WASHINGTON — Congress should continue to provide reliable funding for the Advanced Research Projects Agency-Energy, as it plays a unique and valuable role in the nation’s energy innovation ecosystem, says a new report from the National Academies of Sciences, Engineering, and Medicine.

ARPA-E is an agency within the U.S. Department of Energy that funds high-risk, high-payoff R&D efforts with the goal of developing advanced energy technologies that have the potential to reduce energy imports and emissions, increase energy efficiency, improve nuclear waste management and disposal, and improve energy infrastructure. ARPA-E was established partly in response to a recommendation in a 2007 National Academies report, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. 

The new report, requested by Congress, finds ARPA-E plays a critical role in U.S. energy innovation, helping reduce the risk in adopting new energy technologies and increase the likelihood of private-sector investment. Companies selected for an ARPA-E award see increased patents and follow-on funding in the years after the award, compared with those who applied but were not selected.

“Emerging technologies like artificial intelligence, quantum computing, and nuclear fusion will radically transform the energy ecosystem in the coming years, and highlight the criticality of ARPA-E’s work,” said Gary Marchant, Regents and Foundation Professor of Law and faculty director of the Center for Law, Science, and Innovation at the Sandra Day O’Connor College of Law, Arizona State University, and chair of the committee that wrote the report. “In our analysis of ARPA-E, we found the agency’s unique organization and operations are central to its success and make this agency indispensable to U.S. energy innovation.”

The report recommends that Congress increase annual funding specifically for ARPA-E’s SCALEUP program from roughly $40 million to $120 million, which should be added on top of the agency’s overall budget. The SCALEUP program provides funds to prior ARPA-E awardees with the goal of increasing the commercial readiness of their technologies, and is a critical source of funding for companies that are moving through commercialization. The report notes there are few other sources of funding for energy companies at this particular stage of growth.

Preserving ARPA-E’s Effectiveness
It is essential for ARPA-E to focus on staying nimble and agile in response to changes in energy needs and innovations, while also maintaining consistency in its purpose, the report says. ARPA-E leadership should focus on innovation and continuous improvement of the agency itself — its organization, structure, design, processes, and outcomes.

ARPA-E’s effectiveness also hinges on its distinctive culture, the report says. At the heart of the agency’s model are program directors, who serve in term-limited roles to initiate and manage a portfolio of awards, and use their own expertise and discretion to choose which projects are funded. In its initial years, ARPA-E established a culture of innovation and demonstrated its ability to attract talented experts who can think “outside the box.” The committee found that while many program directors today are hired with prior leadership experience, a large majority have not had roles at startup companies. Over time, hiring has shifted toward late-career individuals and those with a background at national laboratories, and away from industry-only experience. The report recommends ARPA-E leadership develop a proactive hiring strategy to target a range of expertise and career stages, and create performance measures that reward risk taking while ensuring investments align with energy technology gaps.

The report also says ARPA-E should improve its measurement and communication of the broader impacts of its funding, including lessons learned from projects that did not achieve their milestones. Better communication would send important signals to the innovation ecosystem, markets, and other stakeholders about the future of energy.

The study — undertaken by the Committee on the Evaluation of ARPA-E’s Mission and Goals — was sponsored by the U.S. Department of Energy. The National Academies of Sciences, Engineering, and Medicine are private, nonprofit institutions that provide independent, objective analysis and advice to the nation to solve complex problems and inform public policy decisions related to science, engineering, and medicine. They operate under an 1863 congressional charter to the National Academy of Sciences, signed by President Lincoln.

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