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Departments of State and Defense Lead Investment in Green Energy

Departments of State and Defense Lead Investment in Green Energy

The United States clean energy industry certainly cannot count on Congress these days, but at least it has Ghana.

With clean energy momentum stymied on Capitol Hill, Foggy Bottom and Arlington have stepped in to provide some steam for a somewhat floundering industry. The Department of State has struck numerous deals with countries like Ghana to promote clean energy initiatives, which benefits the U.S. firms poised to take advantage of newly liberalized, barren overseas power markets. The Department of Defense, with its deep pockets and a mandate to get 25 percent of its power from clean sources by 2025, also has the tools to emphasize clean energy technology.

The Departments of State and Defense currently must do the clean energy industry’s bidding, as lawmakers continue their love affair with natural gas, a transitional fuel that many Congressmen push as a long-term answer to attaining energy independence. The bankruptcy of solar panel-maker Solyndra, which received $535 million in federal loan guarantees through the American Reinvestment and Recovery Act, only compounded the resistance to alternate clean energy technology. Renewing production tax credits for wind and solar power, which supplement those types of power generation, is proving ever more difficult, as does committing research and development dollars to such endeavors given the influence clean energy skeptics and budget hawks exercise in both legislative chambers.

So the State Department is actively pursuing bilateral accords, like the one it closed in March with Ghana. That partnership, which is modelled after similar ones with El Salvador, the Philippines, and Tanzania, will increase collaboration between the two nations on a menu of energy and development projects. The bilateral agreements usually involve some sort of research and development partnership, a few trade missions, and some guidance on establishing a national energy policy framework.

Began in 2011, the tactic is fast becoming a State Department favourite. Deals with emerging economies in the “Global South” on various energy initiatives are struck, clearing the path for private U.S. companies to sell their wares in those countries, as the agreements establish institutions and standards based on U.S. industry-accepted and -created best practices.

Those institutions and standards are the cornerstone to all the deals. For example, the U.S. will work with Ghana to reform its electric power system, which is nationalized under the Ghana National Petroleum Company. By bringing an already established policy framework and standards crafted by U.S. clean energy firms, the Department of State is essentially sticking a Star Spangled Banner in the grounds of these nascent or non-existent energy markets.

One such set of standards is the Smart Grid Interoperability Panel’s (SGIP) suite of standards and best practices, backed by the National Institute of Standards and Technology (NIST). The SGIP is a public-private partnership, with more than 700 firms participating in its workshops to draft standards for an array of “smart” products, appliances, and communications technology interacting with the electric power grid. NIST and SGIP have actively shopped its standards framework in nations such as Colombia, Ecuador, and South Korea. As he offered insight to how he approaches foreign officials about SGIP's work, SGIP Governing Board Chairman John McDonald said the premise runs along the lines of, “We're doing good work and we're further along than you are as a country. Let's work together. We don't have to dictate to you what to do. We could share with you and even if you take 50 percent of it, you're further ahead.”

By accepting the U.S.-crafted standards, emerging economies get a set of rules without investing their own time or resources. However, those nations’ clean energy industries often cannot compete with established U.S. companies. That means that U.S. firms come into those countries understanding the regulations better and can carve out a position in those markets. That could make it even harder for homegrown companies to challenge known commodities when those industries eventually mature in those countries.

The Defense Department is taking a more domestic approach to promoting clean energy. While lawmakers lambast clean energy technology for being too expensive, the Army is turning to that technology because of projected cost savings. Of course, the Army can afford to do that – though its budget will likely get cut by hundreds of billions of dollars through the next decade, it still has the largest piggy bank and the economies of scale to both ignore up-front costs and drive them down.
Defense, much like State, has room for experimentation considering its decision makers are not subject to popular election. That is why Defense and State can think long-term and absorb high up-front costs that come with clean energy technology, whereas lawmakers are more concerned with getting gasoline prices to a reasonable level for their constituents.

The Navy intends to use alternative fuel for half of its energy by 2020. Its “Great Green Fleet,” a strike force powered entirely by biofuels, will set sail in 2016. The Marine Corps also wants to halve its battlefield energy use by 2025.

The Army also committed to replacing vehicles with electric vehicles whenever part of its fleet reaches retirement. That makes the Army the single largest concentration of electric vehicles, with 40 percent of its 80,670 non-tactical vehicles running on alternative or hybrid fuel.

The Army has also been a boon for clean energy technology through its use of microgrids, which operate independent of the bulk electric system so the Army can continue mission critical services during an emergency. Those microgrids incorporate distributed generation – often rooftop photovoltaic solar panels or wind turbine farms – with energy storage technology, such as batteries.

The Army marked its arrival in the clean energy industry with a November conference in Washington, DC, hosted by the newly created Army Energy Initiative Task Force. That conference served as an invitation to the more than 300 private industry representatives in attendance to apply for public-private partnerships with the Army. The officials there emphasized the Army was willing to take on risk – code these days for clean energy technology.

As Richard Kidd, deputy assistant secretary of the Army for energy and sustainability, told attendees, the Army is “prepared to be a serious business partner.” That’s good news for the clean energy industry, as Washington seems to be running short on them.

By. Zachary Colman

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