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Report to the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

United States Government Accountability Office: 
GAO: 

December 2009: 

Defense Infrastructure: 

DOD Needs to Take Actions to Address Challenges in Meeting Federal 
Renewable Energy Goals: 

GAO-10-104: 

GAO Highlights: 

Highlights of GAO-10-104, a report to the Subcommittee on Readiness, 
Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

The Department of Defense (DOD) consumes about 60 percent of all energy 
used at federal government facilities. To encourage an increased use of 
energy from renewable sources, such as solar and wind power, (1) the 
Energy Policy Act of 2005 (the 2005 Act) directs DOD to consume at 
least 3 percent of its total electricity from renewable resources 
starting in fiscal year 2007; (2) Executive Order 13423 (the 2007 
Executive Order) directs that an amount equal to half of the 
statutorily required renewable energy be generated by sources placed 
into service in 1999 or later; and (3) the 2007 Defense Authorization 
Act directed that at least 25 percent of electricity consumed by DOD 
come from renewable sources in fiscal year 2025. GAO was asked to 
examine (1) DOD’s progress toward these three key goals for consuming 
renewable energy in fiscal years 2007 and 2008, (2) challenges to DOD 
meeting those goals, and (3) DOD’s plans to meet the goals. GAO 
reviewed relevant laws and DOD and Department of Energy (DOE) policy, 
plans, and data; interviewed agency officials; and visited DOD 
facilities. 

What GAO Found: 

DOD has three key goals for its installations’ consumption of renewable 
energy, contained in the 2005 Act, the 2007 Executive Order, and the 
fiscal year 2007 National Defense Authorization Act. DOD met the goals 
in the 2005 Act and 2007 Executive Order in fiscal year 2007. However, 
in fiscal year 2008, DOD fell just short of the 2005 Act goal. 
Moreover, in fiscal years 2007 and 2008, DOD overstated its progress 
toward the goal in the 2007 Defense Authorization Act, counting 
nonelectric renewable energy. In these 2 fiscal years, the 2007 Defense 
Authorization Act goal allowed only electric renewable energy to be 
counted. According to amendments in the fiscal year 2010 Defense 
Authorization Act—which became law in October 2009—DOD is now able to 
count nonelectric renewable energy toward this goal. 

In fiscal years 2007 and 2008, when calculating progress toward the 
2007 Defense Authorization Act goal, DOD included renewable electricity 
produced on DOD land, but not consumed by DOD. According to DOD, it 
has “facilitated production,” but has not “directly consumed” this 
electricity. It is unclear whether such renewable energy should be 
included in the Office of the Secretary of Defense’s (OSD) calculations 
of progress toward this goal. Moreover, OSD has not published guidance 
clarifying key terms in the language of the goal. With such guidance 
specifying how the services are to implement this goal, DOD will have 
greater assurance that it can accurately assess progress toward the 
goal and accurately report on this progress to Congress. 

DOD faces three key challenges in meeting the renewable energy goals. 
First, renewable energy projects may sometimes be incompatible with 
installations’ need to use land for primary mission objectives. For 
example, wind turbines may conflict with aircraft operations during 
training. Second, renewable energy is often more expensive than 
nonrenewable energy. Therefore, using renewable energy can be at odds 
with DOD and DOE guidance that calls for DOD to invest in energy 
projects when cost-effective. In response, DOD plans to obtain 
additional funds by joining with private industry, such as local 
electric utilities, to develop renewable energy projects. Third, 
however, the use of those private sector approaches can be constrained 
by several factors. For example, energy produced by the projects may 
not count toward the renewable energy goals. By addressing these 
challenges, DOD would strengthen its ability to fully realize the 
potential of its renewable energy resources, improving its chances of 
meeting the goals in the most cost-effective way. 

OSD has not developed a long-term, DOD-wide plan to help ensure that 
DOD meets the renewable energy goals. Such a plan that identifies and 
addresses key challenges, has strategies for coordinating the services’ 
renewable energy activities, sets realistic performance measures for 
achieving the goals, and aligns DOD resources will better enable DOD to 
meet the renewable energy goals. 

What GAO Recommends: 

GAO makes 5 recommendations to DOD, including that DOD accurately 
report progress toward the goals and develop a long-term, DOD-wide plan 
to address challenges and meet goals. DOD concurred with 4 
recommendations and partially concurred with 1, agreeing with its 
intent but stating that it is a service responsibility. 

View [hyperlink, http://www.gao.gov/products/GAO-10-104] or key 
components. For more information, contact Mark Gaffigan at (202) 512-
3168 or gaffiganm@gao.gov or Brian Lepore at (202) 512-4523 or 
leporeb@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

DOD Met the 2007 Goals, Missed a 2008 Goal, and Overstated Reported 
Progress in Both Years toward the 2007 Defense Authorization Act Goal: 

DOD Faces Three Key Ongoing Challenges to Its Ability to Meet the 
Renewable Energy Goals: 

OSD Lacks a Long-Term, Departmentwide Plan to Meet the Renewable Energy 
Goals: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 18, 2009: 

The Honorable Solomon P. Ortiz: 
Chairman: 
The Honorable J. Randy Forbes: 
Ranking Member: 
Subcommittee on Readiness: 
Committee on Armed Services: 
House of Representatives: 

The Department of Defense (DOD) is the largest single energy consumer 
in the United States--accounting for over 60 percent of all federal 
government facilities' energy consumption in fiscal year 2006. To put 
this in a national perspective, if DOD were a state, it would rank 
between the 35th and 36th largest states, based on total electricity 
consumption.[Footnote 1] DOD reported that it spent almost $4 billion 
on facility energy in fiscal year 2008.[Footnote 2] Over the course of 
many years, federal statutes and executive orders have set and revised 
a number of goals for changing the way federal agencies use or obtain 
energy. 

Existing laws and an executive order direct federal agencies to 
increase their use of renewable sources of energy such as solar and 
wind power. First, the Energy Policy Act of 2005 (the 2005 Act) directs 
federal agencies--"to the extent economically feasible and technically 
practicable"--that 3 percent of the electrical energy consumed in 
fiscal years 2007 through 2009 come from renewable energy, with this 
percentage gradually increasing to 7.5 percent annually beginning in 
fiscal year 2013.[Footnote 3] The amount of electricity needed to meet 
the 3 percent goal in fiscal year 2007 would power about 79,209 homes 
for 1 year.[Footnote 4] Second, Executive Order 13423 (the 2007 
Executive Order) directs that in each fiscal year, an amount of 
renewable energy equal to at least half of the statutorily required 
renewable energy that is consumed by a federal agency must come from 
"new renewable sources placed into service after January 1, 1999." 
[Footnote 5] Third, Section 2852 of the National Defense Authorization 
Act for Fiscal Year 2007 (the 2007 Defense Authorization Act) 
established a goal for DOD "to produce or procure" not less than 25 
percent of its total electricity consumption during fiscal year 2025 
and each fiscal year thereafter, from renewable energy sources. 
[Footnote 6],[Footnote 7] The amount of power needed to meet the 25 
percent goal in fiscal year 2025 would power approximately 660,080 
homes for 1 year.[Footnote 8] While one of the statutes and the 
executive order also contain goals for agencies to increase their 
energy efficiency, this report focuses on goals regarding the use of 
renewable energy at federal facilities. 

This report responds to your request that we review the status of DOD's 
progress in meeting the three key renewable energy goals. Specifically, 
for domestic installations,[Footnote 9] we (1) assessed the progress 
DOD had made toward the three key goals for consuming renewable energy 
in fiscal years 2007 and 2008, (2) identified the challenges that may 
affect DOD's ability to meet the renewable energy goals, and (3) 
assessed DOD's plans to meet the renewable energy goals. 

To determine whether DOD met the three key goals for consuming 
renewable energy in its domestic installations in fiscal years 2007 and 
2008,[Footnote 10] we reviewed DOD and service guidance and Department 
of Energy (DOE) guidance applicable to DOD and the services to identify 
the goals, and we compared the goals to DOD's renewable energy 
consumption data from DOD submissions to DOE for use in DOE's Annual 
Report to Congress on Federal Government Energy Management and 
Conservation Programs for fiscal years 2007 and 2008. To determine the 
reliability of these data, we interviewed officials at each level of 
data collection, aggregation, and review: those responsible for 
entering this information into data collection templates at the 
facilities level, for summarizing it and checking for accuracy at the 
headquarters level for each of the services, and for combining the 
services' data into a total for DOD and assessing the accuracy of this 
total. We determined that these data were sufficiently reliable for the 
purpose of determining the extent to which DOD met the renewable energy 
goals. 

To identify the challenges that may affect DOD's ability to meet the 
renewable energy goals, we reviewed key documents--such as a DOD 
assessment of installations' potential for renewable energy 
development--and interviewed officials from the Office of the Secretary 
of Defense (OSD) and the services (U.S. Army, U.S. Navy, and U.S. Air 
Force) who are responsible for managing DOD's renewable energy efforts. 
[Footnote 11] Because DOD told us that aggregated data on DOD's 
renewable energy projects were unavailable, we asked OSD to collect 
data on the location, size, and type of renewable energy projects using 
a data collection instrument we provided. To determine the reliability 
of these data provided by OSD, we checked them against previously 
identified information about a selection of projects, and when we found 
inconsistencies, we discussed the inconsistencies with OSD and the 
services and made corrections. We also visited five installations to 
determine the practical effect of the challenges to meeting renewable 
energy goals. We selected these installations because they represent 
each of the services, have different types and sizes of renewable 
energy projects, and operate in three states. 

To assess DOD's plans for meeting the renewable energy goals, we 
obtained and reviewed OSD and service plans to determine the extent to 
which they exhibited elements generally found in effective strategic 
planning documents. We also assessed the information systems the 
services use to track their renewable energy generation and 
consumption. Because two of the three services had not developed 
adequate information systems for monitoring or reporting their use of 
renewable energy, we did not use data from those systems to determine 
our findings, and we discuss the limitations of these systems further 
in our report. Our analysis of DOD's renewable energy production and 
consumption relied on the annual template reports submitted to OSD and 
a data collection instrument we developed, and not on the data logged 
into the services' information systems. In addition, we met with 
renewable energy experts at DOE's National Laboratories, selected 
nongovernmental organizations, and the public utility commissions of 
the states where we also visited DOD installations. We conducted this 
performance audit from October 2008 to November 2009, in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

Background: 

The U.S. Renewable Energy Market: 

Three characteristics of the U.S. renewable energy market are key to 
understanding DOD's renewable energy activities: (1) the generally 
higher cost of renewable energy compared with nonrenewable energy in 
the United States; (2) renewable energy certificates; and (3) state 
standards, mandates, and financial incentives. 

Higher Cost of Renewable Energy: 

According to DOE, in the United States renewable energy is generally 
more expensive than energy derived from nonrenewable sources.[Footnote 
12] We have previously reported that renewable energy technologies have 
typically generated more expensive energy than nonrenewable sources 
because of renewable energy technologies' relatively high up-front 
capital costs and the fact that they operate intermittently, which 
results in less generation for every megawatt of installed generation 
capacity.[Footnote 13] For example, solar energy can only be generated 
during daytime hours and wind energy can only be generated during 
periods of sustained wind activity. 

Renewable Energy Certificates: 

Federal efforts to increasingly rely on renewable energy are taking 
place within the context of a renewable energy commodities market for 
buying and selling this energy through renewable energy certificates. 
In the United States, renewable energy production essentially creates 
two products: the energy itself and an associated commodity, called a 
renewable energy certificate. Each renewable energy certificate 
represents a certain amount of energy generated using a renewable 
resource. 

According to the Environmental Protection Agency, these certificates 
represent the environmental attributes of renewable energy generation 
(e.g., 1 megawatt hour of wind power) that has been produced by private 
or public entities and can be sold to other parties,[Footnote 14] 
including DOD and the services.[Footnote 15] According to DOE's 
National Renewable Energy Laboratory, the certificates provide 
renewable energy producers with an extra stream of revenue that helps 
to offset the higher cost of renewable energy projects.[Footnote 16] 
Bought and sold in a fashion similar to stocks and bonds, renewable 
energy certificates are a commodity with fluctuating prices. According 
to DOE's Pacific Northwest National Laboratory, the relative 
instability of the price for renewable energy certificates is a result 
of fluctuations in demand for these certificates.[Footnote 17] In 
addition, these certificates facilitate the buying, selling, and 
trading of renewable energy without the need to actually transmit the 
electricity to each customer holding a certificate. 

However, under DOE guidance for implementing the 2005 Act goal to 
obtain 3 percent of electricity from renewable sources and the 2007 
Executive Order goal to obtain an amount equal to half of the 
statutorily required renewable energy from sources placed into service 
after January 1, 1999, an agency can count renewable energy 
certificates toward these goals only if the certificate is retained by 
the agency, retired, or precluded from transfer to a third party. 
[Footnote 18] This is because, according to the DOE guidance for 
implementing these two goals, if more than one party owns the same 
certificate, the credibility of the certificates in the general market 
could be jeopardized. Thus, if the federal agency does not retain, 
retire, or preclude the transfer of the certificate, it cannot claim 
the renewable energy that certificate represents toward the 2005 Act 
and 2007 Executive Order goals. 

In order to follow this guidance, an installation or service buying 
renewable energy has two options: buy both the energy and the 
certificate or buy just the certificate. Purchasing the energy and 
certificate together is referred to as buying "bundled" renewable 
energy. When a purchaser buys only the certificate, the renewable 
energy associated with the certificate is sold to another consumer 
without the certificate, and is known as buying "unbundled" energy. For 
instance, at one Air Force installation we visited, Air Force officials 
explained that the owner of a photovoltaic array located on the 
installation sells the project's certificates to the local utility and 
sells the unbundled energy to the installation. DOD often buys only the 
certificate, to avoid the cost of developing its own projects.[Footnote 
19] Another reason a federal agency, such as DOD, would purchase 
certificates is that according to DOE guidance pertaining to the goals 
in the 2005 Act and 2007 Executive Order, purchasing and retaining 
these certificates is one way for an agency to get credit toward 
meeting these two renewable energy goals. This allows DOD installations 
that do not have renewable resources to contribute to achieving the 
renewable energy goals to which DOD is subject. However, it is 
important to note that if DOD buys only the certificate, the department 
is not purchasing actual energy that it can use to run its 
installations. This means that if DOD purchases just the certificate, 
the department still needs to buy actual energy at an additional cost. 

For instance, a DOD installation without any renewable energy projects 
could purchase a certificate for 1 megawatt hour of renewable energy 
generated elsewhere--for example, from utility-owned wind turbines in a 
different state. According to the DOE guidance implementing the 2005 
Act goal to obtain 3 percent of electricity from renewable sources and 
the 2007 Executive Order goal to obtain an amount equal to half of the 
statutorily required renewable energy from sources placed into service 
after January 1, 1999, DOD's ownership of a renewable energy 
certificate is the key requirement if energy is to count toward either 
of these goals. For example, an agency can count energy toward the 
goals in the 2005 Act and 2007 Executive Order by purchasing a 
certificate for 1 megawatt hour of renewable energy plus the actual 
energy (that is, by purchasing bundled renewable energy), by using one 
megawatt of renewable energy from a project on federal land or owned by 
a federal agency and retaining or retiring a certificate, or by 
purchasing just a certificate for 1 megawatt hour of renewable energy 
generated elsewhere. In each case, the key qualification for counting 
the energy toward these two goals is that DOD retains or retires a 
renewable energy certificate. However, it is important to note that if 
DOD buys only the certificate, the department is not purchasing actual 
energy that it can use to run its installations. This means that if DOD 
purchases just the certificate, the department still needs to buy 
actual energy at an additional cost. 

Further, for the purposes of the 2005 Act goal, a bonus equivalent to 
doubling the amount of renewable energy used or purchased is available 
for qualified renewable energy sources generating electricity on 
federal or Indian lands, when that electricity is consumed at a federal 
facility, and the renewable energy certificates are not transferred to 
a party outside the federal government.[Footnote 20] For example, at 
one Marine Corps installation we visited, Marine Corps officials 
explained that the installation consumes renewable electricity from a 
photovoltaic solar array located on-site, and because DOD owns the 
array, it also owns the certificates associated with the project's 
renewable electricity. In this case, because the project is located on 
federal land, DOD consumes the electricity, and DOD retains the 
certificates, the department can claim the bonus, counting the 
project's total amount of electricity twice toward the goal in the 2005 
Act. However, if the agency is operating such a project that otherwise 
qualifies for the bonus and then transfers the renewable energy 
certificates to a party outside the federal government, the agency 
gives up its right to count that amount of renewable energy for its 
goal, as well as its right to claim the bonus. 

If an agency wishes to transfer the renewable energy certificates to a 
party outside the federal government and still count the project's 
energy toward the goal in the 2005 Act, the agency must purchase 
renewable energy certificates from another source, effectively 
replacing the project's original certificates that the agency 
transferred. For the purposes of this report, we call these additional 
certificates replacement certificates. According to DOD data, the 
department has been able to utilize this approach. For instance, in 
fiscal year 2008, 190,964 megawatt hours of renewable energy 
certificates purchased by DOD were eligible to be used as replacement 
certificates by the department. Because DOD had renewable energy 
projects for which it had not retained the original certificates, it 
was able to use these replacement certificates to claim 190,964 
megawatt hours of renewable energy toward the 2005 Act goal to obtain 3 
percent of electricity from renewable sources. 

State Standards, Mandates, and Financial Incentives: 

Many states have established policies that promote renewable energy. 
Specifically, according to the Database of State Incentives for 
Renewables and Efficiency,[Footnote 21] as of September 2009, 

* 34 states and the District of Columbia have established renewable 
portfolio standards requiring or encouraging that a fixed percentage of 
the electricity consumed in the state be generated from renewable 
sources; 

* 40 states and the District of Columbia have established 
interconnection rules for electric utilities to connect renewable 
energy sources to the power transmission grid, which in some cases 
allows non-utility power producers to receive credit for excess 
generation; and: 

* 48 states and the District of Columbia offer tax credits, grants, or 
rebates to stimulate the development of renewable energy projects. 

Federal law requires DOD to comply with state laws governing the 
provision of electric utility services when using appropriated dollars 
to purchase energy.[Footnote 22] Certain types of state laws can affect 
DOD renewable energy projects. For example, the energy manager at a 
Navy installation we visited told us that because of a fee called a 
departing load charge, the installation had decided to reduce the size 
of a planned solar project from an estimated 15 to 20 megawatts to 5 
megawatts. At the time this decision was made, utilities in the state 
where this installation is located could charge a customer this type of 
fee if the customer self-generated a portion of its electricity, 
reducing the amount of electricity the customer would purchase from the 
utility. According to Public Utilities Commission officials in this 
state, fees like the departing load charge exist so that utilities can 
recoup their investment in the energy infrastructure the utilities 
initially built to supply 100 percent of their customers' electricity 
demand. In the case of the Navy installation we visited, once the 
proposed solar project began operating, the installation would have 
purchased less electricity from the utility because a portion of its 
electricity needs would be satisfied by the solar project. According to 
Navy officials, concerns about the impact of the departing load charge 
influenced the decision to reduce the size of the solar project. 

Sources of Funding for Renewable Energy Projects: 

DOD has funded renewable energy projects on its installations using 
both up-front appropriated dollars and various types of agreements with 
private sector entities.[Footnote 23] DOD primarily uses funding from 
two kinds of appropriation accounts to develop renewable energy 
projects. First, DOD uses a military construction account to pay for 
the Energy Conservation Investment Program--funding that Congress 
provides directly to OSD and that OSD, in turn, allocates to each of 
the services. Program funds are specifically directed toward energy 
conservation and renewable energy projects. Second, the services' 
annual operation and maintenance appropriations provide funding that 
many installations have used to support small renewable energy 
projects.[Footnote 24] 

DOD has also joined with private sector entities, entering into various 
types of arrangements to develop renewable energy projects. Because 
these different arrangements with the private sector provide DOD with 
an alternative to using only up-front appropriations to fund renewable 
energy projects, we refer to these arrangements as alternative 
financing approaches. For the purposes of this report, we define an 
alternative financing approach as any funding arrangement other than 
projects in which total project costs are funded only through full up- 
front appropriations. DOD has entered into several different types of 
these approaches that have resulted in renewable energy projects. 

Roles of OSD and the Services in DOD's Renewable Energy Activities: 

According to DOE guidance implementing the 2005 Act goal to obtain 3 
percent of electricity from renewable sources and the 2007 Executive 
Order goal to obtain an amount equal to half of the statutorily 
required renewable energy from sources placed into service after 
January 1, 1999, as well as the 2007 Defense Authorization Act goal 
that 25 percent of electricity consumed by DOD come from renewable 
sources in 2025,[Footnote 25] DOD as a department--rather than each of 
the services--is responsible for meeting the goals. However, within 
DOD, the activities required to meet these goals are carried out by 
both OSD and the services. DOD Instruction 4170.11 specifies that the 
Office of the Deputy Under Secretary of Defense (Installations and 
Environment) acting under the authority, direction, and control of the 
Office of the Under Secretary of Defense (Acquisition, Technology and 
Logistics) oversees the military services' renewable energy activities, 
is responsible for implementing policies and providing guidance to 
manage installation energy resources, and is responsible for providing 
annual programming guidance and overseeing the achievement of the 
energy goals and objectives.[Footnote 26] The services are responsible 
for implementing OSD's guidance to meet the goals. The services do so 
by purchasing bundled renewable energy, unbundled renewable energy 
certificates, and developing renewable energy generation projects on 
their installations. 

DOD Met the 2007 Goals, Missed a 2008 Goal, and Overstated Reported 
Progress in Both Years toward the 2007 Defense Authorization Act Goal: 

DOD Met Both Goals in Fiscal Year 2007: 

According to DOD's fiscal year 2007 submission for DOE's Annual Energy 
Management Report, DOD met both of the goals regarding its 
installations' consumption of renewable energy in fiscal year 2007. In 
fiscal year 2007, 5.5 percent of DOD's total electricity consumption 
was from renewable sources, exceeding the 2005 Act goal of obtaining 3 
percent of electricity from renewable sources. In the same year, 3.3 
percent of the renewable energy consumed by DOD was "new," exceeding 
the 2007 Executive Order goal to obtain an amount equal to half of the 
statutorily required renewable energy from sources placed into service 
after January 1, 1999. 

DOD Narrowly Missed a Goal in Fiscal Year 2008: 

According to DOD's fiscal year 2008 submission for DOE's Annual Energy 
Management Report, DOD met only one of the two applicable goals 
regarding the consumption of facility renewable energy in fiscal year 
2008. Specifically, in fiscal year 2008, 2.9 percent of DOD's total 
electricity use was derived from renewable sources, thus falling just 
short of the 2005 Act goal of obtaining 3 percent of electricity from 
renewable sources. In the same year, 1.8 percent of the renewable 
energy consumed by DOD was "new"--exceeding the 2007 Executive Order 
goal to obtain an amount equal to half of the statutorily required 
renewable energy from sources placed into service after January 1, 
1999. 

DOD missed meeting the 2005 Act goal in fiscal year 2008 because the 
price of renewable energy certificates increased significantly from 
fiscal year 2007 to fiscal year 2008, and as a result, DOD purchased 
fewer of these certificates. In fiscal year 2007, DOD relied on 
unbundled renewable energy certificates for almost 90 percent of the 
renewable energy that it purchased. In that year, DOD purchased 
certificates that allowed it to claim credit for approximately 0.88 
million megawatt hours of energy. However, in fiscal year 2008, the 
price of the certificates rose almost 185 percent. Responding to the 
increase, DOD bought substantially fewer renewable energy certificates 
that year--purchases that allowed DOD to claim credit for 0.32 million 
megawatt hours. According to an OSD official, that fiscal year 2008 
decrease in the amount of renewable energy that DOD could claim caused 
the department to miss the 2005 Act goal of obtaining 3 percent of 
electricity from renewable sources. As a result, DOD's total 
consumption of renewable energy, including that claimed through 
renewable energy certificates, decreased, and DOD missed the 2005 Act 
goal for fiscal year 2008. 

DOD Overstated Its Fiscal Years 2007 and 2008 Progress toward the 
Defense Authorization Act Goal for Fiscal Year 2025: 

DOD's fiscal years 2007 and 2008 progress toward the fiscal year 2025 
goal--reported in DOD's submissions to DOE for the Annual Energy 
Management Report--was overstated because DOD counted nonelectric 
renewable energy that under the 2007 Defense Authorization Act, DOD 
should not have counted. It is important to note that the National 
Defense Authorization Act for Fiscal Year 2010 contains several 
amendments to the language defining the goal in the 2007 Defense 
Authorization Act that change the goal's requirements.[Footnote 27] For 
example, DOD will be able to count nonelectric renewable energy toward 
the 2025 goal. However, regardless of changes in the goal's 
requirements, DOD overstated its progress toward the goal in fiscal 
years 2007 and 2008. 

A key OSD official acknowledged that DOD incorrectly included 
nonelectric energy in its reported progress toward the 2007 Defense 
Authorization Act goal of having 25 percent of its total electricity 
consumption during fiscal year 2025 come from renewable energy sources. 
According to this official, beginning in fiscal year 2007, DOD adopted 
an internal policy goal to obtain at least 25 percent of its 
installations' total energy from renewable resources by fiscal year 
2025. Under this internal DOD policy, all types of renewable energy 
counted toward the goal. However, Congress incorporated a similar 
statutory goal into the fiscal year 2007 Defense Authorization Act. At 
that time, Congress specified that only renewable electricity could be 
counted toward this statutory goal. But, according to OSD and service 
officials, in fiscal years 2007 and 2008 the Army, Navy, and OSD did 
not adapt their calculations to the act's new definition of what type 
of renewable energy counts toward the goal, incorrectly adding 
nonelectric renewable energy to electric renewable energy in their 
calculations of progress toward the goal. 

OSD Has Not Issued Guidance to Clarify What Should Be Included in Its 
Calculations of Progress toward the 2025 Goal Found in the 2007 Defense 
Authorization Act: 

According to the 2007 Defense Authorization Act, DOD's goal was to 
"produce or procure not less than 25 percent of the total quantity of 
electric energy it consumes within its facilities and in its activities 
during fiscal year 2025 and each fiscal year thereafter from renewable 
energy sources."[Footnote 28] Previous GAO work has shown that 
performance measures should be clearly stated and the definitions of 
key terms should be consistent with the methodology used for 
calculating the measure.[Footnote 29] In calculating its progress 
toward the 2025 goal, DOD utilized an accounting method that includes 
renewable energy where DOD "facilitates the production, but does not 
directly consume the renewable energy." However, OSD has not issued 
guidance that provides a clear explanation of this methodology and its 
legal rationale for how its accounting method is consistent with the 
language of the statute. In particular, OSD has not defined several key 
terms in the act, including "produce" and "consumes." Without 
additional information on DOD's accounting method,[Footnote 30] it is 
unclear whether renewable electricity where DOD has "facilitated 
production" on DOD land--but has not "directly consumed" such renewable 
energy--should properly be included in OSD's calculation of progress 
toward the goal. Further, without such clarification from OSD, it is 
unclear how the services are to properly implement the 2007 Defense 
Authorization Act goal. 

DOD has utilized an accounting method in calculating its progress 
toward the 2007 Defense Authorization Act goal where "the Department 
facilitates the production, but does not directly consume the renewable 
energy."[Footnote 31] Pursuant to this accounting method, in its fiscal 
years 2007 and 2008 submissions for DOE's Annual Energy Management 
Report, OSD reported DOD's progress toward the 2007 Defense 
Authorization Act goal by using a calculation that included renewable 
electricity from a power plant that uses a renewable resource on DOD 
land but does not supply renewable electricity to DOD. Specifically, 
OSD included the renewable electricity produced at one geothermal power 
plant located on a Navy installation toward the 2007 Defense 
Authorization Act goal, although the Navy did not use or purchase the 
renewable electricity produced at this location. Given that the statute 
stated that it shall be DOD's goal to "produce or procure not less than 
25 percent of the total quantity of electric energy it consumes within 
its facilities and in its activities during fiscal year 2025 and each 
fiscal year thereafter from renewable energy sources" (emphasis added), 
DOD's legal rationale for how this accounting method is consistent with 
the language of the statute is unclear. 

When DOE issued guidance on the implementation of the 2005 Act and the 
2007 Executive Order, it provided extensive information to federal 
agencies on the implementation of the goals and the definition of 
terms. Specifically, the DOE guidance provides several paragraphs as to 
how projects and purchases qualify as "consumed" electricity in order 
to be counted toward the 2005 Act requirement, and addresses the 
requirements for use of renewable energy certificates in that context. 
[Footnote 32] However, OSD has not issued guidance that provides a 
clear explanation of its methodology for calculating progress toward 
the goal contained in the 2007 Defense Authorization Act, including an 
explanation of how its accounting method is consistent with the 
language of the statute. For example, DOD's April 2008 report stated 
that DOD "produce[s]" energy that meets the terms of the statute when 
it "facilitates the production" of renewable energy, but the 
circumstances under which DOD has "facilitate[ed] the production" of 
renewable energy to such an extent as it may be considered "produced" 
by DOD, as the statute specifies, are unclear.[Footnote 33] As another 
example, DOD's April 2008 report stated that DOD counts energy toward 
the 2007 Defense Authorization Act goal when it does not "directly 
consume" such energy. However, the circumstances under which DOD has 
indirectly consumed such energy are unclear, as is the extent to which 
this indirect consumption is consistent with the statute's requirement 
to consume such energy. Because OSD has not provided such guidance on 
its method of accounting for renewable energy use, it is unclear 
whether OSD's inclusion of renewable geothermal electricity that DOD 
neither directly produced nor "directly consumed" in its calculation of 
progress toward the goal is consistent with the act. Further, without 
such clarification from OSD, it is unclear how the services are to 
properly calculate progress toward the 2007 Defense Authorization Act 
goal. 

This lack of clarity is significant because whether electricity from 
this geothermal power plant is properly included may have a serious 
effect on how much progress OSD reports to Congress in meeting the 2007 
Defense Authorization Act goal. Because this plant generates nearly 
three-fourths of the total domestic renewable energy produced on DOD 
land, by including the plant's electricity as part of the total amount 
of electricity that qualifies for the 2007 Defense Authorization Act 
goal, OSD calculated that DOD achieved substantial progress toward the 
goal in fiscal years 2007 and 2008. In contrast, if OSD does not 
include the plant's electricity in its future reporting, it could 
likely report significantly less progress toward the 2007 Defense 
Authorization Act goal. 

Without providing a clear definition of either the key terms in the act 
or a methodology for calculating progress toward the goal, OSD cannot 
ensure that the information on its progress toward meeting the goal is 
consistent or can be compared to past years' information. Further, in 
the absence of such clarification from OSD, it is unclear how the 
services are to properly implement the 2007 Defense Authorization Act 
goal. Thus, until OSD addresses this lack of clarity, DOD will not be 
able to accurately measure its own progress toward the goal or 
accurately report on its progress to Congress. 

DOD Faces Three Key Ongoing Challenges to Its Ability to Meet the 
Renewable Energy Goals: 

Development of Renewable Energy Projects Is Not Always Compatible with 
the Primary Mission of a DOD Installation: 

According to a 2005 DOD study,[Footnote 34] renewable energy projects 
may sometimes be incompatible with installations' needs for land use to 
meet primary mission objectives. Officials from DOD and most of the 
state public utility commissions with which we met told us that when 
renewable projects and an installation's primary mission are in 
potential competition, it is possible to develop these projects while 
maintaining mission effectiveness. This balance has been achieved when 
installation officials have found accommodations that enable a project 
to be developed without compromising primary mission objectives. 
However, OSD officials have acknowledged that OSD has not provided 
guidance indicating when it is appropriate for installation officials 
to develop such accommodations. Thus, DOD may not be availing itself of 
potential opportunities for renewable projects on its land. 

The 2005 DOD study determined that the potential impact of a project on 
an installation's mission reduces DOD's ability to fully utilize all of 
the renewable resources on its installations. According to data 
included in the study's implementation plan, while DOD had the 
potential to annually obtain enough renewable energy to equal 20 
percent of DOD's total facility electricity use,[Footnote 35] the 
incompatibility between renewable energy projects and the primary 
mission of some installations would likely prevent DOD from fully 
realizing this potential. Officials at four of the five installations 
we visited explained that they had decided not to encroach on the land 
used for core mission activities in order to meet the renewable energy 
goals. For example, a Marine Corps installation we visited conducted an 
assessment of wind resources that determined there were sufficient 
prevailing winds to install wind turbines to generate electricity. 
However, the location of this resource was designated for training 
activities involving rotary-wing aircraft and live-fire exercises-- 
activities that installation officials determined to be incompatible 
with the siting and operation of wind turbines. DOD may also identify 
renewable energy projects outside its installations as incompatible 
with the installations' primary mission objectives. For example, an Air 
Force installation commander requested that the Department of the 
Interior's Bureau of Land Management withdraw permits for a planned 
solar thermal plant 20 miles from the installation. The request noted 
that the tower required for the solar thermal plant would hamper 
installation operations, including the operation of military radar. 

In addition, the transmission and distribution infrastructure required 
to convey power from renewable energy projects to an installation's 
buildings or to the utility grid can sometimes be affected by an 
installation's mission. For example, officials at a Navy installation 
we visited told us that they were planning to install a solar 
photovoltaic system adjacent to the installation's existing geothermal 
plant, to allow the geothermal plant to run more efficiently by 
providing power to cool the plant's turbines. However, if the 
installation was to use the power generated by the solar and geothermal 
plants, the power lines required to distribute the power to the 
installation would have to be routed around areas designated for 
testing of live ordnance. The installation energy manager told us that 
the additional cost to route the power lines around the testing areas 
would make the project too costly to implement. 

However, it is sometimes possible to develop renewable projects while 
maintaining mission effectiveness even when there is potential 
incompatibility between the two. For example, at one Air Force 
installation we visited, the installation officials were restricted in 
their ability to install a photovoltaic array due to concerns from the 
air operations staff that reflections from the array could disrupt 
training. A resolution to the incompatibility of installation needs was 
found by placing the array in a location that did not conflict with 
training, yet had an adequate solar resource. In another example, 
representatives from federal land management agencies, the services, 
and county officials worked with DOD installations to develop a map 
that indicates the height of wind turbines that require DOD review. In 
a certain part of the map colored red, all turbines over 200 feet need 
to be reviewed by DOD to ensure compatibility with the installations' 
mission. In other areas, colored green, no DOD review is required. 

According to the officials responsible for drafting DOD's energy 
security strategy, decisions about specific renewable energy projects 
should be made at the installation level because of the differing 
specifics of each project. But, according to these officials, DOD's 
draft energy security strategy does not provide guidance to enable 
installation officials to develop the accommodations that may be 
possible and required to develop renewable energy projects that do not 
affect an installation's primary mission. While many states have 
established goals requiring or encouraging that a fixed percentage of 
the electricity consumed in the state be generated from renewable 
sources, state government officials we interviewed said that they have 
removed DOD installations from consideration as possible sources for 
the renewable energy required to meet these state goals because of a 
lack of guidance specifying where renewable energy projects can be 
located on DOD lands. A senior OSD energy official has acknowledged 
that base commanders need to do a better job "compromising" between the 
two goals of primary mission execution and renewable energy project 
development and that OSD needs to do a better job of providing guidance 
to these commanders on their consideration of such projects. At the 
time of our report, the services were conducting assessments to 
determine which installations can most cost effectively develop locally 
available resources. However, the lack of OSD guidance indicating when 
it is appropriate for installation officials to develop such 
accommodations to establish a balance between renewable energy projects 
and an installation's mission may delay or impede the development of 
renewable energy projects on and around DOD installations. 

Purchasing or Generating Renewable Energy May Conflict with DOD Policy 
and DOE Guidance to Invest in Renewable Energy Cost Effectively: 

Both DOD policy and DOE's guidance implementing the 2005 Act goal to 
obtain 3 percent of electricity from renewable sources and the 2007 
Executive Order goal to obtain an amount equal to half of the 
statutorily required renewable energy from sources placed into service 
after January 1, 1999, encourage agency investment in renewable energy 
projects when it is cost-effective.[Footnote 36] DOD requires its 
facilities to use life-cycle cost analysis to determine whether a 
planned energy project is cost-effective relative to the status quo, 
and the DOE guidance notes that agencies should develop certain on-site 
renewable energy systems when "life-cycle cost-effective" to do so. 

However, as we have previously reported, energy from renewable sources 
generally costs more than energy from nonrenewable sources, such as 
fossil fuels.[Footnote 37] According to our analysis of DOD data, most 
DOD installations would need to spend more money to generate or 
purchase renewable electricity than they would to purchase conventional 
electricity offered by their local utilities. That is because the cost 
of renewable electricity is often greater than the cost of conventional 
electricity, the latter of which makes up the majority of the 
electricity sold by utilities.[Footnote 38] Furthermore, in most 
states, DOD's installations pay below-average rates for nonrenewable 
electricity.[Footnote 39] That means that most domestic DOD 
installations are even more likely to pay a higher price for renewable 
electricity than for the nonrenewable electricity provided by their 
local utilities. Thus, it may be challenging for DOD to develop on-site 
renewable energy systems that qualify for the goals while also 
attempting to follow DOD policy and DOE guidance that encourage 
investment in renewable energy projects when cost-effective. 

One way for DOD to partially mitigate the challenges posed by higher- 
cost renewable electricity may be to purchase or generate nonelectric 
renewable energy, which DOD officials explained is more cost-effective 
than electric sources. Our analysis of DOD data indicates that a 
sizable proportion--26 percent--of DOD's total on-site domestic 
renewable energy production comes from nonelectric renewable energy 
sources. Ground source heat pumps are an example of nonelectric 
renewable technology; they provide nonelectric heating and cooling by 
using the constant temperature of the earth.[Footnote 40] These heat 
pumps are used in 5 of the 10 largest renewable energy projects on 
domestic DOD installations. According to DOE documentation, after 5 to 
10 years, installations that install these pumps would save enough 
money through the pumps' operation to repay the financing used to 
purchase and install them.[Footnote 41] In contrast, according to Navy 
officials, an installation that installs a renewable electric 
technology, such as a photovoltaic solar array, could have a 
substantially longer payback period--up to 35 years. However, according 
to the guidance and law that implement and establish the renewable 
energy goals, nonelectric renewable energy sources only qualified 
toward one of the three goals--the goal found in the 2007 Executive 
Order stating that an agency is to obtain an amount equal to half of 
the statutorily required renewable energy from sources placed into 
service after January 1, 1999. As discussed earlier in this report, the 
National Defense Authorization Act for Fiscal Year 2010 amends the 
language defining the goal in the 2007 Defense Authorization Act. For 
example, DOD will now be able to count nonelectric renewable energy 
toward the 2007 Defense Authorization Act goal. However, as discussed 
earlier in the report, OSD has provided neither a clear definition of 
key terms in the act nor a methodology for calculating progress toward 
the goal. As a result it is unclear what effect these changes will have 
on the amount of progress DOD will be able to claim toward meeting this 
goal. 

Another example of the challenge faced by DOD to implement cost- 
effective renewable energy projects involves the use of renewable 
energy generation as a source of backup power on DOD installations. 
According to DOD officials, it is particularly difficult to develop on- 
site renewable energy for backup power that is cost-effective because 
this use of renewable energy presents two technical challenges that 
make it expensive relative to conventional sources of backup power. 

* First, because certain renewable energy technologies,[Footnote 42] 
such as solar and wind, provide intermittent power, they require 
batteries to store the energy they produce or supplementary, 
conventional generation to ensure uninterrupted power. For example, 
because solar energy can only be generated during daylight hours, the 
average solar project operates approximately 20 percent of the hours in 
a year, according to industry standards. According to DOD officials, 
the battery technology needed to store a solar project's electricity is 
currently too expensive for most installations to install. At one 
installation we visited, batteries and supplementary conventional 
power--to be used during the night and on cloudy days--would be 
necessary if the installation used its solar array as source of backup 
power. However, according to installation officials, this additional 
equipment would cost an estimated $50 million, increasing the original 
cost of the project by about 50 percent. 

* Second, technical and safety challenges require special controls to 
integrate the on-site renewable energy generation with an 
installation's existing electrical infrastructure and operate the 
renewable technology safely during a power supply disruption. The 
technology required for coordinating an on-site generation project-- 
renewable or nonrenewable--with power delivered by the utility grid is 
costly. For example, at one installation we visited, DOD officials 
explained that using either of the two on-site renewable energy 
projects as a source of backup power would require upgrades to the 
installation's energy distribution network that would allow the 
installation to switch from grid-delivered power to on-site power. 
These officials told us that such upgrades would be prohibitively 
expensive. Further, because of safety concerns, an installation's 
interconnection agreement with its utility company requires that any on-
site generation be switched off during utility grid outages external to 
the installation, to ensure that external utility wires are not 
electrified during repairs. Only one of the five installations we 
visited had installed a renewable energy system that allowed part of 
the installation to operate during an off-installation utility outage. 
That installation designed its distribution system to enable a solar 
photovoltaic system to power certain buildings during power outages, 
but this system relies on natural gas backup, increasing the total 
project cost. 

DOD officials explained that because renewable energy has a relatively 
higher cost than conventional alternatives, it is less feasible as a 
source of backup power for domestic installations. As a result of the 
high costs associated with using renewable energy as a source of backup 
power, installations generally rely on diesel generators for backup 
power. Because DOD policy requires energy projects to be cost-effective 
over their life cycles, and renewable energy projects are generally 
more expensive than nonrenewable energy projects, renewable energy 
projects are rarely selected to provide backup generation on military 
installations. 

Alternative Financing Approaches Are Potentially Beneficial, but DOD 
Faces Three Key Obstacles in Implementing Them: 

According to DOD officials, entering into alternative financing 
approaches to develop renewable energy projects offers three main 
advantages to DOD. First, certain alternative financing approaches may 
be more cost-effective than DOD-funded and DOD-owned development of 
larger renewable energy projects. According to DOD officials, entering 
into alternative financing approaches to develop renewable energy 
projects may increase the likelihood of developing these projects on 
DOD land. This is because private developers have more options than DOD 
when it comes to obtaining project financing. For instance, developers 
can sell either the project's energy or renewable energy certificates 
to a third party, such as the local utility. However, DOD officials 
stated that DOD cannot make these types of sales. In addition, 
according to DOD officials, in some cases, private developers are able 
to accept renewable energy incentives, such as tax credits, that DOD 
cannot claim. 

The second advantage, according to DOD officials, is that the 
government can realize significant benefits when renewable energy 
projects are owned by private developers because the contractor may 
provide operation and maintenance of the equipment. For example, 
officials at an Air Force installation we visited explained that their 
maintenance staff does not have anyone with the expertise to operate 
and maintain the installation's renewable projects, and because 
contractors perform these functions, the installation does not need to 
hire additional staff to perform these tasks. 

Finally, although the services use up-front appropriated funding to 
develop smaller renewable energy projects, DOD officials explained that 
up-front appropriated funding may be a poor fit for developing the 
larger, higher-cost renewable projects that a key official says are 
necessary to achieve the renewable energy goals. According to GAO 
analysis of DOD project data, the services primarily use two types of 
up-front appropriated funding for smaller renewable projects: the 
Energy Conservation Investment Program, funded with a military 
construction account, and the operations and maintenance accounts. 
Because the total amount of annual Energy Conservation Investment 
Program funding is divided among the services, officials explained that 
they are limited in the amount of resources they can commit to a high- 
cost project from that account. According to DOD, OSD generally grants 
Energy Conservation Investment Program funding for potential renewable 
projects based on analysis of the project's life-cycle costs; the less 
an installation's energy costs, the less likely it may be to receive 
funding from that account. Because many DOD installations pay low rates 
for utility-delivered electricity, their proposals for Energy 
Conservation Investment Program funds to develop renewable projects are 
often not selected, increasing the challenge DOD faces in funding 
projects that meet the criteria for funding. 

According to DOD officials, operations and maintenance funding may also 
be difficult to use for the development of the large, higher-cost 
renewable projects that the services plan to develop to meet DOD's 
renewable energy goals. For instance, according to an Army official, 
the service considered building a 35-megawatt concentrated solar 
thermal plant. If completed, this project would be one of the largest 
on DOD land. According to this official, the Army estimated that the 
project would require an estimated $1.8 billion in appropriated 
funding. Because annual allocations of operations and maintenance 
funding are typically limited to $750,000 per project,[Footnote 43] 
these funds may not be sufficient to fund such large, costly projects. 

Although DOD has developed many small renewable energy projects with up-
front appropriated funding, it has relied on alternative financing 
approaches for its relatively few large renewable energy projects. For 
example, GAO analysis of DOD data indicates that while the majority--74 
percent--of renewable energy projects are funded using up-front 
appropriations, these projects only generate 13 percent of renewable 
energy produced on DOD land. In contrast, while only 18 percent of 
projects are funded using alternative financing, these projects 
generate the majority--86 percent--of renewable energy produced on DOD 
land. 

Because alternative financing can supplement up-front appropriated 
funding, the services have encouraged the use of such approaches, in 
which a private developer provides much or all of the funding required 
to develop an energy project that uses a renewable source on, or close 
to, DOD land. We determined that although these approaches can make 
more funding available for DOD renewable energy projects, DOD needs to 
overcome the following three key obstacles to implementing these 
approaches. 

* First, specific, local circumstances at installations can limit 
financing options for renewable energy projects and limit DOD's ability 
to develop a departmentwide strategy for financing projects. 

* Second, DOD has a relatively small community of officials with the 
necessary expertise to develop and manage these approaches. 

* Third, under DOE guidance, unless agencies meet two criteria, the 
agencies cannot count renewable energy from projects built at federal 
facilities or owned by a federal agency but located on private property 
toward the goal in the 2005 act goal of obtaining 3 percent of their 
electricity from renewable sources and the 2007 Executive Order goal to 
obtain an amount equal to half of the statutorily required renewable 
energy from sources placed into service after January 1, 1999.[Footnote 
44] The first criterion is that the renewable energy be produced and 
used on-site by a federal agency, or the renewable energy be produced 
by a project owned by a federal agency but installed on private 
property. The second criterion is that the agency retain or replace the 
renewable energy certificates associated with the energy produced. 
Thus, because alternative financing arrangements often require agencies 
such as DOD to permit the private developer to take possession of the 
renewable energy certificates, DOD would not be able to count the 
energy produced by alternatively financed projects toward the 2005 Act 
and 2007 Executive Order goals. 

Limitations Caused by Local Conditions at Installations: 

If installation officials wish to use an alternative financing 
approach, they could use one of several types, including Energy Savings 
Performance Contracts and Utility Energy Service Contracts.[Footnote 
45] However, in practice, the type of approach chosen by an 
installation can depend on the specific financing options locally 
available to that particular installation. For example, an official at 
an Air Force installation we visited told us that the installation has 
only been able to use Energy Savings Performance Contracts. This is 
because the local electric utility has not offered a Utility Energy 
Service Contract, as in this type of contract the utility usually earns 
a profit only after demonstrating that it has saved its customer money 
by decreasing the amount of money the customer spends on energy. 
Because the installation's electricity prices are already low, it would 
be difficult for the utility to further lower the installation's energy 
costs. While an installation official stated that the installation is 
interested in developing additional renewable energy projects, he 
explained that the installation has already developed the projects that 
are most cost-effective when using an Energy Savings Performance 
Contract. The official explained that if the installation decides to 
develop additional renewable energy projects, it may need to find a new 
contract and financing vehicle. 

The specific, local circumstances surrounding the financing of 
renewable energy projects have made the creation of a DOD-wide strategy 
for funding these projects challenging. According to DOD officials, the 
market conditions that may make a potential renewable energy project 
attractive to private developers are often location and time specific. 
For example, another Air Force installation we visited partnered with a 
developer that financed and built one of the nation's largest solar 
photovoltaic arrays on the installation's land. The installation was 
able to negotiate a contract for low electricity prices with the 
developer because the Air Force provided the developer with the 
project's renewable energy certificates. At the time of negotiation, 
this was possible because of the renewable energy certificates' high 
price in the state's electricity market. However, according to Navy 
officials, when the Navy subsequently attempted to replicate this 
project development model at an installation in the same state, the 
price of renewable energy certificates had decreased significantly, and 
the Navy's potential private sector partners declined the project 
because they did not want to retain the now-less-valuable renewable 
energy certificates. A key OSD official explained that because 
alternative financing approaches depend on these types of specific, 
local conditions, a departmentwide strategy for financing these 
projects is not likely to be feasible. Rather, according to the OSD 
official, the more feasible approach would be to have an installation's 
energy management staff--experts on these local circumstances--develop 
the approaches. 

Shortage of Staff with Expertise for Developing Alternative Financing 
Approaches: 

According to DOD officials with whom we spoke, the department has a 
shortage of officials with the necessary expertise to develop and 
manage alternative financing approaches. GAO has previously reported 
that if an agency is to effectively and efficiently implement these 
types of approaches, agency officials with adequate contracting 
expertise are critical to the success of the agency's efforts and to 
protecting the government's interest in regard to government financial 
resources committed to these approaches.[Footnote 46] 

During our review, we found that DOD installations have varying human 
capital resources and expertise for developing alternative financing 
approaches. For example, according to Army officials, trained and 
qualified energy managers are in "short supply" at Army installations, 
most of the Army's contracting officers are generalists and have not 
been trained in contracting for renewable energy projects, and the Army 
also lacks personnel sufficiently trained in the legal requirements for 
authorizing the development of renewable energy projects. Officials 
from the Navy had similar concerns, explaining that when it comes 
Energy Savings Performance Contracts, the Navy does not have the 
expertise to define its own contract requirements or compare the 
renewable energy project proposals to determine which of the potential 
contractors to hire. Air Force officials stated that because of the 
shortage of trained energy managers in the Air Force, most of the 
personnel serving in this capacity have an installation management 
workload that is two or three times larger than it should be. The 
officials explained that when personnel have workloads this large, they 
will usually not have enough time to fully execute their multiple 
responsibilities. 

Despite DOD guidance requiring that all installations have trained 
energy management personnel, we have previously reported that energy 
managers at some DOD installations lacked the expertise required to 
negotiate contracts for complex alternative financing approaches, and 
DOD has not adequately trained these managers in negotiating these 
contracts.[Footnote 47] In the course of our review, a shortage of 
trained energy managers was evident at some of the installations we 
visited. For example, some energy managers were not aware of certain 
strategies and contracting methods for renewable energy project 
development because they had not received relevant training. At one 
installation we visited, the energy management staff were largely 
unfamiliar with alternative financing because they had not received 
training on the subject. According to service officials, energy 
managers are sometimes "dual hatted," serving as both the energy 
manager and the utility manager, giving an energy manager two complex 
jobs to do at the same time. At another installation we visited, the 
utility manager told us that because he was dual hatted, he did not 
have time to develop additional alternative financing approaches. Army 
officials told us that it was increasingly difficult to recruit and 
retain qualified energy managers because of increasing competition with 
other government entities and private sector employers. To address this 
challenge, service officials said that they plan to hire additional 
staff to support efforts to meet the renewable energy goals. However, 
this hiring is not expected to be completed until fiscal year 2013, at 
the earliest. 

As we explained earlier in this report, DOD expects to rely 
increasingly on alternative financing approaches to meet the renewable 
energy goals. For DOD to effectively implement these approaches, the 
department will require energy management staff who have the relevant 
expertise for implementing the approaches. However, because we found 
that the services and their installations' staff often lack expertise 
in developing alternative financing approaches, DOD may by limited in 
its ability both to use these approaches to develop renewable energy 
projects and to do so in a manner that adequately protects the 
government's financial resources committed to these approaches. 

Much of the Energy Generated May Not Qualify for Meeting the Renewable 
Energy Goals: 

According to DOD officials, in most cases, private developers are 
generally interested in partnering with DOD in order to sell the 
projects' unbundled energy or associated renewable energy certificates 
to a third party. These officials explained that the generally accepted 
business model for these types of approaches includes a renewable 
energy resource on or near DOD land that is harnessed by a project 
financed, built, and operated by third-party developer that then sells 
the unbundled energy to DOD or other customers and typically retains 
ownership of the project's renewable energy certificates.[Footnote 48] 

However, under such approaches, DOD often would neither consume the 
renewable energy nor retain the renewable energy certificates. When DOD 
does not consume the renewable energy, a developer would provide some 
other form of compensation for the use of the renewable resource on DOD 
land. For example, in the largest renewable energy project on DOD land, 
DOD does not consume the energy but instead receives financial 
compensation based on the sale of the project's energy. If DOD neither 
consumes the renewable energy nor retains the renewable energy 
certificates, a serious challenge may be posed to DOD's ability to meet 
the renewable energy goals. That occurs because, according to DOE's 
guidance on implementation of the 2005 Act and the 2007 Executive 
Order--guidance designed to preserve the integrity of the renewable 
energy certificate market--for an agency to count a project's renewable 
energy toward these goals, the project must meet two requirements. 
First, the renewable energy must be produced and used on-site at a 
federal agency or the renewable energy must be produced by a project 
owned by a federal agency but installed on private property. Second, 
the agency must retain or replace the renewable energy certificates 
associated with the energy produced. In addition, as we discussed 
earlier, unlike DOE, DOD has not issued guidance that provides a clear 
explanation of its methodology for calculating progress toward the 
fiscal year 2025 goal under the 2007 Defense Authorization Act, 
including DOD's definition of "consumption" and the treatment of 
renewable energy certificates in that context. 

When DOD consumes the unbundled energy from a project built at a 
federal facility and does not retain the certificate--as is the case 
with one of the largest renewable energy projects on DOD land--DOD has 
two options: to not count the energy toward the renewable energy goals 
or to obtain new renewable energy certificates to replace those 
retained by the private developer.[Footnote 49] If DOD plans to count 
the energy toward the goals, it would need to choose the second option, 
since under DOE guidance, DOD would need to consume the energy and own 
renewable energy certificates in order to count the energy toward the 
renewable energy goals. If DOD chose to purchase replacement renewable 
energy certificates, then it would generally pay a higher price for the 
energy consumed because DOD would need to purchase two products--the 
renewable energy and the replacement certificates. In short, while 
alternative financing approaches supplement DOD's appropriated funding 
and cost DOD less up front, if DOD intends to count projects' energy 
toward the renewable energy goals,[Footnote 50] DOD generally faces 
additional costs to purchase replacement certificates. 

OSD Lacks a Long-Term, Departmentwide Plan to Meet the Renewable Energy 
Goals: 

OSD Has Not Developed a Departmentwide, Long-Term Plan to Meet the 
Renewable Energy Goals: 

Previous GAO work has shown that long-term plans can help agencies 
ensure that they meet their goals by identifying potential challenges 
agencies face in meeting their goals, coordinating the actions of 
agencies' components in pursuit of the goals, laying out performance 
measures for achieving those goals, aligning agency activities and 
resources to attain the goals, and providing the data agencies need to 
accurately assess progress against these performance measures. 

Although DOD guidance states that offices within OSD are responsible 
for providing guidance and oversight for meeting DOD's energy goals, 
OSD has not developed a plan for meeting the renewable energy goals. 
DOD's draft energy security strategy that OSD was developing at the 
time of our review does address some issues relevant to DOD 
installations' use of renewable energy, according to an official 
representing OSD. For instance, the official explained that the draft 
strategy recognizes that renewable energy technologies tend to be more 
costly than nonrenewable energy generation. However, the draft strategy 
focuses on energy security without specifically addressing the 
renewable energy goals or presenting a plan to achieve them. For 
example, the draft strategy does not specify how DOD is to coordinate 
the services' renewable energy activities, according to officials from 
OSD. 

Because OSD has not developed a long-term, departmentwide plan to meet 
DOD's renewable energy goals, DOD instead relies on OSD's current 
approach to managing the services' renewable energy efforts as the 
means for achieving the goals. A senior OSD official who plays a key 
role in OSD's renewable energy activities explained that under OSD's 
current approach, each of the services plans, budgets, and implements 
an individual renewable energy effort. He explained that by following 
this approach, DOD intends to achieve--or nearly achieve--the renewable 
energy goals in most years. However, we found four reasons that this 
approach may not be effective in helping DOD meet the renewable energy 
goals. Specifically, the approach (1) does not identify key challenges 
to meeting the goals or contain solutions for mitigating those 
challenges; (2) relies on the services to develop individual approaches 
to meeting the goals, which may not be effective; (3) lacks accurate 
performance measures with which DOD could assess progress toward the 
goals; and (4) may not be effectively aligning DOD's resources toward 
achieving the goals. 

First, OSD did not identify the key challenges we discussed earlier in 
this report. Specifically, OSD did not identify as a key challenge its 
dependence on renewable energy certificates--a commodity with 
fluctuating prices--to meet the renewable goals. When the price of 
renewable energy certificates increased significantly from fiscal year 
2007 to fiscal year 2008, DOD purchased fewer of these certificates, 
and DOD missed meeting the 2005 Act goal of obtaining 3 percent of 
electricity from renewable sources in fiscal year 2008. When this 
occurred, OSD had neither a plan identifying this key challenge nor a 
solution for mitigating the challenge, such as relying more on sources 
of renewable energy with more stable pricing. For instance, according 
to an analysis by DOE's Pacific Northwest National Laboratory, 
purchasing renewable energy from a wind turbine project is generally 
less risky than purchasing renewable energy certificates in a volatile 
market.[Footnote 51] Because OSD lacked such a plan or solution, DOD 
was unprepared to compensate for the decrease in the amount of 
renewable energy that it claimed toward the goals when it purchased 
fewer certificates. 

Second, we found that if the services separately pursue their own 
courses with regard to renewable energy efforts, their individual 
approaches may not be effective in helping DOD meet its renewable 
energy goals. While the three services are developing renewable energy 
plans, their plans lack key elements. For example, the Air Force's plan 
lacks accurate cost estimates and complete data on how much funding has 
been allocated to renewable energy projects. In addition, the Army's 
plan is preliminary in nature and cannot yet be considered complete. 
For instance, according to its plan and Army officials, the Army still 
needs to develop implementation strategies, establish and coordinate 
performance measures, and begin the "significant job" of executing the 
plan. Finally, the Navy's plan is also preliminary; does not explain 
how the Navy will align its organizations' renewable activities to 
attain the goals; does not discuss what type, or amount, of resources 
the Navy will commit to these activities; and does not address the 
Navy's need for better management of its energy data. 

Third, OSD's current approach lacks accurate performance measures with 
which to assess DOD's progress toward meeting the 2007 Defense 
Authorization Act goal. GAO has previously reported that by specifying 
performance measures, agencies are better able to monitor progress made 
and hence better able to achieve the goals. While OSD has established 
performance measures to assess DOD's progress toward meeting the 2007 
Defense Authorization Act goal, those performance measures are based on 
inaccurate calculations. Specifically, according to a key official, OSD 
assumed that DOD's renewable energy consumption would increase by 
roughly 1 percent annually. In its fiscal year 2010 Budget Request 
Summary Justification (published in May 2009), DOD included renewable 
energy consumption targets for fiscal years 2009 and 2010, based on 
this assumption. However, as we discussed earlier in the report, DOD 
overstated its fiscal years 2007 and 2008 renewable electricity 
consumption by incorrectly including nonelectric renewable energy 
toward this goal. Because DOD's renewable energy consumption targets 
for fiscal years 2009 and 2010 were based on these previous, inaccurate 
calculations, the fiscal years 2009 and 2010 targets were also 
overstated and hence similarly unlikely to be achieved. 

As discussed earlier in this report, the National Defense Authorization 
Act for Fiscal Year 2010 amends the language defining the goal in the 
2007 Defense Authorization Act. However, at the time DOD published the 
targets, the original requirements of the 2007 Defense Authorization 
Act goal were still in effect. This means that--regardless of the 
subsequent changes to the 2007 Defense Authorization Act goal--DOD's 
renewable energy consumption targets for fiscal years 2009 and 2010 
were based on calculations that were inaccurate at the time DOD 
published the targets. 

Finally, the services may not be effectively aligning DOD resources in 
pursuit of the renewable energy goals. According to DOD Instruction 
4170.11, offices within OSD are responsible for providing oversight for 
the achievement of the renewable energy goals. However, OSD is not 
coordinating the services' allocation of resources in pursuit of the 
DOD-wide renewable energy goals, as evidenced by the fact that the 
services' cost estimates include projects that generate renewable 
energy that would not count toward at least two of the renewable energy 
goals. Specifically, officials from each of the services explained that 
their estimates on the total cost of meeting the renewable energy goals 
are based on the assumption that at least a portion of the renewable 
energy will be generated through alternative financing approaches on 
DOD land. However, if the private developers sell the associated 
renewable energy certificates to third parties, and DOD does not 
replace the certificates, DOD cannot count the energy toward the goals 
in the 2005 Act or 2007 Executive Order. Further, as discussed above, 
in the absence of additional guidance from OSD, it is unclear how the 
services are to properly count production of unbundled energy toward 
the 2007 Defense Authorization Act goal. If OSD's lack of oversight 
continues, the services' cost estimates may continue to include 
projects whose energy would not count toward these two goals. 

Lacking a coordinated, DOD-wide plan for achieving the renewable energy 
goals, OSD has instead relied on an approach that has not identified 
key challenges or potential solutions, established accurate performance 
measures, or aligned DOD's resources in pursuit of the goals. This 
means that OSD has relied on the services to develop individual 
approaches. As a result, OSD has relied on the services' incomplete 
plans for achieving these goals, and lacks a coordinated DOD-wide plan 
to meet the challenging goal contained in the 2007 Defense 
Authorization Act. 

OSD Lacks Visibility on Renewable Energy Projects, and Services Lack 
Adequate Information Systems for Tracking Renewable Energy Use: 

GAO has previously reported that strategic information management 
provides agencies with the data they need to improve program 
effectiveness and ensure consistent results. However, OSD does not have 
a system in place to track individual renewable energy projects or key 
information about these projects. Thus, while OSD is responsible for 
coordinating the services' renewable energy activities in pursuit of 
the goals, it does not have adequate visibility over the services' 
renewable energy efforts. For example, at the time of our review, OSD 
had neither a list of the renewable energy generation projects 
operating in DOD installations nor key information on the projects, 
such as their location, the type or amount of energy they produce, or 
the amount of funding required to develop the projects. In order to 
complete our review, we gathered various data on these types of 
projects from DOD to develop our own data set. According to a key OSD 
official responsible for DOD's energy management, the data set we 
created was the first of its kind. 

Although DOD policy requires all of the services to collect and manage 
data on the procurement and use of energy on their installations, at 
the time of our review, two of the three had not developed adequate 
information systems for monitoring or reporting their use of renewable 
energy. Specifically, the software that these two services use to 
manage their energy data does not reflect the sources of renewable 
energy that are eligible to be counted toward the renewable energy 
goals. For example, at two installations we visited, installation 
officials explained that the software they use to report their 
renewable energy production and consumption can only record the use of 
one category of energy: wind. However, both installations used forms of 
renewable energy other than wind. As a result, one installation had to 
use complex calculations in a lengthy process of conversion, 
transforming its data from these other technologies into units that it 
could report as wind energy. According to service officials, the Air 
Force and Navy were in the process of addressing several of the issues 
that we have identified in this report. For instance, an Air Force 
official told us that the Air Force is working on updating its system 
for managing energy information. However, the Air Force official was 
unable to provide us with a date by which the service was planning to 
complete the update of its energy management software. 

As a result of the lack of adequate data management in the services and 
OSD, DOD lacks accurate, complete, and consistent data for effectively 
managing its renewable energy resources in pursuit of the renewable 
energy goals. Lacking such data, OSD cannot effectively coordinate 
service efforts in pursuit of the renewable energy goals, and DOD may 
not be able to accurately assess its performance against the goals. 

Conclusions: 

DOD met both the 2005 Act and 2007 Executive Order goals in fiscal year 
2007 and met the 2007 Executive Order goal in fiscal year 2008. 
However, in that same fiscal year, it missed the 2005 Act goal, and in 
both fiscal years overstated its progress toward the 2007 Defense 
Authorization Act goal. Furthermore, DOD does not have all the elements 
in place to enable it to maximize its progress toward meeting these 
goals. First, because the services lack OSD guidance that provides a 
methodology for calculating progress toward the 2007 Defense 
Authorization Act goal and OSD's legal rationale for how its accounting 
method is consistent with the language of the statute, when the 
services calculate their progress toward the 2007 Defense Authorization 
Act, they cannot be sure whether including electricity generated on DOD 
lands but not consumed by DOD is consistent with the act. Such guidance 
would better enable OSD to both accurately measure DOD's progress 
toward the goal and accurately report on this progress to Congress. 
Second, OSD lacks guidance that could assist installation officials in 
developing accommodations to resolve potential incompatibilities 
between renewable energy projects and an installation's primary 
mission. Guidance would assist DOD in its development of renewable 
energy projects on and around DOD installations. Third, DOD lacks a 
sufficient cadre of qualified officials trained to effectively 
implement alternative financing approaches. With a sufficient number of 
officials qualified to effectively implement these approaches, DOD 
would improve its opportunities for developing renewable energy 
projects while protecting the government's financial resources 
committed to these projects. Fourth, OSD lacks a long-term, DOD-wide 
plan containing strategies for coordinating the services' renewable 
energy activities, establishing accurate performance measures for 
achieving the renewable energy goals, and effectively aligning DOD 
resources in pursuit of these goals. Such a plan would strengthen DOD's 
ability to meet future annual goals for renewable energy consumption. 
It is important to note that the fiscal year 2010 Defense Authorization 
Act amended the 2007 Authorization Act. However, because OSD lacks a 
clear methodology for calculating progress towards the 2007 Act's goal, 
determining the effect of the amendments on the amount of renewable 
energy the department can claim toward that goal is uncertain. 
Moreover, there are other key challenges we have identified in this 
report. Thus, a long-term, DOD-wide plan would still strengthen DOD's 
ability to meet these goals. Fifth, OSD lacks a system for tracking 
individual renewable energy projects DOD-wide, and two of the three 
services do not have adequate data systems for monitoring or reporting 
their use of renewable energy. With an OSD system that tracks projects 
across DOD and service systems that adequately monitor and report data 
on their renewable energy use, DOD would be better able to effectively 
coordinate service efforts in pursuit of the renewable energy goals, 
monitor and report service use of renewable energy, and accurately 
assess DOD's performance against the goals. 

Recommendations for Executive Action: 

To enhance DOD's ability to achieve the renewable energy goals 
consistent with the need to maximize cost-effectiveness, follow 
existing federal guidance, and increase oversight of DOD's renewable 
energy activities, we recommend that the Secretary of Defense direct 
the Under Secretary of Defense (Acquisition, Technology and Logistics) 
in conjunction with the secretaries of the services to take the 
following five actions: 

* Develop and issue guidance specifying how to accurately report DOD's 
annual progress toward the 2007 Defense Authorization Act goal, as 
amended by fiscal year 2010 Defense Authorization Act. Among other 
things, this guidance should clearly define how the services are to 
apply the terms "produce" and "consume" to their implementation of the 
goal and how OSD is to apply the terms to its reporting of DOD's 
progress toward the goal. 

* Develop and issue guidance to assist the services in determining how 
to balance the use of land for renewable projects with their 
installations' primary missions, thereby assisting installation 
commanders and potential investors in knowing which land on the 
installations may be available for renewable energy projects, 
consistent with the installations' mission capabilities. 

* Facilitate the successful implementation of alternative financing 
approaches and help ensure that DOD can maximize its opportunities for 
completing cost-effective renewable energy projects by (1) determining 
the adequate number of energy managers, contracting officials, and 
other officials with the necessary expertise to administer these 
complex transactions and (2) determining and providing the appropriate 
level of training to these employees. 

* Develop a long-term, DOD-wide plan to assist DOD in effectively and 
efficiently meeting the renewable energy goals over the long term. At a 
minimum, this plan should identify key challenges--such as the higher 
price of renewable energy compared with conventional energy and 
volatility in renewable energy certificate markets--that DOD faces in 
meeting the goals and ways to mitigate those challenges. The plan 
should also coordinate the services' renewable energy activities, 
contain realistic performance measures for DOD and the services so that 
OSD can accurately assess annual progress, and align DOD's resources in 
pursuit of the renewable energy goals. 

* Develop information systems or processes that will enable OSD to have 
visibility over DOD renewable energy projects, allow the services to 
monitor and coordinate the services' consumption of renewable energy, 
and guide DOD toward achievement of the renewable energy goals. 

Agency Comments and Our Evaluation: 

In written comments on a draft of this report, DOD concurred with our 
recommendations to develop (1) guidance on reporting progress toward 
the goal to obtain 25 percent of its facilities' energy from renewable 
sources by 2025, (2) guidance on balancing installations' renewable 
energy goals with the installations' missions, (3) a plan to meet 
renewable energy goals, and (4) information systems improving 
visibility over service progress toward the renewable energy goals. DOD 
partially concurred with our recommendation that OSD work with the 
secretaries of the services to facilitate the successful implementation 
of alternative financing approaches and help ensure that DOD maximizes 
opportunities for completing cost-effective renewable energy projects 
by (1) determining the adequate number of energy managers, contracting 
officials, and other officials with the necessary expertise to 
administer these complex transactions and (2) determining and providing 
the appropriate level of training to these officials. In its comments, 
DOD acknowledged that sufficient personnel with appropriate skills are 
necessary to execute third-party finance actions. However, DOD also 
stated that implementing the recommendation is the services' 
responsibility because DOD Instruction 4170.11 requires the services to 
designate and assign adequate staff to satisfy statutory energy 
management mandates, and manage the number and skills of these 
officials. While we recognize that the instruction specifies that the 
military services are to designate and assign energy management staff 
to their facilities, our report clearly stated that the Army, Navy, and 
Air Force had not fully implemented the instruction since each of these 
services continue to experience shortages of qualified energy 
officials. Moreover, the instruction assigns to an office within OSD 
the responsibility of conducting oversight of the services' 
implementation of the instruction, and OSD's activities to date have 
similarly not led to sufficient numbers of trained energy officials at 
the installations. As a result, we continue to believe that our 
recommendation has merit, and consequently we reiterate the 
recommendation. DOD's comments are reprinted in appendix II of this 
report. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to interested congressional committees; the Secretaries of Defense, 
Energy, the Army, the Navy, and the Air Force; the Commandant of the 
Marine Corps; and the Director, Office of Management and Budget. The 
report also will be available at no charge on GAO's Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any questions concerning this report, please 
contact Mark Gaffigan at (202) 512-3168 or gaffiganm@gao.gov or Brian 
J. Lepore at (202) 512-4523 or leporeb@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in appendix III. 

Signed by: 

Mark Gaffigan, Director: 
Natural Resources and Environment: 

Signed by: 

Brian J. Lepore, Director: 
Defense Capabilities and Management: 

[End of section] 

Appendix I: Scope and Methodology: 

Our objectives were to (1) determine whether the Department of Defense 
(DOD) met three key goals for consuming renewable energy in fiscal 
years 2007 and 2008; (2) identify the challenges that may affect DOD's 
ability to meet the renewable energy goals; and (3) assess DOD's plans 
to meet the renewable energy goals. 

To determine whether DOD met the Energy Policy Act of 2005 (the 2005 
Act) and Executive Order 13423 (the 2007 Executive Order) goals for 
consumption of renewable energy in its facilities in fiscal years 2007 
and 2008, we analyzed data on DOD's performance toward these goals from 
the department's annual energy management reports for fiscal years 2007 
and 2008. These reports were submitted by DOD to the Department of 
Energy (DOE) for use in DOE's Annual Report to Congress on Federal 
Government Energy Management and Conservation Programs. For fiscal 
years 2007 and 2008, we considered DOD to have met the 2005 Act goal if 
it obtained at least 3 percent of the electricity it consumed from 
renewable sources as defined in section 203 of the act, and considered 
DOD to have met the 2007 Executive Order goal if it obtained equal to 
half (or 1.5 percent) of this energy from new renewable sources as 
defined in section 2(b) of the executive order. In addition, we met 
with officials from DOE's Federal Energy Management Program--which 
prepared guidance for agencies to follow when meeting the goals--to 
gain their perspective on how progress toward the goals is calculated. 
We also met with officials from the Office of the Under Secretary of 
Defense (Acquisition, Technology and Logistics), the Facility Energy 
office of the Office of the Deputy Under Secretary of Defense 
(Installations and Environment), and each of the military services to 
discuss how DOD and the services calculated their progress toward the 
goals. To determine DOD's progress toward the National Defense 
Authorization Act for Fiscal Year 2007 goal for consumption of 
renewable energy, we reviewed DOD's reported progress toward the goal 
included in the fiscal years 2007 and 2008 annual energy management 
reports and data provided by the services to the Facility Energy office 
of the Deputy Under Secretary of Defense (Installations and 
Environment) for preparation of the report. We also reviewed the legal 
language that established the goal and discussed our interpretation of 
this language with officials in the Office of the Secretary of Defense 
(OSD) General Counsel's office. 

The data used by DOD to determine its progress toward the three goals 
are assembled using a data collection instrument that is separate from 
the information systems used by the military services to manage energy 
data. This data collection instrument is an electronic template created 
by DOE's Federal Energy Management Program and disseminated to the 
federal agencies to use to assemble data for their annual energy 
management reports. To determine the reliability of the data used by 
DOD to report its progress toward the three goals, we interviewed 
officials at each level of data collection, aggregation, and review: 
those responsible for preparing the data collection tool sent to energy 
managers at the military facilities; for entering this information into 
data collection tools at the facility level; for summarizing it and 
checking it for accuracy at the headquarters level for each of the 
services; and for combining the services' data into a departmentwide 
total and assessing the accuracy of this total. We also obtained the 
data submitted by the services to OSD, and compared the two data sets 
for completeness and accuracy. We did not find discrepancies between 
the data submitted by the services to OSD and the department's annual 
energy management report data. We determined that these data were 
sufficiently reliable for our purpose, which was to convey the progress 
DOD made toward the three key goals for consumption of renewable energy 
in its facilities. 

To identify the challenges that affect DOD's ability to meet these 
goals in the future, we met with officials at the Facility Energy 
office of the Deputy Under Secretary of Defense (Installations and 
Environment), each of the military services' headquarters, and offices 
within each military service with responsibility for renewable energy 
projects, and obtained and analyzed relevant documentation from these 
officials. Using a data collection instrument, we also collected data 
on the location, size, type, and financing of renewable energy projects 
at DOD. We used this data collection instrument because DOD does not 
have a central, comprehensive list of renewable energy projects. We 
sent the instrument to OSD with instructions in December 2008, and OSD 
sent the instrument to each of the services for each facility with 
relevant projects to complete the instrument. The initial data 
collection instrument, which we received from OSD in February 2009, 
accounted for all renewable energy projects from relevant DOD 
facilities, but was incomplete in that information on funding 
mechanisms was not provided for all projects. We made a follow-up 
request to OSD to clarify the missing elements of the data. These 
elements were incorporated into the original response from OSD. To 
determine the reliability of these data, we checked them against 
previously identified information about the projects and, when 
inconsistencies were found, discussed them with OSD and the services 
and made corrections when relevant. We determined these data were 
sufficiently reliable for our purpose, which was to establish how much 
renewable energy DOD produced from electric and nonelectric renewable 
energy and from projects financed through each type of financing 
approach. We also visited five military facilities to determine the 
practical effect of the challenges to meeting renewable energy goals on 
the facilities. We selected these installations because they represent 
each of the military services, have different types and sizes of 
renewable energy projects, and operate in three different states. At 
these locations, we interviewed the facility energy managers and other 
relevant officials; confirmed data we had received about the 
facilities' renewable energy projects; viewed renewable energy projects 
at the facilities; and obtained relevant documents, including contracts 
for renewable energy projects, energy reports generated from on-site 
data management systems, and utility invoices. We systematically 
reviewed these interviews with OSD, military service, and facility 
officials to determine what primary challenges DOD faces and the tools 
the department uses to meet the renewable energy goals. 

For our review of DOD's plans to meet these goals in the future, we 
reviewed planning documents obtained from OSD and military service 
officials as well as planning documents from DOD officials that 
summarized DOD's limited plans to achieve the renewable energy goals 
from fiscal year 2010 through fiscal year 2025. We also met with DOD 
officials to discuss efforts to develop a departmentwide, long-term 
plan to meet the renewable energy goals. We systematically reviewed 
these documents and interviews to determine whether DOD's plans 
contained key elements as identified by our past work.[Footnote 52] To 
assess the information systems used by the military services to manage 
their energy data, we met with officials at each of the military 
service headquarters with responsibility for managing these systems, 
and obtained and analyzed relevant documentation about these systems. 
We also asked energy managers at the military facilities we visited 
about their use of these systems. We determined that there are problems 
associated with the systems used by two of the services. Specifically, 
the Navy's central Web-based data system to manage energy data has been 
unavailable since December 2007, and the Air Force's data system is 
unable to manage renewable energy data, requiring the use of 
spreadsheets directly e-mailed from installations to Air Force 
headquarters. We discuss these problems in more detail in our findings. 

In addition to audit work described above, we also met with renewable 
energy experts at DOE's National Laboratories, selected nongovernmental 
organizations--including the National Association of Regulatory Utility 
Commissioners and the Interstate Renewable Energy Council--and the 
public utility commissions of the states where we conducted site 
visits. We also participated in DOE webcast training on alternative 
financing mechanisms for renewable energy projects and attended 
GovEnergy, an energy training workshop and exposition for federal 
agencies. 

We conducted this performance audit from October 2008 to November 2009 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
Acquisition, Technology, and Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000: 

December 8, 2009: 

Mr. Brian J. Lepore: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington; DC 20548: 

Dear Mr. Lenore: 

This is the Department of Defense (DoD) response to the GAO draft 
report GAO-10-104. Defense Infrastructure: DoD Needs To Take Actions To 
Address Challenges In Meeting Federal Renewable Energy Goals," dated 
November 5, 2009 (GAO Code 351274). Detailed comments on the report 
recommendations arc enclosed. 

The Department appreciates the opportunity to respond to your draft 
report and looks forward to working with you. 

Sincerely, 

Signed by: 

Brian J. Lally: 
Director: 
Facility Energy and Utilities Privatization: 

Enclosure: As stated: 

[End of letter] 

GAO Draft Report — Dated November 5, 2009: 
GAO Code 351274/GAO-10-104: 

"Defense Infrastructure: DoD Needs To Take Actions To Address 
Challenges In Meeting Federal Renewable Energy Goals" 

Department Of Defense Comments To The Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics) in conjunction with the Secretaries of the Services to 
develop and issue guidance specifying how to accurately report DoD's 
annual progress toward the 2007 Defense Authorization Act goal of 
obtaining not less than 25 percent of DoD's total electricity 
consumption during FY 2025. and each fiscal year (hereafter, from 
renewable energy sources. 

Among other things. this guidance should clearly define how the 
Services are to apply the terms "produce" and "consume" to their 
implementation of the goal and how OSD is to apply the terms to its 
reporting of DoD's progress toward the goal. 

DOD Response: Concur. The Department recognizes the need the clarify 
the accounting differences between renewable projects that meet the 
2005 Energy Policy Act goals as adjusted Executive Order 13423 and the 
renewable energy goals contained in the 2007 National Defense 
Authorization Act as modified by the 2010 National Defense 
Authorization Act. This will be addressed in the FY 2010 Annual Energy 
Management Report. 

Recommendation 2: The CIAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics) in conjunction with the Secretaries of the Services to 
develop and issue guidance to assist the Services in determining how to 
balance the use of land for renewable projects with their installations 
primary missions, thereby assisting installation commanders and 
potential investors in knowing which land on the installations may he 
available for renewable energy projects, consistent with the 
installations' mission requirements. 

DOD Response: Concur. The Department agrees that it is necessary to 
implement the renewable energy goals contained in the 2005 Energy 
Policy Act and 2007 National Defense Authorization Act in a manner that 
integrates renewable energy projects with installation missions. This 
guidance will be overarching, yet sufficiently flexible to allow
each installation to manage its own specific renewable energy 
opportunities and mission requirements. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition. Technology and 
Logistics) in conjunction with the Secretaries of the Services to 
facilitate the successful implementation of alternative financing 
approaches and help ensure that DoD can maximize its opportunities for 
completing cost-effective renewable energy projects by: (I) determining 
the adequate number of energy managers, contracting officials, and 
other officials with the necessary expertise to administer these 
complex transactions and (2) determining and providing the appropriate 
level of training to these employees. 

DOD Response: Partially concur. The Department agrees that sufficient 
personnel with appropriate skill sets arc necessary to execute third-
party finance actions. In DoD Instruction 4170.11 (9 Sep 2009), the 
Department requires its components to designate and assign adequate 
staff to satisfy statutory energy management mandates. Determining the 
specific quantity and skill set of the staff is a component. 
responsibility. 

Recommendation 4: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics) in conjunction with the Secretaries of the Services to 
develop a long-term, DoD-wide plan to assist the Department in 
effectively and efficiently meeting the renewable energy goals over the 
long term. At a minimum, this plan should identify key challenges — 
such as the higher price of renewable energy compared with non-
renewable energy and volatility in renewable energy certificate 
markets — that DoD faces in meeting the goals and ways to mitigate 
those challenges. The plan should also coordinate the Services' 
renewable energy activities: contain realistic performance measures for 
DoD and the Services do that OSD can accurately assess annual progress: 
and align DoD's resources in pursuit of the renewable energy goals. 

DOD Response: Concur. The Department believes that a single energy 
security plan (which would integrate renewable energy) can satisfy 
recommendations 2 and 4. 

Recommendation 5: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics) in conjunction with the Secretaries of the Services to 
develop information systems or processes that will enable OSD to have 
visibility over DoD renewable energy projects, allow the Services to 
effectively monitor their production of renewable energy, coordinate 
the Services' consumption of renewable energy, and guide DoD toward 
achievement of the renewable energy goals. 

DOD Response: Concur. The Department will identify the required 
personnel and funding resources to accomplish this goal over the long 
term. 

[End of section] 

Appendix III: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Mark Gaffigan, (202) 512-3168 or gaffiganm@gao.gov Brian J. Lepore, 
(202) 512-4523 or leporeb@gao.gov: 

Acknowledgments: 

In addition to the contacts named above, Terrel Dorn, Director; Susan 
Irving, Director; Carol Henn, Assistant Director; Ernie Hazera, 
Assistant Director; Harold Reich, Assistant Director; John Van Schaik, 
Assistant General Counsel; Leslie Bharadwaja; Kenneth Cooper; Pamela 
Davidson; Cynthia Grant; Sarah Jones; Foster Kerrison; Ron La Due Lake; 
Katherine Lenane; Brian Mullins; Carol Shulman; Vasiliki 
Theodoropoulos; Jason Trentacoste; Christopher Turner; Cheryl Weissman; 
Sherie Walker; Michael Willems; Ignacio Yanes; and Kimberly Young made 
key contributions to this report. 

[End of section] 

Related GAO Products: 

Defense Critical Infrastructure: Actions Needed to Improve the 
Consistency, Reliability, and Usefulness of DOD's Tier 1 Task Critical 
Asset List. [hyperlink, http://www.gao.gov/products/GAO-09-740R]. 
Washington, D.C.: July 17, 2009. 

Federal Energy Management: Addressing Challenges through Better Plans 
and Clarifying Greenhouse Gas Emission Measure Will Help Meet Long-term 
Goals for Buildings. [hyperlink, 
http://www.gao.gov/products/GAO-08-977]. Washington, D.C.: September 
30, 2008. 

Defense Management: Overarching Organizational Framework Needed to 
Guide and Oversee Energy Reduction Efforts for Military Operations. 
[hyperlink, http://www.gao.gov/products/GAO-08-426]. Washington, D.C.: 
March 13, 2008. 

Advanced Energy Technologies: Budget Trends and Challenges for DOE's 
Energy R&D Program. [hyperlink, 
http://www.gao.gov/products/GAO-08-556T]. Washington, D.C.: March 5, 
2008. 

Transmission Lines: Issues Associated with High-Voltage Direct-Current 
Transmission Lines along Transportation Rights of Way. [hyperlink, 
http://www.gao.gov/products/GAO-08-347R]. Washington, D.C.: February 1, 
2008. 

Advanced Energy Technologies: Key Challenges to Their Development and 
Deployment. [hyperlink, http://www.gao.gov/products/GAO-07-550T]. 
Washington, D.C.: February 28, 2007. 

Department of Energy: Key Challenges Remain for Developing and 
Deploying Advanced Energy Technologies to Meet Future Needs. 
[hyperlink, http://www.gao.gov/products/GAO-07-106]. Washington, D.C.: 
December 20, 2006. 

Renewable Energy: Increased Geothermal Development Will Depend on 
Overcoming Many Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-06-629]. Washington, D.C.: May 24, 
2006. 

Energy Savings: Performance Contracts Offer Benefits, but Vigilance Is 
Needed to Protect Government Interests. [hyperlink, 
http://www.gao.gov/products/GAO-05-340]. Washington, D.C.: June 22, 
2005. 

National Energy Policy: Inventory of Major Federal Energy Programs and 
Status of Policy Recommendations. [hyperlink, 
http://www.gao.gov/products/GAO-05-379]. Washington, D.C.: June 10, 
2005. 

Meeting Energy Demand in the 21st Century: Many Challenges and Key 
Questions. [hyperlink, http://www.gao.gov/products/GAO-05-414T]. 
Washington, D.C.: March 16, 2005. 

Capital Financing: Partnerships and Energy Savings Performance 
Contracts Raise Budgeting and Monitoring Concerns. [hyperlink, 
http://www.gao.gov/products/GAO-05-55]. Washington, D.C.: December 16, 
2004. 

Geothermal Energy: Information on the Navy's Geothermal Program. 
[hyperlink, http://www.gao.gov/products/GAO-04-513]. Washington, D.C.: 
June 4, 2004. 

Budget Issues: Alternative Approaches to Finance Federal Capital. 
[hyperlink, http://www.gao.gov/products/GAO-03-1011]. Washington, D.C.: 
August 21, 2003. 

Agencies' Strategic Plans Under GPRA: Key Questions to Facilitate 
Congressional Review. [hyperlink, 
http://www.gao.gov/products/GAO/GGD-10.1.16]. Washington, D.C.: May 
1997. 

Executive Guide: Effectively Implementing the Government Performance 
and Results Act. [hyperlink, 
http://www.gao.gov/products/GAO/GGD-96-118]. Washington, D.C.: June 
1996. 

[End of section] 

Footnotes: 

[1] In this example, we used DOD's total facility electricity use for 
fiscal year 2007. 

[2] DOD divides its energy consumption into two main categories: 
mobility energy and facilities energy. We have previously reported that 
mobility energy is required for moving and sustaining DOD's forces and 
weapons platforms for military operations, while facilities energy is 
consumed at fixed installations. This report focuses on facilities 
energy. For previous work on mobility energy, see GAO, Defense 
Management: Overarching Organizational Framework Needed to Guide and 
Oversee Energy Reduction Efforts for Military Operations, [hyperlink, 
http://www.gao.gov/products/GAO-08-426] (Washington, D.C.: Mar. 13, 
2008). 

[3] Section 203 of the 2005 Act directs the President, acting through 
the Secretary of Energy, to achieve these goals on behalf of the 
federal government as a whole. Furthermore, Department of Energy (DOE) 
guidance implementing this statutory goal directs each federal agency 
to meet this goal. 

[4] This example is based on DOE information concerning the 2007 
average residential consumption in the United States and DOD 
information concerning its fiscal year 2007 facility electricity 
consumption. We use the example only to provide a sense of the amount 
of electricity required to meet the goal in the 2005 Act. Because the 
goal is calculated as a percentage of DOD's annual electricity use, the 
actual amount of electricity that it represents will likely change 
annually, along with DOD's electricity consumption. 

[5] DOE guidance directs each federal agency to meet the goals in the 
2005 Act and the 2007 Executive Order. DOE, Office of Energy Efficiency 
and Renewable Energy, Renewable Energy Requirement Guidance for EPACT 
2005 and Executive Order 13423 (Jan. 28, 2008). 

[6] Pub. L. No. 109-364, § 2852(a)(1) (2006) (codified at 10 U.S.C. § 
2911). The law directed DOD "to produce or procure not less than 25 
percent of the total quantity of electric energy it consumes within its 
facilities and in its activities during fiscal year 2025 and each 
fiscal year thereafter from renewable energy sources (as defined in 
section 203(b) of the Energy Policy Act of 2005)." As explained below, 
this goal was amended by the National Defense Authorization Act for 
Fiscal Year 2010, Pub. L. No. 111-84, § 2842 (2009). 

[7] Although not required to do so at the time, DOD reported its 
progress toward achieving this goal in both fiscal years 2007 and 2008. 
However, DOD is now required to report its progress toward achieving 
this goal by the National Defense Authorization Act for Fiscal Year 
2010, Pub. L. No. 111-84 § 332 (2009). 

[8] This example is based on DOE information concerning the 2007 
average residential consumption in the United States and DOD 
information concerning its fiscal year 2007 facility electricity 
consumption. We use the example only to provide a sense of the amount 
of energy required to meet the goal in the 2007 Defense Authorization 
Act. Because the goal is calculated as a percentage of DOD's annual 
electricity use, the actual amount of electricity that it represents 
will likely change annually, along with DOD's electricity consumption. 

[9] While there are DOD overseas installations that use renewable 
energy, this report addresses renewable energy use in DOD installations 
located in the 50 states. 

[10] In this report, we define "renewable energy" as energy generated 
from solar; wind; biomass; landfill gas; ocean (including tidal, wave, 
current, and thermal); geothermal (including ground source heat pumps 
and electric generation); municipal solid waste; or new hydroelectric 
generation capacity achieved since 1999 from increased efficiency or 
additions of new capacity at an existing hydroelectric project. 

[11] In this report, we define "services" as the U.S. Army, U.S. Navy, 
and U.S. Air Force because the Department of the Navy manages both the 
Navy's and Marine Corps' renewable energy programs. 

[12] DOE, Energy Information Administration, Annual Energy Outlook 
2009, DOE/EIA-0383 (Washington, D.C., March 2009). 

[13] GAO, Advanced Energy Technologies: Budget Trends and Challenges 
for DOE's Energy R&D Program, [hyperlink, 
http://www.gao.gov/products/GAO-08-556T] (Washington, D.C.: Mar. 5, 
2008), and Advanced Energy Technologies: Key Challenges to Their 
Development and Deployment, [hyperlink, 
http://www.gao.gov/products/GAO-07-550T] (Washington, D.C.: Feb. 28, 
2007). 

[14] A watt is the basic unit used to measure electric power. A watt- 
hour is equal to a watt of power applied for 1 hour. A kilowatt-hour is 
1,000 watt-hours, and a megawatt-hour is 1,000 kilowatt-hours. 

[15] According to the Environmental Protection Agency, one example of 
an environmental attribute is the avoided carbon emissions from 
renewable energy generation, compared to nonrenewable generation. The 
renewable energy certificate associated with a specific source of 
renewable energy generation and the reporting rights to the avoided 
emissions associated with the certificate are also considered an 
environmental attribute. 

[16] DOE, National Renewable Energy Laboratory, Emerging Markets for 
Renewable Energy Certificates: Opportunities and Challenges, NREL/TP- 
620-37388 (Golden, Colo., January 2005). 

[17] DOE, Pacific Northwest National Laboratory, Purchasing Renewable 
Power for the Federal Sector: Basics, Barriers, and Possible Options, 
PNNL/16485. (Richland, Wash., April 2008). 

[18] DOE, Office of Energy Efficiency and Renewable Energy, Renewable 
Energy Requirement Guidance for EPACT 2005 and Executive Order 13423, 
§§ 3.2.1, 3.3.1. 

[19] Although DOD purchased a substantial amount of unbundled renewable 
energy certificates in fiscal years 2007 and 2008, it is important to 
note that according to DOD data, there are 217 renewable projects 
located on or near DOD's installations in the 50 states; we discuss 
these projects throughout the report. In fiscal years 2007 and 2008, 
the renewable energy DOD claimed toward the goals came from each of the 
applicable categories: production of bundled renewable energy from such 
projects; purchases of bundled renewable energy; and purchases of 
unbundled renewable energy certificates. 

[20] According to the DOE guidance, this bonus equivalent is available 
if any of the following conditions are met: (1) the renewable energy is 
produced and used on-site at a federal facility; (2) the renewable 
energy is produced on federal lands and used at a federal facility; (3) 
the renewable energy is produced on Indian land and used at a federal 
facility; or (4) the electricity produced on-site at a federal facility 
is sold to a third party, but the power purchase contract explicitly 
states that the federal agency retains ownership of the related 
renewable energy certificates and nonenergy attributes, the energy 
buyer is precluded from representing that such purchased energy is 
"renewable" for any purpose, and all renewable energy and nonenergy 
attributes must be retained on-site. Further, nonelectric energy from 
renewable sources is not eligible for the bonus. DOE, Office of Energy 
Efficiency and Renewable Energy, Renewable Energy Requirement Guidance 
for EPACT 2005 and Executive Order 13423, § 3.4. 

[21] This database is available at [hyperlink, http://www.dsireusa.org] 
and is maintained by staff at the North Carolina State University in 
partnership with the Interstate Renewable Energy Council, and is funded 
by the DOE. 

[22] Section 591(a) of Title 40, U.S. Code. In addition, DOD must 
comply with state utility commission rulings and electric utility 
franchises or service territories established under state statute, 
state regulation, or state-approved territorial agreements. 

[23] In this report, we define appropriated funding as "up-front" when 
DOD has sufficient funding to pay for the full cost of the renewable 
energy project before a commitment is made for the project, instead of 
the funding DOD uses to make payments on capital borrowed through 
certain types of alternative financing approaches. We have previously 
reported that full up-front appropriations are the best way to maintain 
governmentwide fiscal control. See GAO, Budget Issues: Alternative 
Approaches to Finance Federal Capital, GAO-03-1011 (Washington, D.C.: 
Aug. 21, 2003). 

[24] For purposes of this report, we define "small" renewable energy 
projects as those under 1,000 million British thermal units of 
renewable energy production per year. 

[25] DOE, Office of Energy Efficiency and Renewable Energy, Renewable 
Energy Requirement Guidance for EPACT 2005 and Executive Order 13423, 
and Section 2911(e) of Title 10, U.S. Code. 

[26] DOD Instruction 4170.11, Installation Energy Management, enc. 2 § 
1 (Dec. 11, 2009). 

[27] Pub L. No. 111-84, § 2842 (2009). 

[28] In the act, "renewable energy sources" are those resources defined 
as renewable in section 203(b) of the Energy Policy Act of 2005 (42 
U.S.C. 15852(b)). As explained above, the 2025 goal in the 2007 Defense 
Authorization Act was amended by the National Defense Authorization Act 
for Fiscal Year 2010, Pub. L. No. 111-84, § 2842 (2009). 

[29] GAO, Agencies' Strategic Plans Under GPRA: Key Questions to 
Facilitate Congressional Review, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-10.1.16] (Washington, D.C.: May 
1997). 

[30] Because of this lack of clarity, in June 2009, we requested that 
DOD's Office of General Counsel provide us with DOD's legal rationale 
for counting renewable energy not consumed by DOD toward the 2007 
Defense Authorization Act goal. We also asked several questions related 
to DOD's interpretation of the act, including DOD's definition of key 
terms and the extent to which DOD's current methodology is consistent 
with the plain language of the act. As of December 2009, DOD had not 
responded. 

[31] DOD, Report to Congress on Renewable Energy (Washington D.C., 
April 2008), 4. 

[32] DOE, Office of Energy Efficiency and Renewable Energy, Renewable 
Energy Requirement Guidance for EPACT 2005 and Executive Order 13423, § 
3. 

[33] It is unclear, for example, whether DOD would consider energy that 
is generated by a private developer on DOD land where DOD is not 
directly involved in the production and distribution of that renewable 
energy as "produced" by DOD. 

[34] DOD, Report to Congress: DOD Renewable Energy Assessment Final 
Report (Washington, D.C., Mar. 14, 2005). 

[35] This calculation was performed using the amount of electricity 
consumed by DOD installations in fiscal year 2006. The scope of the DOD 
study included generation of renewable energy on installations, 
generation of renewable energy on land near installations, and 
purchases of renewable energy. 

[36] Further, the language of the 2005 Act goal itself directs 
fulfillment of the goal to obtain a certain percentage of energy from 
renewable sources "to the extent economically feasible and technically 
practicable." 

[37] GAO, Department of Energy: Key Challenges Remain for Developing 
and Deploying Advanced Energy Technologies to Meet Future Needs, 
[hyperlink, http://www.gao.gov/products/GAO-07-106] (Washington, D.C.: 
Dec. 20, 2006), and [hyperlink, 
http://www.gao.gov/products/GAO-07-550T]. 

[38] According to GAO analysis of DOE data, almost all of the 
electricity generated in the United States comes from nonrenewable 
sources. For instance, in 2008, 91 percent of U.S. electricity 
generation came from power plants using nonrenewable sources of fuel, 
such as coal, natural gas, and nuclear material. 

[39] We compared prices paid by DOD installations to the average price 
for utility-delivered electricity in the states in which the 
installations were located. 

[40] According to the Environmental Protection Agency, these heat pumps 
are underground coils used to transfer heat from the ground to the 
inside of a building. See [hyperlink, 
http://www.epa.gov/OCEPATERMS/gterms.html]. 

[41] The payback data were obtained from the DOE Energy Efficiency and 
Renewable Energy: Energy Savers Web site at [hyperlink, 
http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/my
topic=12640]. 

[42] Certain types of renewable electricity generation technologies-- 
such as geothermal and biomass--can provide uninterrupted power, but 
because of certain limitations, relatively few DOD installations can 
use these types of renewable energy. For example, the distribution of 
these types of resources is limited to certain parts of the country. 

[43] 10 U.S.C. § 2805(c). 

[44] DOE, Office of Energy Efficiency and Renewable Energy, Renewable 
Energy Requirement Guidance for EPACT 2005 and Executive Order 13423, § 
3.2.1, 3.2.2. 

[45] Energy Savings Performance Contracts allow federal agencies to 
hire a contractor to develop energy conservation or renewable energy 
projects with the expectation that the annual savings from the project 
will fund the project's annual costs. We have previously reported the 
Energy Savings Performance Contracts are likely to be more expensive 
over the long run than using full upfront appropriations to purchase 
assets; see GAO, Capital Financing: Partnerships and Energy Savings 
Performance Contracts Raise Budgeting and Monitoring Concerns, 
[hyperlink, http://www.gao.gov/products/GAO-05-55] (Washington, D.C.: 
Dec. 16, 2004). Utility Energy Service Contracts are contracts between 
a federal agency and the local utility to provide comprehensive energy 
improvements, such as an energy efficiency or renewable energy. 

[46] In our previous work, we have found that these contracts offer 
some benefits and challenges similar to those we discuss in this 
report. See GAO, Energy Savings: Performance Contracts Offer Benefits, 
but Vigilance Is Needed to Protect Government Interests, [hyperlink, 
http://www.gao.gov/products/GAO-05-340] (Washington, D.C.: June 22, 
2005). 

[47] GAO, Federal Energy Management: Addressing Challenges through 
Better Plans and Clarifying the Greenhouse Gas Emission Measure Will 
Help Meet Long-term Goals for Buildings, [hyperlink, 
http://www.gao.gov/products/GAO-08-977] (Washington, D.C.: Sept. 30, 
2008). 

[48] Although DOD has relatively few projects that follow this model, 
according to DOD officials, the department plans to enter into more 
alternative financing approaches that follow this model. 

[49] According to the DOE guidance, a federal agency can obtain 
replacement certificates in two different ways. It can trade with 
another federal agency or purchase the certificates from another 
source. DOE, Office of Energy Efficiency and Renewable Energy, 
Renewable Energy Requirement Guidance for EPACT 2005 and Executive 
Order 13423, § 3.2.2. 

[50] In such cases, it is unclear whether DOD must purchase replacement 
certificates to count the renewable energy toward the fiscal year 2025 
goal under the 2007 Defense Authorization Act. As discussed earlier in 
the report, DOD has not developed guidance that could clarify this 
issue. 

[51] DOE, Pacific Northwest National Laboratory, Purchasing Renewable 
Power for the Federal Sector: Basics, Barriers, and Possible Options. 

[52] [hyperlink, http://www.gao.gov/products/GAO/GGD-10.1.16]. 

[End of section] 

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