President Obama’s New Memorandum On Federal Agency Use Of Renewable Energy And Energy Management

On December 5, 2013, President Obama issued a memorandum establishing (1) a new goal for federal agencies' use of renewable energy and (2) new energy management directives (Memorandum). By fiscal year 2020, the Memorandum requires that 20 percent of the total amount of electric energy consumed by each agency during any fiscal year be renewable energy "to the extent economically feasible and technically practicable." The Memorandum also directs federal agencies, inter alia, to update their building performance and energy management practices, and encourages them to consider demand response opportunities.

The 20 Percent Goal and Order of Priority

The 20 percent renewable energy use goal should provide some valuable new federal contracting opportunities for renewable energy companies, and the new building performance and energy management requirements should provide new opportunities for energy service companies.

Section 1.B of the memorandum establishes an order of priority for actions that federal agencies should take "where possible" to achieve the 20 percent goal:

Installing agency-funded renewable energy on-site at federal facilities and retaining renewable energy certificates (RECs) Contracting for energy that includes the installation of a renewable energy project on-site at a federal facility or offsite from a federal facility, and retaining RECs for the term of the contract Purchasing electricity and corresponding RECs Purchasing RECs Overall, given the high probability of future budget constraints on federal agencies, many agencies will likely find that the feasibility of installing agency-funded renewable energy projects on-site is not "possible." We anticipate that the other three options will be more readily used by agencies attempting to comply with the new target. Initially, it looks as though the least constrained option may be the third-party contracting option for projects at federal facilities.

Brownfield sites

Section 1.D requires federal agencies to consider opportunities "to the extent economically feasible and technically practical" to install or contract for "energy" installed on current or formerly contaminated lands, landfills, and mine sites.

Agency Accounting and Interim Goals for Renewable Energy

Agency progress generally will be determined by reference to the number of RECs owned for electricity consumed. In certain circumstances, the percentage of renewable energy counted toward the 20 percent target can be...