Innovation or Ivory Tower? Proposed DOE Energy Hubs Shut Out Private Sector

One largely unnoticed part of the recent energy and climate bill making its way through the national legislature is the section on Energy Innovation Hubs. (See link below for a full analysis.) This important clause establishes a number of geographical hubs to address technical barriers to widespread commercialization for a specific technology.  It lists eight technologies:

·       Fuels from sunlight

·       Nuclear fuel management

·       Energy efficiency building systems

·       Batteries and energy storage

·       Solar electricity

·       Novel carbon capture and storage

·       Modeling and simulation for nuclear reactors

·       Electrical grid systems

Modeled after famed innovation centers like Bell Labs and the Manhattan Project Labs, these centers are meant to bridge the gap between basic and applied science.  They are structured as multidisciplinary research centers that include researchers from academia, government labs, and industry.

The DOE plans to fund these centers with an initial $10 million grant for facilities, and then $25 per year after that, to be funded with permits from the cap and trade program in the bill.  This comes to a total of $280 billion for fiscal 2010.  The research hubs are to be led by a university, a national lab, a nonprofit organization, or a private firm.

While the vision for these is compelling, the current bill as written is somewhat inconsistent with this vision.  The climate bill that came out of the House (HR 2454 section 171) has the following language:

Entities Eligible for Support- A consortium shall be eligible to receive allowances to support the establishment of a Hub under this section if--

(1) it is composed of--
(A) 2 research universities with a combined annual research budget of $500,000,000; and
(B) 1 or more additional qualifying entities;

Many states (including my own state of WA) will have a lot of trouble meeting these requirements, given the sparse number of major research universities, and the difficult state these universities are in given the recession’s impact on state budgets.  It is likely that this requirement will bias the bids towards private universities.

The bill also gives excessive control to universities in each of these innovation hubs:

(B) MEMBERS- Each Advisory Board shall consist of--
(i) 5 members selected by the consortium’s research universities;
(ii) 2 members selected by the consortium’s other qualifying entities;
(iii) 2 members selected at large by other Advisory Board members to represent the entrepreneur and venture capital communities; and
(iv) 1 member appointed by the Secretary

This clause is inconsistent with the DOE’s vision of having flexible management and a variety of leadership organizations.  This would make it difficult for organizations like IBM and GE, already making great strides towards advanced battery and grid research (see link below), to lead such a research effort.

It’s unclear why the bill puts such a large emphasis on universities instead of allowing for a more flexible management structure.  If the goal of these centers is truly to find ways to remove technology barriers to commercialization, then private sector participation is vital.  Universities are probably the wrong managing entities given the goals and timeframes that DOE has in mind for these centers.  Private sector involvement will also be vital to the ability of the centers to actually spur job growth in the future.

   SGN Analysis of Climate Change Bill  

   Report on IBM & GE’s battery research

   DOE’s overview of energy innovation hubs

   Read the climate bill in its current form