Seventy-one years ago this month, the Nazi army began its attack on Stalingrad. After more than six long months of grueling warfare that left the city in shambles and claimed the lives of more than 1.5 million people, the Soviet Army turned back the Nazis and swung the fate of the Second World War. But why did these armies continue to fight with such zealous fervor after the city was nothing but a pile of rubble and its strategic assets were in shambles?
Stalingrad was the last piece standing between the Nazi army and the oil-rich Caspian sea. Had Hitler's army secured this region, it's very likely history would be completely different from what we know it today. This is but one of several examples of how energy influences war, both the reasons we fight them and how they are won.
Today, the United States Department of Defense consumes about 5 billion gallons of oil per year and spent a total of $20 billion on energy last year alone. Not only has the use of traditional fuel sources (oil, diesel) grown more expensive, but our nation's reliance on foreign oil sources adds an unnecessary element of exposure for our nation's defenders. To combat this strategic weakness, our military has put a great emphasis on renewable energy use, and it's starting to pay off.
Self-sufficiency means greater security
The majority of the Department of Defense's energy budget isn't appropriated to run new Iron-Man type body armor suits or death rays, but to simply keeping the lights on at military bases. Not only does relying on traditional energy sources eat into costs, but it also puts the military at a strategic disadvantage as it relies on civilian transmission lines, which have shown to be undependable.
For this reason, the Department of Defense is looking into ways to take bases off the grid, and one of the most economical ways to do that today is through solar power. The Department of Defense has committed to 3,000 megawatts of solar power for its military bases. And companies are lining up to be of service. A major player in that effort is SolarCity (NASDAQ:SCTY.DL). Through its SolarStrong partnership with the DoD, the company will be supplying 10% of that commitment with solar installations for military housing. The entire project will be able to supply 120,000 military households with off-the-grid solar power that can also be used throughout the base.
While this is a major advantage at home, it is even more critical in the field. In 2010, the U.S. was shipping as much as 40 million gallons of diesel fuel a month in Afghanistan, and it cost lives. An Army review of the Iraqi conflict noted that one of every eight casualties in Iraq resulted from protecting fuel convoys delivering diesel for generators at forward operating bases. Through small, portable solar generators, the military is able to reduce diesel consumption at these facilities by more than 90%. According to the Office of Naval Research, alternative power solutions in the field result in fewer shipments, fewer casualties, and fewer fuel costs.
Achieving lift-off with biofuels
In fiscal year 2011, the United States Air Force spent $8.3 billion on jet fuel. This is far and away the largest energy cost for the Air Force today, representing 85.5% of the entire energy budget. Again, not only is this a cost problem, but a large amount of U.S. oil is still sourced from outside the United States. To help alleviate this issue, the Air Force is hoping that biofuels can provide a possible solution. One distinct advantage that using biofuels has is that they could be produced on-site, which could potentially cut costs as well as enhance supply-chain security.
So far, the military is getting a bit of flak for these projects. In its most recent dealing with Solazyme (NASDAQ:TVIA), which is looking to create an algal-based jet fuel, the price tag came out to about $26 a gallon. I agree that buying fuel at those types of costs is completely unsustainable, considering current jet fuel prices are around $3 a gallon. At the same time, this was a test batch of fuel produced in a small lab to see if it could be used in jet engines. As technology and manufacturing processes improve, these prices will come down and could potentially fall within a competitive pricing range of petroleum-based jet fuels while also providing a domestic, secure source that isn't exposed to the global fuel market.
What a Fool believes
The incorporation of alternative energy solutions is not only a way that our military can save money, but it also provides a level of security that can't be guaranteed with the use of traditional oil. Not all of the technology has been completely proven, and it may take a couple of years before the new alternatives sit at the price levels of fossil-fuel options, but backing from the military will certainly help it get there.
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