America's Energy Future

The Business Plan Recommendation 5

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Establish and fund a New Energy Challenge Program to build large-scale pilot projects.

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America’s energy innovation ecosystem lacks a mechanism to build, test, and refine large-scale technologies. Many technologies that need demonstration assistance are too big, expensive or risky to go forward by traditional means. A single nuclear plant, or a coal plant that captures and stores carbon, can cost several billion dollars. Large scale projects carrying significant technology risk, when combined with public resources, create high visibility and intense scrutiny—which in turn add the chance of political interference. Simply put, the United States does not have the capacity to rapidly demonstrate large-scale, capital-intensive energy technologies. The nation needs to fix these institutional challenges or it will not develop the large-scale energy options that our system so urgently needs.

We propose a new institution, the New Energy Challenge Program, to accelerate advanced energy technologies to commercial or near-commercial scale. This program would operate as a publicly owned, private corporation outside of the federal government, and it would report to the Energy Strategy Board. It would apply specifically to energy projects with large system sizes, and it would focus on the transition from pre-commercial, scalable energy systems to integrated, full size system tests.

The New Energy Challenge Program would draw on a broad range of expert perspectives and a set of financial, technical and management tools, with two main tasks:

  1. to create detailed technology commercialization roadmaps for priority technologies determined by the Energy Strategy Board, with the specific roadmaps to inform the National Energy Plan as well as particular demonstration projects; and
  2. to commission, finance and build first-of-kind commercial scale advanced energy facilities.

Staff and funding

We recommend funding the New Energy Challenge Program with a single appropriation of $20 billion over 10 years. This commitment of resources, while decidedly large, should be weighed against the private sector investments it would unleash to transform our energy system over the next half century. The New Energy Challenge Program would leverage public resources to attract private capital and would participate in profits generated from successful activities. Private dollars would be committed on a per-project basis and individually negotiated once its strategic plan is established.

The New Energy Challenge Program would need strong support from the highest levels of industry and government. As discussed in Recommendation 1, it would employ a small management team and bring in top professionals from all relevant fields—scientists, engineers, financiers, risk managers, and the like. Much like DARPA, ARPA-E and other engines of innovation, the New Energy Challenge Program would explicitly not be a long-term career destination for its staff, but rather a place for the best and brightest professionals to interact with the most talented minds in the industry and work on high-priority national projects.

Structure and operations

The New Energy Challenge Program would have two areas of focus:

1. Technology Assessment Working Groups would be charged with developing and updating commercialization plans for the high priority technology arenas determined by the Energy Strategy Board. Modeled on the effective public private technology collaboration that SEMATECH achieved in the semiconductor industry, this group would engage leaders from the relevant technology domains (e.g. advanced nuclear, CCS, wind, solar, etc.) and develop detailed technology development plans or roadmaps. The working groups would need a high degree of independence from industry lobbying, and political forces. Best-in-class analytical and research capabilities will be necessary. Within this structure, key activities would include:

  • Assessing the long-term potential of various energy technologies, including price performance and scalability
  • Developing roadmaps for the most promising options
  • Engaging with international partners on their activities and identifying opportunities for collaboration

The Technology Assessment Working Groups would hire only a small core staff, supported by program teams recruited from industry, finance and academia and seconded by DOE offices, the national labs, and other federal government departments.

2. The Technology Demonstration Initiative would be the heart of the New Energy Challenge Program’s effort. These Demonstration Initiatives would be set up to commission (through competitive proposals), fund, and facilitate the construction of the large-scale energy demonstration technologies identified by the Energy Strategy Board. These projects would be designed to test multiple technology pathways and move forward large-scale demonstrations of the most promising options.

Discretion to undertake projects that are smaller or more pilot in nature would also be allowed to resolve important stumbling blocks. Other attributes of the Technology Demonstration Initiative would include:

  • Each Initiative would be overseen by New Energy Challenge Program management, but program teams would have a great degree of decision-making autonomy.
  • The programs must be designed to bring in private sector partners without inhibiting the sharing of relevant information to the public.
  • Each Initiative would be authorized to pursue beneficial international cooperation.

In addition to these elements, The New Energy Challenge Program should have flexibility to employ a range of financial tools, but it would prioritize direct equity investments negotiated on a case-specific basis with private sector partners. This organization should have explicit support from the White House and Congress to freely seek independent partnership opportunities with other government agencies and with industry. Through its private-sector partners, the Technology Demonstration Initiative would offer project management services and technical resources to help accelerate and improve the design and construction of facilities. It would work to enable fast track siting and construction opportunities within utilities or public power agencies (e.g., TVA), on federal or military lands, or even overseas through international partners in some cases.

America's Energy Future