When you think about military vehicles -- the Humvee, the deuce-and-a-half, or the tank -- the picture is not one of fuel economy. This image is only intensified when you consider that, since 2001, the average Marine Corps infantry battalion has seen a 200% increase in the number of vehicles it includes, and a 300% increase in the amount of computer and IT equipment it utilizes The reality is that military operations are energy intensive, and do not have much of a reputation for efficiency. That is all in the process of changing.
From the role SolarCity (NASDAQ: SCTY) is playing in bringing solar to military housing, to the advances that companies like First Solar (NASDAQ:FSLR) are striving for in their photovoltaic (PV) thin-film solar technology that will ultimately benefit military operations, the goal is to reduce costs and save lives. Given the push that various branches of the military have made toward the forefront of alternative energy, these projects could well serve as a driver of the industry as a whole.
What's the big deal?
If there is one area where you might think that efficiency should be secondary to effectiveness, it would be in military operations. Why, then, would the armed forces be making a concerted push from the inside to improve efficiency? It's not driven by Washington bureaucrats, but rather by statistics. A recent study by the Marine Corps found that, for every 50 truck convoys in Afghanistan, one soldier is wounded or killed, and one in 17 is hit by an improvised explosive device. Less energy means fewer convoys.
Here's another statistic: In 2001, an infantry battalion of 900 to 1,000 marines used less energy than an infantry company of 125 to 150 marines does today. Both at home and in the field, energy consumption is a critical concern for the military, and one that it is addressing aggressively. Solar power is at the center of many of these strategies.
A recent rollout by SolarCity is aimed at installing solar panels on as many as 120,000 military homes across the country in the next five years. The initial phase of the project is targeted at New Mexico and West Texas. For example, Fort Bliss in Texas has adopted the goal of being energy self-sufficient by 2018. While it's hard to estimate the total cost savings, the opportunity for SolarCity is significant, and should be a growth driver for the foreseeable future.
In the field
The types of technologies that companies like First Solar is developing will likely play a central role in military applications. First Solar recently announced a deal with General Electric (NYSE:GE) to acquire that company's intellectual property portfolio in exchange for First Solar stock. The GE IP -- which focuses on uses of cadmium telluride in photovoltaic (PV) thin-film solar technology -- is expected to allow First Solar to make significant advances.
A big focus for the Marines is in finding ways to use traditional power generation more efficiently. The introduction of solar cell can reduce reliance on generators, and allow them to run less often. Beyond the hybrid approach, a recent story from Greenbiz.com reports: "A Marine Corps company, the India 3/5, equipped with SPACES (Solar Portable Alternative Communications Energy System) and GREENS (Ground Renewable Expeditionary Energy System), operated two patrol bases entirely on solar power in the summer of 2010."
The message here is that the military is becoming increasingly interested in, and reliant on, solar technology. This is great news for companies like First Solar and SolarCity because, unlike in the private sector, where adoption may be gradual, debatable, and driven by trends, in the military, when the brass make a decision, that's what happens. Increased demand from the military will likely be an important driver for the industry and is worth watching for all solar investors.