Enhancing energy opportunities through enhanced use leases

  • Published
  • By Breanne Smith
  • Air Force Civil Engineer Center Public Affairs
JOINT BASE SAN ANTONIO-LACKLAND, Texas --  While Air Force leaders work to find ways to meet increasing federal energy mandates, a team of project managers within the Air Force Civil Engineer Center's strategic asset utilization division works to identify installations with viable sites to lease for business opportunities - including energy production.

Currently, there are eight energy-based Enhanced Use Leases in execution with the potential to produce approximately 928 megawatts of energy.

An Enhanced Use Lease, or EUL, is a partnership between the Air Force and public entities or private developers to create mutually beneficial commercial projects on non-excess Air Force real estate. In exchange for leasing property, the Air Force receives cash or in-kind consideration from the lessee at or above fair market value, providing the installation with an additional revenue stream for infrastructure needs. This is a way to meet Air Force expenses while relieving some of the burden on taxpayers.

"It's our job to identify market-worthy opportunities that will generate revenue for Air Force installations, and match those opportunities with qualified developers," said Alex Colby, the division's business development branch chief. "There are numerous energy developers looking for property located in areas conducive to both clean and renewable energy production; it's in our best interest to identify non-excess property that fits that mold."

Of the eight energy leases awaiting finalization, two are expected to close later this year.
Last month, the Air Force entered into negotiations with Arizona Power Service to lease 106 acres at Luke Air Force Base, Ariz., for a solar generation facility as part of the base's proposed EUL. The facility, which will be fully constructed, operated and maintained by APS, will generate on-site renewable energy to help meet the base's renewable energy generation goals.

Another installation looking forward to reaping the benefits of a renewable energy lease is Robins Air Force Base in Georgia. An official announcement has not yet been made, but Air Force leaders hope to enter into an agreement to lease with a developer by early spring.

"These agreements will secure guaranteed revenue for years to come," said Dave Funk, the division's execution branch chief. "And it's important that we build those strong foundations and set our installations, and our communities, up for success -- we call that being 'Battle Ready.'"

As the division prepares to close on their first round of energy EULs, project managers aren't slowing down in their quest for more projects in the energy market.

Working with market experts, the team began to focus on opportunities on the east coast where there is a high demand for energy production. In 2012, the EUL team began pursuing energy generation projects at Joint Base McGuire-Dix-Lakehurst, N.J.

The base's location near the I-95 corridor and Ocean County is a desirable location for energy production, said Larry Lucas, JB MDL's project manager.

"The base had six parcels of non-excess property they offered up for development," Lucas said. "It generated a lot of interest from the start because of the potential magnitude."

Last November, Air Force officials announced the selection of the highest ranked offerer. The proposal by the Starwood Siemens team, with lead developer Energy Management Inc., will see four of the six available land parcels offered developed into various energy ventures.

With negotiations currently underway, Lucas said they don't yet know the exact amount of money the lease will generate; but considering the market value, they know it will be significant.

"This is a big project ... the biggest proposed to the Department of Defense with the best potential return to the government," Lucas said. "It will also contribute to renewable energy goals."

The proposed project is expected to generate at least 50-60 megawatts of renewable energy, putting the Air Force several steps closer to reaching the Air Force-wide goal of generating one gigawatt of renewable energy by 2020. Project officials are also considering an energy park, combining several clean energy technologies together in one location. Significant clean natural gas generation is also under consideration in combination with renewable energy technologies.

While the strategic asset utilization division focuses on a wide-range of business opportunities, energy EULs, specifically renewable energy, provide an added benefit for the Air Force, Colby said.

"Renewable energy EULs support two very important AFCEC mission areas: increased sustainability and support of the warfighter," Colby said. "Each time we close a renewable energy deal, we diversify our energy supply, reduce utility expenditures and contribute to clean energy initiatives that reduce the Air Force's carbon footprint."