By: Lindsay Simmons
In April 2012, the Obama Administration set a goal of building green energy capacity on U.S. military bases by 2025 – three gigawatts of solar, wind and geothermal power. These efforts could require as much as $20B in private funding and will create opportunities for contractors and lenders alike.
Private financing may the only way to fund these kinds of projects. Why? Because private developers receive tax incentives that are not available to the federal government.
What is planned? The Air Force plans to develop 1 gigawatt of renewable energy by 2016. The Army also plans to develop 1 gigawatt, but by 2025. (1 gigawatt of energy is approximately enough to run 250,000 homes.) Additionally, the Navy has established goal of cutting its power consumption in half and obtaining half of its remaining energy needs from renewable sources by 2020.
Like many new initiatives, the green energy drive recently came under fire in Congress. The cause? The high prices paid by the Navy for test batches of biofuel – nearly $27 a gallon for the mid-July 2012 test of a Navy strike force powered mostly by alternative fuel.
But price may not be a critical factor. Just a few weeks ago, the Navy unveiled the first major update of its energy policies in more than 18 years. The new policy calls for integrating “mission compatible and cost-effective renewable energy sources” into the power supplies at shore installations. According to Vice Admiral Phil Cullom, Deputy Chief of Naval Operations, this energy policy is aimed at improving energy security for the Navy’s 70 bases. “We have concerns that if the grid were disrupted for any length of time critical missions that we carry out on our installations could be at risk.” The military is interested in creating “microgrids,” which are mostly self-sufficient bases of power generation and storage that allow for banking electricity for later use. These microgrids could be used to power military installations in the event that regular electrical power is disrupted.
Current efforts include:
- More than $1B in solar installations for the U.S. Air Force
- The Navy’s $62-million biofuel research and development project
- DoD’s $420-million public-private partnership to build commercial-scale biorefineries for aviation biofuel and biodiesel
- The Army’s $7B series of public-private solar power partnerships based on the same statutory authority that privatized military housing
In support of this Army initiative, the Army Corps of Engineers expects, to see Army facilities that include plants generating renewable solar, wind, geothermal, or biomass energy. These plants will be built under power purchase agreements, under which the Army provides the real estate for facilities owned and operated by private sector energy companies. On August 6, 2012 DoD and the Department of the Interior announced a plan to open 16 million acres of land that have historically been restricted for military use in support of renewable energy development.
Stay tuned.
Lindsay Simmons is the attorney responsible for the content of this article.