Reimagining the Pathway to Market for New Energy Technologies [Part 1 of 2]

June 29, 2017

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For those who watch energy innovation closely, one trend has become clear over the last decade: innovation in hardware-based legacy sectors like energy is often much, much harder than innovation in software and IT. More capital is needed to develop physical technologies, the development timeline is long, and mistakes are costly. For example, redesigning a battery material or iterating on a manufacturing process is typically orders of magnitude more costly (in time and money) than updating a software product. Additionally, new energy technologies face significant barriers to entry, because the energy industry itself is necessarily risk-averse. Finally, these technologies are typically not direct-to-consumer—instead they must integrate into complex and established supply chains. As a result, the pathway to market is prohibitively challenging for new, transformative energy technologies.

Much has been written about these challenges to energy technology innovation, and many observers have expressed concern that the United States is falling behind in an industry that has traditionally driven growth and economic competitiveness. A common conclusion: we must work harder to push technologies along their pathway to market. That often means providing additional funding past early stage research and development in order to ensure they have a chance at success.

The Office of Energy Efficiency and Renewable Energy's (EERE’s) Technology-to-Market program (Tech-to-Market) is pursuing a fundamentally different strategy. Rather than funding individual technologies along the pathway to market, we’re focused on constructing a better, more efficient pathway in the first place. We believe that if the pathway itself is more efficient, then government research and development funding can go further, and the private sector can more easily step in and take projects to market. So rather than funding individual technology projects, we fund the development of innovative models that can improve the way energy technologies reach the market.

The pathway to market is heavily influenced by how well various resources and entities interact to support commercialization. For example, potential customers need to have channels to communicate their needs to early-stage innovators at startups, national labs, and universities. Innovators need access to testbeds to evaluate their new technologies. And capital providers need access to the right information and opportunities to vet new technologies and determine where their investments should go. But in these and other examples, inefficiencies abound due to misaligned incentives, lack of information, and organizational inertia. These inefficiencies virtually ensure that it will be expensive and time-consuming for new energy technologies to reach the market.

Tech-to-Market is pursuing a fundamentally different strategy. Rather than funding individual technologies along the pathway to market, we’re focused on constructing a better, more efficient pathway.

We believe those inefficiencies are addressable, and so we fund breakthrough ideas about how to overcome the systemic challenges preventing commercialization. By deploying small amounts of catalytic funding to address structural barriers, we envision an opportunity to create lasting change and a better pathway to market. To implement our approach, we sought ideas from the innovation community that – if successful – would fundamentally change how new energy technologies reach the market.

Through our Innovative Pathways Funding Opportunity Announcement (Innovative Pathways), we asked for ideas that were ambitious, testable, and scalable all at the same time. Applicants were asked not only to propose a new mechanism for getting technologies to market, they also needed to propose a rigorous viability test to prove or disprove their core idea, and an off-take plan for scaling and private sector support if the viability test is passed. This approach allows us to test innovative concepts and quantify their value, rather than design programs that require long-term government funding. We believe that the most effective mechanisms for technology commercialization, if they truly bring value, can be adopted by the private sector once they demonstrate success.

In response to Innovative Pathways, we heard from organizations around the country about how they are reimagining the pathway to market. We will soon announce a set of new projects, each addressing underlying barriers that prevent breakthrough technologies from reaching the market and having an impact on the world. Stay tuned for an update on the projects that we think can change the game for energy innovation nationwide!

Authored by Dr. Johanna Wolfson, Director of EERE's Tech-to-Market program. Tech-to-Market strengthens the U.S. innovation ecosystem by eliminating common barriers that prevent market exploration of new energy technologies.