Showing that public money often needed for “crazy” ideas

It is hard to know whether to leave technology development to the private sector or whether the public sector has a role to play. Ed Crooks provides a good article in the Financial Times where a US government agency has proven to be a valuable ally.

 

The US energy ideas too crazy for private sector money

“We’re trying to create a market that has never existed before, because the technology has never existed before.” Phil Giudice, chief executive of Ambri, a start-up developing innovative batteries to support electricity grids, has no illusions about the scale of the challenge.

If it can be made to work on a large scale, Ambri’s liquid metal battery could revolutionise the energy industry, enabling much greater use of wind and solar power by storing electricity for use when the sun is not shining or the wind is not blowing.

It is the sort of ambitious approach that attracts the Advanced Research Pro­jects Agency — Energy, the US government body intended to support the development and deployment of “transformational” energy technologies. It gave the team behind the liquid metal technology a $7m grant in 2009.

Arpa-E, proposed under George W Bush but funded under Barack Obama, was modelled on the Defense Advanced Research Projects Agency, which supports military innovation, with a similar raison d’être. Both administrations saw energy as a crucial component of national security and international diplomacy, and sought to keep the US at the technological cutting edge.

Cheryl Martin, Arpa-E’s former deputy director, who stepped down last week, says its role is to identify ideas that might seem “pretty crazy” to the private sector, but have real potential for commercialisation. “When you are running research groups as a business manager, you always run out of money before you run out of your science ideas,” she says. “Our role is to be bridging between the impossible and the plausible, in a place where [commercial businesses] just can’t come.”

Ambri, set up in 2010 to develop and sell technology first conceived at the Massachusetts Institute of Technology, is making impressive prog­ress. It is deploying its first prototypes, and has its first commercial contract, for the US military base at Pearl Harbor in Hawaii.

Like more than 400 other ideas back­ed by Arpa-E since it began operations in 2009, however, it represents great potential, rather than achievement. Mr Giudice says: “We’re going to feel really good about what we have achieved when we have hundreds or thousands of batteries out in the market. And we’re not there yet.”

Arpa-E’s grant-winners have shown varying degrees of success, but none so far of the transformative breakthroughs the agency is seeking.

One of the most-discussed has been California-based Envia Systems. Its battery technology looked very promising, but it was hit by a legal battle over alleged theft of intellectual property, and its agreement with General Motors was dropped in 2013. While those blows seemed like they might be fatal, Envia is still going. Last year, it received a $7.7m grant from the US Advanced Battery Consortium, a group backed by Chrysler, Ford and GM. However, it is also looking at consum­er electronics applications, to find a mar­ket more quickly than in the car in­d­ustry.

Purnesh Seegopaul, chief executive, is not saying much about what Envia is doing because the legal action is not yet fully concluded, but notes electric vehicles are a long-term business: “For getting a pro­duct into a car, you have to get product ap­proval three or four years ahead of the model release.” Envia is working on securing those approvals.

Another high-profile company with Arpa-E support is Massachusetts-based Ogin, which is developing innovative wind turbines using ideas from the aero-engine industry. The turbines, which have a shroud around the blades, are intended to be smaller and cheaper than conventional versions. However, Ogin has yet to build a pilot project. A proposed development at Sand Hill, California, had to be abandoned, although a new pilot is planned for this year.

An even more radical approach to wind power given a grant by Arpa-E is being developed by California-based Makani. It uses tethered “kites” that look like model aircraft, each carrying four small turbines, which can move around to find the best wind conditions. It is already a success in one sense, as Google, which was an investor, took over the company in 2013 and has continued to develop the technology.

It hopes to start a pilot project in Hawaii this year, but it is still very early days for the technology: Makani reports only “over 100 hours” of flying time generating power so far. Plenty of issues remain to be addres­sed, not least the safety implications of having kites weighing more than a tonne flying around on cables up to 310m long.

The common theme from all these ventures is that energy innovation is slow and difficult. Technologies must be developed on a large scale, and safety and reliability are critical.

Politically, that creates a problem for Arpa-E. It enjoys strong bipartisan support for an Obama administration programme, but all government agencies like to be able to show results. Some critics argued that under that pressure, Arpa-E has retreated from the hunt for true breakthroughs to backing more incremental improvements.

Slips Technologies — Slippery Liquid-Infused Porous Surfaces — could be seen as an example of that. Slips, developed by Joanna Aizenberg and her team at Harvard university, is a revolutionary technology that uses liquids as a surface coating to reduce drag. It has many ap­plications, but its use in energy is being aimed principally at improving the energy efficiency of refrigeration. That is important, certainly, but arguably not transformational.

Prof Aizenberg says one of the most important contributions by Arpa-E was in showing how best to explore commercial uses for her work. “It was really quite educational for me,” she says. What she had thought would be a simple spreadsheet exercise turned out to be a complex analysis. “We wanted to select the [use] that can bring the greatest energy benefit in a cost-effective way, and can do it in two or three years, rather than something that will be too expensive, or take 20 years.”

Pulled in different directions by its competing imperatives, Arpa-E will never be able to please everyone.

It could be decades before it is clear if its investments have paid off. US government support for shale gas production — in tax credits, demonstration projects and research funding — began in the 1970s but was brought to fruition by the private sector only in the 2000s.

Even so, the researchers who have been supported by Arpa-E have no doubts about its value. “I see it as fundamental to where the company is now,” says David Bradwell, Ambri’s chief technology officer. “Without that grant, we might never have got out of the starting gates.”

***

A call from Bill Gates

When Donald Sadoway at MIT was first emailed by Bill Gates’s assistant asking for a 90-minute meeting, he thought it must be one of his students playing a joke. In 2009, he was working on a new battery technology that had exciting potential, but he did not think his work was likely to have attracted the attention of the Microsoft founder.

Since going part-time as chairman, however, Mr Gates had been pursuing his other interests, including energy storage. He took Prof Sadoway’s online chemistry course, and was so enthused by what he heard that he decided to get in touch. In 2011 Mr Gates became one of the earliest investors in the company, now known as Ambri, set up to commercialise the technology.

Despite Mr Gates’s support, Phil Giudice, Ambri’s chief executive, says a grant from Arpa-E in 2009 was critical in securing other commitments: “We had some interest before that, but that really pushed it over the edge.”

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