Federal energy research program yields billions in follow-on investment
A congressionally requested report from the National Academies of Science found that the Department of Energy's ARPA-E program has generated more than $20 billion in additional funding and over 1,400 patents from its $4 billion investment. Projects receiving ARPA-E grants were significantly more likely to secure patents and private capital than those that were turned down, and about 40% of grants triggered a 'crowding in' effect where other firms pursued similar technologies. The report recommends Congress substantially increase ARPA-E's budget to continue supporting high-risk clean energy innovations.
ARPA-E was established in 2009, deliberately modeled on the Pentagon's research arm, to help early-stage energy inventions survive the so-called "valley of death" between laboratory demonstration and commercial viability. Early grants concentrated on solar panels and lithium-ion batteries, technologies that have since become dramatically cheaper, largely due to Chinese manufacturing scale. The new report suggests the program should pivot toward "clean firm" power sources that operate around the clock, such as enhanced geothermal systems. One notable grantee, Fervo, drills ultra-deep wells to tap underground heat. The report's authors also highlighted a "crowding in" dynamic, where roughly 40 percent of funded projects prompted outside firms to pursue similar technological paths.
This report could influence how Congress allocates federal research dollars for climate technology, potentially steering more funding toward grid reliability challenges rather than mature renewables. If lawmakers act on the recommendation to expand ARPA-E's budget, startups working on hard-to-solve energy problems may gain a crucial lifeline, accelerating the timeline for commercial deployment. Society broadly could benefit from a more resilient grid and reduced emissions, though taxpayers bear the risk of funding projects that may never reach profitability.