Pentagon interested in satellite solar power system

"The technology has advanced vastly, and the security situation has changed quite a bit, as well as the economic situation," Marine Lt. Col. Paul Damphousse, who took over the study from Smith last month, told msnbc.com. "Those things warranted another look."

Those factors still don't make space solar power attractive for commercial users, but a better case could be made for the Defense Department. The U.S. military pays a premium for its power in the battlefield, when you consider the cost of shipping oil out of the Middle East, refining it, then shipping the fuel back to the combat zone and burning it in electrical generators, Miller said. All that brings the current power price tag to $1 or more per killowatt-hour, compared with 5 to 10 cents on the domestic market, the report says.

Even then, the economic equation still doesn't add up, due primarily to the high cost of launching payloads to orbit. But in the near future, the U.S. military could become a potential "anchor tenant customer" for space-generated power, the report says.

"The business case may close in the near future with appropriate technology investment and risk-reduction efforts by the U.S. government, and with appropriate financial incentives to industry," the report says.

Smith said the military would prefer to buy its power from a commercial space provider, rather than operating the system itself. "It is our goal to move this entire project out of DOD [the Department of Defense] as quickly as possible," he said. "Energy is not our business. We want to be a customer."