ARPA-E at 10.

ARPA-E is a program within DOE supporting projects with the potential to transform our energy system, improving U.S. productivity and economic growth. In its 10-year history to date, 145 projects supported by ARPA-E have attracted $2.9 billion in private sector follow-on funding, and 76 projects have gone on to form new companies. Modeled after the successful Defense Advanced Research Projects Agency (DARPA)—which is credited with the creation of GPS and the internet—ARPA-E focuses on high-risk, high-reward, pre-commercial projects. Selected through a competitive application process, every project team receives funding for a limited time and guidance to meet ambitious project milestones. ARPA-E is unlike other federal research programs largely because it combines a nimble, less-bureaucratic structure with a bottom-up approach that empowers researchers to choose which problems to address and take risks to solve them.

In 2005, as other nations like China and Russia began to aggressively scale up their own science and technology programs, leaders from both parties in Congress asked NASEM to identify concrete steps to bolster U.S. competitiveness in science and technology. In 2007, NASEM released its Rising Above the Gathering Storm report, which recommended Congress establish an agency similar to DARPA in the Department of Energy. Following the publication of that report, ARPA-E was created as part of the America COMPETES Act with a congressionally-established mission to overcome the long-term and high-risk technological barriers in the development of advanced energy technologies. Since it was first funded in 2009, ARPA-E has built a reputation as a nimble research model focused on breakthrough energy technologies with significant potential to transform the way we produce and use energy.

Advances in energy technology face unique challenges compared to other industries: energy projects are highly capital intensive, entail long development cycles, face significant regulatory uncertainty, and energy is valued as a commodity rather than as a product or service. For these reasons, the private sector on its own cannot or will not make the investments in energy research needed to match the scale of the opportunity of spearheading energy breakthroughs. The global energy industry was valued at $1.7 trillion in 2017, and advanced energy technology markets are expected to explode in the coming years. In order to capture these billion-dollar opportunities, it is crucial that the United States make robust investments in energy research today to maintain its leadership in the energy technologies of tomorrow, particularly considering decade-long development cycles. ARPA-E is filling a critical gap in the energy innovation space and is actively strengthening U.S. economic competitiveness and national security.

Under a congressional mandate, NASEM was tasked with evaluating the progress of ARPA-E in achieving its statutory mission and goals. In June 2017, NASEM released its assessment of the first six years of ARPA-E’s operations, finding that ARPA-E was making significant progress towards fulfilling its mission and was serving as a positive influence on the rest of the department. Some of the key takeaways from the assessment include:

• ARPA-E has funded projects that would not have otherwise received funding. ARPA-E provides crucial early-stage funding, technical support, and market analysis expertise for “off-roadmap” opportunities pursued neither by private firms nor other funding agencies, including other programs and offices in DOE. NASEM found that in doing so, ARPA-E has:
  • Focused on the most transformative technology opportunities.
  • Avoided duplicating research already underway.
  • Supported projects that have since attracted significant private follow-on funding for technologies that are now beginning to enter the commercial market.
• ARPA-E practices have become an agent of change at DOE. ARPA-E best practices are being adopted in some DOE offices, which has been so successful that NASEM recommends that DOE should:
  • Continue exploring and adopting elements of ARPA-E’s practices across the department.
  • Incentivize more interaction between DOE offices and ARPA-E.
• It is too early to expect ARPA-E to have achieved all its goals. As energy technologies develop on decade-long scales, the report found that ARPA-E has not existed long enough to have transformed the energy landscape—yet.

ARPA-E was designed to accelerate the development of early-stage energy technologies and help projects surpass the so-called Valley of Death, the stage of the innovation cycle before a technology has demonstrated technical or commercial proof-of-concept. There is a lack of private investment for projects at this stage because they carry the highest risk. A series of unique organizational features have enabled ARPA-E to help projects bridge the valleys of death and transition their ideas from concept to engineering and to achieve remarkable success in the program’s relatively short lifetime. These features are listed below:

• Institutional independence
• Flat organizational structure
  • Allows the agency to be highly responsive to research opportunities and the results of individual projects, which may lead to re-orienting or terminating projects.
• Empowered, involved, and term-limited program directors
  • Hiring flexibility and short, three-year terms, enabling ARPA-E to recruit program directors who otherwise would never consider a career in government.
  • Chosen for technical expertise, directors are empowered to conduct expert workshops which help identify problem areas that can benefit from ARPA-E’s unique approach to high-risk, high-impact projects.
  • An active management process means they are frequently and directly involved in project management, including the ability to alter project milestones, budgets, and timelines.
• Projects supported for limited timeframes with multiple quantitative go/no-go milestones.
  • Program directors can cancel projects and re-direct funds to more successful efforts.
• Fellows as a creative resource
  • One key addition to the DARPA model on which ARPA-E was built, was the addition of early career technical fellows granted creative freedom to help program directors develop novel program ideas.
• Technology to Market advisors play a critical role
  • Business development and scale-up experts are able to advise teams in order to accelerate and guide commercialization applications by encouraging projects to anticipate commercial challenges as they make decisions which will carry commercial consequences many years later.
  • This was an innovation spearheaded at ARPA-E, and since its formation, DARPA has looked to build its own technology to market advising capabilities.