2012 CPEO Military List Archive

From: Lenny Siegel <LSiegel@cpeo.org>
Date: Thu, 5 Apr 2012 07:50:37 -0700 (PDT)
Reply: cpeo-military
Subject: [CPEO-MEF] ENERGY: GAO report on financing of Defense renewable energy projects
Improved Guidance and Information Sharing Needed for DOD Project- Level Officials

Government Accountability Office
GAO-12-401, April 4, 2012

What GAO Found

To finance renewable energy projects, the military services use up- front appropriations, such as operation and maintenance funds, and alternative-financing approaches that generally rely on private capital, such as arranging financing and implementing a project with a private developer or utility. The military services have funded about 85 percent of nearly 600 projects that were in design, under construction, or operating in fiscal year 2011 with up-front appropriations, but financed 8 of the 9 large-scale projects and 19 of the 57 medium-scale projects with alternative financing. Several factors affect the military services’ use of financing approaches, including perceived benefits and drawbacks such as how long it takes to obtain funding.

The military services have established methods to help ensure good value and advantageous contract terms and to manage the risks of the various financing approaches, but the services have not issued comprehensive guidance on how and when to prepare analyses for renewable energy projects. For example, headquarters and installation officials said that military services use business case or other cost analyses to help maximize benefits and mitigate drawbacks of the selected financing approach. However, GAO found examples of installations’ not developing cost analyses or not analyzing different financing approaches for projects, as well as uncertainty about how to account for some benefits in the analyses, because the military services generally do not have guidance to ensure that business case analyses are completed and that analyses fully consider the costs and benefits of different financing approaches. As a result of not having processes and comprehensive guidance in place, the military services cannot ensure that decision makers select the financing approach that maximizes benefits and mitigates drawbacks or risks of available financing approaches.

The Department of Defense (DOD) and other agencies have made available guidance, training, and other resources to assist officials in selecting certain financing approaches for renewable energy projects, but some guidance on the approaches is inconsistent and information sharing at the installation level is ad hoc and not formalized. DOD, the Department of Energy, and the military services have developed an increasing amount of guidance on the available financing approaches; however, GAO found instances where different interpretations of some guidance affected the approaches the services used because DOD has not issued overarching guidance on using these approaches. As a result, the military services may not be taking full advantage of the various approaches available to finance projects to meet renewable energy goals. Additionally, DOD personnel were generally satisfied with training they received on the financing approaches, but DOD does not have a formalized process to share information and best practices on the approaches among project-level officials across the military services at the installation level. As a result, DOD cannot ensure that officials responsible for selecting a financing approach have timely access on an ongoing basis to information on approaches that their counterparts from other services have used and their experiences with those approaches. Such information could assist the officials in selecting a financing approach that maximizes the benefits and minimizes the drawbacks or risks of that approach.


For the entire Summary and a link to the full report, go to


Lenny Siegel
Executive Director, Center for Public Environmental Oversight
a project of the Pacific Studies Center
278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918

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