The Department of Energy’s (DOE) Advanced Research Projects Agency for Energy (ARPA-E) is responsible for funding transformational energy technologies that are too early in their development to attract private-sector investment. Projects funded by ARPA-E are typically considered high-risk investments due to the long and arduous incubation period for energy technologies. However, in 2015, the 2% of total project applications that ARPA-E funded raised questions about the agency’s tolerance for risk. Because the program has been under pressure to achieve results quickly, some have suggested that it has been more inclined to invest in projects that have a higher chance of success. This approach has caused concern from Congress in the past that ARPA-E has created market redundancies by funding projects the private sector is already willing to take on. Energy Secretary Moniz has warned that the agency must “guard against getting too comfortable” and look to invest in higher risk/higher reward projects.
At ARPA-E’s 2016 Energy Summit, Secretary Moniz stated “we are still leaving a lot of innovations on the table,” suggesting that the agency would fund more projects if it had a larger budget. President Obama has proposed aggressively scaling up federal funding for energy R&D in announcing Mission Innovation, a U.S. led initiative designed to dramatically accelerate the development of clean energy innovation. The President’s FY 2017 budget requests $7.7 billion towards Mission Innovation programs, positioning ARPA-E as a major participant under this initiative. Specifically, ARPA-E would receive $350 million in discretionary spending, a 20% increase over FY 2016 spending levels. In addition, President Obama has proposed creating an “ARPA-E Trust” of $1.85 billion over five years.
While Secretary Moniz believes increased funding for ARPA-E is justified, questions remain over whether more money will necessarily lead to investment in riskier, more experimental undertakings. Since 2009, ARPA-E has spent $1.3 billion on 475 energy projects, with 45 securing an additional $1.25 billion in subsequent funding from private-sector investors.