2011: DOD Energy Year in Review

A hearty holiday hello to you, dear reader. Lacking any snow in Boston, I decided to head north for a short vacation in between Christmas and New Years and ended up, quite happily, in a winter-wonderland version of Montreal.

Dan Nolan and I talked a lot as this year unfolded about whether we were seeing signs of progress, or merely activity (like a dozen or so conferences) with little direct benefit to the war fighter or the nation.

You might ask: how would we propose to measure progress ... and would we know it if we saw it?

Well sure. In my mind, we'd be stronger or much stronger on the two vectors of concern identified in the 2008 Defense Science Board Task Force report on Energy:

1. Fuel Surety - Access to ample operational fuel supplies around the world that can be delivered without interruption to wherever it is needed, and
2. Installation Energy Security - CONUS and other permanent bases become be markedly less dependent on the electricity from their local grid providers

I haven't provided metrics yet (and won't in this post). But one thing we both agree on is that we make demonstrable gains in both of the above objectives when we reduce the amount of fuel or electricity required to accomplish the many and varied missions of the DOD.

That's energy efficiency, also called "the fifth fuel" as noted in this late-in-the-year post, as well as this one from earlier from Dan that gets quite detailed in talking about the Marines' energy strategy with the introduction of a new metric: GPMD, for gallons per Marine per day.

In 2011, the Army, Navy and Air Force all iterated their energy strategy and planning documents and as you know, there's plenty for us to report. But as you may have guessed by now, Dan's other middle name is Accountability. At the beginning of 2011, he reminded everyone of DOD's stated goals on a number of energy initiatives including:

• Beginning in 2010 the Navy and Marine Corps will change the way contracts are awarded with Industry being held contractually accountable for meeting energy efficiency targets
• By 2013 DOD will procure 7.5% of its electricity from renewables; 25% by 2025
• By 2015, DOD will reduce energy demand by 30%
• By 2015 the Navy will cut in half the amount of petroleum used in their commercial vehicle fleet through phased adoption of hybrid, electric, and flex fuel vehicles
• By 2016 the Navy will sail the Great Green Fleet, a carrier strike group composed of nuclear ships, hybrid electric ships running biofuel, and aircraft flying on biofuel
• By 2016, the Air Force wants to be buying 400 million gallons of fuel alternatives that are cost competitive with petroleum based fuel and no more carbon intensive in production
  than available conventional fuels
• By 2020, the Navy will meet 50% of their total requirements with renewables and have 50% of their installations at Net Zero
• By 2025, the Air Force must bring 1,000 MW of renewable capacity online to meet its goals.

And in so doing, he reminded me that it's hard (more like impossible) to find anyone monitoring progress on these goals. If they're purely aspirational and not intended to drive DOD's behavior and performance, then they/we should say so. If they are hard targets that must-be-met-else-heads-will-roll, that's something quite different. We hope it's the latter, but suspect it's the former.

You should read THIS ... Dan got somewhat detailed in describing a few of the obstacles blocking attainment of these objectives, and as of late December 2011, can anyone say we are on pace, or a little ahead, or a bit behind schedule on any/all of these?

At the blog, all we really want for Christmas is for DOD Energy to be treated like the true enterprise-caliber project senior leadership says it is. We expect metrics for measurement, regular updates on how we're faring, and ready carrots and sticks to incent the right behaviors and punish the wrong ones.

OK, that's enough or now. Have to brush off my translation book (app), not to mention my car. Until next time, Bonne année et bonne santé to you and yours. And remember the troops who are in harms way.  Andy Bochman

Photo credit: DVIDS at Flickr.com

Phase One SPIDERS Report

Here is the latest scoop on SPIDERS from the field:.  

The Smart Power Infrastructure Demonstration for Energy Reliability and Security (SPIDERS) energy security micro-grid government and industry partners conducted their Start of Work meeting for Phase One at Joint Base Pearl Harbor Hickam (JBPHH) in Oahu 13-14 DEC 11.   After a challenging acquisition process and with widely expressed industry concerns, the US Army Corps of Engineers (USACE) technical managers and acquisition professionals were able to select Burns and McDonnell out of several qualified respondents. In micro-grid work, the USACE appears to be accepting some technical risk as they appliqué micro-grid components and novel architecture at this scale in their push for an Enterprise solutions DoD may adopt in the future. Burns and McDonnell and their partners plan to push beyond their previous market experience in addressing technical and business case metrics. Expected outcomes include integrating existing renewable energy demonstration projects, legacy electrical infrastructure (Navy Facilities Command) and challenging Joint Capability Technology Demonstration (JCTD) deliverables aimed at leaving behind real property improvements and providing lasting energy security for part of JBPHH. Final design review is expected within 90 days and construction completed by summer 2012. JCTD deliverables and evaluation reports are forecast by the end of 2012.

Since I was not present for the industry day, I have only single source reporting on this.  Anyone else care to chime in?  Another scout reported the pending release of Phase II at Fort Carson.  More at this link.  All the best, Dan Nolan

Conference Reminder: Start 2012 Operationally

I will be publishing my prognostications for DOD Energy in 2012 following Andy's year end wrap up soon. 2011 seemed to be the year of on your mark….Get set……Get set.... I hope that 2012 is the year of GO!

With all the other holiday related events going on, I wanted to remind you about the kickoff of the 2012 DoD Energy Conference season on 23-25 January with the 9th Tactical Power Sources Summit  at the Hilton Alexandria Mark Center in Alexandria, VA. Goals of the conference are to understand acquisition requirements and technology advancement in mobile and soldier power. 

They have an impressive list of speakers from government and academia. For those in Government that think you only have big DOD firms or companies that only started up a week ago to choose from, catch my friend Mike Bergey of Bergey WindPower on 23 Jan at the Alternative Energy Focus Day. Bergey is a small business out of Oklahoma that was founded in the ’70. 

They represent solid, reliable technology from the backbone of America: small business. Not sure what time on the 23rd, but it should be up on the website soon. That whole day focuses on seminars on latest technology for operational energy. I will be there….hope to see you too. Dan Nolan

DEB on Blogging and More

Saw Daniel Yergin yesterday and will be posting on that excellent experience soon, but before I forget, wanted to put this in front of you.

If you're one of the several thousand regular readers of the DEB (and maybe other blogs too), then you probably have a good feel for what separates a blog from a standard online news article or newspaper for that matter.

I recently came across well known tech blogger Dan Frommer's list of ingredients that make for a good blog. My favorite is #2: "Write the site that you want to read," but I think all ten points are on the mark.

If you've ever thought of writing one yourself, you'll find some simple guiding principles that'll help you have success ... and have a pleasurable experience while you're at it.

Since the holidays are approaching and you should be thinking about slowing down for a few days and enjoying some simple pleasures, here's a nice piece on the history of the Old Fashioned cocktail that includes this line:

The old-fashioned is at once "the manliest cocktail order" and "something your grandmother drank," and between those poles we discover countless simple delights, evolutionary wonders, and captivating abominations.

Pretty good, huh? Dan and may be sipping one or two of these as we prepare our DEB year in review (Andy) and 2012 preview (Dan) posts over the next few weeks. Please feel free to join us with observations and predictions of your own, and don't hold back if the urge for a classic cocktail comes over you.

Photo credit: The BittenWord.com on Flickr.com

Yergin Speaks Out Again on Favorable US Energy Security Trends

Back in September we wrote a post or two on the latest thinking on US and global energy futures from energy market guru Daniel Yergin. In today's Wall Street Journal he had a bit more say re: Energy Security that I think you'll find both helpful and promising. First, the ...

Bad News

Yergin: It is true that the U.S. is still importing a larger share of its oil than it was in 1973, at the time of the first oil crisis. Even with increased domestic production and higher imports from Canada, it will still be part of the global oil market and vulnerable to disruptions and price spikes.

Again, to reinforce: the US is both a seller and a buyer of oil and gas in the global markets, and no matter what we do, that condition will remain the same. We don't set the prices, and we don't get to keep or use all that we make. We buy from many sources, ranging from very friendly to somewhat hostile, and yet there's some significant security in that diversity. 

Now for what's gotten better lately and promises to improve even further in the years ahead thanks to some new ways to get at oil and gas.

Good News

Yergin: ... the shift in oil sources means the global supply system will become more resilient, our energy supplies will become more secure, and the nation will have more flexibility in dealing with crises. It ... also means that economic benefits—in terms of jobs, manufacturing and services—will register on the ground in North America.

Click HERE for the full article, and one more thing: I'll be attending a DY lecture tomorrow afternoon at MIT. If you have a question you'd like me to ask him, please fire away fast.

Image credit: Mitra Encyclopedia

Clock Strikes 13..... Fully Burdened BS

Former Under Secretary of the Navy and Director of the Central Intelligence Agency, James Woolsey once commented on a pronouncement by a retired Admiral regarding DOD energy efforts being a fad. He equated Admiral's specious argument as “like the 13th chime of a clock – it is not only bizarre in and of itself, it calls into question everything that issues from the same source”. Nathan Hodge of the Wall Street Journal just announced that it is 13:00 o’clock.

Several people rushed to get this article in front of me and I have been slow to respond. I have grown weary of explaining from where the number $400 per gallon came. Mr. Hodge raised this boogey man in a piece about air dropping fuel in Afghanistan. An otherwise good article is marred by this inaccuracy.

Why do I get so exercised about this recurring absurdity? Because I work with many small companies and I am often approached with ideas to alleviate this supposed financial burden. “Since the average price for a gallon of fuel in Afghanistan is $400, then my plan to create fuel onsite using hope and butterfly kisses for only $350 a gallon is a steal!”. I then have to destroy their dream by telling them the truth. Part of the burden in the Fully Burden Cost of Fuel is this myth.

To reiterate, the Defense Acquisition Guidance defines FBCF as : “the cost of the fuel itself (typically the Defense Logistics Agency - Energy (DLA-E) standard price) plus the apportioned cost of all of the fuel delivery logistics and related force protection required beyond the DESC point of sale to ensure refueling of this system. “

The purpose of the FBCF is to evaluate new systems and platforms during the Analysis of Alternatives portion of the requirements process known as the Joint Capabilities Integration and Development System. Materiel solutions will be considered more competitive that require less support infrastructure; that have a lower power requirement and that are more energy efficient. This will allow DoD to understand the implications of energy use in a given scenario. The FBCF is completely scenario driven based upon point to point movement of a specific variety (road march, attack, retrograde, etc). There can be no generic FBCF. So how did we get $400 a gallon?

In the Report of the Defense Science Board, More Capable Warfighting Through Reduced Fuel Burden, published in May 2001, the Board envisioned various scenarios in which what they called the “true cost of fuel” was computed. One of the scenarios postulated in the DSB report was fuel delivery to a ground mobile force 600 kilometers beyond the Forward Edge of the Battle Area, back when we had front lines; I miss the good old days. In this scenario the fuel would be delivered by CH-47 helicopters flying in three legs to Forward Area Rearm, Refuel Points (FARRP) and requiring a full fuel load for each helo at each FARRP. For a 1,500 gallon payload in each A/C and three stops there and three stops back, the fully burdened cost per gallon was $400. An exceptionally rare circumstance back then, maybe a bit more likely now. Still it was an extreme scenario.

People change behavior for one of two reasons: overwhelming opportunity or overwhelming threat. If those conditions do not obtain, the status quo will remain. Too often we have seen scare tactics used to try to change behavior. The $400 gallon is the equivalent of crying wolf. There are much better reasons to change: increased security, less actual cost and less impact on the environment. If we want to use economics, let’s build the business case, not the $1000 toilet seat case. The fully burdened cost in dollars is interesting in the acquisition program. The fully burdened cost in blood is the real story. Dan Nolan

Reaching Economic Parity in Some Regions, Solar is on the March

Dependable tech prognosticator Ray Kurzweil has been calling it. But I realize that even hinting that solar is starting to make financial sense vs. fossils  is bound to set off a chorus along the lines of "you granola chomping, Birkenstock donning, eco-utopian, bio-dome occupying dreamer."

Such is life. Of course, economists and everyone else in the energy biz are keeping their eyes on the current costs and projected trends of every kind of generation source: fossil, renewable, nuclear. And depending on how you do the math, folks of good intent can and will disagree.

A new report says that distributed solar is getting closer in many markets, even surpassing conventional generation in some. It's getting to be less about technology and subsidies, and more about pure lifecycle ROI.

GTM wrote about it yesterday, and here are a few excerpts I found interesting:

• ... in cost terms, the homeowner’s choice is between a solar system and other options. “Before we hit the majority of the American public, which the DOE puts out only a few more years, we still need to push the economics down a little further
• The shift to solar is not going to happen all at once ... two pockets of the country [will] open up to solar first. Solar will most quickly be noticed as competitive where electricity rates are high or where utilities have inordinate monthly charges
• Where PV becomes economically viable ... will be when the banks get comfortable with it and it becomes something that you just put on your mortgage, a normal thing that everybody in the neighborhood is doing because they can save a little every month on their utility bill

The report may be optimistic. Its writers may have been wearing sandals when they wrote it. But I think it's becoming less and less of a stretch to call solar a viable alternative in some geographies.

It won't work everywhere, and it won't work for everyone. But I think that in many applications, if it's not a winner today, then it will be tomorrow. Andy Bochman

Photo credit: Clearly Ambiguous on Flickr.com

Getting your Head on Straight re: DOD Energy Strategy and Planning in a Rapidly Changing World

In the earliest days of this blog one of my best sources for clarity was former International Energy Agency (IEA) senior analyst Sohbet Karbuz. This man knows more about the way global energy markets function, and more about the ways DOD participates in them, than perhaps anyone on the planet.

Well, I've come back to him recently to try and grok the significance of some of the reports you may have seen lately saying the US is about to become a net oil & gas exporter, and that large fossil energy firms are increasingly focusing their efforts on unconventional resources (e.g. fracking for nat gas, shale gasoline extraction) in North America and Australia.

Here's some clarity on the contents of a CNA's recently released report on US Energy Security. First of all, the report's authors seem to have gaps in their understanding of the way the global energy markets function. In particular, they ascribe imaginary powers to individual nations and orgs when they say things like:

We are held hostage to price fixing by a cartel that includes actors who would do our nation harm, and we are too often called upon to risk the lives of our sons and daughters to protect fragile oil supplies from this very cartel. 

and ...

OPEC can increase production and drive down gas prices, erasing market incentives for developing alternative fuels ... the price of gasoline at the pump can too easily be manipulated by suppliers.

This doesn't do much to bolster the credibility of those who wrote and reviewed the report. But the report also mixes misleading or mistaken statements like those above with others that are much more on target. Here's Karbuz's take:

None of those [above quoted] claims make any sense. I was thinking about writing a few paragraphs on how the world oil markets functions and how oil prices are set. But I see that a reasonably good answer to those wrong arguments comes again from the report itself: “oil is a global commodity, priced on the global market. No matter how much more we produce here in the U.S., we can’t control the price of oil.”

He's also got a lot to say on the reports recommendations, particularly on biofuels. 

There's much more to process, and by the time you've finished Karbuz's analysis (on his blog, HERE), you'll have a better feel for what's going on, and also better context in which to consider the implications for DOD of the continuously changing energy landscape.  Andy Bochman