuels project.

46 Guidebook for Developing a Comprehensive Renewable Resources Strategy Considerations for Non-Energy Renewable Resource Projects Non-energy renewable resource projects require many of the same administrative, fiscal, and technical considerations as renewable energy projects. The particular similarities and differences are discussed below. Administrative Considerations While energy projects require construction and the associated permitting and planning processes, non-energy renewable resource projects can frequently be implemented outside of the processes related to making capital improvements to airport infrastructure. In fact, many of these projects are part of airport operational and procurement processes, requiring interaction with administrative staff, tenants, and sustainability personnel rather than the planning and engineering departments frequently engaged during the development of new capital and energy projects. Fiscal Considerations Compared with energy projects, many non-energy projects have more novel revenue streams and cost reduction opportunities, such as: • Producing sales from on-site aeroponic or hydroponic gardens, • Reducing waste disposal costs through the diversion of compostable materials away from the standard waste stream, and • Decreasing water usage fees from graywater reclamation. In other cases, renewable resources may not provide an easily defined revenue stream or cost reduction. For example, replacing the plastic flatware traditionally used at airport dining facilities with bioplastic cutlery may not be defensible from a financial perspective alone. Rather, it may require resorting to alternative arguments such as promoting social or environmental good, or improved customer satisfaction. For larger airports, there may be resources to study these indirect benefits, but in most cases, the argument may have to be made based on non-fiscal considerations. Although non-energy projects may be difficult to justify on a purely financial basis, they may be viable as one part of a broader renewable resources strategy, if that strategy is cost-effective overall. For example, the savings from a large solar project can cover the costs of non-fiscally compelling sustainability projects, or be partially diverted to an airport sustainability fund. Technical Considerations The technical aspects of non-energy renewable resource projects are often rather simple, because such projects generally do not involve major construction. Yet, technical personnel and engineers may still be helpful in assisting with the evaluation of proposed projects in comparison with on-site, self-developed alternatives. For example, a technical evaluation of the costs and benefits of an on-site composting facility can inform a comparison against using an off-site vendor to collect and manage compostable waste streams. In some cases, the airport may find that developing and owning an on-site solution is more beneficial. In the case of procurement practices, physical limitations may arise from unexpected complications. For instance, switching to a more environmentally friendly alternative for paper products, bioplastics, or other materials may require the allocation of additional storage space if the supply chain and delivery process are less established.

Next: Chapter 5 - Renewable Resources Goals and Metrics »
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TRB's Airport Cooperative Research Program (ACRP) Research Report 197: Guidebook for Developing a Comprehensive Renewable Resources Strategy highlights renewable energy sources, includes steps for developing a renewable energy strategy, and identifies metrics for measuring success. The report also highlights real-world examples of successful renewable resource projects at airports.

Renewable resources to reduce emissions from airports and climate impacts have been discussed for several years. Technological advancements have allowed organizations, specifically airports, to begin integrating renewable resources into their overall energy plans. In an effort to address climate impacts and achieve neutral carbon growth by 2020, a coalition of aviation stakeholders has adopted emission reduction targets.

Airports are also seeking to become energy independent, and using renewable resources as a strategy to get there. Further, as the costs for conventional energy sources increases, renewable resources become more financially attractive. Those airports who have implemented renewable resources have been able to do so at minimal cost.

While a business case can be made for the integration of any one particular renewable resource, an airport can be more strategic by adopting an overall renewable resource strategy. The renewable resources strategy can then become an input to other airport planning documents (e.g., airport master plan, strategic plan). The success of developing the plan as well as implementation require all internal and external stakeholders are involved in the process.

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