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Lockheed Official Says U.S. Must Fund the Riskiest Clean Energy Projects

Lockheed Martin Corp. (LMT)’s chief technology officer said government funding is needed to spur private-sector investment in “heavy risk” energy projects such as energy storage and smart-grid reliability.

Companies developing technology innovations such as advanced batteries for electric vehicles can sometimes win funding from private investors in Silicon Valley and elsewhere, while Wall Street banks focus on proven technology such as General Electric Co. (GE)’s wind turbines, Lockheed Chief Technology Officer Ray O. Johnson said.

Between those stages is the “valley of death,” where private funding disappears, Johnson said late yesterday at a Bloomberg New Energy Finance conference in New York.

“The perfect role for government is, in fact, to take on heavy risk activities,” Johnson said. “Part of that transition through the valley of death is to actually get private capital to come in.”

Dan Arvizu, director of the Energy Department’s National Renewable Energy Laboratory in Golden, Colorado, said during a panel discussion that basic research funding isn’t enough. “There has to be a lot more than that to get technologies to the marketplace.”

Bringing breakthrough ideas such as small-scale nuclear reactors to market is expensive and takes years before it’s clear which experimental projects will be the ones to last, Jonathan Silver, executive director of the Energy Department’s loan programs office, said during the panel discussion.

‘Series of Firsts’

Silver, who oversees the government’s $90 billion energy investment program, is trying to erase that uncertainty. He’s working on bringing projects such as the world’s largest wind farm in Arlington, Oregon, about 136 miles from Portland, to a point where private investors are interested.

“We are working on a series of firsts," he said. "Anything we can think of to de-risk these technologies."

Once solicitations go out for bids, Silver said his office looks for cutting-edge ideas that show promise, no matter how large or small.

‘‘We are trying to seed the market with a range of technologies that private capital markets will support,’’ Silver said. ‘‘If we don’t start investing now, we run the risk of missing the opportunity.’’

Funding Cuts

Funding cuts that Congress is considering in energy research, loan guarantees and other types of government support in efforts to pare the deficit could mean the U.S. will fall farther behind in energy innovation, the Energy Department’s Arvizu said.

‘‘A lot of members of Congress don’t understand what’s at stake,” Arvizu said. “We’ve probably already abrogated first- generation technologies to other countries, but there’s still tremendous opportunity” he said.

To contact the reporter on this story: Sophia Yan in Bnef Summit at sophiayan@bloomberg.net

To contact the editor responsible for this story: Cary O’Reilly at caryoreilly@bloomberg.net

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