High-tech weapon makers set sights on 'smart microgrid' market.

• Author: Erwin, Sandra I.

Pentagon contractors are looking to transition their skills in assembling complex weapon systems into the nascent market of energy microgrids.

The U.S. military's interest in reducing consumption of fossil fuels in favor of renewable energy is seen as a potential catalyst for growth in so-called "smart" microgrids, even though the Pentagon so far has made only nominal investments in these systems.

Smart, or intelligent, microgrids are small-scale versions of a centralized electricity system. They generate, distribute, and regulate the flow of electricity to consumers, but unlike conventional grids, smart microgrids are viewed as a more effective means to bring renewable resources into the mix, and to match supply and demand of energy in ways that reduce overall consumption.

The Pentagon sees microgrids as a promising new weapon in its campaign to reduce troops' dependence on massive supplies of fossil fuels. Energy microgrids could make it easier for deployed units to become self-sufficient in war zones. At military bases, electric microgrids also are regarded as security mechanisms as they would ensure that bases have access to energy during emergencies such as weather-related blackouts or terrorist attacks.

For defense contractors, the microgrid market opens up opportunities for "systems integration" work that traditionally has focused on weapon systems where disparate pieces of hardware and software are pieced together to create complex machinery such as a combat jet or a command-and-control network.

The global microgrid industry reached $4 billion in 2010, and 75 percent of that work came from North America, according to the market research firm SBI Energy. The demand is being accelerated by the buoying renewable energy and smart-grid markets, said an SBI report. "Microgrid installations around the world include everything from diesel generator-based rural electrification projects that supply electricity to small rural communities to large, futuristic cities and theme parks using the newest microgrid technologies."

The military microgrid segment, predicts SB I, will rise by 375 percent from 2010 to 2020, when it could top $1.6 billion, up from about $330 million in 2010. Electrical output, the report says, will soar from,13 gigawatts in 2010 to,60 gigawatts in 2020.

SBI suggests that most of the military microgrid business will come from U.S. military bases that seek reliable and secure energy. "The majority of U.S. military bases are powered by public electrical grids, which in some instances lead to as many as 300 power outages per year," the study says. "These interruptions weaken military readiness and security. In the face of a terrorist attack or natural disasters, reliance on conventional energy supplies may be inefficient and may even be detrimental to military functions."

A Pentagon advisory panel, the Defense Science Board, noted in a 2008 study that military bases' dependence on often unreliable...