At a Glance
When faced with an expiring energy use agreement that affected the biogas generated at its Hyperion Water Reclamation facility, the City of Los Angeles used a design-build-operate arrangement to rapidly accelerate the construction of an on-site solution.
The City of Los Angeles operates & maintains the 250 MGD Hyperion Water Reclamation Plant. In the mid 00's, the plant faced a major challenge with finding an end-user for the approx. 7 million cubic feet/day of bio-gas generated on site. The energy agreement w/ the neighboring LADWP power generation facility, which received Hyperion's bio-gas in exchange for a discounted electricity rate was set to expire in 2017, without the possibility of an extension. Hyperion can spend as much as $20,000/day on electricity costs at non-discounted rates. As a result, an immediate, on-site solution to avoid the expensive and environmentally damaging practice of flaring the biogas needed to be in place. Compounded with this challenge was the relatively short amount of time left before the energy agreement expired, a lack of "green field" space at Hyperion to construct new works, and lack of power generation engineers within the City's Dept. of Public Works to operate a facility once constructed.
City of Los Angeles used/is using "design-build-operate" (DBO) alternative project delivery method to address this/these challenge(s).
While "design-build-operate" (DBO) poses challenges from a permitting & regulatory perspective - as no complete design is available at the time of bid/RFP release - the City's ability to contract the engineering, design and operations scope of work under a compressed schedule provided a direct means of controlling risks, with the resources available to the City at the time. The DBO contract methodology allowed the City to expedite the procurement/bid process through fundamentally transferring the engineering, design, construction & operation liability to the selected proposer. The City released an RFP that specified scope criteria, facility performance requirements, baseline requirements for demolition & remediation of existing decommissioned works at the planned project site, and standard City development contract general conditions & general requirements. As a result, no plans were required to be finalized & permitted at the time of RFP release, which accelerated the procurement phase of the project.
- In April 2017 the facility, named the "Hyperion Bio-Energy Facility" was brought on-line in time before the LADWP-Hyperion energy agreement expired at the end of June, 2017.
- Completed far more quickly than would otherwise be expected due to design-build-operate arrangement.
- On-site digester gas utilization avoids flaring and, importantly, the regulatory fines and environmental consequences associated with flaring.
There was one cardinal change after the 2011 RFP release and subsequent selection of proposer "Constellation NewEnergy, Inc." - the contract executed in late 2013 modified conditions of the RFP to have the City (and not the proposer) finance the project.