The White House issued a Presidential Memorandum on Dec. 5 establishing new policies for federal energy management that amount to a significant commitment to the increased use of advanced energy in the Federal Government.  How this translates into concrete investments in efficiency, renewable energy, and other advanced energy technologies will ultimately depend on the extent to which agencies implement several of the voluntary provisions of the memorandum. 

The directive establishes a new target for the federal government’s consumption of renewable energy and sets out a clear strategy for energy data management at federal facilities, providing new tools for the government to accelerate its gains in energy efficiency.  This memorandum implements several policy proposals unveiled this summer in the President’s Climate Action Plan.  Like most elements of the Climate Action Plan, the policies set forth in this memorandum do not require congressional action. Using the President’s authority to issue regulations to implement existing law, this memorandum sets deeper targets and adjusts the execution of policies that established in the Energy Policy Act of 2005 (EPACT 2005) and previous Executive Orders issued by Presidents Obama and George W. Bush.

Renewable Energy

The Presidential Memorandum lays out significant new requirements for the federal government’s use of renewable energy, both in terms of quantity and manner of procurement.  It requires agencies to consume at least 20% of their electricity from renewable sources by 2020, with a series of interim targets starting from the current-year requirement of 7.5% set by EPACT 2005.  Almost as important as the target itself, the government will establish tighter policies for how agencies obtain renewable electricity and their associated accounting mechanism, Renewable Energy Certificates (RECs).

Previously, agencies were required to procure at least 50% of their renewable electricity from new generation sources, although the definition of “new” included anything constructed since 1999 – hardly new 14 years later. The memorandum now requires 100 percent of renewable electricity to come from new sources, which the memorandum redefines as facilities built within 10 years of the year of consumption.

Additionally, the memorandum establishes preferred methods for procuring RECs that give more support to development of additional installations.  The memorandum directs agencies to utilize the following methods, in order of priority:

1. Install their own projects on federal land and facilities
2. Finance the installation of private renewable energy projects, either on federal lands and facilities or off-site, through a long term contract for power and RECs
3. Buy electricity bundled together with RECs from a specific source
4. Purchase RECs separately from electricity on the open market

Taken together, these priorities start with the closest relationship to a renewable energy project – owning one directly – and move in steps to the most distant – purchasing RECs from the open market. The preferred methods for procurement and the revamped “new source” definition provide stronger financial support to a smaller group of new projects instead of weak support to the market as a whole. Previously, agencies were able to purchase RECs from anywhere in the country, which allowed them to buy the cheapest RECs on the market (typically those not needed to needed to meet a state RPS), and provide little financial support for new generation.

What these requirements mean for advanced energy development still depends on the agencies. Even now, compliance with the priority procurement methods is essentially voluntary.  The only enforcement mechanism is a requirement that agencies report publicly why they deviated from policy. (That said, many agencies, including EPA, GSA, and Department of State, far exceed current requirements for renewable energy and may seek to continue that record.) Agencies that don’t own land may try to do joint procurements of RECs from facilities sited on lands owned by the Departments of Defense and the Interior, in order to take advantage of the bonus provided in EPACT 2005, which allows agencies to double-count renewable electricity produced on federal and Indian tribal lands.  That would provide a boon for both the agencies procuring the RECs and the DoD in particular, which would also be able to count the renewable energy produced toward other renewable energy requirements that it must meet in addition to this goal.

The addition of the new target from the White House on top of the DoD’s existing statutory requirements, which are calculated in a different manner, may require changes in renewable energy procurement at the Department.  Fulfilling both requirements might require the DoD to retain more of the RECs that it produces, which would make financing their own projects with renewable energy developers more difficult, or substantially increase its REC purchases from the open market, which would increase DoD’s spending on renewable energy overall.

Energy Data

The memorandum also takes on some long-standing barriers to energy efficiency improvement at federal facilities by setting out a new strategy for energy management and analysis. Government campuses often operate with a single meter, obscuring useful energy data on a building-level that could identify low hanging fruit for energy savings. EPACT required all agencies to install meters that provide use data at least daily on every building by October 1, 2012. The White House is repeating that requirement here, indicating that compliance may be lagging. The memorandum also directs agencies to plug their monthly meter data into the EPA’s Energy Star Portfolio Manager, making it the required energy benchmarking system across the government.

The memorandum also calls for agencies to consider using the Green Button standard to automate data collection, analytics, and reporting. Green Button is a standardized format that utilities can use to provide consumers with their usage data.  Once customers have the data in the standardized format, they can turn to third-party software programs, which can analyze the data and provide recommendations for using energy more efficiently. The memorandum also sets a deadline by which Energy Star Portfolio Manager must become compatible with Green Button data.

In linking these policy changes together, the White House has established a framework for a standardized energy data management system for use across the government. If fully implemented, this memorandum will help remove this longstanding barrier to identifying opportunities for investments that will reduce energy use – and turn to advanced energy companies to help make these cost-effective investments.  Better data on federal facilities will also help agencies select opportunities for using energy performance contracts to conduct more energy efficiency upgrades should the Administration extend its Performance Contracting Challenge over the next five years as an industry coalition has urged.