ARPA-E Under Trump

Since the surprise victory of Donald J. Trump on 8 November, the future of United States’ leadership in the emerging clean energy industry has been a subject of speculation. As a climate change doubter and outspoken advocate of the coal and oil industries, the president-elect’s energy policies will undoubtedly represent a bold departure from those of the Obama administration—the most clean-energy-friendly presidency in history. But just what the new president-elect’s energy policies may be and how and when they come into force remains unclear today.

One of the Obama administration’s chief instruments for supporting advances in clean energy has been the Department of Energy’s tech incubator, the Advanced Projects Research Agency-Energy (ARPA-E). As a recent overview report notes, since 2009 ARPA-E has provided $1.3 billion in funding to more than 475 projects in next-generation batteries, grid operations, power electronics, and clean energy. These projects have to date resulted in 36 new companies, and $1.25 billion in publicly-reported, follow-on funding from the private sector. Yet the mandate and perhaps even continued existence of ARPA-E under President Trump is still an open question.

While Trump’s energy transition team is built around fossil fuel industry advocates and climate skeptics, a Pew Research Center survey last month of Trump’s voters also reveal a strong support, for instance, for wind and solar. The survey found 77 percent of Trump’s supporters favor expanding wind turbine farms, while 84 percent of his voters support expanding solar energy farms.

“It’s a more complicated story and a more nuanced story than it was five or ten years ago,” says William Bonvillian, director of MIT’s Washington office and a policy expert who’s studied ARPA-E and the agency that inspired it, DARPA. “The wind industry is a now a major industry. And the solar industry now has 200,000 employees. It’s a big industry, and it’s growing at a more rapid pace than Moore’s Law. These industries will need to be considered by a new administration.”

(As a clarification, Bonvillian noted that his opinions are as a student of energy policy only. His views expressed here, he said, do not represent the views or opinions of MIT.)

Despite the above, what if ARPA-E’s clean energy support was zeroed out completely? If so, it might not affect continued funding for research into electricity storage and distribution. The second point on Trump’s infrastructure wish list, after all, advocates investments in “a modern and reliable electricity grid.” And it’s worth recalling that ARPA-E was initially funded by the incoming Obama administration’s own stimulus and infrastructure bill, the American Recovery and Reinvestment Act of 2009.

“The utility sector is very concerned about its economic model,” Bonvillian says. “The time when the utility industry could be organized around an assumption of ever-increasing demand has passed. And the evolution of distributed renewable power has had a significant effect. So what’s going to happen to utilities?”

If nothing else, electric cars might mandate changes to the grid.  Morgan Stanley predicts at least 10 to 15 percent of the global car market will be EVs within nine years.

“That isn’t happening simply because environmentalists say they want electric cars,” Bonvillian says. “That’s happening because, frankly, the auto industry wanted to get out from underneath a fossil fuel price syndrome that’s played a significant role in disrupting them. The price uncertainty completely distorts their cost and planning models for their their vehicle fleet mix. They would like an alternative power source. And ARPA-E has helped lead innovation in battery technology.”

One additional wildcard is the world’s one established, zero-carbon baseload power source, nuclear energy. Long a bugbear for many Democrats, support of nuclear energy is one policy plank where Trump is entirely in line with previous Republican administrations. Might a Trump-era ARPA-E fund nuclear energy R&D in line with the chief executive’s expressed interests?

So-called fourth-generation nuclear power represents an even safer and more powerful alternative to existing reactor designs. But to make it economically competitive, fourth-generation nuclear designs should be made modular to achieve economies of scale, says Bonvillian.

“Could we apply modular technologies, which would be much smaller power plants,” he says, “but use them more like the way in which natural gas works? A single gas turbine will produce X amount of power output. You can stack five, ten, or more turbines and have much higher output as needed. If you do modular reactors, they can be built more efficiently in a manufacturing process rather than being built one-off.”

Ultimately, Bonvillian says, ARPA-E represents an important piece of the technology development puzzle in the future U.S. economy. When DARPA created the Internet, it funded and incubated the computer network technology from the early 1970s through the mid 1990s, when it was finally mature enough to be supported by the commercial sector. Today the Internet Association, an industry group, estimates DARPA’s golden goose is worth nearly $1 trillion in the United States alone.

Likewise, ARPA-E is standing up technologies that may be a centerpiece of American industry tomorrow.

Entrepreneur and clean energy advocate Tony Seba is bullish enough about solar that he thinks ARPA-E support in 2017 and beyond could be academic. Rooftop-generated solar in many parts of the United States today, he says, costs 7 cents per kilowatt-hour. The cost of storage (in an EV or battery bank like the Tesla PowerWall) is, he says, approximately 4 cents per kilowatt-hour at wholesale, 8 cents per kWh at retail. However, he projects the retail cost of storage will go down to 4 center per kWh by 2020. And PV-plus-storage retail cost of 11 cents in 2020 will be cheaper than the 12.9 cents per kilowatt-hour the U.S. Energy Information Administration rates as the average utility cost of electricity in 2016.

The price of rooftop solar plus storage has come down by 80 percent since 2010, Seba says. And he says it’s reasonable to expect it to come down another 20 percent within the next three to four years. Solar plus storage as well as electric car and self-driving technology, he argues, make for a package of disruptive technologies that he says will drive carbon out of energy and transportation regardless of what ARPA-E does under a new president.

Which is why Seba says he spoke at the COP-21 conference in Paris last year with a message that wasn’t very popular.

“If governments want a zero-carbon energy economy in terms of energy and transport, just get out of the way,” he says. “That’s not necessarily a message that even governments want to hear. But… I’m going with the data, rather than the drama.”

However, Bonvillian notes that China now leads the world in solar panel production. But which country will win the race to build next-generation solar (likely based on thin-film PV and new materials) is still an open question. If ARPA-E is about boosting American technology and therefore its technology companies, it could help seize the moment.

“The U.S.’s historic advantage is the strength of its innovation,” Bonvillian says. “The issue for the U.S. solar industry is will the U.S. develop the next generation of solar technologies? Which is what we need to keep the price going down and keep the efficiency going up. Will that develop here? Which is not to say it won’t spread to China. But will U.S. firms have a first-mover advantage? ARPA-E could be part of that story.”

This story was corrected on 6 December to give Tony Seba’s correct retail and wholesale storage projections.