Historically, the U.S. military—and in particular the U.S. Navy—has always played the role of early adopter in advancing strategic breakthroughs in innovative energy technologies. Indeed, the Navy was a first mover in the 19th Century transitioning from wind to steam power and then again in the 20th Century from petroleum to nuclear. Perhaps it comes as no surprise that in early 21st Century the Navy now leads the military service branches in the transition away from finite, fossil-derived energy towards renewable and alternative energy resources. For the military, it’s not just about the limited supply of fossil fuels; it’s about diversifying risk through a portfolio approach to procuring its energy needs. It’s also about ensuring energy security, reliability, and the continuity of operations in the event of a widespread grid failure. In 2015, the military has become more active than ever in issuing competitive solicitations to procure renewable energy for military installations worldwide.
While 2014 was undoubtedly the year of the Army for procuring renewable energy for military installations and operations--principally through the MATOC and one-off Requests for Proposals (RFPs)—the Navy has decidedly moved ahead of the Army in 2015 as the race to procure 1 GW of renewable energy heated up with the investment tax credit (ITC) for solar expiring at the end of the year. (The ITC for solar was extended at the end of 2015 through 2023 as part of Congress’ Omnibus spending package.) The Navy contracts renewable energy projects through its Renewable Energy Program Office (REPO) and the Army through its Office of Energy Initiatives (OEI). At the end of 2015, our sources indicated that the Air Force intends to begin coordinating its renewable energy initiatives through the Army OEI.
The U.S. Department of Defense (DoD) has had its own targets in place for renewable energy use since 2007. Specifically, the National Defense Authorization Act of 2007 (NDAA 2007) set voluntary goals across the armed forces of producing or procuring 25% of all energy from renewable sources by 2025. Then in 2012, the Navy, Army, and Air Force collectively committed to procure 1 GW of renewable energy each or 3 GWs in total – including solar, wind, biomass, and geothermal—by 2025. The Navy then went a step further by committing to procure 50% of its energy use from alternative sources and deploy 1 GW of renewable energy on Navy installations by 2020. Last March, the President’s Executive Order 13693 set targets for all of the federal government at levels comparable to these of the DoD. The DoD has authority to contract the purchase of green power for up to 30 years (10 USC 2922a) for new generation assets. The crucial component for all renewable energy contracting is that the DoD may only procure green power at rates comparable to what installations are currently paying for brown power.
The opportunities for renewable energy procurement by the DoD in 2016 remain compelling. The Navy had great success in 2015, expanding efforts to identify and implement replicable models for increasing renewable energy utilization and energy resiliency measures at its on-shore bases. The Army OEI has just assumed new leadership under Mike McGhee, a former senior Air Force environmental policy official, and continues to remain receptive to new project ideas. The Air Force has new on-base and off-base hybrid projects similar to Fort Hood and has begun to improve existing project structures and leverage the expertise at the Navy and Army. For renewable energy innovators and developers seeking business development opportunities, the pipeline of DoD energy procurements may present a compelling, strategic market for validating technology, raising company awareness, and deploying numerous projects throughout 2016 and years to come.