Demand for solar energy is heating up across the United States, and the nation's military is becoming one of the sector's major customers. The Department of Defense wants renewable energy to make up at least one quarter of its total energy use by 2025, and solar energy is squarely within its sights.   

The Military just recently began construction of a solar power plant at Fort Huachuca in Arizona, where solar panels will be installed over 68 acres, constituting the largest solar array of any military base in the U.S. According to the commanding general of the base, Maj. Gen. Robert Ashley, the project reflects the military's commitment to energy security. 

Whether it be engaged in disaster relief, humanitarian missions or in military operations, the military needs reliable energy that is "off the grid," since public electrical utilities are vulnerable to adverse weather conditions and potential sabotage. The military also needs to be ready for possible disruptions to the oil supply, which could cripple it and the nation's economy.  

Such risks to national security are turning the armed forces into a vast laboratory for the development of solar technology and the creation of "net-zero" environments, where energy consumption equals the energy created on-site. The military already used solar arrays at fixed-site locations in Afghanistan.  

By moving to solar power, the military could also avoid the high costs of transporting gasoline to remote areas of the world.  In the past, moving gasoline to bases in Afghanistan could cost up to $400 per gallon. 

Even more significantly, by using more solar energy, the military reduces the danger to soldiers who carry and protect fuel supplies in truck convoys, which are a vulnerable target, being large, slow, and highly explosive. An army study showed that one out of eight U.S. soldiers were killed in Iraq near fuel convoys between 2003 and 2007. 


3,000 U.S. soldiers were killed protecting fuel convoys in Iraq from 2003-2007. Source: CNN Money

As the Department of Defense allocates more money for solar power use, a number of companies stand to profit. One such company is SolarCity (NASDAQ:SCTY.DL), chaired by Elon Musk.

SolarCity seems particularly well situated to serve the military's housing needs. In 2011, it announced a plan to build more than a billion dollars of solar energy projects for a number of military housing communities. The plan, called "Project SolarStrong," looks to be the largest solar photovoltaic project for residential homes in American history. Up to 120,000 military housing units will be served, with up to 300 megawatts of solar generation.

SolarCity is clearly cultivating its relationship with the DOD. The company has encouraged veterans to apply for employment, and on its website, a former marine professes to "keep our customers safe." 

Nonetheless, while revenues appear to be increasing, an investor might want to wait until the company is expected to have positive earnings for the coming year, and demonstrates that it can manage its debt as well maintain margins while it continues to grow. The potential, however, is clear. The Department of Defense has become the greatest energy consumer on the planet, spending $20 billion annually on energy. SolarCity is already taking advantage of this vast market, and its future appears to be bright. Investors who could incorporate the stock into a much wider portfolio, and who can buy and wait for the long term as the company continues to grow, should give consideration to SolarCity.