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Concept to Commercialisation Hype in Energy Technology World Energy Outlook '18 Bright Network Awards

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From Concept to Commercialisation

Bridging the ‘Valley of Death’

Political systems must grapple with the role of government in every aspect of public life. The government’s role in conducting and supporting scientific and technological research is no exception. At least in the United States, there is widespread agreement that there is room for government involvement in moonshot research programmes – important research agendas that private companies simply wouldn’t embark upon independently. In addition to the original moonshot, the government has set ambitious goals in fields ranging from cancer research, to defence technology, to energy.

In 1957, President Eisenhower authorised the Defence Advanced Research Projects Agency (DARPA) [1]. The Soviets had just launched Sputnik and the U.S. was losing the Space Race. DARPA was designed to re-establish American leadership in strategic defence technology by conducting transformative research. By any possible measure, DARPA was a success. The agency’s research has given rise to technologies like the Internet, voice recognition software and GPS [1].

Decades later, DARPA’s success inspired a bipartisan group of lawmakers to create a similar agency, housed in the Department of Energy, that would be tasked with undertaking high-risk, high-reward research into new energy technologies [2]. Congress authorised the Advanced Research Projects Agency-Energy (ARPA-E) in 2007 and allocated its funding through the American Recovery and Reinvestment Act of 2009.

ARPA-E’s mission is to ‘create a new tool to bridge the gap between basic energy research and development/industrial innovation.’ This gap between ‘basic energy research’ and ‘development/industrial innovation’ is particularly perilous for new start-ups and technologies. It is common for a cutting-edge technology to show great promise in the lab but to face a steep climb in scaling up to compete with established players [3]. Competing in the energy sector means contending with traditional energy firms which have the benefit of existing infrastructure and networks. Consequently, the so-called ‘incubation period’ for energy start-ups is longer than for biotech or software [4]. Venture capitalists are put off by the longer incubation, resulting in a critical shortage of early-stage funding [5]. By providing this support, ARPA-E funding aims to build a bridge over the so-called ‘valley of death’ between the lab and the market.

For an agency that is by its nature tasked with making risky investments, ARPA-E has a remarkable success rate [6].As of February 2018, ARPA-E has awarded $1.8 billion to more than 660 projects [2]. Seventy-one of these projects have gone on to form new companies and 136 have attracted more than $2.6 billion in follow-on funding, according to its website. ARPA-E funding has also resulted in 1,724 peer-reviewed journal articles and 245 patents. A 2017 National Academies assessment found that ‘ARPA-E is making progress toward achieving its statutory mission and goals [7].’ At the time of the review, 25% of teams raised follow-on funding, about 50% published scholarly articles and 13% earned patents. Furthermore, the agency’s grant scheme prioritises projects that are in the public interest and fulfil current needs in the energy sector. For instance, as wind and solar capacity grow, storage is increasingly seen as the primary constraint on growth in renewables. In 2018, ARPA-E issued $28 million in research grants for energy storage systems like thermal storage and flow battery technologies [6].

Despite these successes, there is a growing sense among some in the industry that the support ARPA-E offers isn’t enough to get emerging technologies off the ground. According to the MIT Technology Review, an ARPA-E grant isn’t enough to bring a new energy technology to full-scale production [4]. Compounding these issues is the fact that both venture capital funds for energy technologies and public investment in energy research, development and demonstration (RD&D) have been falling [8]. The National Academies also notes that despite the potential of some ARPA-E grantees, none of them has succeeded in transforming the energy sector (which, the authors note, would be unreasonable to expect in fewer than ten years).

In order to bring new technologies to scale and actually transform the energy sector, ARPA-E may need to undergo structural adjustments that allow longer-term funding. The National Academies assessment recommended a series of improvements, including developing a system for measuring its impact and extending the three-year time frame for projects. ARPA-E could also implement a new funding scheme for projects that have entered the market but need help scaling up in order to compete.

References »

  1. About DARPA. Defense Advanced Research Projects Agency. [Online] https://www.darpa.mil/about-us/about-darpa.
  2. ARPA-E About. ARPA-E Department of Energy. [Online] https://arpa-e.energy.gov/?q=arpa-e-site-page/about.
  3. Orcutt, Mike. Where's the Money for Energy Startups? MIT Technology Review. [Online] November 23, 2015. https://www.technologyreview.com/s/543421/wheres-the-money-for-energy-startups/.
  4. Orcutt, Mike. Why ARPA-E Needs to Grow Up. MIT Technology Review. [Online] March 1, 2016. https://www.technologyreview.com/s/600896/why-arpa-e-needs-to-grow-up/.
  5. Sopher, Peter. Commentary: Examining the role of early-stage venture capital investment in energy. IEA. [Online] August 30, 2017. https://www.iea.org/newsroom/news/2017/august/commentary-the-role-of-early-stage-venture-capital-investment-in-energy.html.
  6. Roberts, David. A tiny, beleaguered government agency seeks an energy holy grail: long-term energy storage. Vox. [Online] October 4, 2018. https://www.vox.com/energy-and-environment/2018/9/20/17877850/arpa-e-long-term-energy-storage-days.
  7. Temple, James. Scientific Panel Concludes ARPA-E Is Working. Will It Matter? MIT Technology Review. [Online] June 13, 2017. https://www.technologyreview.com/s/608097/scientific-panel-concludes-arpa-e-is-working-will-it-matter/.
  8. Bennett, Simon. Commentary: Declining energy research budgets are a cause for concern. IEA. [Online] October 16, 2017. https://www.iea.org/newsroom/news/2017/october/commentary-declining-energy-research-budgets-are-a-cause-for-concern.html.

Hype and Energy Technologies Development

There is rising concern about climate change. Scientists know it. There has been a remarkable increase in the number of papers on the topic. But the issue is not intrinsic to academia. The public is also concerned with it, and the hype is real.

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Figure 1. Wind, just a load of hot air?

In the news, in social media, even among friends, the issue of climate change is discussed from time to time. It is something of general concern. The growth of our societies has been based on fossil fuels, and we have come to know that this model has seriously damaged the planet. The good news is that new technologies are being developed, which could potentially lead to a more sustainable and green future while assuring our quality of life… if properly managed.

When asking the general public how the future will look, you will probably hear of solar and wind when it comes to electricity and battery electric vehicles for transportation. The field of heating and cooling is the great unknown: solar thermal will be the best-known technology, but you are lucky if you know anyone who mentions heat pumps or CHP.

How come these are the most popular technologies? The hype may well be a big contributor. News and media give us information about these technologies, while other ones are left completely unknown. Media and the general public typically praise their benefits and put them as “the solution” or “the path to follow”.

This is not an unknown reaction towards a promising technology. This kind of hype had appeared before, with biofuels for example. It is a proof of the willingness of society to seek better solutions, and the desire to adopt them. Literary creativity, without a comprehensive understanding of the pros and cons of the technology, boosts this effect. Finally, figures like Elon Musk with Tesla and its marketing pro-electric vehicles make a huge contribution too.

There is a beneficial outcome from hype: the more attractive and popular a technology is, the more public interest it gets. This interest often translates into more investment and more research, making it easier for the technology to reach a suitable level of maturity. It also may lead to supporting policies and regulations, which will reduce uncertainties and promote development.

However, this dynamic highlights the potential benefits without taking into consideration the physical, technical and economic disadvantages. This is a problem, leading to a smaller positive impact than expected. Moreover, hype does not only raise expectations of a specific technology but also can eclipse or completely erase the development of others. Breakthroughs, showcased through media, draw public attention and investment. Those specific technologies, widely covered by the media, receive supportive policies, investment and more research time. Therefore, less mature technologies are not given chance to succeed.

Even if technologies are given time to mature, the hype is always subject to change. The transport industry is a clear example. Research is now all about battery electric vehicles, although it was biofuels before, and previously fuel cells; there has never been support at the same time for more than one technology. Furthermore, batteries themselves won’t solve the issue with fossil fuels in transportation; there are concerns about their real potential, especially as improvements need to be made to the global energy mix.

The idea I am trying to elaborate here is not that we shouldn’t invest in these “mainstream” technologies. There is enough research to ensure that they are a key part in the energy transition of different sectors, and it is important to keep working on their development. However, one has to bear in mind that the hype is not always real.

The kind of transition required cannot be compared to any previous one and is going to require of huge investments in a wide number of areas and technologies, according to the IPCC special report from last October. Strong government support will be needed, as well as learning from the past. There is no point in targeting a single technology, as there is no one that, by itself, can solve all the challenges of climate change.

Regardless of the hype that is naturally related to breakthroughs and developments of a promising field, we need to have a broader scope. Bearing in mind the limitations of a specific technology, we can more easily find a comprehensive solution. A solution that, by acknowledging the gaps in a given technology, can integrate different ones by adding their advantages.

Hype is a natural reaction in our societies, but we need to learn how to cope with it. It can prove useful to support technological development, but the scientific and critical approach should be of the utmost priority. Therefore, experts in academic fields should work to provide a broader view of technologies and development, stressing the limitations of each one, so public can develop a more nuanced idea. In addition, governmental support should not be based entirely on these trends and needs to promote a range of different technologies, if we are really looking for a greener and more sustainable future.


World Energy Outlook 2018

What does the future hold and how is it modelled?

Each year the International Energy Agency (IEA) develops the World Energy Outlook (WEO), a report based on the insights from arguably the most comprehensive energy model in the world. Aimed at decision makers in governments and industry, the Outlook assesses the evolving energy landscape and creates scenarios based on current actions and commitments. The report also develops a global pathway which has the potential to meet the UN sustainable development goals.

In today’s post we’ll be looking into the key trends foreseen in the Outlook, the limitations to these forecasts, and the challenges in using large scale energy models.


Scenarios and Key Trends

The IEA produces three scenarios: Current Policies Scenario (CPS), New Policies Scenario (NPS), and Sustainable Development Scenario (SDS). The CPS is based on policies already enshrined in legislation whilst the NPS incorporates announced policies such as nationally-determined contributions in the Paris Agreement. The SDS takes a different approach: it uses the targets set by the Paris Agreement and UN Sustainable Development Goals (SDGs) and attempts to find the least-cost energy transition paths to meet them. From here on we will focus on the NPS and the likely future we face without ratcheting up climate action.

The NPS sees global energy demand rising more than a quarter by 2040. Whilst this may seem like a large increase, demand would more than double if not for continued improvements in energy efficiency. This growth is led by developing nations, primarily India and China, with the rise in EVs and demand for air conditioning and refrigeration making up a significant portion of electricity consumption.

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Figure 1. Total primary energy demand sources up to 2040 (IEA/World Energy Outlook 2018).

Electricity is set to rise from approximately 20% share in final energy consumption today, increasing at higher rates in countries with light industry which focus on services and digital technologies. Although greater electrification allows us to decarbonise more efficiently, today’s grids are ill-equipped to deal with the rapid changes in renewable generation without measures such as demand side response (DSR) being put in place to improve resiliency. The need for greater flexibility will also be met by batteries which are becoming increasingly more competitive with gas, but conventional power plants will remain the main method of keeping the lights on.

Even with less flexibility from gas combustion, emissions fail to peak before 2040, in stark contrast to the sharp decline called for by climate scientists. The Paris Agreement 2˚C emissions limit could be breached as early as 2030 with the NPS leading to a total temperature rise in the region of 2.7˚C. The impacts of this failure are even more significant in the wake of the latest report by the Intergovernmental Panel on Climate Change (IPCC) with projected substantial loss in biodiversity, stronger and more erratic weather, dangerous heatwaves and significant reduction in land mass due to rising sea levels.


Scenario Criticisms and the Difficulties in Long-Term Energy Modelling

The NPS is the core scenario made by the IEA; it is also the one which receives the most criticism. This primarily stems from the difference between historic predictions and the realities of the energy mix we see today (see Figure 2). Personally, I believe these critiques to be mostly unjustified. By basing the assumptions for the models on policies which have only been confirmed or assured, the forecasts are unable to take into account the effect of inevitable policy revisions and ratcheting up of climate action over the 20+ year horizons they’re made over. It does however highlight a key issue in the two scenarios, namely a lack of communication in what they represent.

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Figure 2. Disconnect between IEA projections and deployment of PV (Auke Hoekstra).

The reasoning behind making these assumptions comes down to two key factors:

  • Without knowing where their current policies are leading them, governments and industry can’t make informed decisions on what to change in order to meet their targets.
  • If the WEO models tried to incorporate all of the possible policies which could be made there simply wouldn’t be enough time to create meaningful analysis on an annual basis.

The second factor is due to the over-arching issue in long term forecasts, uncertainty. In his book Superforecasting, Philip Tetlock discusses the outcomes of a study he ran looking at the response of financial experts when asked whether the economy would improve, stay the same or get worse. To his surprise they were correct less than a third of the time when making forecasts more than 3-5 years ahead, i.e. they’d have performed better by choosing at random. Thankfully the energy sector doesn’t face quite the same level of volatility and speculation as financial markets. However, it is nonetheless a complex system with numerous stakeholders and interactions, making forecasting not just difficult but in some cases dangerous.

To get around this the IEA instead creates scenarios which, in their own words, “do not aim to forecast the future, but provide a way of exploring different possible futures”, allowing them to observe the effects of large shifts in politics, technology etc. One example which fits this brief is in carbon capture and storage (CCS). Currently CCS is in a deadlock between governments waiting for industry to develop the technology and investors waiting for governments to incentivise its deployment. Technologies such as CCS face massive uncertainty when faced with traditional forecasting methods, but scenario-based forecasting allows the effect of specified subsidies or cost reductions to be quantified with increased confidence.


Parting Thoughts

Despite its limitations and criticisms, the WEO remains the most comprehensive and frequently updated view into the energy landscape’s future, with this post merely scratching the surface of the findings in the full report. More information and their other work can be found here.

Following the WEO launch, there was key message stressed by the UKCCC, and echoed by the IEA and IPCC. We cannot return to business-as-usual. If we do, we face damaging the environment further and raising costs for governments and businesses. Whilst the Outlook highlights the challenges we face, it also shows us there is a path to a cleaner and more prosperous world, so long as we face up the scale of the issue and act now.


All views expressed are the author’s and not necessarily those of the Energy Journal


Definitions »

Demand Side Response:

Demand side response is where consumers of electricity change how and when they use electricity, most commonly to reduce peak demand. Utility companies are looking to time-of-use tariffs to promote demand side response amongst consumers.


Final Energy Consumption

Final energy consumption is the total energy consumed by end users. It is the energy which reaches the final consumer's door and excludes that which is used by the energy sector itself


Sustainable Development Goals:

The Sustainable Development Goals are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice. - United Nations


Bright Network Society of the Year Awards 2018

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The Energy Journal Team were amongst societies from universities across the country to be nominated for the Bright Network Society of the Year Awards.

The Energy Journal was shortlisted in the Innovation category due to their unique concept for a cross-university collaboration, their use of technology for publication and advertising, and their ambitious plans for future growth. Other award categories included Diversity and Representation, Impact on Campus and Community Outreach. Societies from across the UK were invited to the awards ceremony, held in the Rumpus Room on the South Bank.