An MIT spinoff just getting off the ground received a huge helping hand from the U.S. Department of Energy on Monday. FastCAP Systems, of Cambridge, MA, received a two-and-a-half-year, $5.35 million grant in the first round of funding ever issued by the new Advanced Research Projects Agency-Energy (ARPA-E). The company aims to commercialize a nanotube-enhanced ultracapacitor, an energy storage device that could greatly reduce the cost of hybrid and electric vehicles and of fast-responding grid-scale energy storage, making it easier to integrate renewable energy sources such as solar and wind-based power.

"The ARPA-E grant represents the ability to ramp up faster," says Joel Schindall, the MIT professor in whose lab the technology was originally developed. "We now have the resources to do the things that we've been wanting to do for the last few years."

ARPA-E was inspired by the Defense Advanced Research Projects Agency (DARPA); like DARPA, it is chartered with supporting high-risk, high-reward research--but ARPA-E is focused on projects that could provide innovative solutions to the problems of climate change and energy security rather than defense. An agency of the U.S. Department of Energy, ARPA-E received $400 million in initial funding from the federal government in April. On Monday, it announced the awardees in its first round of grants to small businesses, universities, and large corporations. Thirty-seven projects were funded, receiving an average of approximately $4 million each. ARPA-E received more than 3,600 concept papers, and the final winners were selected from about 300 full applications.

Nick d'Arbeloff, president of the New England Clean Energy Council, says that the ARPA-E award will make a big difference to the small companies that receive them. "An award of this type is huge," he says. "It is a huge badge of honor and validation for other investors, that this is seen by the Department of Energy as a highly innovative, breakthrough technology, and one that every venture capital firm should be tracking."

Ultracapacitors that use activated carbon electrodes are already on the market but are used only for limited applications, such as absorbing the energy produced by braking in hybrid buses and providing the quick bursts of power needed to get the large vehicles moving. The reason that they are restricted to such niche markets is that they cannot store enough energy to provide power over a long period of time.