Last week this series started off with a look at why the military wants to reduce its dependence on fossil fuels and some of the ways in which it plans to do that. Today we’ll take a closer look at some of the specific technologies and products the military is pursuing and the various plans in place for making it all work.
Again, the military’s interest in clean technology and renewable energy, while certainly supported by federal policy, seems to be more about resource efficiency than any particular political agenda. And while the Solyndra debacle has had everyone complaining about the Department of Energy‘s loan guarantee program, when it comes to military projects the business case is very different.
In September 2011, for example, the U.S. Army announced a plan to install rooftop solar installations on as many as 160,000 privatized military residences in 33 states. The army announced that developer SolarCity would install, own and operate the rooftop arrays at 124 military bases. SolarCity announced that it would put Army veterans and military family members to work installing the panels. USRG Renewable Finance, the debt financing arm of US Renewable Group, announced that it would lend $344 million to SolarCity for the project, in partnership with BofA Merrill Lynch. Up to 80 percent of the loan would be guaranteed by the U.S. Department of Energy’s Loan Programs Office. In this scenario, the risks are incredibly low. SolarCity has a clear interest in ensuring that its product is installed and operating properly–not only does it want to keep a large customer like the U.S. Army happy, but the better its panels operate, the more excess energy it might be able to sell back to the grid. The Army gets to lock in a guaranteed energy rate for the next several years through its power purchase agreement (PPA) with SolarCity, but doesn’t have to worry about the up-front costs or maintenance of the panels. USRG Renewable Finance and the DOE get a low-risk investment, and the solar industry gets greater scale (the Army installations would just about double the amount of installed rooftop photovoltaics in the country) and a solid showcase of its potential.
Perhaps more importantly, as the various branches of the military pinpoint which technologies and solutions work for them, their approach has not been to seek more appropriations, but to meet with private developers and investors who can help fund projects and eliminate the need for more government funding. The Department of Defense is prohibited from paying a premium for goods or services, which is an obvious hurdle when it comes to many renewable energy technologies, but it’s also driving innovation in the military’s strategy and could eventually help to drive down costs in the renewable energy sector.
As of September 15, 2011 the Army launched the Energy Initiatives Office, the mission of which is to engage the private sector in identifying and investing in big green power projects that could be built on the Army’s vast land holdings. The Army estimates it will need about $7.1 billion in investment over the next few years to meet its goal of using 25 percent renewable energy by 2025, and it doesn’t expect that money to come from the federal government.
Part of what makes the military’s renewable energy projects so attractive to would-be investors is that the service owns so much land that lends itself to such projects. A recent solar project installed at Edwards Air Force Base, for example, features three photovoltaic installations across the base, generating 3.4 megawatts of electricity. The project was developed by Borrego Solar, which leases the land the installations sit on from Edwards, and sells solar power to the base through a 10-year power purchase agreement.
We’re able to fulfill about 10 percent of energy needs on base with that system,” says Jon Gensler, federal project developer with Borrego. “They’re operating live missions out of Edwards and this gives them 10 percent of their energy over 10 years where they know what they’ll be paying for it.”
Gensler calls the Edwards project a great example of the willingness of the DOD to work closely with the private sector. In this case Borrego owns and operates the system, provides operational and maintenance support, leases land from Edwards and sells the base electricity. This sort of arrangement seems to be emerging as the DOD’s preferred way of getting renewable energy projects built, but Gensler says it hasn’t been without its obstacles.
Anywhere in the DOD, or really the government in general, having a third-party owning assets is not common” he says, but draws a corollary between what’s happening with renewable energy projects now and how the military privatized housing on bases a few years ago. “It’s a similar model–developers come and build housing for soldiers on bases, they own and operate those residences, and it keeps housing off the balance sheet of the military and converts a CapX expense to an operational expense, which saves taxpayer money on an annual basis. Now they’re looking to do the same thing with energy.
The bulk of renewable energy projects currently being considered or implemented by the country’s military bases are focused on distributed energy. By generating energy onsite, the military can help to ensure resiliency and reliability in its energy supply, which is clearly preferable to the vulnerability inherent in using energy from a source the military does not control.
With distributed energy projects, you can build plants at scale and ramp them up over time,” explains Tim Keating, VP of field operations and marketing at Skyline Solar, a Silicon Valley-based concentrated photovoltaic (CPV) company with contracts to develop solar plants at Edwards Air Force Base and Fort Bliss. “You can build one or two or three megawatts, and put those online in a local grid, so not only can you scale up over time, but you also don’t have to worry about all the issues associated with transmission. Thirty percent of power sent out on transmission lines is lost right off the top.”
It’s not just solar projects the military is looking at, but also technologies that improve the efficiency of everything from buildings to transport vehicles to jets and carriers. According to a recent report from analysts at Pike Research, among the key sectors that will receive significant Pentagon attention and investment over the next two decades are solar power for both permanent bases and temporary facilities; fuel cells for individual soldier power; microgrids for military facilities; and biofuels for military vehicles, particularly the Navy’s “Great Green Fleet” initiative to shift to a largely biofuels-driven fleet by 2016.
Pike analyst Peter Asmus says some military branches are getting into demand-response technologies first, often as a way to generate revenue for renewable energy, microgrid, and/or biofuels projects. The Federal Energy Regulatory Commission (FERC) will be enacting Order 745 this summer, which stipulates that any organization that effectively uses demand-response technologies to “balance supply and demand as an alternative to a generation resource … that demand response resource must be compensated for the service it provides to the energy market at the market price for energy.”
In other words, if you can deliver energy reductions that save the grid from needing to make more energy, you should be compensated, just as you would be if you were adding energy to the grid; reductions in demand should be valued at least the same as increases in supply. Because the cost of installing demand response software is far less than installing a large-scale renewable energy project, some bases are looking down that road first, planning to generate revenue through demand-response installations, which will then help fund renewable energy projects.
In other cases, bases are installing projects with capacity to produce more renewable energy than they need so that the sale of renewable energy credits can offset any premium incurred by replacing fossil fuels with renewables. And then there are products like Soladigm‘s Dynamic Glass and Global Solar’s rechargeable batteries, which, rather than imposing a premium, deliver lasting savings. Soladigm’s Dynamic Glass, which tints on demand in order to provide not only visual comfort and daylihgting, but also to reduce solar heat gain and thus air conditioning requirements, pays for itself immediately.
We have a clear vision to bring a product to market that is cost neutral on day zero,” says Soladigm VP of products Erich Klawuhn. “There’s no ROI or payback time because of the system-level savings that offset the premium in the glass. There’s immediate energy savings in terms of consumption, but it also helps to reduce peak load, which enables building designers to downsize the HVAC system they need. That value proposition holds pretty strong.
The value proposition for Global Solar is equally strong. The military had been in the habit of using non-rechargeable batteries, which it is now largely replacing with fewer rechargeable batteries and solar panels. A tactical team out for a three- to seven-day mission would typically need five to ten non-rechargeable batteries to supply enough power to operate a Sincgars (military radio) for the mission. These are one-use batteries, each of which costs $80 to $100, so that’s $400.00 to $1000.00 per mission. Global Solar can replace those five to ten batteries with two to three rechargeable batteries ($300 each) and their 62w solar panel ($800 each). These systems (called Sunlinq) pay for themselves in two to three missions and can be used 300 additional times or cycles before the batteries need replacing.
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Above and beyond the benefits these projects provide to the military itself, they provide a meaningful boost to jobs and innovation in the private sector as well.
The DOD is positioned to become the single most important driver of the cleantech revolution in the United States,” says Pike Research president Clint Wheelock. “In particular, military investment in renewable energy and related technologies can help bridge the ‘valley of death’ that lies between research & development and full commercialization of these technologies.
Soladigm’s Klawuhn concurs, noting that the current alignment between the Department of Energy and the Department of Defense is a real boon to cleantech companies.
The DOE funds and steers national labs, and they are the research organizations that lead into some development of commercial technology, but then that technology needs to go somewhere,” Klawuhn explains. “So the government can either leave it there or use the General Services Administration and the Department of Defense to lead those technologies to the pilot and implementation stages. I’d love to see more of those pilot projects.
More pilot projects are indeed likely to roll out over the next two decades. Pike Research forecasts the annual U.S. military spend on renewable energy at $10 billion a year by 2030, and the DOD is committed to continuing to test and deploy technologies that will reduce its consumption of fossil fuels.