Operational Energy: The need for clean energy for defense

According to PitchBook, venture-backed clean energy startups raised $5.4B in the second quarter of 2023. This is the best quarter for the sector since 2021.

What many people don’t realize is that energy is a massive challenge for the military and defense sector too.

In Defense circles, energy conversations usually revolve around the term operational energy. which the DoD defines as the energy required for training, moving, and sustaining military forces and weapons platforms for military operations. The term includes energy used by tactical power systems, generators and weapons platforms (excluding nuclear propulsion for ships and energy required for space launch systems).

Using this narrowed definition of energy, it’s easy to see why nearly all of the energy would come from traditional petroleum-based fuels.

In FY20, the DoD consumed 78 million barrels of fuels. In that year, we spent $9.2B. Amazingly, this represented a 10% decrease year-over-year in consumption, and an even more considerable drop in consumption compared to highs during operations in Iraq and Afghanistan.

Speaking of Iraq and Afghanistan, let’s discuss the fully burdened cost of energy (FBCE), which peaked at around $400 / gallon. The FBCE attempts to capture all of the inputs in producing, transporting, and storing fuel that other estimates may not consider. Fortunately, the FBCE is not a fixed number, and not every gallon of fuel cost the DoD $400—far from it. Nevertheless, as the military remains postured for global operations, we must consider that the more remote and difficult it is to reach a locale, the greater the FBCE will be.

Bringing us back to the promising news from PitchBook on investments into Clean Energy, the military similarly invests heavily into alternative energy sources and is certainly watching with great interest developments in Clean Tech. The ability to source a clean energy source in forward deployed locations will tremendously lower that fully burdened cost of energy. Of course, to do so, we’ll also need advancements in the military equipment (specifically engines, power plants, etc) that can use those locally-procured energy sources.

Some of the promising technologies include:

• Hydrogen Fuel Cells - Hydrogen remains relatively abundant, and could be sourced in just about any operational environment. The down side is that fuel cells are heavy, so efficiency will be a consideration. The National Academies of Science, Engineering, & Medicine released a report finding that Hydrogen along with the next tech will be critical to breaking the military’s reliance on fossil fuels and the associated logistical tails.

• Biofuels - The military has worked to turn biofuels into military-grade jet fuels. DARPA has even led studies. Imagine a naval task force that can scoop up algae while underway and then convert that algae into the necessary fuel for its naval aircraft.

• Electrification (Batteries) - Electric Vehicles are the rage currently. Of course, they don’t provide us much benefit in the military, as the energy still needs to come from somewhere to charge the batteries. Nevertheless, as we make advances in clean energy production, battery storage, and battery pack optimization, electrification of vehicles and aircraft will become more attractive and common place.

• Electrification (Power Beaming) - In addition to the same principal challenge faced by electric military vehicles—where does the energy actually come from—this technology is focused on power distribution. It enables wirelessly beaming energy around the battlespace and could be used for charging systems on the move. It faces additional challenges from interruptions of the distribution channels by weather, dust, debris, terrain, etc.

• Fusion - We’ve seen significant advancements in the field of study around fusion. What was always “30 years away” for the past 60-70 years, has moved to always being “10 years away” now. It’s a long shot, but for power generation, it will be a massive game changer.

• Fission - The military already uses fission power for most of its naval ships. Technological advancements and a growing acceptance that nuclear power is one of the cleanest and safest technologies we currently have, has reinvigorated interest in new fission capabilities. The DoD’s Strategic Capabilities Office is working with the DoE to develop a mobile, nuclear power plant (MNPP) that uses Tristructural Isotopic (TRISO) fuel, which provides better safety, economics, and flexibility.

• Space-based Solar Power (SBSP) - SBSP uses power beaming technologies to transmit energy from solar power plants in space to the earth. The technology to do this has largely existed since the late 1960s, but the economics never made sense until launch costs AND material costs have dropped in recent years. It faces significant challenges, similar to other technologies on this list, and offers significant flexibility in steering the power to where it’s needed.

These and other technologies are critical to transforming operational energy, breaking the department’s reliance on fossil fuels, lowering costs, and improving the military’s readiness and operational reach. To this end, the military invests through the Operational Energy Capability Improvement Fund and Operational Energy Prototyping Fund into DoD-based research on these and other technologies.

Of course, as we’ve previously explored, much of the innovation that defense relies on, now comes from outside of the government. The military needs the investments that venture capitalists are making into clean energy technologies. And the military needs great founders to continue to build innovative companies that advance research and development of these technologies.

Keep building!

Andrew