NSI News

A lifeline for venture stage technology

We’ve witnessed a recent wave of growth in cleantech with financial backing from the public and private sectors. Some of the most exciting opportunities, however, lie ahead and might have been lost in the cracks of risk assessment if not for ARPA-e.

After attending the Inaugural ARPA-e Energy Innovation Summit held March 1-3, 2010, I have the feeling we can look forward to phenomenal energy innovation in the years to come.

The event brought together the nation’s key players in energy innovation: scientific researchers, VC investors, technology entrepreneurs, large corporations, and government officials around the agency’s focus on high risk, high payoff concepts — technologies promising genuine transformation in the ways we generate, store and utilize energy. The one-day pre-conference workshop logged 900 attendees while the two-day summit attracted 1700 attendees, one-third higher than what was expected

The goal of ARPA-e is to enhance U.S. economic energy security via a three-part mission: reduce greenhouse gas (GHG) emissions; reduce energy imports; and, improve energy efficiency.

Here’s what makes ARPA-e unique:

· The Agency seeks to bridge the gaps in the energy innovation pipeline by investing in venture stage technology that is too risky for a private sector investment, yet promises a 50 percent or greater gain over current technology if it can be accelerated to commercialization and deployment in 3 to 5 years.

· ARPA-e is not interested in funding incremental improvement (2 to 3 percent annual gains), basic research, or long-term projects (5+ years).

· The first round of awards went to 37 projects; three-quarters of the $151 million was given to small businesses or universities with the balance going to large businesses or research consortia. The average award was $4 million and awards were made in 10 areas ranging from energy storage to building efficiency.

· ARPA-e will provide technical, operations, and commercialization support to its grant recipients.

Here’s what ARPA-e looks for in a project:

· A sound technical plan

· A disruptive, game-changing technology

· The opportunity to “de-risk” a high risk investment that carries too much risk for private equity firm

· A multi-disciplinary, best in class team.

I strongly encourage energy companies with promising technologies to build a relationship with ARPA-e. ARPA-e is a new organization, and its management is creating a culture of openness and transparency. They expect the energy community to play an active role in helping the Agency achieve its mission. ARPA-e emphasized that if a company is not actively engaged with the ARPA-e community, then there’s less likelihood that they’ll get funded. ARPA-e expects cleantech companies and researchers to participate in its workshops, serve on concept paper and application review panels, and get to know its Program Directors (who will run their programs from conceptualization to commercialization and then return to University after 4 years).

We can begin to assess ARPA-e’s success in about a year as work on the 37 current awards moves forward. Meanwhile, even more awards will be doled out in the next few months. And, according to the Agency, if just a fraction of the projects funded by ARPA-e are successful in reaching the marketplace, the U.S. will benefit greatly by creating new industries and jobs, making energy technologies substantially more cost-saving and profitable, and accelerating the timeframe for achieving energy and climate goals.

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For more information, please contact Heather Sabharwal at hsabharwal@kglobal.com or 202-349-7016.