Which is better: $7 billion or $130 million

The Army is willing to buy $7 billion in renewable power. The Navy, USDA and DOE will offer up to $130 million in advanced biofuel project funding. Where should private investment be made?
By Luke Geiver | August 10, 2012

The U.S. Army wants to enter into long-term power purchase agreements for renewable energy. The Army wants renewable power so bad, it will even award contracts to producers with an indefinite delivery or indefinite production quantity status. The U.S. Navy also wants renewable energy, but in the form of drop-in transportation fuel. The Navy has partnered with the USDA and the U.S. DOE to make advanced biofuels happen. Each federal installation has also issued requests for proposals from the private sector that would allow for greater use of renewable power or renewable liquid fuels. Those RFP’s is where the similarities seem to end.

The Army just released its final RFP for private parties to enter into long-term PPA’s with Army facilities in the U.S. and other military installations off-shore. The Army is willing to buy $7 billion worth of renewable power. In the advanced biofuels industry, the opportunity to sell product to the Navy is vastly different. That collaboration between the DOE, USDA and the Navy will offer $130 million in funding to help producers generate fuel.

Although the numbers, $7 billion and $130 million will not be used for the same purpose, as the $7 billion will buy renewable power, and the $130 will fund project development, there are a few potential takeaways from the huge difference. Is their more renewable power (biobased power will not of course be the only option to fulfill that $7 billion Army purchase) available for use today then advanced biofuels? Yes. But, is renewable power in greater demand by U.S. military installations than U.S. produced non-fossil-based drop-in advanced biofuels? Maybe. Is their greater project development incentive to offer biopower as opposed to biofuels for the Army at this point in time? The numbers would say without a doubt. The question I intend to research and gather feedback on however is this: If I’m an investor or project financier, which renewable energy application is more appealing in that context of $7 billion for renewable power or $130 million in project funding for advanced biofuels?