The Military - A New Market Opportunity for Renewables?

The US Armed Forces is relying on the private sector and third-party financing to develop its renewable energy sources.
Published: Wed 19 Feb 2014

Electricity forms a large part of the U.S. military budget — the annual bill is more than US$4 billion. In response, the Department of Defense is taking action to reduce the bill, thereby saving taxpayer money. In addition to this, the Department will be working towards creating more reliable operations.

Renewable energy promises to do this. By 2025, the Department expects to source at least 25% of its energy from renewable sources. Each military branch has committed to deploying 1 GW of renewable energy by 2025.

Renewable projects on Department of Defense and military properties have grown from 454 to 700 between 2010 to 2012. In addition to this, the number of energy savings and efficiency projects has doubled during the same period. This is according to Pew Charitable Trusts in their recent report, Power Surge.

Private Investment

Private investment and third party financing has made this possible since the Pentagon’s budget is shrinking. All involved parties appear to be winning since the military gains a better energy infrastructure, taxpayers save their money, and new market opportunities are opened to the renewable energy industry.

By adopting efficient and renewable technologies over the last decade, the military is now saving hundreds of millions of dollars in energy costs. For instance, the Marine Corps Logistics Base in Albany, GA uses a combined heat and power system to reduce carbon pollution. The system saves the base about US$1.3 million each year.

Energy efficiency measures are improving military troops’ working conditions by providing improved lighting and more effective heating and cooling technologies. Today’s on-site solar, wind and geothermal technologies are helping to ensure that the lights and temperature controls do not run out of electricity on base.

Financially viable

The military has been using energy saving performance contracts and utility service contracts, requiring little or no upfront cost. The private partner typically guarantees that the improvements will generate enough savings to pay for a project over the contract’s term. One example in the study is the US$3.2 million savings from a 1.5MW solar array at the Marine Corps Air Ground Combat Center in Twentynine Palms, CA.

The power purchase agreements, which are in place already, are expected to finance about 80% of future renewable projects. The agreements call for developers to find financing and maintain the projects.

The study also discusses the Master Energy Performance Plan developed by the Pentagon. One of its main focuses is to increase on-site electricity generation with renewable energy, and deploy 3GW of renewable energy by 2025. This is sufficient to power 750,000 homes.

Says John Warner, a former U.S. senator and secretary of the Navy and senior adviser to the Pew study, “The Department of Defense has a long history of embracing energy challenges and has been at the forefront of innovation, “And so it is today that we find America’s armed forces in the midst of the transition to renewable power and efficiency technologies that help ensure a stable, diversified, and continuous supply of electricity.”

Katherine Hammack, assistant secretary for the Army says of renewable energy, “The focus is not on renewable energy as a starting point, but as an ending point.”

Further Reading:

PEW Charitable Trusts-Power Surge-How the Department of Defense Leverages Private Resources to Enhance Energy Security and Save Money on US Military Bases [pdf]