Solazyme Inc (SZYM), SolarCity Corp (SCTY): Weapons Might Not Be Our Ultimate Military Advantage

Seventy-one years ago this month, the Nazi army began its attack on Stalingrad. After more than six long months of grueling warfare that left the city in shambles and claimed the lives of more than 1.5 million people, the Soviet Army turned back the Nazis and swung the fate of the Second World War. But why did these armies continue to fight with such zealous fervor after the city was nothing but a pile of rubble and its strategic assets were in shambles?

Oil.

Stalingrad was the last piece standing between the Nazi army and the oil-rich Caspian sea. Had Hitler’s army secured this region, it’s very likely history would be completely different from what we know it today. This is but one of several examples of how energy influences war, both the reasons we fight them and how they are won.

Today, the United States Department of Defense consumes about 5 billion gallons of oil per year and spent a total of $20 billion on energy last year alone. Not only has the use of traditional fuel sources (oil, diesel) grown more expensive, but our nation’s reliance on foreign oil sources adds an unnecessary element of exposure for our nation’s defenders. To combat this strategic weakness, our military has put a great emphasis on renewable energy use, and it’s starting to pay off.

Self-sufficiency means greater security
The majority of the Department of Defense’s energy budget isn’t appropriated to run new Iron-Man type body armor suits or death rays, but to simply keeping the lights on at military bases. Not only does relying on traditional energy sources eat into costs, but it also puts the military at a strategic disadvantage as it relies on civilian transmission lines, which have shown to be undependable.

Source: Nellis Air Force Base.

For this reason, the Department of Defense is looking into ways to take bases off the grid, and one of the most economical ways to do that today is through solar power. The Department of Defense has committed to 3,000 megawatts of solar power for its military bases. And companies are lining up to be of service. A major player in that effort is SolarCity Corp (NASDAQ:SCTY). Through its SolarStrong partnership with the DoD, the company will be supplying 10% of that commitment with solar installations for military housing. The entire project will be able to supply 120,000 military households with off-the-grid solar power that can also be used throughout the base.

While this is a major advantage at home, it is even more critical in the field. In 2010, the U.S. was shipping as much as 40 million gallons of diesel fuel a month in Afghanistan, and it cost lives. An Army review of the Iraqi conflict noted that one of every eight casualties in Iraq resulted from protecting fuel convoys delivering diesel for generators at forward operating bases. Through small, portable solar generators, the military is able to reduce diesel consumption at these facilities by more than 90%. According to the Office of Naval Research, alternative power solutions in the field result in fewer shipments, fewer casualties, and fewer fuel costs.