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New DOE office could help bridge 'valley of death' for clean energy technologies

  • Author Molly Christian
  • Theme Energy

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A newly passed bill from Congress will create an Office of Clean Energy Demonstrations at the U.S. Department of Energy.
Source: MingzheZhang/iStock/Getty Images Plus

The soon-to-be-enacted infrastructure bill from Congress will create a new office within the U.S. Department of Energy that could speed the commercialization of emerging clean energy technologies.

The proposed Office of Clean Energy Demonstrations will distribute funds for a range of projects, including hydrogen production hubs, grid resilience upgrades, carbon capture and sequestration, advanced nuclear reactors, and long-duration energy storage. The office will oversee $21.5 billion in funding, roughly a third of the $62 billion the DOE received in the infrastructure bill, which U.S. President Joe Biden plans to sign Nov. 15.

Such an office could be instrumental in deploying the technologies that could help achieve Biden's goal for net-zero carbon emissions economywide by 2050.

"To reach our net-zero goal, we have to replicate these huge projects dozens and hundreds of times across the country," Christopher Davis, senior adviser to Energy Secretary Jennifer Granholm, said during a Nov. 10 briefing. "Someone has to build the first ones to show that it can be done, and that's why these [demonstrations] are an essential part of getting to our net zero by 2050 goal."

Many of these technologies have already been proven in labs and at pilot scale, often through earlier DOE research and development work, Davis said. Through the new office, the DOE will form cost-sharing agreements with project developers for "building the first examples of these technologies at scale," the senior adviser explained.

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Breaching 'valley of death'

Ahead of its inclusion in the infrastructure bill, the creation of an Office of Clean Energy Demonstrations was proposed by Biden in his fiscal year 2022 budget request to Congress. In its budget request, the DOE said the office would be the department's "hub" for speeding the maturation of near- and mid-term clean energy technologies, "with the goal of quicker commercial adoption and increased availability."

Rather than displace existing DOE demonstration efforts, the office, which will award funds through a competitive process, "will solicit demonstration projects that address energy challenges that cut across technology silos," the DOE said.

That approach is smart, according to Meghan Claire Hammond, an associate with Pillsbury Winthrop Shaw Pittman LLP, who represents energy industry clients on regulatory and transactional matters.

The office will consolidate project management expertise in one place "as opposed to being siloed in each of the applied energy offices," Hammond said in an interview. "It's a good way to get these projects through kind of the 'valley of death' between funding and demonstration."

The structure of the proposed office mirrors recommendations in a May 2020 report from the Information Technology and Innovation Foundation, a nonprofit and nonpartisan think thank. In the report, the think tank called on Congress to establish an office of major demonstrations within the DOE, with dedicated funding to carry out demonstration projects on "sufficiently mature" technologies that have a "high potential to advance the national and global deep decarbonization agenda."

Such an office would be a "significant improvement" over the DOE's existing approach, the report asserted, where the agency assigns responsibility for demonstration projects to the DOE's applied energy offices, which depend on annual appropriations.

The DOE's Advanced Research Projects Agency-Energy, known as ARPA-E, promotes and funds research on advanced energy technologies, but it has only distributed about $75 million for next-stage demonstration projects, said Lachlan Carey, an energy security and climate change associate fellow at the Center for Strategic and International Studies.

Carey said in an interview that the new Office of Clean Energy Demonstrations could be a bridge between ARPA-E and other sources of federal or private sector funding, such as the DOE's loan program office and a proposed greenhouse gas reduction fund included in Democrats' Build Back Better social spending and climate package in Congress.

Having a large-scale demonstration office within DOE "takes the novel ideas that have incubated in the ARPA-E ecosystem and then provides a sort of booster shot," Carey said.