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What’s So Special About ARPA-E?

By Brad Townsend

Technological innovation has been at the center of America’s economic competitiveness for the better part of the last 80 years. In the energy sector, federally funded research and development (R&D) programs have served as a foundation on which the private sector has built an impressive track record of innovation, creating jobs, lowering costs and enhancing U.S. energy security. The Advanced Research Projects Agency for Energy (ARPA-E), founded in 2009, was created to make sure that the United States maintained a competitive advantage in developing emerging energy technologies.

ARPA-E has already demonstrated a great deal of early success. With 330 projects completed, ARPA-E project teams have thus far been published 1,328 times; reported 1,493 subject inventions; been issued 208 patents; created 56 new companies; and attracted more than $1.8 billion in follow-on, private-sector funding for 74 projects.

With 330 projects completed, ARPA-E project teams have thus far been published 1,328 times; reported 1,493 subject inventions; been issued 208 patents; created 56 new companies; and attracted more than $1.8 billion in follow-on, private-sector funding for 74 projects.

However, in its first and second budget proposals, the Trump administration proposed significant cuts to key R&D programs, including the elimination of ARPA-E. These proposals pose serious risks to the future of American energy research and the myriad benefits it provides to Americans. Boosted by strong congressional support, ARPA-E has thus far survived intact, even securing a $15 million increase in funding in the Consolidated Appropriations Act of 2017, which President Trump signed on May 5, 2017.

The American Energy Innovation Council, among others, has argued since 2010 that ARPA-E’s unique approach sets it apart from the rest of the national energy R&D enterprise. The agency’s success thus far strongly suggests that ARPA-E should be strengthened, not cut.

So what is it about ARPA-E’s approach that has created such a strong group of defenders both inside and outside Congress? In short, a combination of organizational culture and methodologies that were created specifically to address today’s energy challenges. The National Academy of Sciences found that other programs within the Department of Energy (DOE) have already begun modernizing by adopting some of ARPA-E’s methods, including the agency it was modeled on, DARPA.

DARPA model

ARPA-E was modeled on the Defense Advanced Research Projects Agency, or DARPA. DARPA was created in 1958 as a response to the Soviet Union’s launch of the world’s first satellite – Sputnik 1. DARPA’s work revolutionized technology, and included the creation of the Internet, GPS, cloud computing and stealth technology. After decades of volatility in domestic energy prices, ARPA-E was created to address America’s long-term energy challenges and ensure our technological preeminence in energy by following the DARPA model.

Strong Leaders

ARPA-E’s approach has focused on identifying off-roadmap, “white space” research, i.e., research that isn’t being pursued anywhere else. Like DARPA, ARPA-E recruits top talent from across the energy space to identify and utilize unique approaches to solve difficult problems. These program directors utilize a workshop process to refine the scope of the programs they pursue. Like a “shark tank” for identifying important research, program directors have to convince not just the agency, but also a multi-disciplinary team of scientists that they’ve identified a problem worth solving. The bar is, as former ARPA-E Director Dr. Ellen Williams has often noted, “if it works, will it matter?” Once they’ve settled on a refined program, they fund a portfolio of projects, increasing the chance of success by creating more shots on goal instead of focusing on a specific and predetermined set of technologies that may not end up working.

Empowering program directors in this way – while requiring them to demonstrate that a topic is worth exploring – ensures that instead of a top-down, centrally planned research program, ARPA-E has the flexibility to pursue research targets of opportunity that would be more difficult under traditional institutional arrangements. This approach has been key to ARPA-E’s early success.

Early Stage Research

Importantly, ARPA-E also focuses on projects that are too early in their development to attract private sector funding. As the recent National Academy of Sciences Assessment on ARPA-E found, ARPA-E is funding projects that no one else is funding. This isn’t surprising, given the early stage and high-risk nature of the projects they’re pursuing. ARPA-E has also demonstrated an ability to accelerate the development of early stage projects. A Government Accountability Office report found that most ARPA-E funded projects were either at or before proof of concept stages. Without ARPA-E’s support, they would have either terminated their projects, or taken at least a decade to commercialize them.

Management Style

One of the defining features of the ARPA-E program is active management. This hands-on approach means program directors are involved in developing budgets, timelines and milestones that projects must meet to receive continued funding. A unique component of ARPA-E’s management toolkit is the use of techno-economic analysis, which helps project innovators identify and anticipate commercialization challenges such as market shifts or manufacturing bottlenecks that could derail their work. Identifying these challenges early in a technology’s development helps to avoid the “valley of death” – delays or cost overruns that cause a project to fail. This metric-driven process also means that when projects are underperforming and need to be terminated, these decisions can be made with confidence, ensuring responsible stewardship of taxpayer dollars. This culture of self-evaluation benefits ARPA-E’s own management structure as they continually refine internal processes.

It’s clear that ARPA-E’s unique approach is filling an important gap in the energy technology development cycle. With stable support, ARPA-E will be able to continue attracting top talent and maintain its flexible approach to funding transformative, off-roadmap research.

Policymakers should not only reauthorize ARPA-E long term, but appropriate funding more commensurate with its potential impact.

Certainty Matters

Eliminating ARPA-E would have damaging long-term consequences. Even if funding levels are maintained, ongoing questions about the agency’s future will undermine its success. Among the key elements of DARPA’s success replicated by ARPA-E is the focus on recruiting the country’s top talent. Program uncertainty would likely encourage many of these promising scientists to seek out other, more stable, opportunities.

To provide that certainty, policymakers should not only reauthorize ARPA-E long term, but appropriate funding more commensurate with its potential impact.

ARPA-E was designed to be a 21st century energy research agency, attuned to the dynamic challenges of today’s global energy marketplace. America’s success in these markets could depend on whether we empower it, or allow continued uncertainty to undermine it.

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