Project Financing for Industrial Energy

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Veronica Singleton
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1 Project Financing for Industrial Energy Projects Project Financing for Industrial Energy Projects Victor Lopez Corpus Christi Army Depot August 10, 2016

2 According to CCAD (my outline) Background of AMC Organic Industrial Base Energy demands of CCAD CCAD experience with ESPC Using ESPC for Industrial Facilities and Operations 2

3 AMC Installations AAP = Army Ammunition Plant AD = Army Depot Ars = Army Arsenal Lake City AAP CF = Chemical Facility Small Caliber Active Plant MC = Munitions Center MOT = Military Ocean Terminal MC = Manufacturing Center Sierra AD Supply Depot Operations Demil Storage Hawthorne AD Western Area Demil Facility Contractor Operated Supply Depot Operations MOT Concord Tooele AD Supply Depot Operations Ammunition Peculiar Equipment Marine Corps Training Ammo Storage McAlester AAP Bomb Production Supply Depot Operations GOGO Pueblo Chemical Depot Chemical Demil Facility Chemical Storage Red River AD Bradley and MLRS Tactical/Combat Wheeled Vehicles Missile Recertification Joint Systems Manufacturing Cntr Lima Combat Vehicles Weapons p Systems Iowa AAP Missile Warheads Load, Assemble & Pack Active Plant Crane AAA Produce Navy Items Supply Depot Operations GOGO Milan AAP Load, Assemble and Pack Active Plant Corpus Christi AD Helicopters Pine Bluff Arsenal White/Red Phosphorus Smoke/Obscurants Letterkenny AD Tactical Missile Ground Support Equipment Tactical Missiles Navy/Air Force Missiles Conv Ammo Storage Radford AAP Propellants Explosives Active Plant Holston AAP Explosives RDX/HMX Active Plant BlueGrass AD Chemical Defense Equip Supply Depot Operations Chemical Demil Facility Chemical Activity Anniston AD Combat Vehicles Small Arms Artillery Watervliet Ars (WVA) Tank Cannons Mortars Towed Artillery Scranton AAP Projectile Metal Parts Active Plant Tobyhanna AD Communications & Electronics Avionics Missile Guidance & Control MOT Sunny Point Ammunition Terminal Group Supply Depot Operations AMCOM Missiles DA Missile Recycling Cntr 3

Army s Organic Industrial Base Sierra Army Depot Herlong, CA Tooele Army Depot Toole, UT Hawthorne Army Depot Hawthorne, NV Lake City Army Ammunition Plant Independence, MO McAlester Army

Systems Manufacturing Center Lima, OH Rock Island Arsenal Rock Island, IL = Ammo Facility = Depot = Arsenal = Government-Owned, Contractor Operated Providing maintenance, manufacturing, and

Army Ammunition Plant Milan, TN Pine Bluff Arsenal Pine Bluff, AR Tobyhanna Army Depot Tobyhanna, PA Scranton Army Ammunition Plant Scranton, PA Radford Army Ammunition Plant Radford, VA Holston

4 Army s Organic Industrial Base Sierra Army Depot Herlong, CA Tooele Army Depot Toole, UT Hawthorne Army Depot Hawthorne, NV Lake City Army Ammunition Plant Independence, MO McAlester Army Ammunition Plant McAlester, OK Red River Army Depot Texarkana, TX Iowa Army Ammunition Plant Middletown, IA Corpus Christi Army Depot Corpus Christi, TX Watervliet Arsenal Watervliet, NY Joint Systems Manufacturing Center Lima, OH Rock Island Arsenal Rock Island, IL = Ammo Facility = Depot = Arsenal = Government-Owned, Contractor Operated Providing maintenance, manufacturing, and production necessary to sustain the lifecycle readiness of war fighting weapon systems and equipment Letterkenny Munitions Center Chambersburg, PA Letterkenny Army Depot Chambersburg, PA Milan Army Ammunition Plant Milan, TN Pine Bluff Arsenal Pine Bluff, AR Tobyhanna Army Depot Tobyhanna, PA Scranton Army Ammunition Plant Scranton, PA Radford Army Ammunition Plant Radford, VA Holston Army Ammunition Plant Ammo Plant Lexington Blue Grass Army Depot Lexington, KY Crane Army Ammunition Activity Crane, IN Anniston Army Munitions Center Anniston, AL Anniston Army Depot Anniston, AL 4 Primary Energy Consumers

5 AMC Energy Summary AMC uses 17% of All Army installation energy* AMC mission is energy and water intensive AMC facilities and industrial processes in large part remain the same as when first constructed in the 1940 s Third Party Financing authority presents a significant opportunity for AMC Leverage energy cost savings to recapitalize and modernize AMC facilities and industrial processes and equipment Trending towards more use of industrial modernization. AMC ESPC & UESC awarded to date: >$285M with additional FY16 awards.$70m. Many include industrial savings components. *Army FY15 Data in AEWRS Wood framed building constructed during WWII (typical of AMC facilities) 5

6 CCAD Energy Intensity Avg Annual Peak Typical Users Whirl Tower Two Hp motors XTC Hp at full test 6

7 CCAD Current ESPC Task Order 1 $24M awarded 30 SEP 2015 Traditional energy saving measures: HVAC systems, building envelope and controls, low flow water fixtures, cooling towers, LED lighting, and high efficiency transformers. Next Task Order in Feasibility Study Moving towards industrial process support equipment Plant compressed air systems Dust Collector Filtration Make up air systems Moving towards greater O&M savings Leveraging Energy Projects for Industrial Modernization 7

8 CCAD Current ESPC cont. Phase 1a $24M awarded & underway Phase 1b concept Solar PV power generation Phase1c B8, Compressed Air, & B340 Process Improvements Phase 1d Recapitalization of B340 Plating Shop 8

9 CCAD Approach Big Three Deltas M&V Top Cover/Support Improved Contracts Leverage and Partnering 9

10 Energy Savings to Industrial Modernization Distinguishable approach: Three Buckets Energy/Utility Savings mostly energy savings Support Process more O&M savings Change Process mostly O&M savings 10

11 Building 340 Replacement of batch plant and supporting infrastructure: Replacement of chemical vats Replacement of electrical rectifiers Replacement of process chillers and boilers Replacement of air scrubbers and make up air units Replacement of push air and agitation air blowers Replacement of existing SCADA controls Airflow control based on vat conditions Implementation of automated chemical mixing system Replacement of RO/DI Water System Replacement of IWW system and evaluation of improved IWW recycling Various additional upgrades Economics Simple Cost Range Utility Savings O&M Savings Payback $50 60M $ k $ M years 11

12 Building 340 cont. What makes B340 make sense? Facilities efforts Process Engineering efforts Toxic Metal Reduction (TMR) effort Largest energy user per SF on the Depot 12

13 Financial Strategies Balance Payback with Life Cycle Rebates get all available & decide when to use Contributions up front Scheduled contributions 13

14 Themes Think Different Embrace the Partnership Outside the Box 14

15 Industrial Modernization Benefits Need to provide flexibility to meet production/process requirements Significantly improve equipment lifecycles Avoid wasted investments Build performance periods around production cycles Think like a private enterprise; Embrace the manufacturing revolution in the United States that has occurred in the last 15 years; Look to adopt industry best practices 15

16 Avoid Process Pitfalls Integrate lifecycle management (it s guaranteed!) End state impact to production Monitor O&M savings as well as energy savings Account for production requirements Maintain capability during implementation ESCO repair response times Different M&V for process improvements 16

17 Embrace the Partnership Leverage Industry Experience Sustainability goals Energy Mandates Creative thinking and soundboard 17

18 O&M Savings Considerations EMCS upgrades: Claiming of materials and labor for upgrades to system components (e.g. valves, sensors, actuators), commissioning (includes continuous and retro) and replacement of pneumatic controls with DDC. Production Ventilation Control Improvements. Often these result in increase of 10% in productivity but will only allow energy savings to be counted 18

U.S. Army Materiel Command

Geza Cseri AMC G3, Industrial Base Capabilities Division U.S. Army Materiel Command AMC Organic Base Overview 5 February 004 Report Documentation Page Form Approved OMB No. 0704-088 Public reporting burden