Exploring the Federal Role in Energy Innovation

Introduction and Keynote

On February 3, 2016, the American Energy Innovation Council hosted the second event in our “Partners in Ingenuity” series?From Science to Marketplace: The Federal Role in Innovation. This series represents an ongoing effort to bring together key stakeholders to confront challenges facing energy technology research and development. Representative Randy Hultgren’s (R-IL) opening remarks focused on the catalyzing role that smart federal investments, such as our national labs, can have on economic growth. Hultgren praised public-private partnerships, referencing the potential of the Mission Innovation initiative, in which the United States and 19 other countries have committed to doubling clean energy R&D over five years (00:09:07). He also highlighted its private sector complement, the Breakthrough Energy Coalition, a group of investors aiming to provide patient capital for transformative energy projects. Hultgren, noting that federal support for energy innovation has lagged in recent years, stressed the economic potential of these investments as key to the growing bipartisan support for energy innovation.

Panel I: Economics of Innovation

This discussion focused on the economic value of federal investments in energy innovation. Carrie Houtman, Issues Management & Crisis Communications Director for the Dow Chemical Company, started off the conversation by noting that more money does not necessarily lead to more or better innovation (00:06:00) and stressed the need for building collaborative relationships that are more responsive to market signals. Erik Bikerts, CEO of Clean Energy Trust, also said that more money does not necessarily lead to more innovation, but stressed that private sector investments had declined significantly, making smart federal investments even more important (00:15:34). Steve LeVine, author of The Powerhouse and Washington correspondent for Quartz, suggested that using market signals alone to guide federal investments was a flawed approach. Citing the work of the Eastern Shales Gas Project as a “blue sky” investment that has paid tremendous dividends (00:23:30), LeVine said that since no one knows where the next breakthrough will come from, a robust federal role is necessary.

The panelists all agreed on the need to facilitate better tech transfer and commercialization efforts to ensure American competitiveness. Bikerts noted that a focus on commercialization allows for the greatest yield on investments and is critical to conversations about R&D investments (00:17:45). Houtman told the audience about how early DOE investments in high throughput testing, commercialized by Dow, allowed for a tenfold increase in patenting in just 10 years (00:10:17). LeVine, pointing to South Korea’s dominance of the electric battery industry, (00:20:00) said that America risks becoming an energy technology consumer, not a producer, if it doesn’t invest in new energy technology. Bikerts highlighted DOE’s Voucher program as an example of a smart investment that doesn’t have to involve expensive, large-scale projects (00:32:14). The panelists’ remarks made clear that the need for investment doesn’t simply involve improving funding, but rather filling gaps that the private sector isn’t suited to fill. Moreover, as LeVine pointed out “the runway is very long, but the potential payoff is so much larger than for Twitter” (00:35:00).

Moderated Discussion

Former Undersecretary of Energy David Garman discussed energy storage technology with Phil Giudice, CEO of Ambri, which is considered an ARPA-E success story. Ambri is developing an innovative new battery that could significantly improve the reliability of the electric grid, allow for better integration of renewable resources, and do it all at a price low enough to compete with the existing electric grid (00:05:30). Giudice described some of the challenges associated with developing transformative energy technologies, calling the electric power sector the “most capital intensive industry in the world” (00:05:58), requiring over $3 in assets to produce $1 in revenue. Giudice highlighted how Ambri’s technology was initially developed at MIT and would have never left the drawing board (00:18:30) without support from ARPA-E. Giudice described the strict milestones and funding timelines, as well as ARPA-E’s focus on commercialization, as keys to enabling the technology to go from concept to full demonstration.

Panel II: Innovation Collaboratives

The second panel focused on ways in which the Department of Energy has been working to improve collaborative partnerships between innovators, academics, government, and private industry. Dr. Ellen Williams, Director of ARPA-E, described the ARPA-E process for competitively selecting projects, elaborating on the “if it works, will it matter” philosophy (00:11:10) behind the agency’s approach. Williams also cited rigorous and collaborative project management processes, including early commercialization support that has enabled 20 percent of ARPA-E projects to secure follow-on private investment by the end of the support period (00:09:24). David Danielson, Assistant Secretary of Energy Efficiency and Renewable Energy (EERE) at the Department of Energy, referenced the earlier discussions about return on investment by pointing to $12 billion in EERE investments that had provided $230 billion in returns between 1976 and 2012 (00:18:30). He stressed that in order to adequately address the “size of the prize” we need to double the impact of dollars spent on innovation while doubling the investments we’re making (00:21:25). He went on to highlight ways that EERE is focused on creating high impact models, such as research consortiums that better align public and private sector priorities.

Ilan Gur, Founding Director of Cyclotron Road, shifted the focus of the conversation towards human capital, suggesting that innovation is a story about people (00:30:45). He outlined Cyclotron Road’s work in supporting entrepreneurs by embedding them in the national labs. This model has the benefit of more fully leveraging national investments in the form of lab equipment and facilities, but also has the unintended benefit of helping lab staff develop better understanding of industry perspectives, said Gur. John Wall, former CTO of Cummins, focused on the importance of the federal innovation ecosystem in bringing together collaborators with a diversity of skillsets that don’t typically exist within a single company (00:43:07). Wall said consortiums that utilize large assets at the national labs provide a competitive advantage for U.S. businesses as even companies as large as Cummins could not justify the expense internally. Wall pointed out that although increased funding alone doesn’t equal more innovation, stable funding and strong relationships between the private sector and the labs are critical for our nation’s prosperity.