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.
Webinar discussion
Patrice Lahlum
Interim Vice President of Carbon Management, Great Plains Institute
Opening the webinar, Patrice Lahlum offered an overview of efforts and initiatives at GPI to ensure deployment of carbon capture, removal, transport, utilization, and storage, as well as clean hydrogen, to enable meeting midcentury climate goals. This includes efforts across GPI to ensure the proper implementation of IIJA, which directly gives the Office of Clean Energy Demonstrations authority to oversee the demonstration funding contained in the IIJA.
What is the Office of Clean Energy Demonstrations?
David Hart
Director, Center for Clean Energy Innovation, ITIF
David Hart opened his remarks by providing context on the barriers to innovation encountered by companies and investors who set out to demonstrate the possibility of commercial-scale clean energy technologies.
Hart’s remarks highlighted factors that make energy demonstration projects unattractive to commercial investors, as well as the reluctance of the public sector to provide funding. He discussed how those factors have historically deterred investment in new energy technologies that are critical to meeting emissions reduction goals.
Given this context, he asserted that what is needed is “a system that can share the cost, share the risk between the public and private sectors.” Hart outlined the need for shared responsibility for the risks and cost of demonstrating clean energy technologies between the private and public sectors. He noted that the details of the system for cost and risk sharing between the private and public sectors are laid out in the ITIF report, More and Better: Building and Managing a Federal Energy Demonstration Project Portfolio.
Hart proceeded to categorize technologies that are “demonstration ready” as those that support deep decarbonization, are large and complex, and typically “first of kind” or within the first few technology demonstrations. These may include projects providing demonstration support for advanced nuclear power, long-duration storage, carbon-neutral fuels, carbon capture and storage, and carbon dioxide removal.
Hart concluded by sharing the multi-stakeholder group’s recommendations made (in October 2021 and February 2022) to the DOE on program structure at the Office of Clean Energy Demonstrations, which the Great Plains Institute joined in supporting. ITIF summarized the recommendations in a recent blog post.
Jetta Wong
Senior Fellow, Center for Clean Energy Innovation, ITIF
Jetta Wong shared with the group the historical and unprecedented progress on establishing the office. Wong remarked, “what usually takes many years of legislation being introduced and then getting passed, and then hopefully getting appropriation all happened in a little over a year… we have a new Office of Clean Energy Demonstrations that took … a little over a year to fully authorize with a 21.5-billion-dollar budget. This is not something that usually happens.”
Wong proceeded to provide an outline of all the new programs that were authorized in the infrastructure package as it pertains to the Office of Clean Energy Demonstrations and the scope of the work to be done (see table below).
| Office of Clean Energy Demonstration | |
| Project type | FY2022-2026 |
| Sec. 41001 (a) Energy storage demonstration projects | $355 million |
| Sec. 41001 (b) Long-duration demonstration Initiative | $150 million |
| Sec. 41002. Advanced Reactor Demonstration Program | $2.477 billion |
| Sec. 41004 (a) Carbon Capture Large-Scale Pilot Projects | $937 million |
| Sec. 41004 (b) Carbon Capture Demonstration Projects | $2.537 billion |
| Industrial Emissions Demonstration Projects | $500 million |
| Sec. 40342. Clean energy demonstration program on current and former mine land | $500 million |
| Sec. 813. Regional Clean Hydrogen Hubs | $8 billion |
| Sec. 40103 (b) Program Upgrading Our Electric Grid and Ensuring Reliability and Resiliency | $5 billion |
| Sec. 40103 (c) Energy Improvement in Rural or Remote Areas | $1 billion |
| Total | $21.456 billion |
Source: Infrastructure Investments and Jobs Act, P.L. 117-58 (11/15/2021)
Conclusion
The Office of Clean Energy Demonstrations is a wholly new way of approaching deploying innovative technologies within the federal government. The pipeline of technologies that the office will begin demonstrating must be on a pathway to reach commercial maturity over the next decade if we are to remain on track to meet midcentury climate goals. The office must provide a framework for scaling clean energy technologies in this ambitious but necessary timeframe.
This blog was originally published by Great Plains Institute.