Hanscom AFB Energy-as-a-Service Pilot

This information has also been posted as an attachment. REQUEST FOR INFORMATION RFI NARRATIVE Background The United States Air Force (AF) is seeking a single industry provider to cost-effectively and comprehensively deliver reliable, resilient, and efficient energy to mission owners at an AF installation. In July 2017, Defense Logistics Agency (DLA) Energy released an initial Request for Information (RFI)[1] for two demonstrations of this new way to holistically procure and manage installation energy, known as Energy-as-a-Service (EaaS). The original goals for EaaS from the 2017 RFI remain: EaaS envisions a realignment of AF energy procurement and management functions through a single, comprehensive contract to deliver holistic energy solutions to an installation. Ideally, the EaaS provider would be solely responsible for operation of and investment in the on-base electricity system, including any onsite generation; the procurement of electricity supplies; and the implementation of energy conservation and demand management measures. With an emphasis on using third-party financing and existing levels of appropriated funds, the expected end-result from implementing EaaS at an AF installation includes the following: - A modernized on-base power distribution system that is sufficiently flexible to meet future mission requirements. - An assured energy supply from dedicated backup power supplies, on-base microgrids, and/or resilient interconnections to the power grid, as appropriate. - Increased conservation and efficiency of energy usage including advanced capabilities to manage loads to optimize energy supply costs. - A procurement strategy for commodity energy supplies. - Coordination of other procurement actions and contractors that directly affect achievement of the goal. - Collaboration, when possible and where practical, with adjacent communities that provide housing and other services supporting the AF mission to enhance energy resilience. - Resilient response capabilities with respect to outages ranging from localized transient issues to continental transmission failures of extended duration. - An all-inclusive plan that encompasses all the above with a single provider using a comparatively easy to manage contract at a cost that is lower than the AF could contract for each service individually. The EaaS pilot will focus on providing electric utility services, but the AF will consider Industry recommendations to broaden the scope to include other utilities, particularly natural gas, if acceptable to the Government. Since the release of the 2017 RFI, the EaaS concept has begun to penetrate the commercial and industrial market. For its part, the AF has identified two pilot sites to test EaaS (Altus AFB, Oklahoma and Hanscom AFB, Massachusetts) and has refined its assessment of the energy profile and energy requirements at each site. Based on feedback from the 2017 RFI, the Government is considering various contracting strategies. Now is an appropriate time to share the status of AF EaaS efforts, re-engage with Industry, and explore opportunities through this RFI to proceed with procurement for EaaS at Hanscom AFB. No single statutory authority allows for the full scope of EaaS. In addition, the contract should allow an EaaS provider to recover its energy investments in the electric system. The Government remains open to innovative suggestions from Industry for how this might be accomplished. In October 2018, DLA Energy released a sole source justification[2] to enter into contract discussions directly with the local electric utility for the Altus EaaS pilot. The Government seeks to implement EaaS at Altus AFB using a combination of a contract for electric utility services[3] and energy savings[4] with the local electric utility. While the Government anticipates this contract structure will achieve many of the EaaS goals, limitations on scope, term, and investment levels remain. Description The Government seeks an approach that deviates from the approach at Altus in order to address some of the scope, term, and investment limitations. The Government seeks to obtain utility services and energy savings via a competitive solicitation to meet EaaS objectives at Hanscom AFB. Further, the Government is interested in conveyance of the base electric utility system in connection with the utility services contract,[5] which may maximize value and flexibility for the EaaS pilot. The Government is soliciting Industry feedback on the attached draft requirements for Hanscom AFB, as well as feedback on whether conveyance of the electric utility system is needed, or whether alternative arrangements would be more favorable. The EaaS provider is expected to integrate the functions across the installation energy delivery chain in order to optimize operations and investment, thereby meeting the energy requirements of mission owners more cost effectively. The EaaS provider is also expected to respond flexibly over the agreement term as missions at Hanscom AFB and its corresponding energy requirements change. The AF anticipates that the resulting operational efficiencies that come from bringing together these objectives will be core to the success of EaaS. The three EaaS objectives are: 1. Integration - Demonstrate and implement an integrated approach to managing and procuring electricity at Hanscom AFB through a comprehensive scope of work that addresses commodity procurement (as purchaser, negotiator, or advisor) and delivery; operations, maintenance, and investment in the distribution system and onsite generation; and load management and energy conservation measures. Execution of this scope of work shall be through a single entity and rely on the development, review, and implementation of an Installation-wide 5-year Energy Plan to be updated annually in coordination with Hanscom AFB starting two years post-conveyance. 2. Optimization - Demonstrate the viability of an enhanced utility services contract that: (a) can optimize operations and internalize costs and incentives for an overall attractive business case; and (b) is comparatively easier to manage than multiple existing contracts, resulting in efficiencies in contracting, contract coordination, routine management, and reporting. 3. Flexibility - Demonstrate that utility services delivered under a comprehensive, long-term contract can incorporate all the technical, physical, and financial adjustments necessary to cost-effectively meet changing energy needs and uses at Hanscom AFB. The EaaS provider is expected to maintain energy requirements for reliability, resilience, and efficiency through five service standards: Power Availability - Continuously provide power that meets the levels of utility service outage duration and frequency for all on-base facilities identified in Section JA1.3 by means of various power supply options (grid power, on-site prime generation, back-up generation, uninterruptable power source, etc.). Power Quality - Ensure the overall quality of power provided (including regulation of voltage, frequency, and power factor; and diminution of harmonic distortion, voltage flicker, and switching surges) to all on-base facilities identified in Section JA1.3 will suffice to avoid adverse impacts on the Installation's electrical distribution system and end-use equipment. Power Outage Duration - Immediately provide power to all identified Priority Service Facilities in Section JA1.3 upon a commercial power grid outage, and maintain that power at a level sufficient to sustain each facility's critical load for no less than the duration specified in JA1.3. Cybersecurity - Ensure a cyber-secure energy system, including any monitoring and control systems employed to dynamically manage the portfolio, and any relevant data access and rights per the requirements in Section JA19. Efficiency - Plan and deliver energy conservation, demand management, and other efficiency measures - including advanced capabilities to manage heating, cooling, lighting and other loads - to achieve near term (in the next 10 years) goals of 10%-20% reduction and a longer term goal of 50% as measured by a reduction in either total cost for energy services or base-wide energy intensity (electricity consumed per gross square foot). The intended follow-on of this RFI is the release of a competitive solicitation for an EaaS pilot contract at Hanscom AFB. This solicitation would ideally offer an EaaS provider a defined yet sufficiently flexible ability to operate, maintain and invest in the entire electricity delivery chain at Hanscom AFB to meet the installation's energy requirements. Hanscom AFB Energy Profile A detailed energy profile of Hanscom AFB is included in Section JA1, Hanscom AFB Electric Distribution System, and in the Technical Library. In summary: The Government procures commodity electricity through short-term market purchases and the local utility, Eversource, provides electric distribution delivery service via a single interconnection to Hanscom AFB. The Government-owned electric distribution system on Hanscom AFB was placed underground approximately 20 years ago and delivers power to approximately 150 buildings that host AF and other missions, including for the Federal Aviation Administration at Hanscom Field, which is located adjacent to the installation. The average system load is 6.4 MW; the peak load is 12 MW; and critical loads are less than 2 MW. A 2016 base-wide Energy Savings Performance Contract (ESPC) implemented three energy conservation measures: (1) construction of a 4.6 MW Combined Heat and Power (CHP) plant; (2) replacement of existing oil-fired boilers with new natural gas-fired boilers at four buildings; and (3) LED lighting retrofits. The new CHP plant, at which the Government will hold title, will begin operation later in 2019 and will burn natural gas supplied from a new interstate pipeline connection. Currently, the plan is for Hanscom personnel to operate the CHP plant to produce steam in conjunction with an existing Government-owned Central Steam Plant and distribute the steam through existing lines to AF and other facilities, including those of the adjacent MIT Lincoln Laboratory. The CHP plant has no alternative fuel supply currently, but could utilize #2 fuel oil. The Central Steam Plant has two weeks of #6 fuel oil stored on site for peak demand. Back-up diesel generators ranging in size from 20 to 1,500 kW are dedicated to specific building-level loads and separate from the Hanscom electric distribution system via automatic transfer switches. Hanscom AFB has conducted preliminary technical, environmental, and economic studies to evaluate the development of up to 4 MW of solar photovoltaic generation on site. The Massachusetts Clean Energy Center awarded Hanscom AFB a grant in 2018 to conduct a microgrid feasibility study;[6] results are not yet available. RFI QUESTIONS The questions outlined below for this RFI are divided into three categories: (1) draft scope of work; (2) contractual performance; and (3) technical performance. Draft Scope of Work EaaS envisions a single industry provider taking on responsibility for the full spectrum of functions across the electricity delivery chain to more cost-effectively deliver reliable, resilient and efficient power to mission owners. Such responsibility spans commodity procurement, onsite generation, operating, and maintaining the utility distribution system, and in-building energy efficiency and end-use consumption. At a typical AF installation, responsibility for these functions is siloed across a combination of internal and outsourced providers, with the installation support staff ultimately responsible for integrating these efforts to ensure energy is delivered to mission owners when, where and how it is needed. By combining these functions at an installation into one contract and specifying delivery performance requirements at the building-level or end use, the AF anticipates the EaaS provider can propose and implement more efficient and effective solutions to meet mission owner energy requirements. Stated differently, the EaaS provider is expected to be able to identify and capture operational efficiencies while meeting its performance obligations under the contract. The EaaS provider could, for example, develop an optimal strategy for onsite power generation and load management to simultaneously offset commodity procurement needs and generate revenue from wholesale market participation while meeting performance requirements for reliability and resilience. Similarly, the EaaS provider may coordinate operations and maintenance on the distribution system and inside buildings with energy conservation investments that require specific operating schedules in order to achieve targeted energy savings. The following questions address the draft scope of work for the contract in order to best achieve the objectives and service standards outlined above. 1. Generation and Distribution System Ownership - Contractual interest in or control over existing and new generation and distribution system assets at Hanscom AFB will be required. This could range from full title transfer, some form of a lesser estate such as a lease, a license, no share of ownership, and/or a hybrid approach. For each of the items below, please indicate which would be preferable, why, and the associated financial implications. Please reference JA1 for the existing Hanscom AFB generation and electric distribution system inventory. a. Electric distribution system overall b. CHP plant c. Back-up diesel generators and uninterruptible power supplies (UPS) d. Electric meters, Supervisory Control and Data Acquisition (SCADA) and Energy Management Control System (EMCS) e. The point of demarcation delineating responsibility for the distribution system given your perspective on the assets in (a) through (c) above. Please see Section JA1.12 for further discussion. 2. End-Use Facilities - What role and responsibilities could the EaaS provider have in operating and maintaining building systems (e.g., heating, ventilation and cooling; lighting) at Hanscom AFB that are not part of a cost effective investment in energy conservation measures? a. What benefits and challenges are there in operating and maintaining these building systems? How would you address these challenges? b. What interest in or control over these building systems should the EaaS provider have? 3. Commodity Procurement - What role should the EaaS provider have in procuring energy commodity supplies for Hanscom AFB (e.g., purchase directly, provide advisory services)? a. What role should the EaaS provider have in procuring electricity supplies? b. What role should the EaaS provider have in procuring and managing any fuel commodities for onsite storage to support resilience needs? c. How should the EaaS provider be compensated for services related to commodity procurement? d. What opportunities and risks do the energy markets in New England and Massachusetts present in procuring such commodities, and how could these risks be mitigated? 4. Investment Opportunities - What specific investment opportunities and strategies for resilience and energy efficiency at Hanscom AFB would you as the EaaS provider propose? a. What are the key considerations and constraints that must be addressed to facilitate these opportunities? b. What additional information beyond what is provided in Section JA1 and the Technical Library would you need to evaluate investment opportunities? Contractual Performance The specific questions below are intended to gather insight from Industry on how EaaS could be executed through a single contract at Hanscom AFB. The singular contract structure sought under EaaS should be comprehensive, flexible, financeable, and organized in such a way industry understands and is incented. The EaaS pilot is seeking to capture operational efficiency benefits from a single provider responsible for managing the entire suite of electric utility services, and providing a contractual framework to enable timely investments and associated recovery of capital. Please consider your responses to the Draft Scope of Work and Technical Performance sections when responding to these questions. 5. Operational Efficiency - How would the EaaS provider leverage and gain synergy from managing the suite of electric utility services and functions at Hanscom AFB? a. What opportunities do you see for synergies and other improvements? b. What are associated benefits, both monetary and non-monetary (e.g., timeliness and service quality), in serving as the sole provider? c. How should operational efficiency be measured and reported to the Government? 6. Financing and Fee Structure - What are the "must haves" for an EaaS provider to secure financing upfront, and through the duration of the contract term? Given the specific situation at Hanscom: a. Provide both the minimum contract term required and the optimal contract term. Please justify why each is sought respectively for a successful contract. b. How should the reimbursement terms (e.g., fixed payments, variable payments, pass-throughs) be structured to make the project financeable and ensure performance while also providing some level of budget certainty to the AF? 7. Cost Recovery - How should an expenditure and cost recovery strategy be configured and facilitated by the EaaS provider throughout the contract term for both operations and maintenance, and capital expenditures? a. What mechanism(s) would ensure reasonable and predictable costs to the AF? b. How and when would various kinds of investments be funded and recovered (e.g., upon expenditure, at year-end, amortized)? If possible, address your approach for each type of asset that would be repaired or replaced in JA1, as well as investment opportunities identified in your answer to question #4 above. c. How can flexibility be accommodated as energy requirements invariably change over time? d. How would investments that occur near the end of the contract term be recouped? 8. Commercial EaaS Contracts - Industry reports suggest aspects of EaaS solutions are beginning to be offered in commercial and industrial markets. Please respond to the following as it is relevant to the Hanscom EaaS pilot: a. The services typically included in commercial EaaS contracts that you may offer. b. How commercial EaaS contracts are structured. What can be taken from these models to increase the attractiveness and success for the AF's EaaS effort? c. The payment regimes, and specifically the incentive structures (e.g., bonus payments, deficiency deductions, shared savings) in commercial EaaS or other relevant energy management contracts. Technical Performance EaaS is a shift in focus from the delivery of kWh to the delivery of enabling services that power AF missions. This means typical requirements and metrics that may be found in solicitations and contracts for electric infrastructure and utility services may not apply, (e.g., $/MWh). This pilot effort seeks to explore how those technical requirements may be refined or re-examined to build a more collaborative and outcomes-based structure to meet the operational needs of the AF. The questions below focus on the technical aspects of EaaS in light of the objectives and service standards, and are intended to gather insights from industry on how key requirements might be best defined, monitored and achieved. Please consider your responses to the Draft Scope of Work and Contractual Performance sections when responding to these questions. 9. Resilience - The AF seeks to define and assess energy resilience through a guarantee of service required by the EaaS service standards in the Description above, together with the Priority Service Facilities in Section JA1.3. a. Are power availability, power quality and power outage duration standards sufficient to ensure energy resilience at Hanscom AFB? If not, please suggest alternative or additional standards that are appropriate for resilience. b. For the standards recommended, should these apply system-wide and/or to specific points of service identified in the Priority Service Facilities? c. Given that utility reliability metrics are typically backward-looking, what proactive indicators are appropriate to track performance towards the standards you discuss above? What methods should be used to verify that performance? d. Do these indicators and/or the associated performance thresholds in (b) change for situations in which power from the commercial grid and/or pipeline gas is not available? 10. Cybersecurity - Cybersecurity requirements are outlined in the Description above and JA19, EaaS Information Assurance - Critical Infrastructure Cybersecurity. Industrial control systems (ICS) that are privatized cannot be connected on the AF network and must be on a physically separate network. The EaaS provider must then secure these systems and document a cybersecurity plan to meet DFARS 252.204-7012 and NIST SP 800-171, with additional ICS security controls in NIST SP 800-82. a. What experience do you have in meeting these cybersecurity requirements and/or the Risk Management Framework requirements applied to AF-owned systems? b. What challenges do you see in meeting the EaaS service standards given the cybersecurity requirements outlined in JA19? c. How would you propose to integrate and staff the cybersecurity function into the other services requested under the EaaS contract? d. How would you mitigate the cybersecurity risk and vulnerabilities associated with owning and/or operating industrial control systems? 11. Energy Efficiency - EaaS assumes energy efficiency measures are integral to resilience as well as best energy management practice. Energy efficiency is a service standard as described in the Description above and could include Utility Energy Services Contract (UESC) projects predicated upon repayment from displaced energy purchases. Energy efficiency projects may also reduce the cost of resilience investments and operating expenses that also reduce EaaS costs. Accordingly, EaaS is expected to continuously reduce energy use consistent with its contributions to both resilience improvements and total cost reduction. a. Is the inclusion of UESC contract language sufficient to incentivize energy efficient operations? b. If not, what other mechanisms could be used to internalize energy efficiency measures within EaaS Provider operations? c. What measurement(s) would you propose to track success for energy efficiency? Are traditional efficiency metrics, such as energy use intensity (EUI), adequate for monitoring improvements? 12. Planning - Current government practice for utilities privatization requires four separate plans addressing specific topics.[7] The EaaS provider is asked to develop a comprehensive 5-year plan that subsumes these same topics and as well as additional topic on cybersecurity in JA19. a. How would you address these planning requirements in your comprehensive 5-year plan? Please comment on the feasibility and desirability of combining these requirements into one plan. b. How would you propose using a 5-year plan to help demonstrate continued adherence to the EaaS service standards? Would a longer term be necessary to provide this demonstration and achieve operational efficiencies? c. What management and approval process would be necessary to develop, review and execute your 5-year plan? d. How would unanticipated changes be addressed within the structure described in (a) and (b)? Are there technical considerations (e.g., system reconfiguration) that could be considered early in the Hanscom pilot to facilitate or ease these potential changes? Response Date and Time: We appreciate your interest in advance in supporting the Government's requirements. Interested parties must provide the requested information via email submission by 5:00 p.m. EST, Friday, June 14, 2019. Emailed submissions shall not exceed 10 MB and should be sent to the designated representatives below. OFFERORS REQUESTING INFORMATION REGARDING THIS REQUEST FOR INFORMATION SHALL CONTACT THE DESIGNATED INDIVIDUALS LISTED BELOW. CONTACTS TO OTHER GOVERNMENT PERSONNEL OR NONGOVERNMENT ADVISORS ARE PROHIBITED. The designated representatives are the only persons authorized to contact Industry and release information. EAAS INDUSTRY DAY An EaaS Industry Day will be held on Wednesday, May 15, 2019 from 9:30 a.m. - 5:00 p.m. in the Boston, MA vicinity. Interested parties will be given the opportunity to ask questions and the Government will be soliciting information as requested in this RFI. All interested Industry parties must register for this conference via email by contacting all three of the designated representatives listed below by Wednesday, May 8, 2019. Note: when registering, please prioritize your attendees, as there may be a need to limit how many individuals from a single company may attend. Details regarding exact location and any security requirements upon registration will be provided starting NLT Friday, May 3, 2019. In order to make Industry Day as productive as possible, attendees are requested to submit any questions in writing (electronic mail is preferred) NLT Friday, May 10, 2019 in advance of the conference to the points of contact listed below. DLA Energy Designated Representatives DLA Energy ATTN: Utility Services Division 8725 John J. Kingman Road, STP 10400 Fort Belvoir, VA 22060-6221 Bonnie Sheehan Contract Specialist, Utility Services bonnie.sheehan@dla.mil (571)767-9115 Laurie Carlson Deputy Director, Utility Services laurie.carlson@dla.mil (571)767-5927 Martha Gray Director, Utility Services martha.gray@dla.mil (571)767-5926 1 See https://www.fbo.gov/spg/DLA/J3/DESC/SP0600-17-0424/listing.html 2 See https://www.fbo.gov/spg/DLA/J3/DESC/SP0604-18-R-0414/listing.html 3 Pursuant to the acquisition of utility services in FAR Part 41 procedures. 4 Pursuant to Utilities Energy Service Contract authority in 10 USC - 2913. 5 Pursuant to Utilities Privatization authority in 10 USC - 2668. 6 See https://www.masscec.com/technology-programs/community-microgrids-program. 7 The Plans included in typical Utilities Privatization contracts include the following: Service Interruption/Contingency and Catastrophic Loss Plan Operations and Maintenance/Quality Management Plan Initial System Deficiency Corrections/Upgrades/Connections and Renewals & Replacements Plan Operational Transition Plan