The first-ever assessment of the Department of Energy’s energy innovation incubator is in and the glowing reviews say its Advanced Research Projects Agency – Energy (ARPA-E) is driving cutting-edge innovation in energy technologies with the potential to greatly enhance U.S. economic competitiveness and energy security. Unfortunately, the president’s proposed 2018 budget eliminates it.
While the Trump Administration argues that private industry should finance these efforts, the National Academy of Sciences assessment reaches the exact opposite conclusion: industry isn’t willing to take on these high-risk, high-reward projects. Funding cuts for ARPA-E and other government R&D efforts put the economic and energy security of the U.S. at risk and threaten America’s place as an energy leader.
Under the proposed Department of Energy (DOE) budget, which Secretary Rick Perry will be asked to defend at congressional hearings this week, the Trump administration would slash ARPA-E’s funding by almost 95 percent in 2018 and shutter it in 2019. Trump’s 2017 budget proposal also attempted to eliminate the program, but Congress ended up actually increasing ARPA-E’s funding by $15 million instead. Not only has the administration proposed eliminating this program, but the incoming agency leadership has been dragging their feet by withholding grant funding for previously approved projects.
When Congress first authorized ARPA-E in 2007, it mandated a third-party review after the first six years (while authorized in 2007, ARPA-E did not receive funding until 2009). The National Academy of Sciences (NAS) assessment released last week provides the first estimations of the impact of ARPA-E – information that is even more critical given the administration’s attempts to eliminate it.
What is ARPA-E?
ARPA-E supports the early development of risky energy technologies that have the potential to revolutionize and transform our energy system. It serves a distinct and critical role, bridging the gap between the national labs’ basic science work and DOE programs that support pilot, commercial-scale projects. At ARPA-E, “revolutionary advancements in fundamental and applied sciences” are given the technical and financial support to translate this fundamental research into engineering reality.
ARPA-E has two broad missions:
- To “enhance the economic and energy security of the United States” by supporting development of technologies that:
- reduce imports of energy from foreign counties,
- reduce energy-related pollution and emissions, and
- improve the energy efficiency of the U.S. economy
- To “ensure that the United States maintains a technological lead in developing and deploying advanced energy technologies.”
On Track to Achieve Its Congressionally Established Mission
ARPA-E’s first funding opportunity attracted over 3,700 concept papers, with 37 projects (or 1 percent of applicants) selected for an initial three years of funding in October 2009. Even at this early stage, ARPA-E made waves: “setting records within the DOE” for the speed at which it processed and awarded funding.
As of February 2017, ARPA-E had invested over $1.5 billion in 580 projects. They cover 39 focus areas and programs and represent just five percent of the funding requests ARPA-E has received. Over 200 projects have already been completed, providing a record of early accomplishments.
So far, 74 ARPA-E projects have attracted $1.8 billion in private funding to complete next-stage pilot projects. And many projects have received further funding from other federal agencies, most notably from the Department of Defense, which has seen huge value in ARPA-E projects. These technologies can lower the costs of powering U.S. military bases overseas, eliminate the military’s reliance on foreign fuels, and improve troop mobility and health.
ARPA-E grantee, 1366 Technologies, highlights the unique and critical role this program plays in fostering new, better energy technologies and maintaining America’s leadership on innovation. 1366 Technologies won one of the first 37 ARPA-E grants in 2009. They set out to develop a new, cheaper way to manufacture solar wafers, which are the building blocks of solar panels. Their new process had the potential to develop more efficient solar wafers at half the cost. And because most solar panels are imported, this cost-saving process could help make U.S. solar panel manufacturing a more economic option – reducing U.S. reliance on imports from China, while boosting American jobs and economic growth. Since winning funding in 2009, 1366 Technologies has gone on to set global solar efficiency records, successfully raised almost $100 million in private investor funding, and is almost done completing its first commercial-scale manufacturing facility, which is expected to bring up to 1,000 new jobs and $700 million in new investment to western New York.
After reviewing the early successes of ARPA-E grantees, the NAS report concludes “that ARPA-E is making progress towards achieving its statutory missions and goals” with “no signs that ARPA-E is failing, or on a path to failing, to deliver on its missions and goals”.
A Positive Agent of Change
The report also notes the positive impact of ARPA-E on the operation of other DOE programs and the broader federal government. ARPA-E has been anecdotally described as more similar to a start-up than a government agency, with a culture focused on talent, openness, and empowerment that encourages risk-taking necessary to produce true innovation. ARPA-E is widely seen as “nimble, efficient,” with the report noting that several federal offices have “adapted some ARPA-E practices in an effort to improve their own operations.” This includes new DOE procedures that empower staff to make funding recommendations, adjust and create milestones over the project period, and allow for termination of under-performing projects. These changes reduce the bureaucracy and improve the operational efficiency and responsiveness of federal programs.
The report says these ripple impacts “increase the efficacy of the programs and their value to the American people,” and calls on Secretary Rick Perry to continue incorporating ARPA-E practices across the department to improve operations and reduce the DOE’s bureaucratic culture.
Reform Attempts “Pose Significant Risk” on Chances of Success
The NAS report closes its findings with “the agency is not failing and is not in need of reform. In fact, attempts to reform the agency… would pose a significant risk of harming its efforts and chances of achieving its mission and goals.” While ARPA-E is a relatively new program – all signs show it is flourishing. It has spurred dozens of new companies and billions in private investment. DOE has seen an unparalleled level of patents and publications come out of its ARPA-E Projects. And the more open and flexible environment of ARPA-E has the potential to reduce federal bureaucracy, improve agency efficiency, and increase the value of federal programs for the American people. Secretary Perry, the Trump Administration, and Congress should heed these recommendations and ensure that the U.S. continues to fund critical innovation and research programs like ARPA-E.