In previous decades, the Department of Energy drove basic research by operating giant government-funded labs, but under the leadership of Energy Secretary and Nobel Laureate Steven Chu, the agency has transformed itself into something different: the biggest, greenest venture capital firm in the world.After receiving an unprecedented surge in funding for renewable energy courtesy of the American Recovery and Reinvestment Act, Chu set to work hiring big names from the nation’s top research laboratories, in order to staff a new agency called ARPA-E, modeled after DARPA, the R&D wing of the Pentagon. In just three years, ARPA-E has made more than 180 investments in basic research projects in renewable energy, and that’s in addition to grants issued by the Department of Energy proper, like the one that funded the Ocean Power Technologies project in Oregon. …
In the book you describe a new federal agency, ARPA-E, a stimulus-funded incubator for alternative energy technologies that is the brainchild of Secretary of Energy Steven Chu. Can you describe how ARPA-E came into being?
Grunwald: The stimulus didn’t create vast new armies of government workers at alphabet agencies like the WPA or CCC; ARPA-E was its only new agency, with a staff the size of a major-league baseball roster. But it’s a really cool agency, the kind of place where Q from the James Bond movies would want to work. It actually had its roots in the Bush administration, when Chu served on a National Academy of Sciences panel on American competitiveness that released a report called Rising Above the Gathering Storm; one of its recommendations was an energy research agency modeled on the legendary DARPA at the Pentagon. The idea was to finance out-of-the-box, high-risk experiments, like an early-stage venture capital firm. Congress authorized it, but never gave it money to launch until the stimulus.
The early days at ARPA-E were pretty insane. Its first couple of employees had to put out its first solicitation, and it was inundated with 3700 applications for its first 37 grants, which crashed the federal computer system. But they attracted an absurdly high-powered team of brainiacs: a thermodynamics expert from Intel, an MIT electrical engineering professor, a clean-tech venture capitalist who also taught at MIT. The director, Arun Majumdar, had run Berkeley’s nanotechnology institute. His deputy, Eric Toone, was a Duke biochemistry professor and entrepreneur. Arun liked to say that it was a band of brothers; I like to think of it as a $400 million Manhattan Project tucked inside the $800 billion stimulus.