Talking Energy Innovation with ARPA-E’s Cheryl Martin, Part 1: ARPA-E’s Lessons Learned

Dr. Cheryl Martin is the Deputy Director of ARPA-E, the federal government’s premier program for investing in high-risk, high-reward energy research and development. She’s the heir apparent to Arun Majumdar, the first Director of ARPA-E who departed last year after helping spin-up the program and bring it to national prominence.

She assumes leadership less than four years into ARPA-E’s existence at an inflection point for the program as well as U.S. climate and energy policy. On one hand, government investments in energy innovation are declining and gridlock makes crafting a new comprehensive national energy policy a pipedream. On the other hand, ARPA-E recently hosted its fourth widely attended Energy Innovation Summit, a number of early investments are starting to show signs of success, and its bipartisan support continues to grow. It’s one of the few bright spots in an increasingly contentious energy policy debate.

I recently sat down with Dr. Martin and talked extensively about her unique take on ARPA-E, its potential legacies, and the evolving U.S. energy innovation ecosystem. The interview covered a lot of ground so it will be published as a multi-part series, lightly edited, and broken up into cohesive topics.

In part 1, we take a deep dive into what lessons ARPA-E has learned in its few short years. To start, why is it that ARPA-E has attracted so much attention from such a diverse and bipartisan group of businesses, analysts, advocates, and policymakers?

Cheryl Martin: The reality is we’re three and a half years old; and we were founded with bipartisan support, so I think that’s helpful. The original National Academies report, recommending ARPA-E, was asked for by a bipartisan committee. We were established by the Bush Administration and funded by the Recovery Act [under the Obama Administration]. I think that, at its most basic level, innovation — that catalytic accelerative of the innovation space — is something that there is a lot of support for.

As you know we have a broad mission; economic security, environmental security, energy security, and keeping our technological lead in energy innovation. So we funded everything from re-envisioning plants, to no rare earth components in magnets, to new hardware and software on the grid, and carbon capture. When you start to look at the energy space and you look at the places where we’re filling that early stage need, it does appeal to a lot of different people no matter your political leaning. I think that’s what we heard on stage [at the Energy Innovation Summit] from the various politicians that spoke this year and in prior years.

I also think our focus on funding technologies with a fixed amount of time and then moving them on is important. People worry that things are going to languish. We ask, is our research going to be transformational? And that’s our focus. If it works, let’s demonstrate that first. And if it works, is it going to matter?

Of particular importance is the growing attention ARPA-E is gaining from the private sector and how that’s strengthening the potential for moving early-stage research into the market place. Dr. Martin went on to detail how ARPA-E’s relationship has evolved with industry.

Cheryl Martin: We’ve started to ask, “how is what we’re doing going to plug into what they’re [the private sector] doing,” so there can be an appropriate government handoff with things that matter to them. The big companies are showing up now because these projects are starting to look like more than pipe dreams. Some of them are starting to show signs of success and we’ve been trying to get industry input right from the beginning. Industry will often send people to workshops that we have. They’ll come to the kickoff meetings [for new programs] as an expert. For example, MOVE – the natural gas FOA – attracted pretty much all the auto companies like Volvo, Ford, GM — everybody was there — and we had a panel and asked where do we think these cars [natural gas powered vehicles] may come about? How do you guys think about this space? Industry is sharing their perspectives right from the beginning. They’re not all positive, they’re not all negative. They’re sharing honestly where they think the space is and this enables our awardees to get to know people early and so the relationships build up.

I was talking about the Summit and how it felt a little different this year, at least to me, and this is my third one. It’s almost like the ecosystem has grown up together and we’re starting to see that it is actually showing some traction on the technology. We are beginning to see handoffs. People are comfortable with each other. You show up knowing what to expect. You know there is going to be discussion in key technology areas. It’s about the whole ecosystem saying “this could make some sense going forward.” As I said we’re only three years old, so we’ve got to continue making traction, but I also think the focus on bringing the end use customer back to the beginning of the innovation process makes a big difference.

The intersection between ARPA-E research investments and the private sector is particularly important. There’s been an ongoing debate among clean energy advocates and analysts about what the United States energy and climate policy should emphasize and include. In particular, one potential weakness is the need for better innovation-centric deployment policies supporting emerging technologies in the market. From ARPA-E’s perspective, what are the biggest national policy needs?

Cheryl Martin: We are really focused on developing transformative energy technologies and thinking about how to hand those technologies off. One of our priorities that we’re thinking a lot about is how to get an idea from research to market. To accomplish this, you have to be able to fund the process. Somehow you have to be able to do demos, lab scale demonstrations, and implementation. And size depends on the technology. It’s going to be a lot different for power electronics and fuels, right. But I think we’ve seen a lot of change in the financing ecosystem in the past five to seven years.

If you’re sitting back five or seven years ago the view is that venture capital is going to have a huge role. I think that’s really changed and we’ve seen a lot of Strategics [e.g. large investors and corporations] really step in and look at what they should be doing. We certainly feel that.

Of course, ARPA-E’s role at the Department of Energy isn’t to dive into energy policy and Dr. Martin was clear that they “didn’t do policy, that’s not our thing.” But Dr. Martin did go on and dive into areas of technology development that take a bigger lift and public and private support aren’t fully developed yet.

Cheryl Martin: For larger technology development projects the funding is going to have to come from someone’s balance sheet. There are assets out there, whether from various public or private funding or they’re funded by a Strategic company. There are a lot of ways forward and I think we’re still in a state of flux about where and how strategic companies are going to participate in this space. But in my view the more engagement we have earlier in the innovation pipeline, the more likely this whole process is to work.

Separate from anything going on with the larger technology development ecosystem, I think we’re starting to see a lot of engagement throughout the innovation pipeline and it will continue to feed on itself. So I’m excited to see some of those things take shape, but they’re still forming. I think we’re still at the point where the innovation community is still exploring what’s possible in some of these technological spaces and how they can play in the market. So for now we are continuing to feed the innovation pipeline and engage the whole community. We’re starting to hear what else we can do to get the right relationships while these policy and funding ideas continue to move around.

Originally Posted at Energy Trends Insider.