Energy gambles worth the risk


It would have been difficult to miss the recent flap between the Obama administration and its Republican detractors over the Department of Energy’s ARPA-E (Advanced Research Projects Agency-Energy) half-billion-dollar loan guarantee to bankrupt solar manufacturer Solyndra or its $10 million L Prize last August to Philips Lighting for developing an “affordable,” efficient, made-in-America LED light bulb — that costs almost $50. From these expensive flops one might reasonably conclude this kind of program was tantamount to solving the energy crisis by burning money.

This sentiment was echoed in a USAToday interview with David Kreutzer, an energy economist at the Heritage Foundation, a conservative think tank, “The government does not have a good track record of funding research for commercial development.”

Maybe so, but this kind of economic conservation doesn’t seem to elicit the same scrutiny when the Defense Department’s decades-old DARPA (Defense Advanced Research Projects Agency), the sibling agency of the ARPA-E, burns through fortunes of its own. Only when programs threaten the strangle-hold of the fossil fuel industry do they gain such notoriety.

Of course, projects such as those supported by ARPA-E have a well-understood high rate of failure. Just as Thomas Edison tried thousands of materials before he hit upon a workable filament material for incandescent light bulbs, so too must we expect that today’s pioneering energy companies would likewise have a rocky track record.

Critics will rightly point out that Edison’s lab was a private enterprise, that didn’t rely on public undergirding. This argument holds up until one remembers that Edison and his contemporaries (such as Nicola Tesla) fought for government contracts. Yes, it’s arguably different but the process is pretty similar.

Innovators know this. Microsoft founder Bill gates, speaking at the third annual Energy Innovation Summit, concurs. Gates, who’s invested in a start-up to create safer, smaller and more efficient nuclear power (TerraPower) plants said, “We need to be willing to take risks.” Moreover, Gates, said the U.S. should double its spending on energy research even though he expects about 90 percent of the ideas will fail. For those folks who think government should be more supportive of small-startup businesses, this is ground zero. Yes, it likely that the taxpayers would back a whole stable of lame horses, but for the rare one that hits, the payoff could transform society. Even a few examples make the point. Lithium batteries, long known as the stumbling block between the present and energy independence, provide a perfect case. California-based Envia Systems, which received a $4 million grant in March 2010, announced last month that its lithium-ion battery has broken the world’s record for energy density at 400 watt-hours per kilogram — more than double today’s batteries.

Speaking at the energy summit, Atul Kapadia, Envira’s CEO, says his company has raised $28 million from General Motors and other major automakers to commercialize its product within the next few years. He projects that his company’s new battery will cost half as much a those in today’s electric vehicles.

ARPA-E is funding research on other types of lithium batteries, including a metal-air version by Berkeley, Calif.-based PolyPlus Battery that aims to run a car for 500 miles on a single charge. If successful, it would represent a five-fold improvement over current technology.

To be certain, these are gambles, but they are gambles on the future, not just throwing tax dollars at 18th century fossil fuels.