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Lockheed Martin's Fusion Breakthrough Is Just One Piece Of Its Fast-Growing Energy Portfolio

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When I interviewed Lockheed Martin Chairman & CEO Marillyn Hewson for Forbes.com in August, she stressed how pleased she was with her company's current business mix.  And well she might be.  Many analysts say the world's biggest defense contractor is also the best positioned in military markets for future success.  Lockheed is replacing most of the joint force's Cold War fighters, it dominates the military space business, it is the biggest provider of information services to the federal government, and its technology is found on every warship in the U.S. fleet.

(Disclosure: Lockheed Martin contributes to my think tank and is a consulting client.)

However, with little fanfare Hewson has been making a slew of investments in businesses beyond Lockheed Martin's traditional military focus.  The company has developed a filter that can remove salt from seawater a hundred times more efficiently than existing processes.  It has secured a license to mine polymetallic nodules containing rare earths on the Pacific seabed.  It has won awards for developing a revolutionary approach to farming millions of fish at sea in an environmentally friendly way.  And this week, its storied Skunk Works -- a secretive research site in California named after the moonshine factory in the hillbilly cartoon strip Li'L Abner -- disclosed a breakthrough in fusion research that could transform the world's energy future.

Briefly stated, the breakthrough would enable development of compact fusion reactors ten times more efficient than existing fusion designs.  A 100 megawatt power source capable of generating enough electricity for 80,000 homes could be carried on a single truck, sustained by a mere 55 pounds of low-cost hydrogen fuel per year.  Unlike in the case of fission reactors, there would be no risk of a meltdown and no long-term challenge in handling radioactive waste.  Instead, the technology would exploit the same physics powering the Sun to deliver clean energy in unprecedented abundance.  The company says it can have a working prototype in five years, and a saleable commercial product in ten.

What got missed by much of the initial coverage of this breakthrough is how extensive Lockheed Martin's portfolio of renewable energy ventures has become.  Senior management apparently decided some time ago that clean energy was the most attractive business development opportunity beyond its traditional military markets, so it now has over a dozen separate ventures in progress -- often in partnership with other companies.  Here is a sampling of what the company is doing energy-wise in addition to its fusion research.

1. Ocean thermal energy conversion (OTEC).  In partnership with Hong Kong-based Reignwood Group, the company is building the world's largest OTEC plant off the coast of southern China. Lockheed envisions the 10 megawatt floating facility as the first in a series of plants scaling up to 100 megawatts that exploit the heat difference between ocean depths and the Sun-warmed sea surface to generate electricity; the same technology could potentially be utilized along the U.S. Gulf Coast and lower East Coast.

2. Ocean tidal energy.  In partnership with tidal-energy leader Atlantis Resources, Lockheed is helping develop a 1.5 megawatt tidal turbine that will be one of the biggest single-rotor turbines ever developed.  Tidal turbines work like undersea wind turbines to generate electricity in locations where there are strong tides.  The turbine technology will be used in Scotland's MayGen project -- the world's largest tidal-energy project -- to help generate nearly 400 megawatts of power, and can be applied in other places such as Canada's Bay of Fundy.

3. Liquefied natural gas (LNG).  The same Lockheed Martin unit that built cryogenic fuel tanks for the Space Shuttle is now applying its expertise to a wide array of LNG supply-chain solutions.  Natural gas, which generates fewer greenhouse gases than other fossil fuels when burned, must be chilled to very low temperatures before it can be concentrated in liquid form for transport by sea.  The company has received initial orders to construct fuel tanks for LNG-powered vessels, and expects to participate in other areas of the on-going natural gas boom.

4. Biomass energy.  Lockheed Martin has signed a series of teaming agreements with commercial partners to use non-food feedstock and waste in generating clean energy.  For instance, it is providing engineering and construction services for a six megawatt biomass plant in Sydney, Nova Scotia that will generate both electricity and heat in an industrial park.  A separate venture with Blue Concord will help that company to scale up its waste conversion energy technologies for the global market, producing clean energy while reducing waste disposal challenges.

5. Smart-grid solutions.  Lockheed Martin's Information Systems & Global Solutions unit has developed an extensive practice in designing, operating and protecting smart electrical grids.  Smart grids greatly enhance the efficiency of electricity distribution through the use of information technology.  However, these tightly interconnected networks require sophisticated software code to deliver best results and ward off cyber attacks.  The company has developed an advanced cybersecurity solution tailored to the needs of the energy industry called Palisade.

6. Energy complex cyber defenses.  Earlier this year, Lockheed Martin made its first-ever acquisition in the cybersecurity business, purchasing a company called Industrial Defender.  Although Lockheed prefers to develop its cyber skills organically, Industrial Defender had assembled unique competencies in the protection of industrial control systems used by electric power grids, refineries, and oil/gas pipelines.  Protection of such vital infrastructure has been a growing concern, and Industrial Defender fits in well with Lockheed's focus on energy-complex security.

This is far from being an exhaustive list of Lockheed Martin's energy initiatives.  From its energy-efficient desalination technology to its longstanding management of the Energy Department's Sandia Lab to its fusion-energy research, Lockheed Martin has become a significant force in energy innovation.  Although much of this activity might seem like white-space business development for a defense contractor, company executives tend to view it as part and parcel of how national-security concerns are shifting.  Whether Washington wants a stealthy fighter or a secure electrical grid, Lockheed Martin is determined to be a player.