By Melie Ekunno
Great Plains Institute, Jun. 28, 2022
Commercial demonstrations are key to de-risking energy technologies so that the marketplace can begin adopting them. Created and funded by the bipartisan Infrastructure Investment and Jobs Act (IIJA), the US Department of Energy (DOE) Office of Clean Energy Demonstrations is expected to select and manage many large-scale demonstration and pilot projects.
Recently, the Carbon Capture Coalition, Regional Carbon Capture Deployment Initiative, and Industrial Innovation Initiative jointly hosted a webinar to highlight the formation of the office. This blog post provides highlights of the discussion from the webinar panelists along with the full event recording. (GPI provides staffing for each of these groups and is a convener or co-convener)
The webinar explored the office and highlighted recommendations to the DOE on the establishment of the office in October 2021 and February 2022. The recommendations were from a multi-stakeholder group coordinated by the Information Technology & Innovation Foundation (ITIF) and were also supported by the Great Plains Institute. Both sets of recommendations are detailed further in a recent joint blog post.
The Office of Clean Energy Demonstration has approximately $21.5 billion in funds:
- $3.5 billion for carbon capture projects
- $500 million for industrial emissions demonstrations
- $8 billion in funding for clean hydrogen demonstrations over the next five years
The office is also expected to be called upon to advise other units of DOE that are managing demonstration and pilot-scale projects across the department’s technology portfolio to accelerate the deployment of clean energy technologies, which is necessary to meet midcentury climate goals.
The role of commercial demonstrations in energy technology deployment
Despite its key role in preparing innovative technologies for market scale, demonstrating new and innovative energy technologies has not typically been the DOE’s central role. The DOE has been more focused on earlier research and development of energy technologies, with a few notable exceptions.
Consequently, clean energy technologies have suffered a lack of federal investment, leading to the so-called “valley of death” which occurs when technology is past the stage of early investment but still too risky for traditional project developers to deploy commercially.
Most recently, the American Reinvestment and Recovery Act (ARRA) in 2009 provided $4.5 billion to demonstrate several innovative energy technologies, including energy storage, smart grid, and carbon capture and storage technologies. However, until the passage of IIJA, the federal government had not made any additional investments in large-scale energy demonstration projects since ARRA.
Due to this critical gap in support for commercial demonstrations, advocates have suggested over the years that the federal government has a key role to play in systematically funding large-scale energy demonstrations, including in the 2020 ITIF report More and Better: Building and Managing a Federal Energy Demonstration Project Portfolio.
The argument for a central office at the DOE overseeing large-scale energy demonstration projects is that they require managing financial and technical risks beyond the skills needed to oversee research and development programs. With the creation of the new Office of Clean Energy Demonstrations, a diverse set of projects can be managed as a portfolio. That approach will, in turn, reduce overall risk and increase the chances for success and commercialization of the best-performing technologies in the office’s portfolio.