Solar energy at military bases, once too expensive, is now within easy reach.

• Author: Price, Tom
• Position: INDUSTRY PERSPECTIVE

The Defense Department's energy mandates are as clear as they are difficult to reach: Procure at least 25 percent of facility energy from renewable resources by 2025.

With patchworks of infrastructure in and outside the fence line, electrical energy rates all over the map, and a mandate to do it all without additional expense, meeting these goals could prove to he an insurmountable challenge.

The solution isn't a cheaper solar panel. A fast emerging trend in renewable energy is offering base commanders the opportunity to get the benefits of large-scale projects with the deliverability of traditional rooftop solar. Known as virtual net metering (VNM), or more colloquially as community solar, this policy solution may help crack the funding wall around renewable energy, allowing it to quickly deploy nationwide without requiring significant public capital investment.

To understand how VNM might help the military services meet their renewable portfolio goals, it helps to understand just how hard it is to get a renewable energy project like a solar array built today.

For decades, solar has been stuck in one of two forms: Either fairly small arrays on a building or parking lot, connected directly to the electrical meter of that facility, or large, so-called "utility scale" projects, most often assigned to power companies. But with a huge upfront sticker price, relatively few projects were getting built, and none were coming close to offsetting grid power. One of the problems was the enormous upfront financing.

Then in 2001, the solar industry began using a financing model known as a power purchase agreement (PPA) in which a customer contracted to finance a project over a fixed term--usually 20 years--at a preset price. It functions much like a mortgage. The owner gets a manageable cost per month, and the lender gets certainty the debt will be repaid. Most contracts recognized two streams of value - the cost paid per unit of energy, as well as the emerging market for renewable energy credits, or the environmental attributes of that renewable power.

The model began taking off in 2007, after it was used to finance the then blockbuster 14-megawatt solar project at Nevada's Nellis Air Force Base, still the largest operational solar project on a military facility. PPAs are well suited to the military, since they depend on having a stable counterparty with a good credit rating, and even with the recent downgrade, there are few counterparties with the...