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Pentagon Expands $7 Billion Power Purchase Agreement to Cover Geothermal

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The Department of Defense issued 17 new contracts worth $831 million on Tuesday -- but it also expanded scope of an 18th contract -- a massive $7 billion Power Purchase Agreement for the supply of alternative energy that's been popping up every few weeks over on the DOD contract-announcements website... and the subject of today's story.

According to the Pentagon, it awarded a $7 billion potential vendor indefinite-delivery/indefinite-quantity, firm-fixed-price, non-option, non-multiyear contract Tuesday, and it awarded this massive-sounding contract to just one company, a small business by the name of "New Generation Power" in Chicago, Ill.

The award, for the purchase of geothermal energy "from renewable and alternative energy production facilities that are designed, financed, constructed, operated and maintained by private sector entities," would be a really big deal if it was truly issued to just one single "small business." However, the fact that the Pentagon has now announced a total of three such alternative energy contracts, each stating the same $7 billion contract value, gives new significance to a caveat mentioned in the announcements: "All awarded technologies will share a total estimated value of $7,000,000,000."

The significance: The Pentagon is making $7 billion -- total -- available for the purchase of power from alternative energy sources. This includes solar, wind, and now geothermal, and could well include other alt-energy forms such as hydropower or even "clean coal" in the future. More importantly, it now appears that all of the companies awarded the right to bid for work financed from this $7 billion pot, and that includes 22 solar energy companies, 17 wind energy, and now one geothermal (although there's some overlap among companies working with multiple forms of alt-energy) -- must bid against each other for the work and the money. The Pentagon is agnostic on which kind of alternative energy it buys as long as it's not derived from burning hydrocarbons.

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  • Report this Comment On September 18, 2013, at 8:18 AM, G2B wrote:

    The comment about only one company being awarded the geothermal is incorrect. Five companies were awarded that segment of the contract. Only three firms were awarded all three renewable energy technologies.

  • Report this Comment On September 18, 2013, at 9:43 AM, TMFDitty wrote:

    Do you have a cite for that, G2B? I'd be happy to confirm this if you're right, but so far I've only seen DoD announce one geothermal contract -- the one hyperlinked above.


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