Renewable Energy Project Financing: Improved Guidance and Information Sharing Needed for DOD Project-Level Officials Page: 2 of 61
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GAO
Accountability * Integrity * Reliability
Highlights
Highlights of GAO-12-401, a report to
congressional committees
Why GAO Did This Study
DOD is the largest consumer of energy
in the federal government, spending
about $3.8 billion on facilities' energy
at more than 500 permanent military
installations throughout the world in
fiscal year 2010. The House Armed
Services Committee directed GAO to
review issues related to financing
approaches for renewable energy
projects on military installations. GAO
(1) determined the approaches that
military services are using to finance
renewable energy projects and the
factors the services consider in
selecting an approach, (2) assessed
the extent to which the services have
established methods to obtain good
value and advantageous contract
terms and manage risks of financing
approaches for renewable energy
projects, and (3) identified the extent to
which the services developed
guidance, training, and other resources
to assist officials in selecting and
implementing financing approaches.
GAO reviewed applicable legal
authorities, guidance, and project
information from selected projects and
interviewed officials from the Office of
the Secretary of Defense, military
services, 10 selected installations, and
the Department of Energy.
What GAO Recommends
GAO recommends that DOD issue
comprehensive guidance to ensure key
analyses are completed and available-
financing approaches are fully
considered. GAO also recommends
that DOD develop a formalized
communications process to share best
practices on financing renewable
energy projects among installations.
DOD generally concurred with GAO's
recommendations.
View GAO-12-401. For more information,
contact Brian J. Lepore at (202) 512-4523 or
leporeb@gao.gov or Frank Rusco at (202)
512-3841 or ruscof@gao.gov.RENEWABLE ENERGY PROJECT FINANCING
Improved Guidance and Information Sharing Needed
for DOD Project-Level OfficialsWhat GAO Found
To finance renewable energy projects, the military services use up-front
appropriations, such as operation and maintenance funds, and alternative-
financing approaches that generally rely on private capital, such as arranging
financing and implementing a project with a private developer or utility. The
military services have funded about 85 percent of nearly 600 projects that were in
design, under construction, or operating in fiscal year 2011 with up-front
appropriations, but financed 8 of the 9 large-scale projects and 19 of the 57
medium-scale projects with alternative financing. Several factors affect the
military services' use of financing approaches, including perceived benefits and
drawbacks such as how long it takes to obtain funding.
The military services have established methods to help ensure good value and
advantageous contract terms and to manage the risks of the various financing
approaches, but the services have not issued comprehensive guidance on how
and when to prepare analyses for renewable energy projects. For example,
headquarters and installation officials said that military services use business
case or other cost analyses to help maximize benefits and mitigate drawbacks of
the selected financing approach. However, GAO found examples of installations'
not developing cost analyses or not analyzing different financing approaches for
projects, as well as uncertainty about how to account for some benefits in the
analyses, because the military services generally do not have guidance to ensure
that business case analyses are completed and that analyses fully consider the
costs and benefits of different financing approaches. As a result of not having
processes and comprehensive guidance in place, the military services cannot
ensure that decision makers select the financing approach that maximizes
benefits and mitigates drawbacks or risks of available financing approaches.
The Department of Defense (DOD) and other agencies have made available
guidance, training, and other resources to assist officials in selecting certain
financing approaches for renewable energy projects, but some guidance on the
approaches is inconsistent and information sharing at the installation level is ad
hoc and not formalized. DOD, the Department of Energy, and the military
services have developed an increasing amount of guidance on the available
financing approaches; however, GAO found instances where different
interpretations of some guidance affected the approaches the services used
because DOD has not issued overarching guidance on using these approaches.
As a result, the military services may not be taking full advantage of the various
approaches available to finance projects to meet renewable energy goals.
Additionally, DOD personnel were generally satisfied with training they received
on the financing approaches, but DOD does not have a formalized process to
share information and best practices on the approaches among project-level
officials across the military services at the installation level. As a result, DOD
cannot ensure that officials responsible for selecting a financing approach have
timely access on an ongoing basis to information on approaches that their
counterparts from other services have used and their experiences with those
approaches. Such information could assist the officials in selecting a financing
approach that maximizes the benefits and minimizes the drawbacks or risks of
that approach.United States Government Accountability Office
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United States. Government Accountability Office. Renewable Energy Project Financing: Improved Guidance and Information Sharing Needed for DOD Project-Level Officials, report, April 4, 2012; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc302006/m1/2/: accessed April 24, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.