The US military services want to derive 3 gigawatts of electric capacity from renewables by 2025, but they don’t have the budget to pay to build it.

So they’re ready to deal.

They want entrepreneurs to build facilities and sell them power on long-term agreements, Army and Air Force officials told a packed audience of industry contractors June 12 at the Joint US Army/US Air Force Renewable Energy Industry Day in Arlington, VA.

More than 800 people attended the day-long conference, with many questioners seeking specifics on how they could make their technologies or services fit the military’s needs.

Decisions Being Driven by Energy Security and Economics

The military is faced with increasing conventional fuel costs, like everyone else, but also a looming 10% budget sequester required by deficit legislation. That’s given added urgency to lowering the services’ energy bills while slashing money for facility capital investment.

The Army held its energy usage flat in fiscal 2011 but its energy bill increased by $1 billion, said Assistant Secretary of the Army Katherine Hammack. “We must effectively work with the private sector,” she said, to sustain the Army’s mission.

Ditto for the Air Force, said Assistant Secretary of the Air Force Terry Yonkers. Private financing arrangements will be critical to the military’s transition to renewables, he said.

While some have questioned whether the interest in renewables comes from environmental concerns, he and Hammack both said energy security and economics are the military’s long-run drivers.

The Army Energy Initiatives Task Force (EITF) is coordinating smaller-scale renewable projects where the Army brings the land, usually offering a long-term lease or easement, and developers bring technology and financing. Typically, officials said, the Army will sign a long-term power purchase agreement for most or all of the power, working as needed with local utilities, so projects can get third-party financing.

Neither service wants to own or operate generators, officials said, but they do want power priority in any emergency.

Our objective is a cost-effective Btu” – Correll, Air Force

EITF Executive Director John Lushetsky said his office has screened more than 180 Army and National Guard sites in the last six months, and is currently working with more than 20 installations on projects totaling 683 megawatts.

Lushetsky said his office compares project power prices with the price of power available locally, including any extra utility fees and reliability charges, so there’s no universal kilowatt-hour price at which a renewable project becomes economic.

One key to project economics, officials said, is whether a state has a Renewable Portfolio Standard, allowing the project to benefit from Renewable Energy Credits. States without RPS’s are unlikely to qualify for military renewable projects, they said.

Army projects nearest to realization are 20 MW of solar photovoltaic capacity on Ft. Irwin, CA; another 20 MW of solar on Ft. Bliss, TX; 15 MW of solar at Ft. Detrick, MD; and 50 MW of biofueled generation at Schofield Barracks, HI.

‘Open for Ideas’

The EITF is also looking at larger-scale projects, and expects to contract as appropriate through the Army Corps of Engineers, the Defense Logistics Agency, and possibly the Department of Energy’s Power Marketing Administrations.

Air Force efforts are also centered around the needs of its bases, officials said, and three different contracting offices are being reorganized into one to streamline processes. “Our objective is a cost-effective Btu” that supports the Air Force mission, said Mark Correll, Deputy Air Force Civil Engineer.

“If I find companies already working with installations” on ways to apply technology to individual bases, “those are the projects I’m looking for,” said Brian Brown, Chief, Real Estate Transactions Division, AF Real Property Agency.

Click here to read the first article in an Breaking Energy two-part series covering the Joint US Army/US Air Force Renewable Energy Industry Day.

Allan Curlee, Deputy Chief Counsel, Office of the Deputy General Counsel, said projects must be market-driven and competitive, but the military can assemble land that otherwise simply wouldn’t be available.

“The Air Force has land, private industry has creativity,” Brown said. “We are completely open for ideas.”