Jolt for Energy Innovation: Government Investing
A funny thing happened when
When Chu got to
People who have heard this story chuckle because they say that it's a good reminder of how slowly the government moves. But it's also a tale of how slowly the energy landscape in America is changing and how people like Chu, who are itching to change it, are frustrated with the pace.
Chu knows this is a problem. At the center of his effort to remedy it is a radical new program called ARPA--E, or the Advanced Research Projects Agency--Energy. The idea for the program came from a report Chu contributed to in 2005, and
Energy innovations. Can this approach do for energy what it has done for the military? Can it help usher in a new industrial revolution, this time in clean energy? Chu chose
ARPA--E's first big move was in October, when DOE announced that the program was awarding
The proposals all have two things in common. First, they're far enough along to be promising, but they're still too risky and have too many unknowns to be attractive to the business community. The ARPA--E folks like to talk about innovation as occurring along a spectrum from 1 to 10. A 1 is an idea, a concept, that still needs a lot of basic research; a 10 is a product that's ready to be sold. And here's the fundamental problem that energy researchers often face: There's funding at the low end of the spectrum, and there's funding from venture capitalists at the high end, but there's not a lot of funding in the middle, in the 4 to 6 range. Hence the moniker "valley of death."
The projects' second commonality is that each could be transform- ative if it panned out. Take 1366 Technologies, a
ARPA--E is closely monitoring the progress of its funding recipients and coaching them for a set period of time (1366 Technologies' contract runs 18 months) But the agency doesn't grow too attached. "Something could be a good idea on paper, but it may not work out," says Majumdar. "They may fail, and we'll learn quickly from it and move on." If a concept does work out, Majumdar's team will help market the product to buyers.
By most accounts, the innovation "valley of death" is only growing bigger. Venture capital has been hit hard by the recession. But more fundamentally, there's been a decades-long trend of declining investment in energy research, both from the government and from private companies, in part because energy was cheap and not a national priority. "The last big surge in energy research happened in the Seventies," says Majumdar. "That's not to say nothing happened in the Eighties and Nineties, but frankly, energy research and development was not a focal point for our country for about two and a half decades."
In the old days, successful innovators followed a well-defined path.
To get the company off the ground, he found venture capital. Yurek's company is now publicly traded, and business is good. But he admits that if he were starting out today, funding might be more difficult to find. "Venture capital is really taking it on the chin," he says. "Lots of groups have folded up." That doesn't mean Yurek is sold on the idea of the government taking over part of the job, however. "I think the jury is out on this right now," he says of ARPA--E. "You have some pretty enthusiastic guys within ARPA--E who want to do the right thing. They've got money to spend and throw at the wall and see what sticks. It could serve a purpose of seeding some good things."
The Chinese model has its flaws, which should serve as something of a cautionary tale for ARPA--E. "It's really a bunch of people sitting in a room in
Majumdar says he's trying to avoid that fate by funding different teams working on the same goal and letting the best approach win. "We don't know ahead of time which one is going to work in the market," he says. "So competing technologies are developed to the point that business can take over and someone makes money out of it."
That last point may be the most important one. Profit and risk-taking have long been the bedrock of American innovation, with high-quality products rising to the top. The lack of that is one reason why
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Jolt for Energy Innovation: Government Investing | Kent Garber
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