Lockheed Martin Co. (LMT) is serious about national security, and these days that means increasing development around renewable energy and energy efficiency technologies as much as jets or missile defense systems, Clean Technology Insight has learned.

Building on partnerships the company announced last year to develop utility scale solar and wave-power technologies, the defense and aerospace giant is now working on new types of fuels for vehicles and power plants, according to executives at the company.

"We see energy as a major piece of what this country needs to do both for electric reliability and security, and this is a huge opportunity to put a lot of people to work," said Thomas Grumbly, a vice president and customer relations executive for Lockheed Martin Information Technology.

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As part of its expansion into the renewable energy market the Bethesda, Md.-based company has set aside $10 million for investment in energy technologies developed outside of Lockheed Martin that could be of value to the company, according to Grumbly.

Also, through its Seabrook, Md.-based Information Technology business division Lockheed Martin runs an energy efficiency services business, which it acquired with the purchase of Aspen Corp. in 2006.

Initially a $10 million revenue business, when Lockheed acquired it, energy efficiency services now bring in nearly $100 million in revenue, Grumbly said.

Equally as important, though less of a cash engine at the moment is the work the company is doing in energy generation, said Chris Myers, vice president for business development in Lockheed Martin's Maritime Systems and Sensors group.

"We saw that energy was going to become a national security issue as well as global climate change issue," said Myers. So in 2007 the company began pursuing opportunities to take its experience in manufacturing and process engineering and bring that to the alternative energy market.

Initially the company began with solar-thermal technologies through a development partnership with the private equity investment firm Starwood Energy Group. Some of that firm's $433 million fund will be used to back the development of utility scale solar projects alongside Lockheed Martin, according to a statement the companies issued in 2007.

When the project was first announced, Lockheed and its investment partner estimated up to 10 gigawatts of solar power could come online globally by 2017. At a cost per watt of $3, that generating capacity would represent a market of $30 billion.

Already the company is in the process of negotiating three power-purchase agreements with select utilities, and is building a solar power test-bed to prove the efficacy of the technologies it has developed.

Lockheed also sees similar opportunities in additional renewable energy markets like biofuels and ocean power, according to Myers.

The company is preparing to announce a partnership that will work on the development of non-food-based biomass-to-gasoline technologies, Myers said.

"We're providing engineering support and engineering services to the company that we're working with," Myers said. "We're working on a demonstration plant right now. From there we would go to a beta scale and then go to a commercial-scale biofuel plant."

Lockheed also sees opportunities in the ocean.

In January, Lockheed Martin and Ocean Power Technologies Inc. (OPTT) signed a letter of intent to collaborate on the development of a utility-scale wave-power generation project in North America.

Through the agreement, Ocean Power Technologies will provide its project and site-development expertise and build the power and control systems for the plant, while Lockheed Martin will handle the construction, systems integration and deployment of the plant, as well as operations and maintenance services.

Deeper and further out to sea, Lockheed plans on harnessing the ocean's thermal energy to generate power. Through a $1.2 million cooperative agreement contract with the Department of Energy, announced in October, Lockheed will explore the viability of ocean thermal energy conversion, which would use the thermal gradient of the sea to drive a heat engine.

Under the terms of the agreement, Lockheed Martin will demonstrate a cold-water pipe-fabrication approach that can make pipes durable enough to withstand moving the large volumes of seawater necessary to make commercial levels of power. The company thinks ocean-thermal technology can support both power generation and the desalination of seawater to produce potable water.

As the company moves into renewable energy it not only increases its potential for revenue from new business sectors, but also from new sources.

Currently a vast majority of the company's revenue comes from sales to the Department of Defense, which is the consumer of 58% of Lockheed Martin's goods and services. Selling power to utilities opens up a whole new class of customer for the defense giant.

The numbers Lockheed Martin generates from its renewable portfolio, both in energy generation and in energy efficiency services are dwarfed by the $11.6 billion the company saw in 2008 sales for electronic systems and the $11.6 billion it generated from information systems and global services, but a new multi-billion dollar market is hard to ignore, executives at the company said.

For Myers the energy market is a perfect fit in two ways. "We're dealing with regulated utilities and we're used to dealing with government-regulated customers," he said. "[Furthermore], we're a national security company and I view energy as a national security issue."

-By Jonathan Shieber, Dow Jones Newsletters; 201-938-4305; jonathan.shieber@dowjones.com