January 29th, 2010
04:43 PM ET
13 years ago

Using stimulus dollars to push energy innovation

Washington (CNN) - Government researchers and officials are hoping to use a relatively small amount of stimulus dollars to help find new ways for the nation to produce, consume and store energy.

The Advanced Research Projects Agency-Energy, part of the Energy Department, was conceived during the George W. Bush administration but only got its first funding in the stimulus bill - to the tune of $400 million.

Agency director Arun Majumdar says that the nation lags in energy security and that his agency is key to helping the country address the problem aggressively. He aims to invest early in ventures that he says could deliver huge gains if they pan out.

He calls it investing in "American pioneers."

"Invest in high-risk, high-payoff R&D to get innovations from the lab into the market," Majumdar said.

So far, ARPA-E has committed to 37 projects worth $151 million after receiving more than 3,000 applications in the areas of renewable power, new technologies and efficiency. The average investment is about $4 million.

Among the programs:

· Researching how to help make plants and their waste easily transformable into biofuels and to reduce the costs of doing so
· Developing a new type of high-efficiency wind turbine that could deliver more energy and reduce noise and safety concerns
· Creating an all-liquid metal battery that would dramatically increase electrical energy storage

Other projects include one that would split water into hydrogen and oxygen for solar fuel; research into a technology that would use silicon wafers to dramatically cut the cost of installing solar power; and installing magnetic materials that would decrease the weight and increase the efficiency of motors for hybrid and electric vehicles.

After getting more than 500 applications for its second round of $100 million in grants, program directors are deciding which ones will make the cut.

While agency officials hope all of the initiatives they fund will become commercially profitable, they acknowledge the chances of that are very remote.

"Let's say a few of them are successful. They will be game-changing. They'll change the landscape of the energy field - not just in our country, but globally," said Majumdar, a former associate director at the Lawrence Berkeley National Laboratory and a former professor at the University of California-Berkeley.

He also believes these investments will help spur innovation and market success that will create a large number of jobs down the road - ones that, with the Department of Energy's help, will stay in the U.S.

Companies receiving funds say government money is essential for this risky research.

"I think this is just the kind of research the government should be getting behind because it is higher-risk, it has the potential for very high payoffs," said Michael Raab, president of Agrivida, the company doing the biofuels plant project.

"But, particularly in this kind of an economic climate, it is hard to find investors that are willing to invest in high-risk opportunities. And so the government can fund this research and get it to a point where others will invest in it and really push it forward into the marketplace."

Tom Schulz, co-founder of BioCee, which does research in solar fuels, said the program will produce the next "Energy Google."

"We don't know which company of the funded projects it will be, and we don't know when it will 'tip.' However, most of the projects will create only a few (but very qualified) jobs over the next two years," Schulz said. "The real question is how many jobs will be created and saved in 5 to 10 years."

Some critics say, however, that the government should not be investing in particular projects with the aim of getting them to the marketplace.

"Government is terrible at picking winners and losers," said Kevin Book, an energy consultant and former Wall Street analyst.

Book supports government-sponsored scientific research but not having the government trying to help determine which projects should get a financial boost toward the marketplace.

"Turning science projects that nobody wants into products that no one can afford to buy is a terrible idea," he said.

To help make the best decisions possible, ARPA-E has recruited staff from the private sector, including some with hedge fund experience, and also consults with experts in particular scientific fields.

ARPA-E is based on the concept of the Defense Advanced Research Projects Agency, or DARPA, which was created in 1958 to push technological research and development after the Soviet Union launched its Sputnik satellite before the U.S. could get off the ground. Among DARPA's accomplishments is helping to spur the creation of the Internet.

- CNN's Francesca Johnson and Bob Crowley contributed to this report.

Filed under: Energy • Stimulus
soundoff (7 Responses)
  1. Orange Curtain, CA

    Money well spent. We are slipping against Europe and emerging nations whom invest much more of their budgets towards energy innovation.

    January 29, 2010 06:21 pm at 6:21 pm |
  2. annie against biased news

    How about drill baby drill (here) not brazil for an oil company owned by georgie soreas.

    January 29, 2010 06:39 pm at 6:39 pm |
  3. MatthewDetroit

    Barack just keeps spending money spending money spending money.

    1.45 Trillion added to the national debt in 2009

    1.35 Trillion to be added to the national debt in both 2010 and 2011. EACH.

    Wow... thats right he is trying to save 15 billion a year starting next year, while spending an additonal 150-180 Billion this year....

    What a joke.

    January 29, 2010 06:39 pm at 6:39 pm |

    How about CNN to stop advertising for GOP!!

    January 29, 2010 06:54 pm at 6:54 pm |
  5. Mrs. S Callahan

    sounds like a fungi story..... This is a good thing

    January 29, 2010 07:02 pm at 7:02 pm |
  6. Scott, Tucson

    I guess the spending freeze obama was touting the other night was just one more lie to add to his growing list of lies.

    January 29, 2010 07:04 pm at 7:04 pm |
  7. Libertarian

    GW created an agency and never funded it? Ohhhhh....because it created the APPEARANCE that his administration was interested in alternative energy. How many of us watched him KISS the Saudi King in the White House Rose Garden and then walk around for 45 minutes holding hands with him? Literally!!! They held hands like an old married couple for 45 minutes!!

    GW didn't like big oil much though.

    January 29, 2010 07:04 pm at 7:04 pm |