The clean-tech industry’s advocates are striving to bring those prices down. Retired Gen. Charles F. Wald is working with the Aviation Fuel Alliance, a group of the nation’s biggest military and commercial consumers of jet fuel (including the Air Force, Navy, FedEx, and American, Delta, Southwest, and United airlines) to push for legislation to change the military’s fuel-procurement requirements; specifically, they want to extend the five-year limit on contracts to 15 years. The idea is that the military and commercial users would commit to 15-year pacts if they could get the fuel at a lower price, and those contracts would create the economy of scale that could unleash private investment in algae technology.
The Pentagon, too, has been trying to get Congress to allow it to ink longer contracts, but the push has been stalled since the George W. Bush administration. “The current commodity buy is too low to get production to scale,” Wald said. “If you could send a signal to industry that this group will buy guaranteed fuel at a certain rate, comparable to the cost of oil, for 15 years, you could send the signal the market needs.” Not to mention paving the way for a future in which commercial flights are powered by algae-generated biofuels.
Meanwhile, the Defense Department is also confronting a new world of energy-security threats—and clean-energy opportunities—in the form of domestic military bases that rely on the fragile, aging U.S. electric grid for power. Over the past two years, a slew of studies have raised alarms about the vulnerability of the nation’s commercial electric grid, which is more than a century old in some parts of the country. A 2008 study by a Defense Science Board task force on the Pentagon’s energy strategy concluded that U.S. military bases rely almost exclusively on “outside the fence” commercial power, which is “remarkably fragile” and a highly attractive target for terrorist attacks. Yet increasingly, the military is conducting remote warfare abroad from bases at home, such as Nevada’s Creech Air Force Base, which operates the Predator drones over Iraq and Afghanistan. Creech is “deeply vulnerable to blackouts and cyberattacks,” according to Dorothy Robyn, the deputy undersecretary of Defense for installations and the environment. According to the Defense Science Board, the Pentagon’s reliance on the commercial grid puts missions at risk. “A power failure at a military base here at home could threaten our operations abroad,” Robyn said.
So energy officers at military bases are working to turn their facilities into “island microgrids”—entities that can generate and store their own electricity, independent of the surrounding commercial grid. The base grid is plugged into the bigger grid, but in the event of a blackout, it could continue to function on electricity generated on-site—largely from renewable sources. These include utility-scale solar arrays, backed up with advance-battery solar-power storage units and diesel generators—along the lines of the two small, all-solar bases operating in Afghanistan’s Helmand province. Energy experts say that the military’s approach could also offer a new model for towns and cities, protecting them from regional-grid blackouts—and boosting local renewable-energy production.
The military’s push for energy independence is opening up new opportunities for companies like NanoSolar, a San Jose, Calif.-based manufacturer that is building solar generators this fall at the National Guard’s Camp Roberts in California and Camp Perry in Ohio. One of the largest solar arrays in the world is currently operating outside Las Vegas, where a 140-acre field of solar panels generates electricity for both Nellis Air Force Base and the surrounding towns. “There’s tremendous opportunity for solar power at DOD installations throughout the Southwest,” said Brian Stone, NanoSolar’s vice president of sales.
For now, the cost of solar-generated electricity is still 10 to 50 percent more than power from fossil fuels, but Stone hopes that the new military demand will lower the price—if the Pentagon changes how it buys electricity. For now, military bases make two- to 10-year purchase agreements with electricity providers. But, as with biofuel producers, solar and other renewable-source companies say that those contracts won’t be enough to help them get the investment they need to grow. Only longer, 20- to 25-year contracts could be enough to bend the cost curve.
Risk, Reward
Even some of the biggest defense contractors see both challenge and opportunity in helping the military reduce its oil use. Defense giant BAE has developed prototypes of 27-ton hybrid combat vehicles—rolling tanks that carry a two-person crew and alternate between electric-battery and conventional-fuel propulsion. The firm is also working on a line of full-sized, 75-ton hybrid tanks that Mark Signorelli, BAE’s vice president of ground combat vehicles, said could save the military as much as 20 percent of the fuel it now uses in giant combat vehicles, which are one of the top three fuel guzzlers in the arsenal. But the sticker price of the vehicles' propulsion systems, which BAE estimates will be in the range of $1 million to $2 million, is about 5 percent to 10 percent higher than that of standard propulsion systems, which has caused military procurers to hesitate; to date, the Pentagon has not purchased any hybrid tanks.
Signorelli says that the process is comparable to the quandary that a consumer faces in buying a new car: balancing the higher up-front cost of, say, a $28,000 hybrid Ford Fusion against the prospect of recouping the money in fuel savings two or three years down the road—and enjoying additional economy thereafter. It’s a case that the car dealer has to make to the customer, and that Signorelli has to make to the military. In both situations, he says, the seller also has to demonstrate that the hybrid will be as safe and sturdy as a standard vehicle. “They want you to show them first,” said Signorelli, who added that given the Pentagon’s latest drive to save petroleum, his company intends to make a new pitch to the military this fall.
In some ways, however, the timing of the military’s clean-energy push couldn’t be worse. Because the effort will cost more at the outset, an era of budget-cutting isn’t the best time to sell the proposal to Congress. And for GOP deficit hawks, any outlays that smack of clean-energy subsidies are the first target. Republicans have already sought to slash all of the Energy Department’s funding for clean-energy research this year, and some want to eliminate the department altogether. Meanwhile, Republican leaders of the House Appropriations Committee want to cut $8.9 billion from the Defense Department’s $538 billon request for fiscal 2012. Although that’s a pittance compared with the cuts awaiting other agencies, it means that something will come under the knife, and it may well be purchases of algae-generated jet fuel, solar-power contracts, or hybrid combat vehicles.
But expect this to be one priority for which the administration pushes back hard—aided by many powerful friends at the Pentagon and on Wall Street. With Obama unable to enact any of the climate-change legislation he once envisioned, the military is the next best platform to spur the growth of a clean-energy economy—and it may be his last.
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This article appears in the May 28, 2011, edition of National Journal.
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