NEW YORK (Reuters) - Alternative energy companies hope to get a big boost from the U.S. military, a massive new customer that will soon be spending billions of dollars in economic stimulus aimed at greening the federal government.

Melding military might and environmental awareness will bring savings for the Pentagon, a major fuel user. Green technology producers also hope ramping up production to fill government contracts could help them achieve economies of scale, making their products more affordable for others.

The Pentagon says the initiative could also save lives as fewer troops are needed for the dangerous job of transporting and guarding petroleum.

One project, the army's initiative to insulate tents, saves about 100,000 gallons of fuel a day, said Brigadier General Steven Anderson, deputy chief of staff and operations and logistics readiness director at U.S. Army Headquarters.

That one initiative will save $2 million a day or $700 million a year, he said.

"TIDAL WAVE OF WORK"

Such payoffs already have given a big boost to military demand for green energy products, from efficient electrical generators and solar panels to fuel cells, developers said.

They expect demand to balloon even more as the military gets its portion of the $4.5 billion in stimulus money devoted to greening federal buildings.

"We're seeing this big tidal wave of work," said Melton David, chief executive of Sacred Power Inc, a small solar electricity company based in Albuquerque, New Mexico.

In the last week alone, the U.S. Army and Air Force have both contacted David's company with proposals that could result in multimillion-dollar projects, he said.

Sales at privately held Sacred Power, now less than $5 million a year, could jump by as much as 30 percent in the next year, enabling the company to add 10 professional jobs, David estimates.

Light Engineering, which makes efficient electric motors and generators, estimates that military application of its technologies will quadruple sales in 2009 to $8 million.

Already, about half of Light Engineering's business comes from the military, CEO Matt Johnston said.

A GREEN REVOLUTION'

Some see increased U.S. military interest in alternative energy and energy efficiency as a key catalyst for a nation-wide green revolution.

Investment soared last year as crude prices soared to record highs in the summer. Prices have plummeted since then, sparking fears that alternative energy projects could stall.

But demand for green technologies from the military, the largest single U.S. energy consumer, could help make the products more affordable for businesses and consumers.

"The more we acquire, the less the cost of the product will be for the private sector," said Paul Bollinger, deputy assistant secretary of the Army for energy and partnerships.

Green energy advocates noted that military spending has helped make other cutting-edge technologies commercially practical. The Internet, global positioning systems, microchips and the jet engine industry were all incubated in the military before spreading to commercial and consumer markets.

"Some of the bonus effects are that jobs will be created, the environment will be less harmed and we'll be more secure," said Dan Nolan, founder of Sabot 6 Inc, a consultancy that links green energy firms with government agencies.

SAVING LIVES TOO

Experts say the effort should also save lives that could be lost transporting petroleum along dangerous roads.

"We knew that if we could reduce (our fuel) requirement, we could take trucks off the road and what we'd do is save lives," said Brigadier General Anderson.

About half of U.S. military casualties are associated with convoys, mostly hauling fuel. "That's the soft underbelly of our deployed forces," said Amory Lovins, chairman and chief scientist of Rocky Mountain Institute, an independent nonprofit think tank.

Using more alternative energy "can free up many tens of billions of a year and a great cost in blood as well as treasure and improve combat effectiveness markedly," said Lovins.

(Editing by David Gregorio)

Reprint permission provided by Reuters. The article was originally published by Reuters on March 10, 2009.