Under federal statutes, executive orders, and department-level guidance, DOD is to meet various renewable energy goals. Statutory goals include the following: Production. DOD is to adopt the goal to produce or procure not less than 25 percent of the total quantity of facility energy it consumes within its facilities from renewable sources beginning in fiscal year 2025. DOD can meet this goal by producing electricity using renewable sources on its installations or by procuring electricity produced using renewable sources that is produced in other locations. Consumption. To the extent economically feasible and technically practicable, not less than 7.5 percent of electrical energy consumed by federal agencies is to come from renewable sources beginning in fiscal year 2013. According to federal guidance implementing the Energy Policy Act of 2005, to count toward the consumption goal, DOD must possess renewable energy credits for electricity it consumes. Executive Order 13693 established additional goals, including directing agency heads to ensure that increasing percentages of electrical energy consumed in buildings be renewable electric energy where cost-effective, beginning with 10 percent in 2016 and climbing to at least 30 percent by fiscal year 2025. In addition, the military departments have also taken steps to encourage renewable energy, and each has issued department-level guidance to develop 1 gigawatt of renewable energy—Air Force by 2016, Navy by 2020, and Army by 2025. The military departments have also established some unique energy goals. For example, the Secretary of the Navy established a goal to derive at least 50 percent of shore-based energy requirements from alternative sources, including renewable energy, by 2020. In addition, in its energy strategy, the Army established a goal to increase its use of renewable or alternative resources for power and fuel use. To meet these goals, over a number of years, DOD has taken steps to develop renewable energy projects on its installations. Additionally, Congress requires that DOD report information on its progress toward these and other energy goals in its annual energy management report. DOD’s most recent report identifies more than 1,130 operational projects of varying generating technologies and capacities. In addition to its renewable energy goals, DOD has also identified renewable energy projects as a possible way to contribute to its energy security objective. In particular, DOD has noted that its installations and missions can be vulnerable to disruptions of the commercial electricity grid and that renewable energy, combined with energy storage and other tools, can allow installations to maintain critical operations without electricity from outside the installations. To develop renewable energy projects, DOD can either directly fund the construction or development of projects or work with private developers to help initially finance them. To directly develop renewable energy projects, DOD typically uses funds provided through its annual appropriations process—referred to in this report as up-front appropriated funding. Otherwise, DOD can finance projects through agreements with private developers and pay back the costs of the projects over time—referred to as alternative financing mechanisms. In addition, when developing projects with private developers, DOD may use one of three types of land use agreements to provide developers with use of DOD land. Through such agreements, DOD allows developers the use of its land in exchange sometimes for revenues or in-kind consideration. Each type of land use agreement has different requirements for compensation for the use of DOD land, as follows: Leases. Under 10 U.S.C. § 2667, the secretary of a military department (or the Secretary of Defense in certain contexts) may lease land in exchange for the payment of cash or in-kind consideration in an amount that is not less than the fair market value of the lease interest, as determined by the secretary. Easements. Under 10 U.S.C. § 2668, the secretary of a military department may provide an easement for rights-of-way, upon terms that the secretary considers advisable, but is not required to include a cash or in-kind consideration. Access licenses or permits. Depending on the structure of the agreement, DOD may provide contractors a license or permit, which allows access to and use of a site for the purposes of the contract, without compensation. According to DOD officials and documents, in recent years, DOD’s approach emphasized developing larger projects and working with private developers to develop renewable energy projects with a generating capacity of greater than 1 megawatt on DOD installations in the United States. DOD used alternative financing mechanisms—that is, financing the initial capital investments in projects with private funding—to facilitate working with private developers. Nonetheless, DOD also directly developed some of these projects using up-front appropriated funds. According to DOD officials and documents, the department has emphasized generally larger renewable energy projects—such as those greater than 1 megawatt—and working with private developers. In 2012, DOD testified before Congress that it planned to emphasize the development of large-scale renewable energy projects with private developers. In 2011, the Army began an initiative focusing on large-scale renewable energy, and in 2014, it established the Office of Energy Initiatives and issued supporting guidance for developing large-scale projects with private developers. According to the guidance, the Army forms relationships with project developers, utilities, and the renewable energy industry and leverages these relationships to identify, develop, and finance projects across its installations. Likewise, in 2014, the Navy established the Renewable Energy Program Office to provide a centralized Navy and Marine Corps approach to developing large-scale renewable energy with private developers. According to a Marine Corps official, there has been a shift toward larger projects in recent years, and the Marine Corps’ strategy for renewable energy will be to finance large- scale projects through private developers. Similarly, according to Air Force officials, the Air Force has been shifting its emphasis toward developing large-scale renewable energy projects with private developers, in part to avoid committing DOD resources to the ownership or operation of renewable energy projects. In March 2016, the Air Force announced the establishment of its Office of Energy Assurance to focus on developing large-scale renewable and other energy projects with private developers. DOD officials told us that the recent focus on pursuing larger projects offers some key advantages. For example, officials said that the increasing emphasis on larger projects offers better opportunities to more efficiently reach DOD’s renewable energy goals and that projects that generate more electricity allow the installations to obtain larger amounts of renewable electricity to apply toward energy goals. According to DOD officials, because of recognition that larger projects can sometimes be more cost-effective, among other reasons, DOD has pursued projects that are larger than 1 megawatt, such as those 10 megawatts and greater. Ten of the 17 projects in our sample were 10 megawatts or larger. According to DOD officials and our prior work, working with private developers when developing renewable energy projects offers several advantages for DOD, including the following: Access to incentives. According to DOD officials, private developers can obtain federal, state, and local tax incentives, which can significantly lower their overall costs of developing renewable energy. These incentives are not generally available to DOD if it develops projects on its own. In particular, the federal government offers certain incentives, such as tax credits to encourage the development of renewable energy, but while private developers may claim these by filing tax returns, DOD cannot claim them because it does not pay federal income taxes. Access to capital. Private developers can arrange their own funding for developing and constructing projects, which allows DOD to avoid seeking up-front appropriated funds. DOD officials told us that obtaining up-front appropriated funds for developing large-scale renewable energy projects can be difficult. Large renewable energy projects such as these can cost several million dollars. As we found in our April 2012 report, obtaining appropriations to finance projects can take longer than developing projects with alternative financing mechanisms. In that report, DOD officials told us that it can take 3 to 5 years to navigate the programming and budgeting process and to obtain military construction appropriations for the project. Up-front appropriation funding through the Energy Conservation Investment Program can also be difficult to obtain. Air Force officials told us that renewable energy projects over 1 megawatt would generally have a difficult time competing for Energy Conservation Investment Program funding against other types of energy conservation measures. Better asset management. According to DOD officials and our previous work, working with private developers allows DOD to leverage private companies’ expertise in developing and managing of projects and limits the number of personnel DOD has to commit to projects. Better risk management. According to prior work and military department officials, private developers can be held responsible for development and operational risks, depending on the contract terms. Previous reports and DOD officials we interviewed also identified drawbacks to entering into agreements with private developers, including the following: The federal government incurs the cost of some incentives used to develop projects on DOD installations. Many of the financial incentives private developers use, such as federal tax credits, are paid for by other parts of the federal government, such as the Department of the Treasury. As we found in an April 2015 report, incentives for renewable energy projects like those in our sample have collectively cost taxpayers $13.7 billion in tax expenditures, such as tax credits, and an additional $16.8 billion in grants provided in lieu of tax expenditures from fiscal year 2004 through 2013. Because DOD’s analysis of cost-effectiveness solely focuses on the costs DOD incurs, these costs to the government are not included in DOD’s decision-making process. As a result, projects using such incentives may be more expensive to the government than the cost that DOD estimates it will incur on its own. In its comments on our draft report, DOD stated that in federal procurement, it is the norm for a business case to address the cost to the agency, not to the entire government. Private financing of projects can increase overall cost.