The U.S. Army is going green. No, it's not getting new uniforms again. Instead, it has now awarded the third of four contracts focused on renewable energy technology. The $7 billion spending plan is for the purchase of energy over a period of 30 years from renewable energy plants. These plants would be constructed and operated by private sector companies.
In April of 2012 the U.S. Government made one of the largest commitments to clean energy in history. It announced a bold goal to deploy three gigawatts of total renewable energy on U.S. military installations by 2025. To put that size into perspective, that's enough energy to power about three million homes.
The U.S. Army is under Congressional mandate to meet a goal to have 25% of its energy production and consumption come from renewable sources by 2025. It's part of the overall plan to improve energy security and sustainability. In order to meet that goal, the Army has devised a plan to use mix of solar, wind, geothermal and biomass as part of its $7 billion spend to go green.
So far the contracts for geothermal, wind and solar have been awarded. Several public companies including major utilities Duke Energy (NYSE:DUK) and Dominion Resources (NYSE:D) as well as solar panel maker Sunpower (NASDAQ:SPWR) were among those recently awarded contracts. While these contracts are likely to be small and lower-margin and not likely to be needle moving for big utilities like Duke and Dominion, it does open up the door for future contracts. The Department of Defense is the biggest single energy consumer in the world at $20 billion each year. Meaning, there are plenty of opportunities to fuel the U.S. military machine in the future.
While the Army is currently splitting its funds up into the three technologies, solar could be the big long-term winner. In addition to utility scale projects on military installations, solar is already proving to be useful in the battle field. For example, the Army has used solar at remote bases in Afghanistan, which significantly cut down on the amount of liquid fuel it uses for generators. That is why interested investors should keep a close eye on Sunpower and other solar manufacturers as these companies could really benefit from long-term demand from the military.
While many will surely criticize the military's plans to spend so much money on green technologies, let's face it, this really is a drop in the bucket compared to its annual spend of $20 billion. We are talking about trying to offset some of the nearly 5 billion gallons of oil that it consumed last year. To put that into perspective, that's nearly 120 million barrels of oil and for a country that imports about 7.4 million barrels per day, and it represents 16 days' worth of oil imports which is a pretty significant amount of oil. Cutting costs by switching using more renewable energy is really a smart move.
The other important factor in all of this is saving lives. For example, in 2010 alone there there 1,100 attacks on fuel resupply convoys. Sadly, attacks like these cost lives. In fact, during 2003 to 2007 we lost 3,000 soldiers and contractors on refueling missions alone in Iraq. It's really quite simple, by using less fuel on the battlefield we can save more American lives.
If America is ever going to get serious about our own energy security, renewables need to be part of the picture. The best place to start is with those in charge of our national security, which is why it makes a great deal of sense for the U.S. Army to start pushing for more renewable power. If we ever want to become OPEC's worst nightmare, we need to stop being its best customer.
Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Dominion Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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