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Pew Study Documents Progress in Military Renewables, Reliability and Efficiency Efforts

January 28, 2014 posted by Eric Christensen

The U.S. military is making substantial progress toward its goals of acquiring 3 GW of renewable energy by 2025, substantially reducing energy use, and improving the reliability of power delivery to military bases, according to a recent report from the Pew Charitable Trusts. The progress attained so far demonstrates the seriousness of the military's commitment to renewable energy, energy conservation, and reliability, and confirms that the Department of Defense ("DOD") energy initiatives represent a huge opportunity for private-sector energy developers. The DOD initiatives arise from both Congressional mandates requiring increased use of renewable fuels and from recognition within the armed services that continued reliance on fossil fuels and an aging electric infrastructure creates unacceptable security vulnerabilities. For example, the Defense Science Board's influential 2008 report, "More Fight, Less Fuel," identified the military's continued reliance on fossil fuels, and the fragile supply lines associated with that dependence, as a major security problem for military operations around the world. "Unleashing the tether" that ties troops to vulnerable fuel supplies therefore became a major strategic objective. Similarly, the report concluded that serious security risks arise from the dependence of U.S. military bases on an aging electricity infrastructure that exposes bases to increasingly frequent power outages. The Pew report documents both the substantial progress the DOD has made in responding to these imperatives and substantial challenges that remain. With respect to renewable generation, the Army, Navy and Air Force have each committed to generating 1 GW of distributed renewable energy on military installations by 2025. A bit over 200 MW of new renewable capacity has been installed on DOD facilities, primarily solar and biomass facilities. Another 322 MW of capacity is in development, and 1,400 MW of additional capacity is in the planning stage. If these trends continue, the Pew report suggests that the DOD will be on track to meet its 2025 goal of 3 GW of installed capacity. Notably, while the military has frequently purchased Renewable Energy Credits to meet Congressionally-mandated targets, it is now moving away from that approach in favor of constructing renewable generation on or near military bases. To meet the 3 GW goal within the budgetary constraints faced by the military, however, the new capacity will have to be financed largely by the private sector. Hence, the armed services have begun exploring third-party financing mechanisms such as power purchase agreements, where the military agrees to a long-term power purchase contract that can then be used to support private financing of renewable energy facilities. This structure allows private parties to take advantage of tax and other incentives and allows the military to acquire renewable resources without having to finance project construction. While such financing structures are common in the industry, the Pew report indicates that they are novel from the military's perspective but gaining greater acceptance. With respect to energy conservation, the Pew report documents notable progress. The per-square-foot use of energy for military facilities has dropped 17.7 percent since 2003 and is declining at an accelerated pace. Investments in conservation projects have grown to more than $900 million in FY 2012. As a result, the DOD has saved taxpayers hundreds of millions of dollars in energy costs. As with renewable energy projects, continued progress in energy conservation will require creative approaches to leverage private financing. For example, performance-based energy efficiency contracts, while complicated, allow the DOD to pay for energy conservation out of the savings produced. Similarly, energy service contracts, in which the utility serving a military base pays for conservation measures out of the savings produced, have been used with increasing frequency. Finally, with respect to reliability, the report notes that domestic military bases are more than 99 percent dependent upon the electric grid, and that the number of significant outages on the grid has more than doubled in the last two decades. In this arena, the military is also moving aggressively to address this strategic vulnerability. For example, DOD facilities were home to more than half the microgrids under construction in 2012. To comprehensively address problems related to reliability, renewable energy, and conservation, the DOD is now looking at various combinations of renewable resources, microgrids, advanced energy storage technology, smart grids, and electric and advanced-fuel vehicles. Thus, military bases are likely to become a major testing ground for advanced energy technologies and combined approaches to address energy concerns. If you have any questions about the matters discussed in this post, please contact Maj. Gen. (Ret.) Tim Lowenberg or Eric Christensen. Together, Maj. Gen. Lowenberg and Mr. Christensen are leading the Renewable National Security Project, a joint initiative of the Gordon Thomas Honeywell law firm and Gordon Thomas Honeywell Governmental Affairs. Maj. Gen. Lowenberg, GTH-GA Vice President and Of Counsel to the GTH law firm, is a 44-year veteran of the Air Force, with extensive experience and contacts across the U.S. Mr. Christensen is Chairman of GTH's Energy, Telecommunications, and Utilities practice group, and has more than twenty-five years of experience in the energy industry. Combined with GTH's extensive experience in renewable energy development, Maj. Gen. Lowenberg's military experiences gives our firms, working together, unique insights to help guide clients through the often complex and daunting world of contracting with the military on energy projects.