REPORT: DOE SHOULD RETOOL APPLIED ENERGY, SCIENCE OFFICES

Tamar Hallerman
GHG Monitor
4/12/13

The Department of Energy’s organizational structure for applied energy research is hamstringing technology development and must be reorganized if the Department wants to truly innovate, according to a new report from a pair of energy nonprofits. The Clean Air Task Force and the Energy Innovation Reform Project argue in their report, released ahead of MIT physicist Ernest Moniz’s confirmation hearing for Energy Secretary earlier this week, that the way DOE’s four applied energy research programs are structured is flawed, creating “institutional silos” around technology types that “inhibits” effective energy innovation. Applied energy research at DOE is currently broken up between the offices of Fossil Energy; Nuclear Energy; Energy Efficiency and Renewable Energy; and Electricity Delivery and Energy Reliability. But in an accompanying op-ed in the newspaper The Hill, the report’s authors argue that the current structure “inhibits internal and external communication, coordination and collaboration, and makes it virtually impossible to conduct objective comparisons of technology options.” 

The report also finds fault with the fact that the Department’s basic and applied energy research programs are managed across several different offices and are under the direction of different under secretaries of Energy. It argues that the difference of management styles—and the fact that each office has its own analytical organization, budget shop, public affairs and congressional relations activities—has led to factionalism and huge gaps in coordination, with technology innovation and commercialization subsequently getting relegated to the back seat. “Linking these activities under a common, coherent organizational structure is imperative,” the report says. 

Report Calls for Offices Based on End-Use

Instead, the report recommends that DOE reshuffle its applied energy offices into two or three new ones centered on end-use rather than primary energy source. It proposes the Office of Power and Grid Technologies; the Office of Transportation and Fuel Technologies and the Office of Advanced Energy Efficiency Technologies. The current applied energy “stovepipes are clearly detrimental to holistic, collaborative innovation and problem solving; breaking the silos is integral to reform of DOE,” the paper argues. It also calls on the new Secretary of Energy to combine the Office of Science with the Department’s applied energy programs, creating a single office for both basic and applied energy that the authors say can improve collaboration opportunities.

The think tanks also recommended that DOE create an internal and systematic technology portfolio review that is insulated from political influence that can identify any gaps or imbalances that may occur over time. DOE currently has a system of self-evaluation in place, according to the report, where in-house analytical organizations tend to produce “inherently political self-assessments.” “As one might expect of such self-evaluations, all DOE programs score highly, despite the fact that their overall impact in the marketplace is underwhelming at best, or a waste of resources as worst,” the report says. It also calls for all planning, budget, analysis and Congressional and public affairs work be removed from applied and basic science offices and become an office of its own. The report says the current system is “wasteful and duplicative,” as well as “self-serving.”

Novel Demonstrations Need New Model?

The nonprofits argued that within DOE’s applied energy programs, desperately in need of a makeover is the way the Department executes first-of-a-kind, commercial-scale technology demonstrations. The report says DOE has a “generally poor record” in that arena, and lists both iterations of the FutureGen carbon capture and storage project as a prominent example of the Department’s managerial “failure.” Given the fact that projects are typically reliant on government funding that often fluctuates due to Congressional and administration politics, many do not receive adequate funding for maximum construction efficiency, the report argues. It says the requirements that often accompany federal grants and cost-shares can add “significant cost and administrative burdens” to already complex projects. “As a result, it is all but guaranteed that a federal project will take longer to construct, and cost significantly more, than a comparable private or commercial project,” the report says.

Instead, new institutional arrangements and partnership models for demonstration projects are needed, according to the report. It recommends that instead of putting DOE in the driver’s seat in terms of leadership and direction of large-scale, first-of-a-kind projects like FutureGen, projects should instead be driven by the private sector with some DOE assistance, similar to the organizational structure of the Department’s Clean Coal Power Initiative. That program is helping fund projects like Mississippi Power’s Kemper County plant and Summit Power Group’s Texas Clean Energy Project. In addition to relying on partial federal funding, both projects are selling captured CO2 to nearby operators of enhanced oil recovery projects to make money, and Summit is also selling sulfuric acid and chemicals to produce urea fertilizer.

The paper also suggests that those facilities be managed by outside private sector consortia that can be assisted, if necessary, by special funding arrangements, targeted grants, federal tax holidays, and other federal incentives, but fails to mention a specific structural approach. The report does point to two proposals made in previous years about how to move forward, the first being legislation from 2009 that would have created an industry-funded and managed organization to finance the development of CCS demonstrations, funded through a fee on people’s electricity bills. The other proposal, pitched in 2010 by the industry consortium the American Energy Innovation Council, suggested creating a new publicly-owned private corporation operating outside of the federal government, using both public and private funding to build first-of-a-kind large-scale CCS and new nuclear demonstration plants. Both proposals essentially consist of a tranche of funding allocated to large demonstrations from either ratepayers or taxpayers that are somewhat protected from changes from Congress or the Administration. “The essential point is that DOE should not attempt to lead commercial demonstrations in the absence of similar conditions; it should instead consider ways that it might assist private entities as they conduct relevant commercial-scale demonstrations,” the report says.

‘Determined Leader’ Needed

The report’s authors said in their op-ed piece that Moniz, if confirmed as Secretary of Energy, is in the unique position of having both a scientific background and political experience at DOE, which puts him in a unique position to reform the Department’s operations. “The solutions to these problems are neither simple nor sexy; they will require a determined leader willing to find satisfaction in organizational reform, hardly a headline-making activity,” the authors said in the op-ed. “But the surest path to real success for DOE would be a sustained effort to smash the silos, surmount the institutional barriers that separate basic and applied research, impose new analytical rigor throughout the department and insist on crisp execution of programs and contracts.”