A research consortium led by Pennsylvania State University won up to $129 million in federal funding to develop an "energy innovation hub" at the Philadelphia Navy Yard - a project expected to create and retain 1,200 jobs in the area immediately and as many as 100,000 over the next five to 10 years, officials said Tuesday.

The Penn State group garnered the highly competitive grant - the largest in the university's history - from the Department of Energy. Three other federal agencies also contributed about $7 million, and Pennsylvania kicked in $30 million.

The federal grant - to be paid out over the next five years - will fund research into energy-efficient building designs and training workers in how to do the best retrofitting and new construction.

Main projects include retrofitting a 28,000-square-foot building - an old gymnasium in disrepair - into lab space and office space on the Navy Yard campus. A new 40,000-square-foot building also will go up adjacent to it and serve as a living laboratory. Research will focus on how to improve energy efficiency and cut pollution in the construction, maintenance, and management of buildings, with a particular emphasis on retrofitting older buildings.

"It's really a technological game changer," said Henry C. Foley, Penn State's vice president for research and dean of the graduate school, who will lead the effort.

The team includes Princeton, Rutgers, the University of Pennsylvania, Drexel, and other institutions.

But while the grant was secured by Penn State in cooperation with various state, local, and federal politicians, it was the Navy Yard's unique qualities that sold the federal funders on the project. The Navy Yard's 1,200 acres includes more than seven miles of waterfront, a workforce of 8,000 in more than 100 companies, 5.5 million square feet of buildings, and more than $500 million of private investment.

"It is perfect as a test bed," said John Grady, executive vice president of the Philadelphia Industrial Development Corp., which manages the Navy Yard for the City of Philadelphia.

The Navy Yard's inventory of 200 buildings provides a complete and diverse set of "lab rats." Buildings are old and brand new and include factories, offices, warehouses, research facilities, and, eventually, residences.

The Navy Yard has its own unregulated power grid. That allows experiments on how buildings relate to the power grid to be conducted without having to affect the city's entire power system.

"It's bigger than a test lab, but smaller than a regional grid," Grady said. "Because we own it, we can implement new software technologies."

Foley said he was excited about the potential.

"It's a little city within a city . . . with very old buildings we can experiment on," he said in an interview from his office in State College, shortly before meeting with Mayor Nutter and Penn State president Graham B. Spanier.

Buildings account for nearly 40 percent of U.S. energy consumption and carbon emissions. The research could lead to reduced energy use and bills, less pollution, and more jobs in the building-efficiency industry, officials said.

The Department of Energy on Tuesday declined to comment on the Philadelphia proposal or say how many other applicants had vied for the money. Crain's New York Business reported that the project beat out a New York "consortium of more than 100 education, nonprofit, government, and industry groups" that had said the project would create 76,000 jobs at Syracuse University.

"All applicants went through a competitive review process with experts from the federal government, industry, and academia that looked at the scientific and technical merit of the projects, along with the qualifications of the management team and personnel, and the applicants' plans for commercializing their technologies," the department said. "This innovation hub will spur significant job creation and economic development throughout Pennsylvania."

Creating green-energy jobs has been a priority of President Obama's. Congress has already approved $22 million for this project and is expected to authorize the balance for each of the next four years.

The Penn State consortium, called the Greater Philadelphia Innovation Cluster, includes academic institutions, federal laboratories, global industry partners, regional economic development agencies, and other entities.

The Philadelphia project becomes the third energy hub to be funded nationally. There is one for nuclear power at Oak Ridge National Lab in Tennessee and another for solar power at the California Institute of Technology.

In announcing the Penn State grant, U.S. Energy Secretary Steven Chu emphasized the importance of the hubs.

"The Energy Innovation Hubs are a key part of our effort to harness the power of American ingenuity to achieve transformative energy breakthroughs," he said in a prepared statement. "By bringing together some of our brightest minds, we can develop cutting-edge building-energy-efficiency technologies that will reduce energy bills, cut carbon pollution, and create jobs. This important investment will help Philadelphia become a leader in the global clean-energy economy."

The project will do more than develop technologies. It will also engage students and researchers in how those technologies are put into use, said James Gambino, vice president of technology commercialization at Ben Franklin Technology Partners, a quasi-state agency that will be neighbor and partner to the Penn State project at the Navy Yard.

For example, he said, computers often have complex capabilities that are never used because only a handful of geeks on the help desk understand them. The project aims to avoid a similar pattern in energy technology. "We're going to see how the human factor works, how people relate to them, how they use them," Grady said.

Research will include components of training and communication.

Grady said the project's implications go beyond its immediate impact at the Navy Yard.

"We already know that life-sciences drive a huge section of our economy in the Philadelphia area," he said. "We think that engineering and energy can be a great second hitter in our economic lineup in our city of Philadelphia.

"We can build a new economy not just around energy, but around engineering and all its implications - software, grids, energy management, the storage of energy."

The project, which is expected to begin by Oct. 30, was heralded by Gov. Rendell and Sen. Bob Casey (D., Pa.), who both said they had sent letters of support to the Energy Department.

"This funding is great news for the commonwealth and is a crucial step towards creating a more sustainable and environmentally friendly America," Casey said in a statement.