The Capitol Energy Report with Matthew SteppIn part one of this interview, Assistant Secretary of Energy David Danielson (pictured below) and I talked about his efforts to support and advance clean energy manufacturing for both new technologies as well as way to make existing U.S. manufacturers more internationally competitive. In part 2 of our conversation, we take a deeper dive into important institutional reforms he’s making at the Office of Energy Efficiency and Renewable Energy (EERE) to change how it manages and invest in high-impact clean energy research—efforts that help make up what I’ve been calling the “quiet clean energy innovation revolution” now underway at DOE and across the federal government.

Matthew Stepp: You announced at the end of last year a series of significant institutional changes at EERE. What made institutional reform such a priority?

David Danielson of the Department of EnergyDavid Danielson: I came to the government from the private sector but started in government as the first employee at ARPA-E, where we had the chance to build a new federal agency from scratch. It allowed us to think creatively about the right way to build an agency, so we used a lot of the best practices learned from the DARPA model, which has been incredibly successful. When I came to EERE a year ago, we identified opportunities to implement some of these same best practices here as well.

EERE has existed by name since 2001, but the DOE has been supporting energy research and development since the 1970’s. That’s decades of intuitional build-up, so how did you go about reforming an organization with such a long history?

I should say first that EERE has a good operational history, but we can always do better. So as soon as I was confirmed, I undertook a broad-based listening tour where I sat down with almost everyone in the organization in small groups of 10-15 and asked, “How are we doing? What are we doing well? What are we not doing well? What can we do better?” From that listening tour and from my experience at ARPA-E, we gained a number of powerful ideas to make EERE operate more effectively.

And based on this listening tour, you most recently created a new Deputy Assistant Secretary for Transportation and reorganized EERE’s research offices.

Right, instead of organizing ourselves around ten different technology office siloes, we’re organizing those offices around three sectors – transportation, renewable power and the grid, and end-use energy efficiency in buildings and factories.  The new Deputy Assistant Secretary for Transportation is going to oversee all of our transportation work, whereas the Deputy Assistant Secretary for Renewable Power will oversee our work in wind, water, solar, and geothermal and our Deputy Assistant Secretary for Energy Efficiency will lead our work in building efficiency, advanced manufacturing and industrial efficiency as well as the Federal Energy Management Program Office and the Weatherization and Intergovernmental Programs Office.

For example, in the previous organizational make-up, our Vehicle Technologies Office would invest in advanced engine technology and our Bioenergy Technologies Office would invest in new biofuels, with some but not a sufficient amount of strong coordination between the two. There were linkages between the two, but it needs to be stronger if we want to be as effective as we possibly can in jointly developing the advanced engines, biofuels and fueling infrastructure that need to all work together. Ultimately, it came down to breaking down the silos, and I believe that we’ll continue to see efficiencies by organizing around these sectors instead of around technology areas.

The change that really connected back to your time at ARPA-E was to bring DARPA-style project management to EERE.

Yes, I wanted to focus on active project management at EERE. That required a few structural changes. The first thing we had to do was reorganize and give uniform titles, roles and responsibilities across all of our technology offices. The reason for this was that each of these ten technology offices was led by very strong leaders, but they had all evolved slightly different organizational structures, to the point where accountability for active project management could sometimes be shared between two people, as opposed to having a clearer structure where a single person was accountable for executing active project management for each and every project.

The second thing we’re doing is providing uniform active project management guidance for every awarded project’s cooperative agreement so that every project is effectively and uniformly managed. To provide some background, grants and cooperative agreements are both common types of government financial assistance contracts. In [Fiscal Year] FY 2014, we’ll be transitioning from grants to cooperative agreements for all of our competitive awards. Under a cooperative agreement, EERE and DOE are active partners with the award recipient – providing us with additional control over re-orienting or terminating underperforming projects.

We’ll also be transitioning to a requirement that every EERE project must have aggressive “go/no-go” milestones every year. EERE awardees will be held accountable to these milestones. Also, we’re developing for the first time a single corporate database where senior EERE leadership, including myself, will have direct and immediate visibility in to the status and progress over every single project.

Can you give an early report card on how these reforms are working? What benefits can we expect? More innovation? Accelerated technology development?

One thing I should point out is that EERE has a strong history of active project management. Over the last 7 years, EERE has terminated more the 50 projects and redirected $140 million from low-performing projects to higher-performing opportunities. So what we’re doing here is taking a uniform DARPA/ARPA-E like active project management approach and implementing it across the board.

So, at the end of every quarter, project managers will give [each project] a status and provide a memo to the researcher on their status and areas where the project needs to improve. My expectation is that — and I made it very clear to the organization — that when projects are falling very short of milestones and we’ve come to the conclusion that it’s no longer in the taxpayers’ interest to continue investing, we will terminate them early and redirect the funds to higher performing projects. This is something that we successfully embedded into the culture at ARPA-E and I am excited to bring this to EERE as well.

Let’s wrap up by talking about another reform DOE and EERE is targeting - technology incubators. They are proposed in the President’s FY2014 budget proposal. How do they fit EERE’s overall strategy?

One of the most important roles I have to play at DOE is to make sure that ARPA-E and EERE have clearly defined and very complementary and synergistic missions. The distinction between the two is very clear to me: EERE is focused on solving long-term clean energy challenges. In each of the technology areas EERE invests in, we lay out bold national techno-economic goals and then work with stakeholders to develop multi-year roadmaps , identify a set of technology approaches that have the highest probability of achieving our goals, and then invest in aggressive, next generation RD&D to accelerate their development. ARPA-E’s job is to really blow up those roadmaps and try and invent completely new approaches. EERE can then look at these [new approaches] and re-write its roadmaps and ideally accelerate towards our long-term EERE clean energy technology development goals even sooner.

The challenge I saw is ensuring EERE can on-board technologies showing exciting results from ARPA-E. So this year we’re planning in each of our technology programs to use about five percent of their research budget to create an incubator program. The incubators would invest in “off-roadmap” activities, such as ARPA-E projects that have shown great promise. For example, our wind power program is aggressively investing in offshore wind technologies, but we’re primarily funding innovation in horizontal axis, three-blade wind machines, whereas ARPA-E has shown some initial success in really exciting approaches like wing or kite-based technologies. These technologies are not on EERE’s roadmap, but the incubator could support it further, and if it showed greater promise it could be integrated into EERE’s multi-year roadmap going forward.

Graphic by Jesse Wells: www.JesseWellsArt.com

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