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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DOE smacks down Space Solar to Fund Hot Parking Lots

(by Tyler Burton, crossposted from the Breakthrough Institute blog)

The ARPA-E initiative is a project of the Department of Energy, its purpose is to fund "high-risk, high-payoff transformational R&D ... that can enhance the economic and energy security of the United States through reductions of imports of energy from foreign sources, etc." (more here)

Funded with money from the American Recovery and Reinvestment Act, one would think that ARPA-E, being a semantic cousin of the Pentagon's well-known DARPA division, famous for its assisted walking suits, robotic espionage dragonflys and, of course, the internet, would have a slew of strange projects on their roster. However, one scientist, whose rejected space based solar program requested a modest $2 million dollars for further testing, feels the DOE's selection process was a bit lopsided.



Senior Breakthrough Fellow and Professor Emeritus of Physics at NYU, Martin Hoffert, has long made the case for space-based solar power as an alternative to earth-moored models. Up beyond the filters of pollution and the limits of daylight, the sun's energy is nearly constant and undiffused. Using solar panels affixed to a satellite or, say, the International Space Station, the idea would be to beam the energy back to terrestrial sources in the form of microwaves or some other heretofore undiscovered method.

Hoffert even has the PR effort down pat, as he explains in a segment for Clean Skies TV: "We've spent a fortune on the International Space Station, and people are still saying, 'What have we got from it?' Well, we could probably beam power from the International Space Station to various locations along its ground track, including some in developing countries that have no prospect of getting energy."

Now that certainly sounds "transformational"; and for $2 million dollars it's a no-brainer, right? But out of the 3500 applications the ARPA-E program received, only 40 - 60 (roughly 1.1%) will receive funding of between $3 to $5 million dollars. While Hoffert's program got the snub, in the approved pile is a project that aims to capture the heat trapped in asphalt parking lots and other paved surfaces via a series of tubes filled with water.

On his Dot Earth blog, NY Times science reporter, Andy Revkin, asks the $2 million dollar question: "Which project strikes you as more 'transformational'?"



Solaren gets the nod from PG&E, Hoffert gets the snub...

Not only is Hoffert's query more transformational, it is also supported by big industry. When news broke this April that California's biggest energy utility, PG&E, had signed on with Solaren, a manufacturer of solar cells, to potentially capture and beam back to earth 200 megawatts of electricity from solar power stations orbiting the earth, can you guess who wasn't too surprised to hear the news?

PG&E have contributed no money to the project as of yet, but have promised to buy the energy back from Solaren at an undisclosed, but roughly equivalent rate to the current market prices of other renewables.

"Solaren would generate the power using solar panels in Earth orbit and convert it to radio-frequency transmissions that would be beamed down to a receiving station in Fresno, PG&E said. From there, the energy would be converted into electricity and fed into PG&E's power grid." (via MSNBC)

The Solaren plan puts together some more of the specifics about how they plan to get the satellites into space via private deployment vehicles, which makes sense given that most of its employees are former aerospace engineers, but it makes no mention of using methods other than those that Hoffert and his son, through their company, Versatility Energy, have long pioneered to beam the wattage back to terra firma.

So it would seem that with a major utility taking the time to put its public stamp of commitment upon a technology, that the development of the above-mentioned "undiscovered methods" would merit at least a couple million dollars study in the meantime, particularly if the results might further the adoption of a potentially limitless resource. Then again, maybe ARPA-E's focus is on something a bit more pedestrian.

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Shouldn’t Energy Innovation be Worth More than Rush Limbaugh?!

Despite President Obama’s call for an energy revolution, it is up to Congress to provide funding. The Department of Energy’s Advanced Research Projects Agency – Energy (ARPA-e) made a recent call for research proposals into “high-risk, high-payoff transformational energy-related R&D,” for projects that “(1) translate scientific discoveries and cutting-edge inventions into technological innovations and (2) accelerate transformational technological advances in areas that industry by itself is not likely to undertake because of high technical or financial risk.”

Over 3,500 research teams submitted proposals for a slice of the available $150 million. As a result, over 98% of applicants we “discouraged” from submitting a full application.

Sure, some of the applications were “undoubtedly unrealistic, fundamentally flawed, written in crayon, or the like,” as Andrew Revkin aptly noted at Dot Earth. But with 98% of all proposals rejected, there’s got to be another explanation for the high rejection rate as well. Surely at least 5%, 10%, maybe even one third of these proposals are worth further consideration. Remember: this round of project proposals was simply to get into the next round of consideration where ARPA-e program managers would being the real project grant selection process. No, the reason so many proposals were rejected has more to do with the fact that there is simply not nearly enough money to fund all the good, potentially game-changing clean energy ideas out there.

This problem is not unique to this ARPA-e or this round of research proposals. It is a chronic symptom of this country’s (under)commitment to clean energy. For FY 2009, ARPA-E received $15 million, just enough to cover operating expenses, to say nothing about grants for research. The agency did receive $400 million from the stimulus, which is the source for this round of proposals, and may last through a year or two of project grants. Although the stimulus funding is admirable, it is nowhere near the sustained level of energy funding needed to transform our energy system. In 2007, the federal government spent just $4 billion on energy-related R&D, which was just 3 percent of total federal R&D investments and a measly 0.03 percent of GDP.

Here are a few comparisons to help illustrate the scale of money I'm talking about.

• $150 million: The amount of funding for the recent ARPA-E grants. The State of Wisconsin alone is dedicating $150 million to clean energy projects, albeit for clean energy deployment (not research).
• $400 million: Amount of funding for ARPA-E in the stimulus. Rush Limbaugh’s extended contract in 2008 was worth $400 million as was former Exxon Chairman Lee Raymond’s retirement package in 2006.
• $3 billion: That’s how much money the U.S. invests each year in defense-related innovation through DARPA alone. DARPA, the Defense Advanced Research Projects Administration (responsible for funding the invention of the Internet, GPS, among many others) is the highly-regarded inspiration for ARPA-e and provides a good example of what a fully-funded federal innovation agency looks like. (By the way, total annual defense-related R&D spending tops $80 billion annually!)
• $4 billion: Amount federal government spent on energy research in 2007. Also how much the Navy paid in phone bills that same year.
• $30 and $84 billion: Amounts Japan and South Korea are spending on energy research and support for new clean energy technologies over the next 5 years.
• $30 billion is also the amount the U.S. government invests every year in the National Institutes of Health, as we pursue cures to ravaging diseases. That is what a national commitment to research and innovation really looks like. We’ll know that the U.S. is truly serious about clean energy innovation when it invests at least the same order of magnitude in energy R&D as we spend on health care research ever year.
• $440-660 billion: Amount China is reportedly investing in their clean energy technologies and industries over the next ten years.

Oh, and don’t expect private investments to make up the difference. The Brookings Institute estimated that in 2007 private sector investments in R&D were at only $2.4 billion, and investments have declined since the recent economic meltdown. Individual biotech companies invest more in R&D than the entire energy industry combined. In short, current U.S. investments in energy are pretty much chump change – and it’s time we got serious about remedying that fact.

The federal government, specifically Congress, must provide adequate funding for energy research if we are to take the nation’s mounting energy challenges seriously. $150 million for ARPA-E projects is a start (a small one), but we should increase federal energy innovation spending by at least $15 billion per year to make the scale of commitment necessary to make a difference in our nation’s energy challenges – and even more if we are to compete in the clean energy race with countries like Japan, South Korea and China.

Cross-posted at Breakthrough Generation

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