“In some ways,” Isakowitz says, “the challenges are greater today” than they were 30 years ago. For one thing, Congress is working on legislation that would cap carbon emissions and require renewable-energy technologies, both of which are things that could dramatically change the energy market. But the DOE is under pressure to issue the loans quickly, especially since the money is intended to help stimulate the economy. It may need to make decisions about at least some of the loans before it’s known whether that legislation will pass, and if so, what affect it will have, Isakowitz says. “It’s really hard to predict what the market will look like three years from now,” he says. “Your guess is as good as mine about what the price of oil will be going forward.”
To prevent the failures of the 1970s and 1980s from happening again, Isakowitz says that the DOE is bringing in a number of outside experts, in addition to its own experts, to consider a variety of models of what could happen with energy commodity prices. It’s also bringing in experts to help evaluate the potential of new energy technologies, including engineers, and people with experience in finance and marketing.
To speed up the process, the agency is considering working with commercial banks to help sort through loan applications, Isakowitz says. But in light of recent bank failures, he says, the DOE is requiring the banks to have “some of their skin in the game.” Some of the banks’ own money will be on the line, he says, to encourage them to be careful in their loan evaluations. And the DOE won’t rely completely on the bank’s assessments in its decisions about what to fund, he says.
Meanwhile, Isakowitz says that ARPA-E, which operates outside the normal administrative structure of the DOE, is designed to bring “disruptive” technologies to market. He says that ARPA-E should be able to move “much faster” than the rest of the DOE because it doesn’t have to go through the same procurement process and can make its own decisions about hiring people and dealing with various legal issues. Whereas other parts of the DOE might fund research to improve batteries incrementally, by “5, 10, or 20 percent,” Isakowitz says that ARPA-E is designed to support technology that doubles or triples performance. Although the new agency still lacks a director, it’s issued its first request for applications–for $150 million of the agency’s $400 million in funding–and it has received thousands of concept letters describing new technologies. The agency is now sorting through the letters to determine which ideas merit complete applications.