Innovation in the energy space is difficult for any business, large or small. Ideas that show promise in the lab are too often stalled at the application process, partnership, and commercialization stages. Recently, the U.S. Department of Energy made an attempt to alleviate this barrier — quietly changing the path that future innovation in areas like hydroelectricity will take to get to market.
A system built for new ideas, not always for deliverables
Entrepreneurs, who provide critical input on developing innovative ways to produce, distribute, and consume energy, have traditionally been key players in driving American energy innovation — particularly in very complex engineering-based sectors like hydroelectric. However, these same entrepreneurs continue to encounter disjointed and lengthy application processes, protracted review cycles, and restricted access to the expertise provided by the nation’s laboratories when attempting to leverage federal resources.
Furthermore, in hydroelectric technology — which requires significant amounts of capital and years to scale — these barriers can become particularly expensive.
The Department of Energy’s decision to consolidate its Small Business Innovation Research (SBIR) program and Small Business Technology Transfer (STTR) program within the Office of Technology Commercialization (OTC) is a sign of increasing understanding that development tools must also grow as the technologies do. In this case, rather than creating additional funding sources, the department is working to make current support more accessible and easier to use.
How a consolidation approach will change things
When combined into a single commercialization strategy, the SBIR/STTR programs will allow for increased efficiency in support of innovation, as well as create a better interaction experience for those involved with DOE. As per the department, the consolidation will simplify the application process, shorten the time it takes for reviews to occur, and increase accountability among individuals within a singular office.
Therefore, for hydroelectric technology providers and start-ups developing hydroelectric technologies, this could lead to a reduction in the distance between R&D and testing in actual field conditions. Additionally, DOE intends to develop expanded partnerships with other organizations that will assist in connecting small businesses with national laboratories and outside intermediary organizations to test products, utilize technical expertise, and receive commercialization assistance.
This signifies a shift from using grants as the primary mechanism for support towards support that will create momentum for recipients once funding is received.
Why small businesses are more important than ever in water power
Waterpower innovation often occurs through small increments of improvement, such as:
- New materials
- Sensing systems
- Control methods
- Deployment concepts
Therefore, many of the first developments in these areas are developed by small firms specializing in specific niches that larger firms may ignore.
However, due to several reasons, including harsh environmental conditions, stringent regulatory standards, and high expectations related to product durability over extended periods, water power entrepreneurs face unique challenges. Even if a solution is viable, without improved commercialization pathways for support, viable solutions can fail to attract subsequent rounds of financing. Therefore, by improving coordination between funding mechanisms, laboratories, and partner organizations, DOE’s new approach recognizes that innovation capability — not simply technical ability — limits our ability to innovate. This is especially true as DOE works to modernize the existing hydroelectric fleet and integrate new functionality into aging infrastructure.
Administrative reform has a sectoral impact
Although the reforms apply broadly across all energy-related fields, we believe there will be considerable visibility of these impacts in waterpower. Faster review timescales and enhanced collaboration frameworks could allow smaller hydroelectric firms to rapidly transition from conceptualizing new ideas to piloting them, therefore reducing both risk for potential developers/investors.
According to DOE, the combination of the two programs was done primarily as a means to further enhance their “stewardship” of taxpayer dollars while accelerating commercialization results. Over time — this emphasis may fundamentally alter how successes are measured — from the number of funded projects to the number that ultimately make it to market.
