Military Microgrids Steeply Cut Energy Costs Says New Study

Jan. 19, 2017
Military microgrids open the door to steep cuts in electricity costs at U.S. bases, and even create free energy in some cases, says a newly released study.

Military microgrids open the door to steep electricity cost cuts at U.S. bases, and even create free energy in some cases, says a new Pew Charitable Trusts report.

“Power Begins at Home: Assured Energy for U.S. Military Bases” describes research into the financial benefits of installing more microgrids at bases nationwide.

The Department of Defense has been a leader in exploring advanced microgrid technologies with several demonstration projects underway. So far, the efforts have been largely about keeping the power flowing to military installations when storms or other calamities disrupt grid power. Increasingly the conversation also centers on potential cyberattacks.

But the new study, undertaken by research firm Noblis, focuses on the economics of military microgrids. A base can save up to $20 million by replacing stand-alone generators with a microgrid, according to the analysis.

The study compares the cost of stand-alone diesel generators with microgrids powered by diesel or a combination of diesel and natural gas.

The results were striking. Diesel microgrids ensured electric supply at a cost of $31- $61/kW, compared to $80 to $85/kW for standalone diesel generators.

“This means that an installation anywhere in the country will save money by replacing its standalone generators with a large diesel-only microgrid, and the savings will range from $8 million to $20 million over the 20-year life of the microgrid,” says the report.

The study used diesel generators as a proxy because they are commonly installed on military bases for back-up power.

Download our free guide, “Reciprocating Engine Generators and Microgrids: The Last Defense Against a Power Outage.”

The analysts looked at what it takes to provide 20 MW of reliable electricity at a hypothetical military installation with a peak demand of 50 MW. They focused on three regions: California, the Mid-Atlantic/Northeast, and the Southeast.

Maintenance costs lower for military microgrids

The bulk of the savings came from lower operations and maintenance (O&M) costs for the microgrids. This is because a large military base will often use 100 to 200 standalone generators, each wired to a building. On the other hand, one microgrid may serve several buildings or the entire base. Multiple diesel units typically demand more O&M attention than a single unit, according to the report.

The microgrids in the Mid-Atlantic/Northeast also offset costs by participating in demand response programs.

The third way the military microgrids saved money was through peak shaving to reduce demand charges.

Most interesting, in California microgrids resulted in a negative cost (-$80/kW). This was the case when hybrid microgrids (diesel and natural gas) replaced standalone diesel generators.

“The result means that at an installation in California, the military could protect its critical load for free and create additional savings of $80/kW, or $1.6 million a year,” the report says.

The savings occurred because grid electricity prices are high in California. So by comparison the cost is low of on-site natural gas powered generation.

Conversely, power prices are moderate in the Mid-Atlantic/Northeast and low in the Southeast. So hybrid microgrids modeled for those regions did not save money. They came in above the diesel generator cost at $93/kW in the Northeast/Mid-Atlantic and $195/kW in the Southeast.

The report authors noted that the study doesn’t provide a complete picture because it did not consider non-monetary advantages of military microgrids. Nor does it take into account efficiencies if a microgrid includes combined heat and power. It also does not consider sophisticated energy management techniques and renewable energy integration made possible with advanced microgrid controllers.

“The case for microgrids is even better than our analysis suggests,” says the report.

Triple play appeal of military microgrids

The report says microgrids offer a “triple play” appeal:

  • More energy security and independence from the commercial grid
  • Lower power costs
  • Enhanced ability to integrate renewable energy.

Energy security looms large for the military in the face of concerns about cybersecurity attacks. But weather and grid malfunction are more common causes of power outages.

The Navy experienced 900 outages in 2015. The outages lasted an average of 15 hours in the Atlantic and 32 hours in the Pacific region.

Even short outages can have serious consequences for the military. A Navy base was forced to postpone a weapons test because of a short-term loss of power at a cost of $1 million, the report says.

Beyond defense, military microgrids offer benefits to the larger U.S. economy. The defense department often acts as a first mover for new technologies, testing them and helping drive down costs through scale. This is particularly true in energy, since the military is a large consumer that uses one percent of U.S. electricity. In 2015, the military’s electric bill was almost $4 billion for 284,000 buildings that cover 2 billion square feet, according to the study.

The report concludes that miltary microgrids “provide more energy security for less money” and that military bases “do not need to pay a premium for energy security.”

John Carroll, vice president of business development for IPERC,  said that the report did “a great job of highlighting the major concerns and drivers of energy security and reliability, as it pertains to US military bases.”

But he added, “At IPERC, we believe that energy security also includes a very robust, defense-in-depth cybersecure architecture for command and control.  The true measure of a cybersecure microgrid architecture lies not in the cost to implement, but in its ability to mitigate the unforeseen attack.”

IPERC, a subsidiary of S&C Electric, has obtained a military Authority-to-Operate (ATO) status for its microgrid control system and has been leading efforts to better define the value of cybersecurity.

[clickToTweet tweet=”Military #Microgrids Steeply Cut Energy Costs in New Study” quote=”Military Microgrids Steeply Cut Energy Costs in New Study”]

The report is available as a free download from the Pew Charitable Trusts.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of She is co-founder and former editor of Microgrid Knowledge.

Exploring the Potential of Community Microgrids Through Three Innovative Case Studies

April 8, 2024
Community microgrids represent a burgeoning solution to meet the energy needs of localized areas and regions. These microgrids are clusters of interconnected energy resources,...

Download the full report.

Decentralization: How Microgrids Contribute to the Energy Transition

Learn how decentralization could help tackle the energy challenges of the 21st century by creating an optimized way to access reliable, green and resilient energy.