1. 2011 ADC WINTER FORUM | PAGE 1 Navy Use of § 2922 Authority CAPT Clayton Mitchell NAVFAC Energy Office

2. 2 Key Energy Legislative Provisions  10 USC 2922A Establishes contract duration for provision and operation of energy production facilities.  10 USC 2917 Permits Secretary of military department to develop geothermal resources beneath withdrawn public lands.  10 USC 2916 Permits military to sell, or authorize the sale by a contractor of electricity produced from alternate energy or cogeneration facilities. Funds to be invested in account for electricity.

3. 2011 ADC WINTER FORUM | PAGE 3 10 USC § 2922A Authority – Contracts for Energy  Contract up to 30 years in duration  Purchase energy either from: production facilities on real property under SECNAV jurisdiction or; on private property  Requires SECDEF approval  Sometimes (mistakenly) referred to as the Power Purchase Agreement (PPA) statute.

4. 2011 ADC WINTER FORUM | PAGE 4 DON Applications of §2922A  None to date. China Lake Geothermal often mistaken as under § 2922A. Miramar Land Fill Gas (currently in-progress) would represent DON’s initial use of § 2922A authority Potential future opportunities at: o 29 Palms (Solar ) o NSWS China Lake (Solar) o NAS Fallon (Solar)  Navy interpretation of § 2922A1 Section A references §2917 – authorizes geothermal energy resource development. Section A2 references provision and operations of an energy production facility (not specifically renewable or geothermal) on land under jurisdiction of the Secretary concerned or on private property. Navy interprets that withdrawn land would fall under the jurisdiction of the Secretary concerned. o Except when the withdrawal notice notes specific conditions:  Executive Order  Other statues

5. 5 China Lake Geothermal Plant Public/Private Venture Generally considered a “revenue” contract vs FAR contract. DON can take revenue or power Not considered a FAR Contract because it does not involve the expenditure of appropriated funds for either services or supplies. Several FAR clauses have been incorporated into the contract §2922A often mistakenly cited as the enabling authority for China Lake plant. Originally authorized under 10 USC § 2867 and 2889; the precursor to § 2917 Contractual Overview 5 Production Capacity Power Plants (4) – Navy (2)/BLM (2) Net Production Output: 270 MW Infrastructure Turbine-Generator Sets: (9) Transmission Lines: (2) Productive Wells: (166) Piping (Linear Feet): +200,000

6. Miramar Landfill Gas Overview Contractor Scope: Develop/ construct/ operate/ maintain renewable power generation facility Methane gas extracted from landfill (15 years - § 2922A) Located on MCAS Miramar real property leased to the city of San Diego 3 MW Renewable Energy at MCAS Miramar 25,542 MWH annual capacity/ 18,809 MWH/yr minimum delivery Contractor to deliver renewable power NLT (9) months after contract award Government Scope: Construct/ own/ operate/ maintain power transmission infrastructure to new facility Strategic Objectives: Reduce MCAS Miramar’s reliance on fossil fuels At a later date, the Government may negotiate provisions to include “Black Start” capability to mitigate electric grid failure USMC to retain Renewable Energy Credits Pre-established price for predictability and budgetary planning Potential delivery of 33% to 50% of installation’s annual mission essential energy requirement.

7. Miramar Challenges Coordination of multiple contracts Government construction of transmission/distribution lines o Portion of the transmission lines funded under ARRA – should be awarded after PPA is awarded. o If transmission line completed but PPA not awarded, then no complete and usable system. Contractor construction of production facility Power Purchase Agreement for commodity utility o Take or Pay Legal Considerations o Termination Clause Legal Considerations

8. QUESTIONS?

9. 9 China Lake Geothermal Plant History Project Location: NAWS China Lake Key Milestones: Start Initial Testing: 1964 Test Initial Well: 1977 Initial Contract Award: 1979 California Energy Corporation Follow-on contractor: Terra-Gen Contract Renegotiation (30 years): 2005 Type of Contract: “Unique” Navy receives negotiated percentage of contractor’s gross revenue up to ceiling of 20%. Business Model Revision Underway Co-locate solar PV or wind with geothermal wells. Share transmission line with geothermal power.