Thursday, March 03, 2011

The Fierce Urgency of Now: Notes from the ARPA-E Summit

by Matthew Hourihan and Matthew Stepp, Policy Analysts for the Information Technology and Innovation Foundation

There are times when the nation’s political leadership in Washington is perfectly in sync with the realities of the day, and there are times when much of that leadership is out to lunch. Exhibit A: the current energy debate. Even as global demand and instability threatens to challenge affordable supply, and as overseas states are investing heavily in clean technology, many of the nation’s leaders are contemplating gutting domestic investment in clean energy.

Amid this context, enter the 2011 ARPA-E Energy Innovation Summit, a gathering of some of the best and brightest in clean energy innovation intended to showcase often-astounding advances in energy technology. The Advanced Research Projects Agency-Energy – one of the single most important agencies in the federal innovation portfolio – has recently been fighting for its budgetary life, surviving a recent push to de-fund the program, and still facing significant uncertainty over future appropriations. Yet few programs are doing what ARPA-E is doing: supporting cutting-edge energy research in the private and academic sectors in search of revolutionary game-changers to fundamentally alter our energy landscape.

ARPA-E was modeled after DARPA – the cutting-edge Defense Department research agency – to be an agile, dynamic innovation engine at the recommendation of the National Academies. It’s early yet (the agency’s research programs are multiyear endeavors), but if just a handful pay off, the potential upside is enormous. Already, certain awardees are leveraging public funding to entice private investment at a 4-to-1 ratio. Agency Director Arun Majumdar summed up the program’s mission on the first day: “What ARPA-e does best is identify the opportunities and create the competition. And eventually, the market will pick the winners.” (video)

Even given its relative youth and small size, the agency has attracted plaudits for its ability, as when CO Sen. Mark Udall remarked of ARPA-E at the summit, “You're a model of efficiency. That’s government at its best.” On top of this well-earned reputation, multiple expert recommendations have said ARPA-E is critical to American cleantech competitiveness and urged a boost to its original $400 million budget. And last year Congress saw fit to reauthorize the agency for three more years in the America COMPETES Act, albeit at lower levels than has been recommended.

Nevertheless, some leaders want to zero out the agency, and even those who nominally support it remain unwilling to invest adequately. AK Sen. Lisa Murkowski acknowledged as much, warning that “Many programs are never funded at their authorized levels, let alone higher. At what level Congress will support funding for ARPA-E remains uncertain.”

Suffice to say, we hope those leaders out to lunch will finish up soon and get back to investing in the future.

The Future on Display
Congressional disconnect notwithstanding, what the conference made clear is that there is enormous vitality behind the movement towards energy innovation. This is partly due to the urgency of the cleantech competitiveness challenge. As Energy Secretary Stephen Chu put it, “Clean energy is a race and the train is leaving the station.” Former Governor Arnold Schwarzenegger was more colorful, but still spot on, ending his sterling keynote address with a reference to his past role as Conan the Barbarian that got plenty of laughs: “I’ve made a lot of action movies in the past, so I know about action. And you are the true people of action. Conan [the Barbarian] was asked, 'What is best in life?' He answered, 'To crush your enemies, see them driven before you and to hear the lamentations of the women.' Now, my views have evolved since. But my point is that Conan was not big on philosophy or navel-gazing. He was big on action, just like you.”

And that vitality is there for good reason: the energy technology sector—from private entrepreneurs and investors to scientists and engineers in university labs—is brimming with, well, energy, in the form of radical and frequently eye popping ideas for advanced low-carbon energy technology. Dozens of these experimental projects – many of which are supported by ARPA-E – were on display at the technology showcase, a sampling of which can be found here (with photos here). In the midst of a burgeoning trillion-dollar market, many of these technologies could yield massive returns on investment – assuming, of course, adequate and appropriate policy support is there to accelerate their development.

The discussion covered much more ground than can be summarized here, but there were a few key themes that rose to the surface through the summit.

DOD Wants Effective Cleantech
Top Navy official John Quinn told the summit his superiors need to “be bold” on energy innovation. Partnering with ARPA-E is a good start: Navy Secretary Ray Mabus made news by announcing a pair of energy storage projects in partnership with ARPA-E. Many have made the connection between overseas fossil fuels and national security risks, but Mabus also made clear during his speech that clean energy also represents an opportunity: to make a more agile and efficient fighting force free of dangerous supply convoys, as well as to reduce the need to defend the global oil pipeline. Solar-powered rucksacks save marine patrols from having to carry 700 pounds of extra weight. And alternative fueled ships like the USS Makin Island could save hundreds of millions of dollars in costs. Contrast this with Mabus’ observation that every $1 increase in the price of oil costs the Navy $31 million (and keep in mind, world crude has increased by $30 over the past year). These are resources to purchase, transport, and protect that could be used elsewhere.

As for the naysayers who argue that an effective fighting force can’t rely on petroleum alternatives, Mabus pointed out that they’ve been there every time the Navy transitioned to new energy sources, from wind to coal to oil, but “every time it’s lead to a better navy.”

IT and Power Electronics Have a Big Role to Play
Whether through the use of supercomputers to develop more efficient wind turbine blades or the development of innovative software to develop new and better chemical energy solutions, IT was a common theme throughout the summit and stamped on nearly every project.

For example, CREE Inc. – an ARPA-E supported business – is developing the necessary technology to seamlessly integrate grid-capacity clean energy and rapidly charge electric cars on-grid. Their idea seeks to create an efficient, intelligent substation, replacing traditional transformers, to manage the stream of energy coming from clean sources to consumers. These new transformers would be drastically smaller and much less costly, and act as an IT middle man – allowing bidirectional flow of energy (consumers both producing and consuming clean energy) as well as efficiently managing the often time-inconsistent flow from clean generators through a smarter grid (which would of course be mitigated by advanced storage eventually).

Another showcased example is Arkansas Power Electronics International (APEI). Consumers will require plug-in vehicles to rapidly charge, just like gasoline power vehicles can be quickly refueled. But with greater penetration of PHEVs, rapid charging could quickly strain or overload the grid and local infrastructure. APEI showcased advances in small, modular power conversion technologies utilizing silicon-carbide semiconductors that promise high-temperature operation, meaning they would allow for high power densities conducted by rapid-charge PHEVs. And because this technology is modular and significantly smaller than typical high power density converters, their cost is greatly reduced.

Manufacturing Needs to Be Here
Many economists shrug off the need to maintain a viable manufacturing base. But this is of course mistaken thinking, as the message came through loud and clear from the manufacturing-oriented panel. As Siemens Chairman Peter Solmssen pointed out, “Innovation includes R&D, and the 'D' part in particular is important to a competitive manufacturing sector.”

What also was clear is that government has an important role to play in boosting that sector, through a comprehensive approach: stable market creation for scaleup, targeted R&D support, incentives for investment, and a coherent strategy to tie it all together. Business Roundtable President and former Michigan Governor John Engler highlighted the importance of making the R&D credit permanent and in continuing to foster productive programs like NIST’s Manufacturing Extension Partnership.

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