Army’s Green Energy Bargain: We Will Give Industry Land, in Exchange for Wattage

9/15/2011
By Sandra I. Erwin

A new U.S. Army organization created to focus on green-energy programs officially is open for business. Its first order of duty is to enlist the private sector to invest at least $7 billion over the next decade for the production of renewable energy at Army posts nationwide.
Army officials are confident that energy companies will jump at the opportunity to spend their own money upfront with the expectation of big returns years from now. The Army, which owns half of the nearly 24 million acres of federal land, would give energy providers free use of its land. The goal is to have these companies produce 2.1 million megawatt-hours of power annually, which would be sold to the Army landlords and to the local communities.
Army Secretary John McHugh formed the so-called “Energy Initiatives Task Force” as a one-stop shop for the development of cost-effective large-scale Army renewable energy projects, said Katherine Hammack, assistant secretary of the Army for installations, energy and environment. Its primary function will be to “work with the private sector to develop renewable and alternative energy projects,” Hammack said Sept. 15 at a Pentagon news conference.
Army officials are betting that the private sector will jump at the opportunity to spend billions of dollars to build utility-scale solar plants and wind turbines, or produce geothermal energy on federal lands. The large upfront investment would be offset by future government contracts to supply electricity to military bases and surrounding communities.
A similar business model was used for privatizing military housing, Hammack noted. Developers leveraged $2 billion in Army equity and received a return of more than $12 billion, she said.
The newly created energy task force expects the first solicitations to be published next spring or summer, Hammack said. One of the concerns is assuring companies that the Army will revise its acquisition rules, if necessary, to ensure that suppliers can receive long-term energy contracts once the utilities are up and running.
The Army does not plan to spend much cash upfront. It is hopeful that by offering the use of the land and administrative support — such as environmental studies and due diligence — the industry will come aboard. “We’ve got the land and the demand,” Hammack said. “We will be a purchaser of their energy.”
The Army will have “some skin in the game, said Jonathan Powers, a member of the task force. Army installations currently are pursuing renewable energy infrastructure but at a smaller scale, and often lack the needed expertise, he said.
The Energy Initiatives Task Force will be led by Deputy Assistant Secretary of the Army for Energy and Sustainability Richard Kidd. It will host its first “summit” in Washington, D.C., Nov. 3.

Topics: Energy, Alternative Energy, Energy Security

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