Partnerships for Energy Innovation

February 27, 2017

In 2007, the National Academies of Sciences challenged the U.S. federal government to devise a “comprehensive and coordinated federal effort” to increase U.S. competitiveness in science and technology to bolster our collective economic and employment outlook for the future. The same year, Congress passed and President George W. Bush signed into law, the America Competes Act, which took the National Academies’ advice to heart and developed a research and development (R&D) strategy and programs across federal agencies. One of the most notable programs created by this legislation is the Advanced Research Projects Agency-Energy (ARPA-E). Housed at the U.S. Department of Energy, it is designed to complement an already robust research and development portfolio with investments in “high-risk, high-return” projects that could have a meaningful impact on “reducing energy imports, reducing energy-related emissions and greenhouse gases, and improving energy efficiency in all sectors of the U.S. economy.”

ARPA-E plays a unique and important role in the energy innovation process. Guided by the simple mantra—“if it works, will it matter?”—their goal is to accelerate the development of transformative or disruptive energy technologies. In the world of innovation, ARPA-E seeks to bridge the valley of death between basic research and private sector R&D by working on the techno-economic challenges and risks that limit private sector engagement. Funded projects fall into four main categories: electricity generation; electrical grid operations including storage, energy efficiency and emissions; and transportation, including vehicle batteries. Within each category, project applications are evaluated for both specific scientific and commercial barriers and the potential for resolution of those barriers to yield real change in the energy system. A large percentage of ARPA-E funding recipients and partners are in the private sector—approximately 46 percent of ARPA-E projects are led by businesses, and roughly 79 percent of all projects include a business partner.

For a group that is comfortable with the failure so often necessary for moving innovation forward—they’ve been remarkably successful. According to a recent report, since its inception, ARPA-E has invested over $1.5 billion in research funding distributed across more than 35 programs and 500 projects, of which 45 projects have received follow-on funding from the private sector totaling $1.8 billion and 36 have resulted in the formation of new companies. ARPA-E is a stand out model for a new type of R&D support—it was patterned after a similar program in the U.S. Defense Department, but in many ways, its technological commercialization challenges are much different from those in the defense industry.

These types of innovation partnerships are more important than ever in the face of today’s challenges to provide affordable, clean, and reliable energy sources to growing world populations; meet the expectations of changing consumer preferences; incorporate new technologies and capabilities; and to reduce pollution and emissions. So far, ARPA-E’s success is catching on. Major countries and companies around the world are following suit. Mission Innovation is a partnership of more than 20 of the world’s largest economies that have committed to doubling their own R&D spending and seeking partnerships with the private sector—some patterned after ARPA-E. The Breakthrough Energy Coalition, a group of private sector investors led by Bill Gates, has also committed to the high-risk, high-reward funding philosophy espoused by ARPA-E. This week ARPA-E will hold its annual Energy Innovation Summit just outside of Washington, DC—a chance to review and reflect upon their accomplishments to date while seeding new opportunities for the coming year. Also expected this week, the Trump administration will outline its budget priorities and address Congress about how to enact policies and programs that seek to bolster the U.S. economy and create jobs. ARPA-E is one good, bipartisan example of how government can create private sector opportunity and boost American competitiveness. The president and Congress would do well to safeguard and strengthen its role as a source of new growth and opportunity.

Sarah O. Ladislaw is a senior fellow and director of the Energy and National Security Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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