Enhancing Energy Reliability at the Tactical Edge Through Innovation

FINAL
Prepared for:
Prepared by:
Contact: Jawad Rachami

Preface
The assessments, insights, conclusions and recommendaƟons summarized in this report are the result
of research and analysis efforts conducted under the Reliability InformaƟon Analysis Center (RIAC) for
the U.S. Army Rapid Equipping Force (REF).
RIAC has served as a Department of Defense (DoD) InformaƟon Analysis Center (IAC) for more than 35
years. The mission of a DoD IAC is to improve the producƟvity of researchers, engineers, and program
managers in the research, development and acquisiƟon communiƟes by collecƟng, analyzing,
applying, and disseminaƟng worldwide scienƟfic and technical informaƟon. The secondary mission is
to promote standardizaƟon within their field.
As an IAC, RIAC provides the informaƟon, tools, training, and technical experƟse in the engineering
disciplines of Reliability, Maintainability, Quality, Supportability, and Interoperability (RMQSI) to
support accurate decision making and implement cost‐effecƟve soluƟons throughout all phases of a
product or system life cycle.
WR 13‐16: Enhancing Energy Reliability at the TacƟcal Edge
RIAC website: hƩp://www.theriac.org/

Acronyms & AbbreviaƟons
ExecuƟve Summary
TABLE OF CONTENTS
SecƟon 1.0
IntroducƟon
1.1 US Army Policy IniƟaƟves
1.2 US Navy and USMC Policy IniƟaƟves
SecƟon 2.0
Understanding Energy Reliability at the TacƟcal Edge
2.1 Energy GeneraƟon
2.2 Energy Storage
2.3 Energy Management
SecƟon 3.0
TacƟcal Edge Energy IniƟaƟves
3.1 GeneraƟon: High‐Efficiency Flexible Solar Panels
3.2 Storage: Advanced BaƩeries
3.3 Management: TacƟcal Micro‐grids
SecƟon 4.0
Understanding the Energy Technology Landscape
4.1 US Clean Technology Industry
4.2 Industry Overview and Market Trends
4.2.1 Venture Capital and Private Equity Funding Flows
4.2.2 Cleantech VC Funding Trends
SecƟon 5.0
Understanding InnovaƟon Hubs: Silicon Valley
5.1 High‐Tech Marketplace
5.2 InsƟtuƟonal Landscape
5.2.1 Academic InsƟtuƟons
5.2.2 NaƟonal Laboratories
5.2.3 NASA Ames Research Center
5.2.4 State and Municipal Government Agencies
5.3 Silicon Valley Culture
5.4 Silicon Valley’s PotenƟal ContribuƟons
5.4.1 Energy GeneraƟon in Silicon Valley
5.4.2 Energy Storage in Silicon Valley
5.4.3 Energy Management in Silicon Valley
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TABLE OF CONTENTS
SecƟon 6.0
Conclusion and RecommendaƟons
6.1 Understand Venture Capital and Private Equity Funding Flows
6.1.1 DifferenƟate Venture‐Backed Companies
6.1.2 Observe and Forecast Trends
6.2 Align IncenƟves for Companies with PotenƟal Dual‐Use Technologies
6.2.1 Early and EffecƟve Investor Engagement
6.2.2 Break Down Capability Gaps to IdenƟfy Technical Needs
6.2.3 Address Ambiguity in Program Milestones
6.3 Promote Interagency CollaboraƟon
Figures
1. DoD TacƟcal Electric Power Requirements
2. DoD Petroleum Spending and ConsumpƟon
3. Global WTI Crude Oil process, 2005—2012
4. DLA‐E Fuel Price per Barrel, FY05—FY11
5. Major Players in U.S. Clean Technology Industry
6. VC Cleantech Sector Investments, 2005—Q2 2013
7. Cleantech and Total U.S. VC Investment, 2005—Q2 2013
8. Major Cleantech IPO Performance, 2010—present
9. Cleantech Start‐Up Investment Rounds
10. Total U.S .VC Investment in All Sectors, 2008—Q2 2013
11. Cleantech Funding Trends in Top Five Regions, 2010—2013
12. Cleantech Venture Funding by Subsector, Q1 2013
13. The Valley of Death
Tables
1. Major Cleantech IPOs, 2010—present
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IntenƟonally LeŌ Blank
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ACRONYMS & ABBREVIATIONS
AHPCRC Army High Performance CompuƟng Research Center
ARC NASA Ames Research Center
ARCIC Army CapabiliƟes IntegraƟon Center
ARPA‐E Advanced Research Projects Agency – Energy
ARRA U.S. American Recovery and Reinvestment Act of 2009
ASA/IE&E Assistant Secretary of the Army for InstallaƟons, Energy and
Environment
ASD(OEPP) Assistant Secretary of Defense for OperaƟonal Energy Plans and
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Programs
bbl/d Barrels per day
BCIL Army Base Camp IntegraƟon Laboratory
COMISAF Commanding General of the InternaƟonal Security Assistance Force
COTS Commercial‐off‐the‐Shelf
DARPA Defense Advanced Research Projects Agency
DLA‐E Defense LogisƟcs Agency – Energy
DoD U.S. Department of Defense
DoE U.S. Department of Energy
DTIC Defense Technical InformaƟon Center
DWCF Defense Working Capital Fund
E2O USMC ExpediƟonary Energy Office
EIA U.S. Energy InformaƟon AdministraƟon
ESG Energy Security Goals
FFRDC Federally funded research and development center
FY Fiscal Year
GCEP Global Climate and Energy Project, Stanford University
GREENS Ground Renewable ExpediƟonary Energy System
HPC High Performance CompuƟng
IPO IniƟal Public Offering
KPCB Kleiner Perkins Caufield & Byers
LBL Lawrence Berkeley NaƟonal Laboratory
LLNL Lawrence Livermore NaƟonal Laboratory

ACRONYMS & ABBREVIATIONS
(CONT’D)
LP Limited Partner
M&A Mergers and AcquisiƟons
MROC Marine Requirement Oversight Council
NASA NaƟonal AeronauƟcs and Space AdministraƟon
NECO Navy Energy CoordinaƟon Office
NNSA DoE NaƟonal Nuclear Security AdministraƟon
NREL NaƟonal Renewable Energy Laboratory
NVCA NaƟonal Venture Capital AssociaƟon
OCO Overseas ConƟngency OperaƟons
REDUCE Renewable Energy for Distributed Undersupplied Command Environ‐ments
RENEWS Reusing ExisƟng Natural Energy from Wind and Solar
SAGE Smart and Green Energy program,
SEEDZ Smart Energy Enterprise Development Zone
SPACES Solar Portable AlternaƟve CommunicaƟons Energy System
TFE U.S. Navy’s Task Force Energy
VC Venture Capital
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ES
EXECUTIVE SUMMARY
In this age of conƟnued fiscal austerity, diminished
defense budgets will not be accompanied by reduced
threats or requirements for US naƟonal security.
Responding to the variety of complex emerging
threats characterizing the 21st century security
environment will require projecƟng power and
maintaining a military presence in a variety of austere
areas, oŌen without support from a developed host
naƟon infrastructure or contribuƟons from allies or
partners. In order to more effecƟvely and efficiently
address and overcome this century’s security
challenges, the US Department of Defense (DoD) has
a compelling interest in insƟtuƟonalizing innovaƟon
within its programming and acquisiƟon systems. This
will require creaƟng incenƟves and mechanisms to
enable parƟcipaƟon by non‐tradiƟonal actors to help
DoD access a wider spectrum of innovaƟon and
harness its potenƟal in an era of both great challenge
and marked opportunity.
Significantly, the United States military will conƟnue
to have a criƟcal and enduring interest in the security,
reliability, and resilience of all types of operaƟonal
energy needed to sustain itself and meet its mission
requirements worldwide. Strategic planning
frameworks assume consistent and sustainable
funcƟoning of materiel and supply chains in support
of domesƟc and overseas operaƟons and demand
This report idenƟfies general shortcomings in DoD’s
efforts to insƟtuƟonalize innovaƟve pracƟces
throughout the procurement cycle in general and
assesses opportuniƟes for the Army, and DoD at
large, to beƩer harness innovaƟon in support of
operaƟonal energy requirements in parƟcular and
with special emphasis on leveraging the resources of
innovaƟon hubs—specifically Silicon Valley.
Energy generaƟon, storage, and management are
criƟcal components of operaƟonal energy at the
tacƟcal edge. The US military's current energy
requirements and the sources and methods it relies
on to meet these needs exposes it to undue risk for
supply disrupƟon, as well as security vulnerabiliƟes
affecƟng baƩlefield fuel supply lines. The inefficient
consumpƟon model currently used limits overall
readiness and combat effecƟveness and increases
budget volaƟlity during a period of extended fiscal
austerity. In addiƟon, energy inefficiency at the
tacƟcal edge:
 Increases the threat of aƩacks on deployed
units and supply convoys;
 Elevates risk to the mission and limits effecƟve
and agile command and control;
 Burdens logisƟcs systems resulƟng in both
higher direct and opportunity costs.
InnovaƟon hubs, such as those represented in Silicon
Valley can play an important role in the evoluƟon to
greater energy reliability and mission effecƟveness at
the tacƟcal edge. Today, unique clusters of
businesses, private capital, academic insƟtuƟons, and

government laboratories can be more systemaƟcally
engaged for the beƩerment of warfighter needs in
the areas of energy development and power
management. Silicon Valley’s widely‐used model of
low‐cost, rapid prototyping and risk‐tolerant
investment can be used to address some pressing
defense challenges when properly leveraged and
applied.
DOD has long been a champion of innovaƟon. It has
pioneered a number of breakthrough technologies
that found their way into widespread commercial use
with great benefits to society. In fact, it is thanks to
some of those breakthrough innovaƟons that
‘Pandora’s box’ has opened on a whole host of
transformaƟve innovaƟons across the globe—
resulƟng in democraƟzing access to informaƟon and
networked human creaƟon. Ironically, this has also
accelerated the need for more innovaƟon to counter
the nefarious use of advanced technologies and the
means to produce them. Therefore, the main thrust
of this report is that more can be done to
insƟtuƟonalize innovaƟon within current defense
programs and that current acquisiƟon systems need
to adapt to exisƟng and emerging realiƟes in order to
create pathways for the military to take advantage of
the talent and ingenuity of a larger community of
innovators who are not necessarily aligned with
defense markets and applicaƟons.
To be sure, this report does not advance a silver‐bullet
soluƟon. Rather, it advances a set of
recommendaƟons and advocates for a consideraƟon
of a more effecƟve and proacƟve approach to
innovaƟon within Army and (more generally) DOD
program and acquisiƟon systems in order to more
effecƟvely address a rapidly evolving threat and
strategic environment.
There are specific iniƟaƟves that may be pursued in
the short‐term based on programs already underway.
OrganizaƟons such as the Army’s Rapid Equipping
Force, the Marine Corps ExpediƟonary Energy Office
and the Army's Research, Development, and
Engineering Command can benefit from Silicon Valley
‐based companies working on related technologies.
More broadly, a suite of recommendaƟons can be
applied across DoD to beƩer leverage Silicon Valley's
comparaƟve advantages in technology development.
These include:
 Understanding Private Capital Flows in
innovaƟon hubs like Silicon Valley.
 Aligning incenƟves between Military and
innovaƟon‐centric business models.
 PromoƟng Inter‐agency CollaboraƟon,
including the effecƟve sharing of technical and
technology data.
 Establishing and expanding key partnerships
for agile and meaningful innovaƟon.
The tradiƟonal military procurement system will be
considerably strained as it strives to keep up with
dynamic demands under increasing budgetary
constraints. More deliberate use of innovaƟon
models to assist in solving the complex challenges of
operaƟonal energy can provide a range of benefits to
the U.S. military, including the oŌen‐conflicƟng goals
of reducing costs while increasing capability.

1.0
INTRODUCTION
The United States military has a criƟcal and enduring
interest in the security, reliability, and resilience of all
types of operaƟonal energy needed to sustain itself
and meet its mission requirements worldwide.
Strategic planning frameworks assume consistent and
sustainable funcƟoning of materiel and supply chains
in support of domesƟc and overseas operaƟons. This
report describes and assesses opportuniƟes for the
US Department of Defense (DoD) to harness
innovaƟon in support of energy security, parƟcularly
in an operaƟonal context.
Today, the United States faces a rapidly changing
geostrategic environment, with evolving security
threats that include internaƟonal terrorism, WMD
proliferaƟon, hosƟle non‐state actors, and
environmental instability. Responding to such a
volaƟle threat environment requires increased agility
and innovaƟon. The U.S. military must conƟnuously
adapt to exisƟng and emerging challenges—including
challenges to the security and reliability of
operaƟonal energy supply. Strategic planning
frameworks assume consistent and sustainable
funcƟoning of materiel and supply chains in support
of operaƟons. However, the criƟcal challenges facing
the warfighter around the globe evolve too rapidly
for exisƟng materiel. Responding to evolving threats
requires presence in a variety of austere
environments, oŌen without support from a
developed host naƟon infrastructure or contribuƟons
from allies or partners. Furthermore, current energy
sources and methods expose the mission to undue
risk for supply disrupƟon and security vulnerabiliƟes
affecƟng fuel supply lines. Energy generaƟon,
storage, and management are all criƟcal components
of operaƟonal energy at the tacƟcal edge. The
inefficient consumpƟon model currently used limits
overall readiness and combat effecƟveness and
increases budget volaƟlity during a period of
extended fiscal austerity.
OperaƟonal energy will conƟnue to be an
important consideraƟon in current and future
engagements, since increasing energy security in
all theaters of operaƟon is a vital element of U.S.
military strategy. In 2011, the DoD published its
OperaƟonal Energy Strategy to “transform the
way the Department consumes energy in military
operaƟons.” The strategy established the office
of the Assistant Secretary of Defense for

OperaƟonal Energy Plans and Programs (ASD
(OEPP)) to “promote the energy security of
military operaƟons through guidance for and
oversight of Departmental acƟviƟes and
investments.”1
More recently, on 20 June 2013, Deputy
Secretary of Defense Dr. Ashton Carter issued
guidance for a “comprehensive defense energy
policy,” designed to transform how DoD uses
energy to enhance military capability, improve
energy security and reduce costs.2 This iniƟaƟve
represents a major effort by the DoD to
insƟtuƟonalize effecƟve operaƟonal and faciliƟes
energy management across the full range of
defense acƟviƟes. It also provides the impetus for
the Department to invest in innovaƟve, cost‐effec
Ɵve energy soluƟons.
Successfully meeƟng DoD energy goals will enhance
operaƟonal efficiency during an extended period of
fiscal austerity and geostrategic volaƟlity. Ensuring
that current and emerging operaƟonal energy needs
are adequately met can not only achieve budget
efficiency, but enhance mobility, endurance, and
overall operaƟonal effecƟveness. It would also
provide US forces with the ability to beƩer fit current
and emerging conƟngency environments with
increased impact and lower footprint: ‘more tooth,
less tail.’
There is an important role for innovaƟon in the U.S.
military efforts to address operaƟonal energy needs.
InnovaƟon has long been a keystone of technology
advancement in the United States, including in the
field of alternaƟve energy. The challenge remains to
insƟtuƟonalize innovaƟon as a key enabler of soluƟon
‐targeƟng within defense planning and acquisiƟon
systems. Current defense acquisiƟon processes are
predominantly aligned with tradiƟonal defense
industry and do not systemaƟcally seek and engage
innovaƟon‐driven organizaƟons as industry partners.
Missed opportuniƟes for collaboraƟon and
breakthrough innovaƟon impose an opportunity cost
in terms of the reliability, efficiency, and overall
performance in a highly kineƟc mission
environment.
1.1 U.S. Army Policy IniƟaƟves
The U.S. Army has long recognized that operaƟonal
energy is criƟcal to the supply, execuƟon, and success
of the military mission of the United States. A long
record of policy statements, research and analysis
products, and operaƟonal assessments highlights the
need for effecƟve operaƟonal energy strategies to
fulfill mission requirements at home and abroad.
More recently, however, the need for effecƟve
OperaƟonal Energy planning and implementaƟon has
come into focus as a result of a changing geostrategic
landscape marked by asymmetric threats, global
economic challenges, increased compeƟƟon for
global energy supplies, and climate change. In 2009,
the Army established a Senior Energy Council, which
put in place a governance structure for energy policy
1 DOD, Energy for the Warfighter: OperaƟonal Energy strategy, May 2011. Available here.
2 DoD Guidance for Comprehensive Defense Energy Policy, June 2013. Deputy Secretary of Defense Memorandum available
here.

and issued an Army Energy Security ImplementaƟon
Strategy. The strategy arƟculated five Strategic
Energy Security Goals (ESGs):3
 Reduced energy consumpƟon
 Increased energy efficiency across plaƞorms
and faciliƟes
 Increased use of renewable/alternaƟve energy
 Assured access to sufficient energy supplies
 Reduced adverse impacts on the environment
The Army CapabiliƟes IntegraƟon Center, Deputy
Chief of Staff, G‐4, issued a white paper in April 2010
that stated:4
Recent efforts to idenƟfy operaƟonal energy
objecƟves highlight a lack of exisƟng systems
analysis to idenƟfy mission‐related aƩributes, such
as resilience, agility and flexibility – important, not
only in an expediƟonary environment, but on
domesƟc installaƟons in a “flaƩening” world. The
OperaƟonal Energy Campaign must establish a
capability‐based approach to energy and power
that integrates all DOTMLPF aspects and idenƟfies
performance parameters based upon analysis of
operaƟonal concepts. This will require both
operaƟonal analysis and a comprehensive
assessment of baseline energy use and
performance, providing the basis for modernizaƟon
prioriƟes and improvement goals, as well as
management tools and training.
In June 2011, General David Petraeus, then
Commanding General of the InternaƟonal Security
Assistance Force (COMISAF) in Afghanistan, released
a memorandum in which he recognized operaƟonal
energy as the “lifeblood of our warfighƟng
capabiliƟes.”5 At the same Ɵme General Petraeus
released his 2011 memo, Army leadership directed
the Office of the Assistant Secretary of the Army for
InstallaƟons, Energy and Environment (ASA/IE&E) and
the Deputy Chief of Staff, G‐4 to coordinate efforts
related to the development and management of
conƟngency bases in support of Combatant
Commander requests for Base OperaƟons Support.
In September 2012, the Deputy Chief of Staff, G‐4,
was designated as the Army Staff lead for OperaƟonal
Energy in support of ASA/IE&E. Deputy Chief of Staff,
G‐4, was charged with the mission of integraƟng
Army efforts with other services in order to meet DoD
energy security, efficiency, and sustainability goals.
Shortly thereaŌer, Army leadership announced the
launch of ‘The Power is in Your Hands’ campaign to
promote cultural awareness of energy‐informed
operaƟons throughout the Army. Army Secretary,
John McHugh; Army Chief of Staff, General Ray
Odierno; and Sgt. Major of the Army, Ray Chandler,
3 Army Energy Security ImplementaƟon Strategy, The Army Senior Energy Council, 13 January 2009
4 Army CapabiliƟes IntegraƟon Center (ARCIC), Research, Development and Engineering Command, Deputy Chief of Staff,
G‐4, “Power and Energy Strategy White Paper”, April 2010.
5 Memo available online and can be accessed here. Also Memo from General Allen can be accessed here

issued a joint statement challenging the Army to
change its operaƟonal energy culture.6
1.2 U.S. Navy and USMC Policy
IniƟaƟves
The Department of the Navy named six objecƟves for
FY13, including to “lead the naƟon in sustainable
energy.”7 In 2009, Secretary of the Navy, Ray Maybus,
idenƟfied five major energy goals for the Navy and
the Marine Corps8:
 By 2020, 50 percent of total energy
consumpƟon will come from alternaƟve
sources.
 By 2020, at least 50 percent of shore‐based
energy requirements will be produced from
alternaƟve sources, and 50 percent of
installaƟons will be net zero.
 By 2012, the Navy will demonstrate a Carrier
Strike Group fueled by alternaƟve energy, and
deploy it by 2016.
 By 2015, petroleum use in commercial vehicles
will be reduced by 50 percent.
To this end, the Navy created Task Force Energy (TFE)
to “develop the metrics, processes, tools, and
organizaƟonal structure to support the Navy Energy
Strategy.” The Task Force is comprised of a number of
energy‐related working groups, a Navy Energy
CoordinaƟon Office (NECO), and a flag‐level execuƟve
steering commiƩee.
As an expediƟonary force, the Marine Corps has long
championed the need for energy efficiency and
reliability to enhance the mobility, endurance, and
combat effecƟveness of its units. “Unleash us from
the tether of fuel,” Lieutenant General James Maƫs
wrote in an April 2006 Naval Research Advisory
CommiƩee report. The burden of liquid fuel became
increasingly apparent through operaƟons in Iraq and
Afghanistan, which saw exponenƟal growth in Marine
Corps energy consumpƟon. This trend, combined
with the changing geopoliƟcal and economic
landscapes, drove significant insƟtuƟonal and policy
change in recent years.
In October 2009, the USMC ExpediƟonary Energy
Office (E2O) was established to “analyze, develop,
and direct the Marine Corps’ energy strategy in order
to opƟmize expediƟonary capabiliƟes across all
warfighƟng funcƟons,” as well as advise the Marine
Requirement Oversight Council (MROC) on energy‐related
issues. E2O is a Director‐level office within
Headquarters Marine Corps, reporƟng to the
Assistant Commandant.
E2O released an ExpediƟonary Energy Strategy and
ImplementaƟon Plan in March 2011, which idenƟfied
objecƟves of a 50 percent increase in overall
efficiency by 2025, as well as the ability to deploy an
expediƟonary force that is fully energy self‐sufficient
(excluding vehicle fuel). This strategy again
emphasized the parƟcular importance of energy
efficiency to the Marine Corps, framing the problem
thus: “Over the last ten years, we have become more
lethal, but we have become heavy. We have lost
speed. To reset the balance, we must return to our
Spartan roots – fast, lethal, and austere.”
6 Announcements are documented on Army official website here .
7 Department of the Navy Business transformaƟon Plan: Fiscal Year 2013 and Fiscal Year 2012 Annual Report.
Available here

TradiƟonal procurement processes were deemed
inappropriate for the early stages of the E2O's
mission. The office decided to address condiƟons on
the ground as they existed in Afghanistan rather than
work with MTOE figures. To do this, the E2O
conducted the first energy “audit” of major bases in a
combat zone. The Marine Energy Assessment Team
compiled an extensive report with findings related to
larger camps along with company and baƩalion level
bases.9 This gave the E2O an accurate baseline
assessment of energy use across the spectrum of
current operaƟons.
The E2O also began reaching out to industry groups
to begin mapping currently‐available Commercial Off‐
The‐Shelf (COTS) technologies. The evaluaƟon
sessions were named ExFOBs aŌer their intended
goal – creaƟng an expediƟonary forward operaƟng
base. AŌer the iniƟal ExFOB at QuanƟco, Virginia in
March 2010 the exercises were moved to Twentynine
Palms, California to beƩer reproduce environmental
condiƟons in Afghanistan. The ExFOBs have since
grown in scope and parƟcipaƟon. They now involve
the Marine Corps WarfighƟng Laboratory, the Office
of Naval Research, Training and EducaƟon Command,
and Marine Corps Systems Command.10
81%
8%
10%
1%
Figure 1: DOD TacƟcal Electric Power
Requirements
9 The Assessment report is available from the Defense Technical InformaƟon Center (DTIC) and can be accessed
here.
10 Available here.
Army
Navy
Air Force
Marines
Source: US Army Project Manager‐Mobile Electric Power (PM‐MEP), AAO 2007

2.0
Understanding Energy
Reliability at the TacƟcal
Edge
DoD is the largest energy consumer in the federal
government and, arguably, the largest single‐enƟty
consumer in the world. Demand includes energy for
military installaƟons at home and overseas, as well as
operaƟonal energy used by military forces in their
day‐to‐day missions. U.S. forces need reliable access
to sufficient energy to meet these operaƟonal and
installaƟon needs. DoD’s current OperaƟonal Energy
Strategy outlines three main primary goals for
achieving energy reliability:11
 More Fight, Less Fuel: Reduce Demand for
Energy in Military OperaƟons. DoD will work to
reduce demand for and increase efficiency of
military energy use, in order to reduce risk and
costs of military operaƟons.
 More OpƟons, Less Risk: Expand and Secure
Energy OpƟons for Military OperaƟons. DoD
will work to diversify sources of energy away
from petroleum‐based fuels, which are an
increasingly expensive and unreliable source in
today’s world. Security for energy
infrastructure overall is an ongoing issue.
 More Capability, Less Cost: Build Energy
Security into the Future Force. DoD is engaged
today in equipping the military force of
tomorrow. It is important to consider energy
reliability in strategic planning and force
development.
Petroleum spending has seen significant increases in
response to internaƟonal oil prices, fluctuaƟng by as
much as $11 billion, or almost 2% of the DoD budget,
in the last eight years (See Figures 2 and 3).
Increased discreƟonary funding for DoD, primarily
through funding for Overseas ConƟngency
OperaƟons (OCO), has offset these budgetary strains.
With sequestraƟon and other looming fiscal
restraints, the volaƟlity of petroleum spending likely
will force tradeoffs in supporƟng or even mission
criƟcal spending.
Many energy analysts, including at the U.S. Energy
InformaƟon AdministraƟon (EIA), project that oil
prices will conƟnue to increase over the next several
decades, based on trends in both supply and
demand. According to the EIA, global petroleum
demand has increased steadily from about 63 million
barrels of oil per day (bbl/d) in 1980 to 89.2 million
bbl/d today; this demand is projected to pass 110
million bbl/d by 2035.
Heavy reliance on petroleum markets is especially
problemaƟc due to the drivers of global demand.
DiversificaƟon, a focus on energy efficiency, and
economic recession dropped demand in the EU,
whose members comprise our strongest military
allies, by 0.5 million bbl/d to 14.4 million bbl/d in
2012. This marks its lowest level in two decades aŌer
five straight years of decline, which is projected to
conƟnue in upcoming years.12 Worldwide appeƟte for
petroleum is instead driven by China, India, and, to a
lesser extent, Brazil. Projected consumpƟon in China
alone is increasing by 410,000 bbl/d in 2013 and is
11 DOD, OperaƟonal Energy strategy: ImplementaƟon Plan, March 2012.
12 Source of data is the U.S. Energy InformaƟon AdministraƟon.
13 Graph from Moshe Schwartz, Katherine Blakeley, Ronald O’Rourke, “Department of Defense Energy IniƟaƟves:
Background and Issues for Congress,” Congressional Research Service, 10 Dec 2012, hƩp://www.fas.org/sgp/crs/
natsec/R42558.pdf.

Figure 2. DoD Petroleum Spending and ConsumpƟon, FY05‐FY1113
Figure 3. Global WTI Crude Oil Prices, 2005‐2012

advance, based on price and budget projecƟons.17 A
renewable fund, called the Defense Working Capital
Fund, absorbs gains or losses based on the market
price; for example, if the market price is higher than
the standard price in a given year, the DWCF pays out
the difference. Recently, DLA‐E has needed to adjust
the price more frequently in order to keep the DWCF
solvent (Figure 4).
The final element to consider is the increasing cost of
extracƟng petroleum. Despite advances in alternaƟve
extracƟon methods, such as horizontal drilling (oŌen
called fracking), extracƟon and development costs
are rising faster than oil prices. As of 2013, the major
expected to increase by 430,000 bbl/d in 2014.14
CompeƟng with these states for increasingly
expensive petroleum may lead to heightened poliƟcal
tension, with potenƟal effects on military strategy
and operaƟons.
Rising demand combines with potenƟal supply
constraints, since oil is a non‐renewable resource,
and tensions between the US and a few major
producers persist (e.g. Venezuela, which provided 9%
of U.S. petroleum imports in 2012, and Iran).15
Therefore, even assuming steady DoD demand,
petroleum‐based fuel is a growing burden on the
defense budget.
Petroleum costs are not only rising overall but also
increasing in volaƟlity. For example, DoD costs
increased 90% from FY04‐FY05 and then dropped
sharply from FY08‐FY09. Price volaƟlity makes it
difficult for DoD to accurately budget for its future
needs. This can cause dangerous budget shorƞalls,
forcing DoD to redirect funds to fuel purchases. This
is both expensive and disrupƟve to strategic and
operaƟonal planning.
Another reflecƟon of price volaƟlity is the frequency
with which the Defense LogisƟcs Agency – Energy
(DLA‐E) has to set the price of fuel. DLA‐E is the DoD
agency responsible for acquiring, storing, distribuƟng,
and selling energy. It acquires petroleum from
suppliers around the world and resells it to DoD
customers at a standardized price, designed to
insulate them from price volaƟlity.16 This standard
price originally was determined 12‐18 months in
14 “Short‐Term Energy Outlook,” U.S. Energy InformaƟon AdministraƟon, July 2013, hƩp://www.eia.gov/forecasts/
steo/archives/jul13.pdf.
15 Source of data is the U.S. Energy InformaƟon AdministraƟon.
16 See hƩp://www.desc.dla.mil for more informaƟon.
17 Defense LogisƟcs Agency – Energy, hƩp://www.energy.dla.mil/customer/standard_prices/Pages/default.aspx .

oil companies (i.e. ExxonMobil, Chevron, BP, Total, Shell, and ConocoPhillips) only made net revenue of about
$20/bbl, despite the recent jump in price.18 The costs of petroleum are not expected to return to 2005 levels.
To beƩer understand the unique energy requirements of the DoD, operaƟonal energy can be broken down into
its three major components: generaƟon, storage, and management. These overlapping capabiliƟes help guide
operators, contracƟng officers, and other non‐technical personnel through challenges and opportuniƟes in the
wide array of energy‐related technologies.
Figure 4. DLA‐E Fuel Price per Barrel, FY05—FY1119
2.1 Energy GeneraƟon
A major component of operaƟonal energy is energy generaƟon – that is, the inputs and infrastructure needed to
produce energy consistently, affordably, and in sufficient quanƟƟes. Recently, military energy generaƟon
iniƟaƟves have focused on integraƟng renewable energy sources in an effort to reduce dependence on
convenƟonal petroleum‐based fuels. The 2007 NaƟonal Defense AuthorizaƟon Act called on DoD to produce a
25% of its electricity from renewable sources by 2025; internally, each branch of the service established similarly
ambiƟous goals.
Developing renewable energy generaƟon capabiliƟes will support DoD energy reliability in two major ways. First,
18 Ryan Carlyle, “What are the top five facts everyone should know about oil exploraƟon?” Forbes, 3 Apr 2013, hƩp://www.forbes.com/sites/quora/2013/04/03/
what‐are‐the‐top‐five‐facts‐everyone‐should‐know‐about‐oil‐exploraƟon/.
19 Schwartz, et. al., “Department of Defense Energy IniƟaƟves: Background and Issues for Congress.”

Reducing the logisƟcs tail not only protects war
fighters but also enhances the maneuverability and
endurance of forward‐deployed units. Recent
InternaƟonal Security Assistance Forces experiences
in Afghanistan showed that supplying energy will be a
major component of anƟ‐access and area challenges
in future operaƟons; surmounƟng the logisƟcal
obstacles to producing and supplying energy will only
increase with Ɵme.
2.2 Energy Storage
The second major component of operaƟonal energy
is the capacity to store energy for future use. Energy
storage technology manages fluctuaƟons in both
power demand and supply. The military’s need for
electricity can vary by Ɵme of day or season,
operaƟonal tempo, and other factors that lead to
demand exceeding supply during peaks in the load.
Further, renewable energy sources generate power
unevenly; for example, levels of incoming solar
radiaƟon directly impact solar panel output, causing
intermiƩent and unpredictably energy supply. Both
these challenges require backup storage capability to
ensure consistent power output.21
Military interests in energy storage are related to
requirements for generaƟon, parƟcularly for the
ground based expediƟonary forces of the Army and
Marine Corps. High‐efficiency deployable energy
storage systems can provide a longer‐lasƟng and less
resource‐intense power supply for military
operaƟons, reducing the need to resupply fuels for
power generaƟon. Even if warfighters can produce
power downrange, the inability to store that power
it will lower the heŌy cost of energy so that limited
resources can be applied to other defense prioriƟes.
Annual DoD consumpƟon of petroleum is
approximately 120 million barrels. Since 2005 this
consumpƟon has held fairly steady, with a slight
decline due in part to increased use of renewables.
Reducing costs associated with energy generaƟon can
have a significant impact on operaƟonal effecƟveness
by enabling beƩer direcƟon of resources, especially
within a limited budget. Renewables, such as solar
and wind energy, have the potenƟal to generate
energy at more affordable, less volaƟle prices
because they lack the global supply constraints and
demand compeƟƟon of petroleum. IntegraƟng
renewables also will simplify logisƟcs and reduce the
risk to fuel supply lines.
Fuel convoys are vulnerable targets. An Army
Environmental Policy InsƟtute study of the 2003‐2007
period esƟmated one Army military or contractor
casualty for every 24 fuel convoys in Afghanistan. A
similar 2010 Marine Corps study found one Marine
casualty for every 50 fuel or water convoys.20
20 “Sustain the Mission Project: Casualty Factors for Fuel and Water Resupply Convoys,” AEPI, Sep 2009, hƩp://www.aepi.army.mil/docs/whatsnew/
SMP_Casualty_Cost_Factors_Final1‐09.pdf
21 “Energy Storage,” DoE Office of Electricity Delivery and Energy Reliability, hƩp://energy.gov/oe/technology‐development/energy‐storage

will impact the reliability of criƟcal equipment.
The experiences of India Company, 3rd BaƩalion, 5th
Marine Regiment (I/3/5) illustrate these benefits.
During operaƟons in Sangin District of Helmand
Province, Afghanistan, I/3/5 used rechargeable
baƩeries for its communicaƟons equipment. The
eliminaƟon of disposable baƩeries reduced the
weight carried by each Marine, while also removing
the need for several logisƟcal resupply convoys.
2.3 Energy Management
Energy reliability demands the ability to monitor and
opƟmize energy generaƟon, storage, and delivery.
Energy management is exemplified in the ‘smart grid’
systems under development today, which use
advanced informaƟon and communicaƟons
technology to enhance the reliability of electrical
grids.
Neither advanced generaƟon nor storage
technologies alone can provide energy reliability to
military ground units. They must have
complementary energy management capabiliƟes to
maintain the balance between generaƟon and
storage. For example, both the Army and Marine
Corps are working to develop mobile tacƟcal micro‐grids,
which integrate different energy sources to
manage and distribute power more efficiently.
Micro‐grids exemplify the benefits of effecƟve energy
management from a system‐wide perspecƟve. These
intelligent systems can integrate exisƟng power
generaƟon sources, such as generators, with
renewables (discussed in more detail in SecƟon 3.3).
By efficiently managing sources based on load in real
Ɵme, tacƟcal micro‐grids reduce fuel consumpƟon,
enhancing mobility and tacƟcal capabiliƟes.

3.0
TacƟcal Edge Energy
IniƟaƟves
DoD has iniƟated a number of operaƟonal energy
programs across the different Services to advance the
state of energy reliability, efficiency and security at
the tacƟcal edge. There are numerous examples of
government‐led advances in technology that were
either fully or parƟally funded by the DoD. Efforts to
harness innovaƟon currently revolve around the
acquisiƟon and marginal improvement of COTS and
GOTS products and services. There has also been an
increased interest in the 3+ year Ɵme horizon of
technology development organizaƟons such as
DARPA and ARPA‐E. A gap sƟll remains, however, for
rapidly procuring and fielding emerging technologies
in the 1‐3 year Ɵmeframe.
As with other capabiliƟes, the DoD balances the need
for process‐driven acquisiƟons with the flexibility to
respond to dynamic requirements and rapidly‐commercializing
technologies. The need for rapid
development and fielding is consistently matched
with tesƟng and evaluaƟon of equipment with liƩle
or no operaƟonal background. Such careful balancing
requires coordinaƟon and collaboraƟon in the DoD to
insƟtuƟonalize and align incenƟves for harnessing
innovaƟon in support of common operaƟonal needs.
For example, the U.S. Army is integraƟng energy
consideraƟons into various program requirements,
including: Concept development and
experimentaƟon; resource management; materiel
development and acquisiƟon; tesƟng and evaluaƟon;
as well as training and educaƟon programs. The Army
is also engaging in a number of capabiliƟes to
enhance operaƟonal energy implementaƟon at the
TacƟcal Edge including the Base Camp IntegraƟon
Laboratory (BCIL), the Smart and Green Energy
(SAGE) program, and the ConƟngency Basing
IntegraƟon Technology and EvaluaƟon Center.
3.1 GeneraƟon: High‐Efficiency
Flexible Solar Panels
The U.S. Marine Corps ExpediƟonary Energy Office
has two energy generaƟon/storage systems as
Programs of Record: the Solar Portable AlternaƟve
CommunicaƟons Energy System (SPACES) and the
Ground Renewable ExpediƟonary Energy System
(GREENS). Both of these systems are designed to
provide power to Marine units in remote locaƟons,
ranging in size from platoons to enƟre baƩalion
combat operaƟons centers. The updated GREENS 2.0
prototype uses mono‐crystalline silicon solar panels
from SBM Solar, Inc., which meet tacƟcal
requirements as light, flexible, glass‐free, and high
performing in extreme temperatures.

weight, compaƟbility with exisƟng mobile renewable
energy systems for recharging, and the ability to
perform well at high temperatures.
Engaging more effecƟvely and substanƟvely with
Silicon Valley could contribute to these soluƟons. For
example, QuantumScape, an early‐stage company
operaƟng out of San Jose, CA, is commercializing all‐electron
baƩery technology that was first developed
by mechanical engineers at Stanford with an ARPA‐E
grant. InteresƟngly, this research was conducted
through the new Army High Performance CompuƟng
Research Center (AHPCRC) with military applicaƟons
in mind. This type of baƩery “stores energy in charge
separaƟon, using only electrons, which are lighter,
and therefore faster, than the ion charge carriers
typical of convenƟonal baƩeries.”23 It exhibits higher
power density, energy density, and life cycle than
advanced lithium‐ion baƩeries.24
QuantumScape’s management has long experience
with venture‐funded start‐ups in the region. CEO
Jagdeep Singh co‐founded an opƟcal networking gear
company called Infinera that scaled from start‐up to
publicly traded commercial success. KPCB and Khosla
Ventures, two of Silicon Valley’s most acƟve and
profitable cleantech VCs, were both early backers of
QuantumScape.
This company’s potenƟally disrupƟve baƩery
technology addresses many of the military’s major
energy storage challenges, and its financial,
managerial, and technical experƟse bode well for its
conƟnued development. However, despite the early
connecƟon with Stanford’s AHPCRC, there is no
Alta Devices, a venture‐backed company in Silicon
Valley, manufactures gallium arsenide solar panels
that share the same key characterisƟcs as SBM Solar’s
products but are almost twice as efficient—30.8%
NREL—reported efficiency for Alta compared to 17‐
18% for SBM Solar. TheoreƟcally, GREENS electricity
output could be increased without adding to the
weight of the system, if it uƟlized Alta’s technology.
Other companies that are developing similar solar
technologies include MicroLink Devices (San
Francisco, CA), SiGen (San Jose, CA), and AstroWaƩ
(AusƟn, TX).
3.2 Storage: Advanced BaƩeries
The military – parƟcularly the ground units of the
Army and Marine Corps – relies on baƩeries to
provide energy storage soluƟons in remote locaƟons.
However, baƩery technology in use by the military
today tends to be heavy, have low power density and
oŌen is not rechargeable. In 2010, a typical Marine
Corps patrol in Afghanistan carried enough baƩeries
to support mission essenƟal requirements for three
or four days – about 20‐35 pounds per person22. An
average mulƟband radio, operated conƟnuously,
requires 216 AA baƩeries every two days. Larger
electronic systems oŌen uƟlize bulky baƩery packs
that are hooked up to vehicles to be recharged,
increasing fuel needs.
There is significant room for improvement in
advanced baƩery technology for military applicaƟons.
Reducing the burden of carrying baƩeries would
make warfighters more nimble and self‐sufficient.
CriƟcal requirements include high efficiency, low
22 “KaƟe Fehrenbacher, “The Valley’s next big baƩery play: QuantumScape,” Gigaom, 5 Oct 2011, hƩp://gigaom.com/2011/10/05/the‐valleys‐next‐
big‐baƩery‐play‐quantumscape/
23 Army High Performance RecruiƟng Center, Stanford Mechanical Engineering Department, hƩp://me.stanford.edu/research/centers/ahpcrc/
Project1_6.html
24 Dan Lafontaine, “Army scienƟsts develop deployable renewable energy soluƟons,” U.S. Army News, hƩp://www.army.mil/arƟcle/79471/

baƩery components would boost the number of
hours of power the RENEWS system can provide.
Beyond this, numerous new startups are developing
soŌware and data analysis tools that could provide
military energy soluƟons. Palo Alto‐based AutoGrid,
for instance, has a cloud‐based soŌware plaƞorm
that analyzes electrical grid data in order to idenƟfy
usage trends and opƟmize load management. Nest
Labs (discussed in SecƟon 5.1) invented a smart
thermostat designed for home use, but the
underlying analyƟcs that “teach” the thermostat to
adjust to an individual’s energy needs and usage
paƩerns could have military applicaƟons. In general,
all the R&D efforts targeƟng domesƟc ‘smart grids’
could benefit Army and other military efforts to
develop tacƟcal microgrids, which are scaled‐down,
stand‐alone versions of larger connected electrical
grids.
public indicaƟon that the Army or any other DoD
organizaƟons have pursued a partnership with
QuantumScape.
There are numerous other examples of innovaƟve
work in energy storage going on in Silicon Valley.
Imprint Energy, a start‐up based in Alameda, CA, is
commercializing zinc‐based baƩery technology first
developed at UC Berkeley. Its products are thin,
flexible, and rechargeable, with a much higher energy
density than comparable lithium‐ion baƩeries and
much safer. Research into zinc‐air baƩeries conƟnues
at Stanford (as discussed in SecƟon 5.2), and similar
zinc‐air fuel cell technology currently licensed to Zinc
Air, Inc., in Montana, originated at LLNL.
3.3 Management: TacƟcal Micro‐grids
The Army Research, Development and Engineering
Command is developing two tacƟcal microgrid
systems. The first, called Reusing ExisƟng Natural
Energy from Wind and Solar (RENEWS), uses
completely renewable energy sources to power
smaller systems in very remote locaƟons. RENEWS,
which weighs about 100lbs and is stored in two 70lb
cases, can power two or three laptops conƟnuously
with solar/wind power or for about five hours from
stored energy. The second, Renewable Energy for
Distributed Undersupplied Command Environments
(REDUCE), is a larger system that will integrate fuel‐based
generators with renewables.25
Advances in energy generaƟon and storage (will
support effecƟve micro‐grids: higher‐efficiency
25 Author generated, adapted from Dan Goldman, Highland Capital Management, cited in Tony ValenƟne et. al., “USDA Guarantees 2nd
GeneraƟon Biofuels Access to Bond Market for IniƟal CommercializaƟon,” Clean Energy Notes, 17 Mar 2011, cleanener‐gynotes.
blogspot.com.

4.0
Understanding the Energy
Technology Landscape
U.S. renewable energy and other clean technology
sectors have seen renewed interest in recent years
due to a number factors including the advent of new
technologies, shiŌs in the geostrategic and policy
environments, and lessons learned from a range of
threat environments. Many of these systems are sƟll
not commercially viable, however. They require
government support through a mix of subsidies, tax
breaks, mandates, and other policy tools. This public
sector reliance oŌen shapes technological capabiliƟes
and commercial organizaƟons because of the
requirements that accompany this governmental
support.
Recent events and global trends make government
involvement more likely in the future. Natural
disasters such as Hurricanes Katrina and Sandy
demonstrated the vulnerability of the energy sector,
raising awareness and galvanizing public interest.
There also has been a sustained rise in public concern
about anthropogenic climate change. The scienƟfic
community has reported that observed trends
toward greater climaƟc volaƟlity can be aƩributed to
increased greenhouse gas emissions, and this has
aƩracted resources and innovators to the challenge
of developing low‐ and zero‐carbon energy
technologies, and the storage and management
technologies required for their implementaƟon.
4.1 US Clean Technology Industry
The US cleantech industry (Figure 5) includes a
diverse set of actors with overlapping and
interrelated roles. Government influence is
prominent throughout the industry at both federal
and state levels, especially as a regular and
substanƟal source of financing. Large research
universiƟes and naƟonal and corporate laboratories
figure prominently in the early stages of research and
development. New technologies are discovered and
explored at this stage, with increasing aƩenƟon paid
to high potenƟal products and/or services.
ProducƟon opƟons are reviewed and tested during
commercializaƟon, as businesses consider aspects of
design, manufacturing, cost, market size, regulatory
environment and other factors. These early‐stage
companies are oŌen funded privately by investors
who specialize in the field. Consumer input is
integrated early in the process during
commercializaƟon, providing opportuniƟes for
tesƟng and feedback. This cycle conƟnues as the
company matures, moving toward profitability and
self‐sufficiency.

exploraƟon, $34 billion in health research, and $81
billion in defense‐related research).27
Within the industry, generaƟon and deployment of
renewable energy has seen the most growth. As a
result, prices conƟnue to be driven down and
renewables present an increasingly viable alternaƟve
to petroleum‐based fuels. This is parƟcularly true for
the residenƟal solar sector; the US had 7,500MW of
solar photovoltaic capacity at the end of 2012, three
Ɵmes more than in 2010, and more than ten Ɵmes
2007.28 Renewables supplied over 49% of new US
power generaƟon capacity in 2012. The EIA projects
that this surge will conƟnue, with renewables
supplying more electricity than nuclear reactors or
natural gas by 2016.29
4.2 Industry Overview and Market
Trends
Energy technology research receives significant
aƩenƟon from major universiƟes and other academic
and research insƟtuƟons across the country. For
example, the New York BaƩery and Energy Storage
Technology ConsorƟum is partnering with Dutch firm
DNV Kema to build a $23 million BaƩery and Energy
Storage Technology tesƟng and commercializaƟon
center in Rochester, NY.26 While federal funding for
energy R&D averaged about $4.7 billion annually
from 2009‐2014, this is much lower than annual
investments in other areas of naƟonal innovaƟon
priority (e.g. $19 billion in space research and
Figure 5. Major Players in U.S. Clean Technology Industry
26 Silvio Marcacci, “$23 Million Energy Storage Research Center Launched in New York State,” Clean Technica, 30 Jul 2013. Access here.
27 Alex Trembath, Michael Shellenberger, Jesse Jenkins, Ted Nordhaus, “Beyond Boom and Bust: Puƫng Clean Tech on a Path to Subsidy
Independence,” 17 Apr 2013. Access here.
28 Silvio Marcacci, “Dazzling Dozen US States Illuminate Path to Solar Energy Future,” Clean Technica, 26 Jul 2013. Access here.
29 Dennis McGinn, “American Renewable Energy is Powering the American Energy TransformaƟon,” Huffington Post, 9 July 2013. Access
here.

majority of domesƟc cleantech sectors rely on
government subsidies and other supporƟve policies
to compete in energy markets. This leaves the
industry vulnerable in the face of significant funding
cuts. Federal funding for clean technologies reached
an all‐Ɵme high of $44 billion through the American
Recovery and Reinvestment Act of 2009 [ARRA]. By
2014, annual federal cleantech spending will drop to
$11 billion (a 75% decline since 2009), and 70% of all
federal clean energy policies in place in 2009 will
have expired. Even regular non‐ARRA federal clean
tech funding is set to decline by more than half, from
a high of $24.3 billion in 2010 to $10.9 billion in
2013.32
Overall, the US clean technology industry is at an
inflecƟon point. The rapid expansion of government
funding since 2009 prompted significant advances,
parƟcularly in the large‐scale residenƟal solar sector.
These new technologies could become compeƟƟve in
domesƟc energy markets, but for now the industry
remains dependent on unreliable federal support,
leading to a dangerous “boom and bust” cycle.
4.2.1 Venture Capital and Private Equity
Funding Flows
Venture capital investment in the cleantech sector is
trending downward and has been for several years.
According to publicly available data from the
MoneyTree Report, generated by
PricewaterhouseCoopers LLP and the NaƟonal
Venture Capital AssociaƟon (NVCA), the cleantech
sector saw its sixth straight quarter of decline in Q2
2013 to $364 million.33 This marks a 62% year‐over‐
Cleantech growth is reflected in industry
employment, which expanded 12% from 2007 to
2010. This represents more than 70,000 new jobs
during the height of the recession. From 2011 to
2012, the solar sector added jobs nearly six Ɵmes as
quickly as the rest of the economy, though solar
manufacturing dropped off in 2012 in part due to
compeƟƟon from cheaper foreign imports.
This recent cleantech expansion is largely due to
unprecedented government support for clean energy.
President Obama has called on the US to double wind
and solar electricity generaƟon by 2020, ciƟng
economic, climate change, and energy security
demands.30 States also have taken the iniƟaƟve to
promote energy reliability, parƟcularly the
integraƟon of renewable energy sources. California,
New York, MassachuseƩs, and other states in the
New England region conƟnue to lead the charge in
this area.
Government cleantech spending will exceed $150
billion from 2009‐2014, a more than three Ɵmes
increase from 2002‐2008. A majority of this spending
is directed toward subsidizing the deployment and
adopƟon of new energy technologies (e.g. solar
installaƟons) while manufacturing received only 8%.
Overall investment in renewables and other
cleantech followed the government’s lead, jumping
155% to $9.5 billion in Q2 2013. This was supported
by the extension of a wind power tax credit and
unexpectedly good performances from cleantech
iniƟal public offerings (IPOs), like Tesla.31
Due to the rapid expansion of government funding, a
30 “President Obama’s Plan to Fight Climate Change,” 25 Jul 2013, hƩp://www.whitehouse.gov/share/climate‐acƟon‐plan.
31 “Clean energy investment rises 22%, led by US, China,” Bloomberg, 11 Jul 2013, hƩp://www.eco‐business.com/news/clean‐energy‐investment‐
rises‐22‐led‐us‐china/ .
32 Alex Trembath, et. al., “Beyond Boom and Bust: Puƫng Clean Tech on a Path to Subsidy Independence.”

sign for an industry. The venture model takes
advantage of high risk, high reward early‐stage
companies; therefore, as industries mature, the role
for VC investment naturally declines. This creates
space for increased debt/equity and project financing
from other sources. The drop in cleantech venture
investment may be partly explained by growing
maturing in cleantech markets, parƟcularly the larger
solar companies. Mark Heeson, president of the
NVCA, observed: “As clean energy conƟnues to
evolve from a capital intensive to a capital efficient
model, it is clear that the venture industry is
responding to the market forces at work.”35
iii. Limited exit opportuniƟes:
As the risk associated with investment goes down
and later‐stage investors step in, VCs look to exit the
venture profitably. Typically, VCs rely heavily on iniƟal
public offerings (IPOs) as a viable exit strategy, and
acquisiƟons also play a role. However, the last few
years have shown that (at least right now) there is no
real domesƟc IPO market for cleantech. Ten venture‐backed
companies had to pull IPO plans in 2012 and
raise addiƟonal rounds of private investment,
significantly reducing the returns of these backers.
Even companies with successful IPOs have had
disappoinƟng performances. Nine VC‐backed
cleantech start‐ups have done major market IPOs
since 2010 and stayed public for more than six
months (the typical length of the lock‐up period VC
investors need to wait before selling their shares). All
but two were trading below their IPO price at that
180‐day mark, and over Ɵme only Tesla has clearly
year decrease and the lowest quarterly funding total
in over seven years (Figure 6).
There are a number of likely contribuƟng factors to
this downward VC investment trend:
i. Overall weak economy:
Declining venture investment can indicate that VCs
are reluctant to invest in new companies in general,
which is not surprising in a weak economy. This is
likely a large part of the drop between 2007‐2008
across all sectors, which coincided with the bursƟng
of the U.S. housing bubble in mid‐2007 and start of
the recession (Figure 7). Even the recent drop in
cleantech since Q1 2011 may be rooted in VC cauƟon;
it mirrored overall VC acƟvity, but with a
disproporƟonate decline that makes sense from this
perspecƟve, given the parƟcularly significant losses
VCs took on cleantech firms such as A123 Systems.
However, VCs seem parƟcularly reluctant to invest in
new cleantech companies. In Q2 2013, overall
venture capital investment acƟvity rose 12 percent in
terms of dollars and 2 percent in terms of number of
deals compared to the previous quarter, but
cleantech venture investment declined further.34 This
could indicate parƟcularly low VC confidence in
cleantech deals, compared to other sectors, but more
likely a weak economy is not a sufficient explanaƟon
for the downward trajectory of cleantech venture
funding.
ii. Maturing industry:
Decreased VC investment is not always a negaƟve
33 Generated by the author. Data from MoneyTree Report Q1 2013 and PWC press release on trends from upcoming MoneyTree Q2 2013
report .
34 PWC press release on trends from upcoming MoneyTree Q2 2013 report, hƩps://www.pwcmoneytree.com/MTPublic/ns/moneytree/
filesource/displays/noƟce‐D.html .
35 Data from Yahoo! Finance; MaƩhew Nordan, “The state of cleantech venture capital: what lies ahead,” GigaOM, 27 Mar 2013.

Figure 6. VC Cleantech Sector Investments, 2005 – Q2 2013 36
Figure 7. Cleantech and Total US VC Investment, 2005 – Q2 2013 37
36 Generated by the author. Data from MoneyTree Report Q1 2013 and PWC press release on trends from upcoming MoneyTree Q2 2013
report (hƩps://www.pwcmoneytree.com/MTPublic/ns/moneytree/filesource/displays/noƟce‐D.html).
37 “Q2 2013 – Quarterly Venture Capital Financing and Exit Data,” CBI Insights, 15 July 2013, hƩp://www.cbinsights.com/blog/trends/
venture‐capital‐data‐q2‐2013.

are only limited returns, given the size of iniƟal
investments.39
Regardless, there seems to be a growing role for
corporaƟons in funding cleantech firms, and potenƟal
military customers should watch their behavior
closely. There are numerous examples from the last
quarter alone. Sunrun, a domesƟc residenƟal solar
provider, raised $630 million from JP Morgan to
construct a new facility. SolarCity raised $500 million
from Goldman Sachs, and SolarReserve raised $260
million from Google. Notably, innovaƟve fuel cell
manufacturer Bloom Energy raised $150 million from
Credit Suisse, German uƟlity company EON, and its
previous investors.40
iv. Concerns of limited partners (LPs).
VC firms get the money they invest from LPs, such as
foundaƟons, pension funds, and private wealthy
families. Recently, many of these limited partners
have been backing away from cleantech.
VantagePoint Capital Partners, one of the largest VCs
acƟve in cleantech, stopped raising a new clean‐tech
fund because of lack of LP interest. Solar
manufacturing was one of the fund’s intended
targets, along with energy storage, electric vehicle,
and smart grid technology. Many LP insƟtuƟons sƟll
interested in cleantech are earmarking venture funds
for lower risk late‐stage growth equity deals.
v. Losing government support.
Federal funding for clean technologies reached an all‐
Ɵme high of $44 billion through the American
done well (Table 1, Figure 8).
These are not the outsized returns on investment
that VC firms need from their successes to
compensate for inevitable losses on other high‐risk
investments. There is some hope; last year, both
SolarCity and First Solar had strong iniƟal showings,
and Tesla conƟnues to outperform the average.
However, it is too early to tell whether this indicates
a turn‐around for cleantech IPOs.
Mergers and AcquisiƟons (M&A) are the primary
alternaƟve exit vehicle to IPOs. In the cleantech
sector, M&A acƟvity historically has been modest,
although it is trending upward: $5 billion earned in
Q2 2013, compared to only $2 billion in Q1, according
to data from analysis group CleanTechIQ. Significant
contributors to those numbers was ABB’s $1 billion
acquisiƟon of Power One, a power management
company, and CoinStar [subsidiary] Outerwall’s $350
million acquisiƟon of ecoATM, an electronics
recycling company.38
It is difficult to assess cleantech venture‐backed
acquisiƟons, let alone Silicon Valley cleantech
acquisiƟons, since most exit data does not
differenƟate venture‐backed companies. This means
potenƟal military customers will not be able to
determine the best VC firms and/or porƞolio
companies in the energy technology sector with a
high degree of confidence. However, a 2012
Cleantech Venture‐Backed M&A Exit Study showed
only 27 venture‐backed cleantech deals greater than
$50 million in the previous ten years, with an
esƟmated $13 billion in total M&A exit value. These
38 Neal Dikeman, “Guest Post: Cleantech VC‐Backed M&A Exit Numbers,” Green Tech Media, 18 September 2012, hƩp://
www.greentechmedia.com/arƟcles/read/Guest‐Post‐Cleantech‐VC‐Backed‐MA‐Exit‐Numbers
39 Carus, “Cleantech VC jumps 56% in Q2, M&A rebounds.”
40 “Q2 2013 – Quarterly Venture Capital Financing and Exit Data,” CBI Insights.

Table 1. Major Cleantech IPOs, 2010 – present 42
Company Date of IPO Opening
Value
Value
at Day
180
%
Change
to Day
Current
Value
% Change
to Current
Codexis, Inc. (CDXS) 22 Apr 2010 13.00 10.58 ‐19% 2.46 ‐81%
Tesla Motors, Inc. (TSLA) 29 Jun 2010 19.00 22.86 20% 127.26 570%
Amyris, Inc. (AMRS) 28 Sep 2010 16.50 28.79 74% 2.94 ‐82%
SemiLEDs Corp (LEDS) 9 Dec 2010 24.00 4.28 ‐20% 1.28 ‐95%
Gevo, Inc. (GEVO) 9 Feb 2011 14.23 9.25 ‐35% 1.99 ‐86%
Solazyme, Inc. (SZYM) 27 May 2011 20.00 11.37 ‐43% 11.40 ‐43%
KiOR, Inc. (KIOR) 24 Jun 2011 15.00 9.08 ‐40% 4.39 ‐71%
Ceres, Inc. (CERE) 22 Feb 2012 15.00 5.03 ‐66% 2.19 ‐85%
Enphase Energy, Inc. (ENPH) 22 Apr 2010 7.50 3.36 ‐55% 8.08 8%
Figure 8. Major Cleantech IPO Performance, 2010 – present42
41 Author generated, adapted from MaƩhew Nordan, “The state of cleantech venture capital: what lies ahead.” Data from Yahoo! Finance
42 Felicity Carus, “Cleantech VC jumps 56% in Q2, M&A rebounds,” CleantechIQ, 3 July 2013, hƩp://cleantechiq.com/2013/07/cleantech‐vc‐jumps‐56‐in‐q2‐ma‐rebounds/.

 Related to the problem of limited exit
opportuniƟes, the increased proporƟon of
follow‐on investment may indicate adverse
selecƟon: VCs are providing working capital to
companies they had hoped to have profitably
exited already. In any case, VCs will be
reluctant to conƟnue invesƟng in a sector with
limited opportuniƟes for profitable exit.
 VCs are earmarking more money for late‐stage
funding because of anƟcipated needs aŌer a
boom of seed/Series A investments around
2006. That year VCs began focusing on the
cleantech industry, and funding quickly
increased by more than 50% annually for the
next three years. Most of those cleantech
rounds used seed/Series A money, but since
then the trend has reversed (Figure 9). VC
firms may have responded to these trends –
and the projected need for even greater late‐stage
funding in the future – by earmarking
funds. In support of this idea, a number of
major VCs started raising large late‐stage
cleantech funds c. 2010‐2011, including
VantagePoint, KPCB, Khosla Ventures, and
Hudson Clean Energy.
Tracking these trends in VC funding may help DoD
and other government customers forecast future
developments. If they can idenƟfy sectors that are
likely to need extra funding in the future, they may
be able to match those sectors to their own needs
and idenƟfy business opportuniƟes. Early
engagement in these sectors would help determine
the technological and organizaƟonal hurdles to
effecƟve partnering.
Recovery and Reinvestment Act of 2009 [ARRA].
Dependence on government subsidies leads to
unpredictability in the sector, parƟcularly as the
sƟmulus money winds down, which can complicate
investment. This blends with concerns about other
federal, as well as state, incenƟves for cleantech
commercializaƟon.
4.2.2 Cleantech VC Funding Trends
Not only is venture funding down for cleantech, but it
is increasingly made as follow‐on investment (Series
B or later, meaning investments in later‐stage, lower‐risk
companies). Nearly 90% of cleantech VC
investments were Series B or later in Q1 2013, and
the average size of those rounds fell by 45%.
However, the increase in venture funding over all
sectors featured a resurgence of early stage
investments, which rose 63% in dollars to their
highest level in six quarters. Average size of early
stage deals also jumped from $3.7 million in Q1 to
$5.2 million in Q2. As of this wriƟng, Q2 2013
investment data by stage of development for the
cleantech sector is not yet publicly available, but
reports indicate that cleantech did not see a
comparable rise in early‐stage acƟvity.
There are a number of possible contribuƟng factors
to this trend:
 VCs someƟmes favor add‐ons over new
plaƞorms in hard Ɵmes, because they know
the company and have a beƩer chance of
success. Further, poor economic condiƟons
may have sƟfled other new promising
opportuniƟes.
41 Author generated, adapted from MaƩhew Nordan, “The state of cleantech venture capital: what lies ahead.” Data from Yahoo! Finance
42 Felicity Carus, “Cleantech VC jumps 56% in Q2, M&A rebounds,” CleantechIQ, 3 July 2013, hƩp://cleantechiq.com/2013/07/cleantech‐vc‐jumps‐
56‐in‐q2‐ma‐rebounds/.

Nonetheless, investment metrics need to be balanced against other factors—VC‐funded start‐up enterprises
may at Ɵmes pose risks to the acquisiƟon of sustainable soluƟons, as was the case with Solyndra.
Figure 9. Cleantech Start‐Up Investment Rounds43
43 Graph from MaƩhew Nordan, “The state of cleantech venture capital, part 1: the money,” Gigaom, 28 November 2011, hƩp://
gigaom.com/2011/11/28/the‐state‐of‐cleantech‐venture‐capital‐part‐1‐the‐money/ .

5.0
Understanding InnovaƟon
Hubs: Silicon Valley
Silicon Valley, located in the southern region of the
San Francisco Bay Area in northern California, is one
of the most innovaƟve and producƟve high‐tech
regions in the world (Inset Figure44). Its unique
combinaƟon of business, academic, government, and
cultural resources facilitate technological innovaƟon.
In the last decade, Silicon Valley has emerged as one
of the centers of U.S. clean technology industry.
Given the recent strategic shiŌs outlined above and
the long history of the region's support for tradiƟonal
defense industries such as semiconductors, satellites,
and opƟcs, the DoD has the opportunity to
systemaƟcally reengage Silicon Valley on energy
reliability challenges. Leveraging Silicon Valley in a
producƟve fashion requires substanƟal adjustment to
standard DoD pracƟces. The companies, investors,
and educaƟonal insƟtuƟons in the region do not
funcƟon like tradiƟonal defense contractors. As a
community, these groups share characterisƟcs such
as access to cuƫng‐edge research, large labor force
of talented engineers, rapid development and tesƟng,
low levels of cash reserves, and the pressure for
exponenƟal growth to provide investor returns.
These qualiƟes offer comparaƟve advantages for
innovaƟve problem‐solving but also potenƟal for
misunderstanding and frustrated collaboraƟon.
The DoD will likely face skepƟcism in its outreach to
individuals and organizaƟons in Silicon Valley. Many
groups harbor concerns about government
collaboraƟon based on recent high‐profile failures,
especially in cleantech (e.g. Solyndra), and a general
lack of appreciaƟon for process‐heavy – or just slow –
relaƟonships. Silicon Valley culture and incenƟve
structures reward technical competence and rapid
iteraƟon. This is a crucial aspect of the region upon
which much innovaƟve and entrepreneurial acƟvity
rests. Unfortunately, it can place undue stress on
potenƟal DoD partners if these concerns are not
adequately addressed during the early stages of
negoƟaƟon. Given these hurdles, the DoD is best
equipped to provide clarity in technological and
contractual arrangements, along with an accurate
assessment of milestones and disbursement
schedules. EducaƟng organizaƟons and thought
leaders in Silicon Valley is criƟcal to a sustainable and
valuable relaƟonship.
5.1 High‐Tech Marketplace
Silicon Valley has long been a center of high‐tech
business in electronics and informaƟon technology.
Numerous industry leaders have developed there,
including Google, Yahoo, Cisco Systems, Intuit, and
Sun Microsystems.45 In recent years Silicon Valley has
also supported the development of the U.S. clean
44 Image from hƩp://www.californiatraveldreams.com/SiliconValley.htm.
45 “History of Stanford,” Stanford University, hƩp://www.stanford.edu/about/history/history_ch3.html .

VantagePoint Capital Partners. Venture capital
investors like these are skilled at idenƟfying
technologies with long‐term growth potenƟal. These
“porƞolio companies” are expected to provide
substanƟal returns on investment, usually in the 7‐9
year Ɵmeframe.
Several major cleantech success stories were iniƟally
supported by Silicon Valley capital. Several
representaƟve examples include:
1. Clean Power Finance provides Internet‐based
financial services and soŌware for the
residenƟal solar industry. It was founded in
2006 in San Francisco, CA, with venture
capital from a number of Silicon Valley firms.
Currently, Clean Power Finance partners
with major solar manufacturing and
installaƟon companies and has secured half
a billion dollars from bank and corporate
investors, such as Google and Morgan
Stanley.
2. Nest Labs developed a “learning
thermostat” system for home energy
management. Since its founding in 2010 in
Palo Alto, CA, Nest has expanded quickly and
now has partnerships with leading U.S.
uƟliƟes (e.g. Southern California Edison) and
sells its product in 80 countries worldwide.
Nest aƩracted Series A investment from a
number of high‐profile Silicon Valley‐based
VCs, including KPCB, Google Ventures,
Shasta Ventures, Lightspeed Venture
Partners, and Intertrust. Its co‐founders
gained experience in tech development and
design at Apple, where they worked on the
iPod and iPhone.
technology, or “cleantech,” industry. Many young
and rapidly growing companies with distributed
energy soluƟons are based in the region.
Alongside its high‐tech industry, Silicon Valley has
developed a network of risk‐tolerant private capital
with substanƟal commercializaƟon experience. OŌen
referred to as venture capital (VC), it is a vital source
of financing for many start‐ups. VC firms solicit funds
from a variety of sources, including private families of
high net worth and insƟtuƟonal investors such as
pension funds. Each fund is comprised of several
backers, who expect a return on their investment
upon closing, typically in the 7‐9 year Ɵmeframe.
Investment is made at the early stages of company
growth, oŌen before it has begun generaƟng
revenue, based on projected growth that will bring
outsized returns to the investors. This high‐growth
strategy is necessary to maximize returns, as many
venture‐backed companies end up failing and are
liquidated or acquired at a value well below their
total backing.
Overall U.S. venture investment is heavily weighted
toward Silicon Valley, with $2.2 billion going into 274
deals in Q1 2013 (Figure 10). For comparison, New
England, the next most acƟve venture investment
region, received only $677 million in 88 rounds.46
Silicon Valley similarly dominates cleantech VC, as a
subset of the total (Figure 11).
There are well over 100 venture capital firms based in
Silicon Valley, and many firms headquartered
elsewhere are acƟve in the area. Leading investors in
Silicon Valley energy technologies include Kleiner
Perkins Caufield & Byers (KPCB), Khosla Ventures, and
46 MoneyTree Report Q1 2013,” PricewaterhouseCoopers and NaƟonal Venture Capital AssociaƟon, hƩps://www.pwcmoneytree.com/
MTPublic/ns/moneytree/filesource/exhibits/13Q1MoneyTreeSummaryReport.pdf.

Figure 10. Total U.S. VC Investment in All Sectors, 2008—Q2 201347
Figure 11. Cleantech Funding Trends in Top Five Regions48
47 Author generated. Data from MoneyTree Report Q1 2013
48 Graph from Cleantech MoneyTree Report Q1 2013, PricewaterhouseCoopers and NaƟonal Venture Capital AssociaƟon, hƩp://
www.pwc.com/en_US/us/technology/publicaƟons/assets/pwc‐money‐tree‐cleantech‐venture‐funding‐q1‐2013.pdf

and the emerging high‐tech industries. Today, the
crossover between the university and Silicon Valley
conƟnues to be so strong that Stanford has been
called “the farm system for Silicon Valley.”49
There are many acƟve energy research centers and
iniƟaƟves at Stanford.50 A few of the most prominent
include:
 The Precourt InsƟtute for Energy was
established in 2009 as the center of all energy
research and educaƟon iniƟaƟves at Stanford. In
addiƟon to coordinaƟng the other diverse
programs, the Precourt InsƟtute offers seed
grants and co‐sponsors the Energy and
Environmental Affiliates Program, which forges
connecƟons between companies and Stanford
researchers to promote the exchange of ideas
and more rapid commercializaƟon of working
soluƟons.51
 The Global Climate and Energy Project (GCEP),
founded in 2002, conducts early‐stage research
aimed at developing new energy sources to
reduce greenhouse gas emissions. It has over
$130 million in funding from corporate partners
such as ExxonMobil, GE, and DuPont.52
 The Hoover InsƟtuƟon Shultz‐Stephenson Task
Force on Energy Policy “addresses energy policy
in the United States and its effects on our
domesƟc and internaƟonal poliƟcal prioriƟes,
parƟcularly our naƟonal security.” The task
3. Kurion is a profitable start‐up that
developed an improved, faster process for
cleaning up nuclear waste. In 2011, it gained
prominence for its role assisƟng aŌer the
Fukushima nuclear disaster in Japan. Kurion
shows the long reach of Silicon Valley
cleantech venture capital; though the
startup is based in southern California, one
of its two major iniƟal investors was Palo
Alto firm Firelake Capital Management.
Market forces and selecƟon effects, which can and
should be harnessed by DoD procurement efforts,
drive efficiencies in the private sector. Developing
awareness and relaƟonships with VC firms –
parƟcularly those with past experience in the
cleantech sector – could help DoD idenƟfy and target
emerging technology soluƟons of relevance to
emerging tacƟcal edge challenges.
5.2 InsƟtuƟonal Environment
5.2.1 Academic InsƟtuƟons
Silicon Valley industry has long‐standing historical Ɵes
to the many academic insƟtuƟons in the area,
parƟcularly Stanford University. The Palo Alto garage
where Stanford alumni David Packard and William
HewleƩ founded their electronics company in 1939 is
known as “the Birthplace of Silicon Valley.” As Silicon
Valley developed into a powerhouse of technological
innovaƟon, close Ɵes conƟnued between Stanford
49 That parƟcular quote comes from a 2012 arƟcle in the New Yorker (Ken AuleƩa, “Get Rich U,” 30 Apr 2012, hƩp://www.newyorker.com/
reporƟng/2012/04/30/120430fa_fact_auleƩa), but in the last few years there have been a number of similar arƟcles in major publicaƟons,
highlighƟng Stanford’s start‐up culture.
50 This is not an exhausƟve list of Stanford’s energy‐related iniƟaƟves. Other relevant programs include the Precourt Energy Efficiency Center
(hƩp://peec.stanford.edu), the Stanford Woods InsƟtute for the Environment (hƩp://woods.stanford.edu), the Stanford InsƟtute for Materials
and Energy Science (hƩp://simes.stanford.edu), the SUNFACE Center for Interface Science and Catalysis (hƩp://suncat.slac.stanford.edu), the
Energy Modeling Forum (hƩp://emf.stanford.edu), and the Center for Advanced Molecular Photovoltaics (hƩp://camp.stanford.edu), and the
Stanford Energy Club (hƩp://energyclub.stanford.edu).
51 Energy and Environmental Affiliates Program, hƩp://eeap.stanford.edu/.
52 Global Climate and Energy Project, hƩp://gcep.stanford.edu/.

levels.
Other area universiƟes also engage meaningfully with
local industry – especially University of California‐
Berkeley, Santa Clara University, and San Jose State
University. Santa Clara idenƟfied “Engagement with
Silicon Valley” as one of five prioriƟes in its 2011
Strategic Plan, specifically ciƟng the need to “increase
learning, service, and research opportuniƟes with
Silicon Valley corporaƟons, insƟtuƟons, and
communiƟes.”57
The academia‐industry nexus in Silicon Valley brings a
number of potenƟal indirect benefits to DoD energy
reliability efforts. UniversiƟes provide valuable R&D
resources, in terms of both on‐campus laboratories
and equipment and access to government and
private grant funding. Both the Precourt InsƟtute and
the TomKat Center offer seed grants for proof‐of‐concept
research on potenƟally disrupƟve
technologies. GCEP currently supports 80 full‐Ɵme
and 35 exploratory research projects. This research
could lead to innovaƟve military applicaƟons in the
future; for example, earlier this year GCEP
researchers announced the development of a zinc‐air
baƩery that eventually could provide a low‐cost, high
‐efficiency alternaƟve to tradiƟonal lithium‐ion
baƩeries.58
Significantly, businesses have the opportunity to
support, and even shape, this early academic
research. The Precourt InsƟtute sponsors an Energy
and Environmental Affiliates Program, which builds
force chair is former U.S. Secretary of State
George Shultz, and its members include current
and former leaders in environmental science,
government, and industry.53
 The TomKat Center for Sustainable Energy funds
research in science, technology, and policy to
address major global energy problems.54
 The Center on Nanostructuring for Efficient
Energy Conversion is one of 46 naƟonal Energy
FronƟer Research Centers, established and
funded by the Department of Energy [DoE]. Its
mission is to “understand how nanostructuring
can enhance efficiency for energy conversion
and solve fundamental cross‐cuƫng problems
in advanced energy conversion and storage
systems.”55
 The Steyer‐Taylor Center for Energy Policy and
Finance is a joint program of the Stanford Law
School and Graduate School of Business. The
Freeman Spogli InsƟtute Program on Energy and
Sustainable Development is “an internaƟonal,
interdisciplinary program that draws on the
fields of economics, poliƟcal science, law, and
management to invesƟgate how the producƟon
and consumpƟon of energy affect human
welfare and environmental quality.”56 The
Stanford Environmental and Energy Policy
Analysis Center is a joint effort between the
Precourt InsƟtute and the Stanford InsƟtute for
Economic Policy Research to study energy policy
at the regional, naƟonal, and internaƟonal
53 For a complete list of the Shultz‐Stephenson Task Force members, see hƩp://www.hoover.org/taskforces/energy‐policy/members.
54 TomKat Center for Sustainable Energy, hƩp://tomkat.stanford.edu/ .
55 Center on Nanostructuring for Efficient Energy Conversion, hƩp://cneec.stanford.edu/about/mission.html.
56 FSI Program on Energy and Sustainable Development, hƩp://pesd.stanford.edu/.
57 Santa Clara University Strategic Plan 2011, hƩp://www.scu.edu/strategicplan/2011/prioriƟes‐goals/engagement/
58 Mark Shwartz, “GCEP scienƟsts develop high‐efficiency zinc‐air baƩery,” GCEP, hƩp://gcep.stanford.edu/news/zinc‐air‐baƩery.html

UniversiƟes have built‐in networks with other
academic and research insƟtutes worldwide, which
broaden Silicon Valley’s access to other ongoing R&D
efforts in energy reliability. For example, the Shultz‐
Stephenson Task Force and Stanford University
partnered with the MassachuseƩs InsƟtute of
Technology to study emerging disrupƟve energy
technologies. This two‐year project culminated in a
workshop in March 2013, and is expected to release
an in‐depth later this year.
In addiƟon to these indirect benefits, there is a
history of more direct cooperaƟon between DoD and
Silicon Valley’s academic insƟtuƟons. During the Cold
War, Stanford was acƟvely involved in technical
research for criƟcal military applicaƟons. In the
1950s, Stanford established an Applied Electronics
Laboratory to build prototypes of electronic
intelligence and warfare systems for the Office of
Naval Research. In 1966, the Stanford Research
InsƟtute built a $4.5 million radio reflector antenna
on university land with Air Force funding. The original
purpose of was atmospheric study, though the
NaƟonal AeronauƟcs and Space AdministraƟon
(NASA) later used the antenna to communicate with
satellites and spacecraŌ.
More recently, Stanford has received several mulƟ‐
million dollar military research contracts with the
Defense Advanced Research Projects Agency60
(DARPA) and the Air Force Research Laboratory61
(AFRL). In 2007, Stanford joined a consorƟum of three
other universiƟes and NASA to study high
performance compuƟng, with $105 million of Army
funding.62 This Army High Performance CompuƟng
Research Center (AHPCRC) is run out of Stanford’s
partnerships between Stanford and parƟcipaƟng high
‐tech firms. One feature of this program is the Fellow‐
Mentor‐Advisor program, which pairs each member
firm with a research team of PhD students, led by a
faculty member.
The firm has privileged access to cuƫng edge
relevant research, and the researchers benefit from
the experƟse and commercializaƟon experience of
businesses. Similarly, the TomKat Center’s Energy
InnovaƟon Transfer Program connects each research
project with an industry mentor. This cooperaƟon
facilitates the process of moving from research to
commercializaƟon, and increases the viability and
business acumen of start‐ups and potenƟal future
DoD partners.
Academic insƟtuƟons provide conƟnuing educaƟon
for industry players and updates to cuƫng‐edge
research developments. Many of the programs and
centers discussed above hold regular conferences,
faculty lectures, and other educaƟonal events open
to both business and academic leaders. San Jose
State University recently teamed with Lawrence
Berkeley NaƟonal Laboratory on a “BaƩery
University,” offering special conƟnuing educaƟon
courses in advanced energy storage technology.59
Start‐ups and established businesses recruit from a
near constant supply of young, highly educated,
innovaƟve entrepreneurs. This happens organically,
through informal networking and other
opportuniƟes, as well as in a more formal way. For
example, one of the member benefits of the Precourt
InsƟtute’s Affiliates Program is facilitated graduate
student recruiƟng, through special recruiƟng events
and PhD research showcases.
60&61 Military‐Industrial Complex database, hƩp://www.militaryindustrialcomplex.com/contract_detail.asp?contract_id=11790
62 Dan Stober, “Event celebrates collaborate project to advance high‐performance compuƟng,” Stanford News, 5 Dec 2007, hƩp://
news.stanford.edu/news/2007/december5/army‐120507.html.

Beyond internal research, LBL frequently partners
with industry and government actors in Silicon Valley
on energy‐related innovaƟon. Last year, for example,
LBL joined the city of San Jose in an iniƟaƟve to
promote “a mutual exchange of ideas and experƟse
in the applicaƟon of technology toward next‐genera
Ɵon buildings, renewable energy, energy
storage and the smart grid, all research strengths of
Berkeley Lab.”65 LBL and the California Clean Energy
Fund also launched CalCharge, a consorƟum aimed at
building connecƟons between promising Silicon
Valley‐based energy storage start‐ups with venture
funding, industry knowledge, and academic experƟse
from UC Berkeley and Stanford.
Lawrence Livermore NaƟonal Laboratory
Lawrence Livermore NaƟonal Laboratory (LLNL) is
one of three DoE NaƟonal Nuclear Security
AdministraƟon (NNSA) laboratories, located in
Livermore, CA. Because it falls under the NNSA, it
differs from LBL in its explicitly defense‐oriented
mission to “[strengthen] United States security
through development and applicaƟon of world‐class
science and technology to enhance the naƟon’s
defense; reduce the global threat from terrorism and
weapons of mass destrucƟon; and respond with
vision, quality, integrity, and technical excellence to
scienƟfic issues of naƟonal importance.”66 As a result,
LLNL has a long history of scienƟfic and technical
research for military applicaƟons, as well as
experience working for DoD directly.
LLNL conducts perƟnent research in all aspects of
energy reliability, especially energy storage and
Mechanical Engineering Department. These limited
iniƟaƟves have not yet been directed toward energy
reliability challenges, but there is no relevant
difference that would make such an arrangement
unfeasible.
5.2.2 NaƟonal Laboratories
There are two naƟonal laboratories in Silicon Valley
that conduct research and develop technologies
related to energy. Both naƟonal laboratories in
Silicon Valley are Federally Funded Research and
Development Centers (FFRDCs), which means they
are “federally funded, privately operated faciliƟes
established to meet a special long‐term R&D need of
the federal government which cannot be met
effecƟvely by exisƟng in‐house or contractor
resources.”63 Though independently owned and
operated, FFRDCs exist to support government
efforts and, in some ways, funcƟon as unofficial
government sub‐agencies.
Lawrence Berkeley NaƟonal Laboratory
Lawrence Berkeley NaƟonal Laboratory (LBL) is a DoE
naƟonal laboratory located on the University of
California – Berkeley campus, with a planned second
facility in Richmond, CA. LBL has an Environmental
Energy Technologies Division that is deeply engaged
in research related to energy reliability, with major
funding from the DoE Office of Energy Efficiency and
Renewable Energy. Key research areas include lithium
ion and other advanced baƩery technologies, solar
films, electrical grid modernizaƟon, and energy
analysis.64
63 LBL Environmental Energy Technologies Division, eetd.lbl.gov/research‐development/electricity‐grid
64 Julie Chao, “New Lawrence Berkeley NaƟonal Laboratory and City of San Jose Partnership to Boost Clean Tech in Silicon Valley,” LBL News
Center, hƩp://newscenter.lbl.gov/news‐releases/2012/06/12/city‐of‐san‐jose‐partnership/
65 Mission statement quoted from hƩps://www.llnl.gov/about/whatwedo.html.
66 See hƩp://hpc4energy.org/incubator/ for more informaƟon on the incubator program .

NASA scienƟsts and engineers. These small, high‐tech
businesses, now leasing at NRP, conduct research in
biotechnology, environmental technology,
nanotechnology, communicaƟon and homeland
security.”68 Some of these partners are key players in
the Silicon Valley energy sector.
5.2.4 State and Municipal Government
Agencies
California, its regional agencies, and its municipaliƟes
have taken a leading role in addressing energy
efficiency and environmental sustainability.
California’s Renewables Porƞolio Standard is one of
the most aggressive in the country, requiring uƟliƟes
to use renewable energy sources for 33% of total
procurement by 2020.69 California is also a leader in
the deployment of renewable energy resources. The
California Solar IniƟaƟve incenƟvizes uƟlity providers
to use solar power by providing per‐waƩ rebates, on
top of the federal Solar Investment Tax Credit. Solar
capacity in California increased 26% from 2011‐2012,
to 1629 megawaƩs.70
Silicon Valley municipaliƟes have been parƟcularly
acƟve in developing climate acƟon plans and
cooperaƟng with local industry and academia to meet
renewable energy challenges. Certain ciƟes also have
taken more tangible acƟons to support cleantech
industry research and development. San Jose expects
to launch Providing Real‐Ɵme OpportuniƟes to
Showcase and Pilot Emerging Clean Technology
(ProspeCT) in Silicon Valley. ProspeCT SV is a
cleantech demonstraƟon center located in a city‐management,
and oŌen in partnership with regional
government and industry. For example, in 2011 LLNL
formed the hpc4energy incubator pilot program to
demonstrate the value of high performance
compuƟng (HPC) modeling and simulaƟon in
developing new energy technologies. The hpc4energy
incubator partners LLNL with six major industry
players: Robert Bosch, GE Energy ConsulƟng, ISO New
England, PoƩer Drilling, United Technologies
Research Center, and GE Global Research.67 Each of
these partnerships works on a different energy
challenge. LLNL and ISO New England, which is
responsible for oversight of electricity transmission
operaƟons in New England, are using HPC techniques
to opƟmize load management and increase grid
reliability. This project originated in ISO’s need to
integrate more renewable energy sources, based on
guidance from New England policymakers—a
challenge that DoD also faces.
5.2.3 NASA Ames Research Center
The Ames Research Center (ARC) is a major NASA
research center located at the NASA Research Park at
MoffeƩ Field in Santa Clara County. ARC has been
acƟve since the 1950s in R&D primarily related to
astrobiology, informaƟon technology, biotechnology
and nanotechnology.
In 2002, ARC iniƟated a number of collaboraƟve
partnerships with academia, industry, and non‐profits.
According to ARC, industry partners “posiƟon
themselves for extraordinary opportuniƟes to engage
in mutually beneficial cuƫng‐edge research with
67 Quoted from NASA Research Park Partners, hƩp://www.nasa.gov/centers/ames/researchpark/partners/index.html#.Uec6getQ21I
68 California Renewables Porƞolio Standard, hƩp://www.cpuc.ca.gov/PUC/energy/Renewables/index.htm
69 Catherine Green, “California solar installaƟons jumped 26% in 2012, Los Angeles Times, 11 Jul 2013, hƩp://www.laƟmes.com/business/
money/la‐fi‐mo‐california‐solar‐growth‐20130711,0,4238121.story .
70 The January 2013 memo to the San Jose Community and Economic Development CommiƩee, reporƟng plans for ProspeCT SV can be read at
hƩp://ca‐sanjose.civicplus.com/DocumentCenter/View/11352 .

important features of Silicon Valley culture. This
secƟon already discussed many forward‐thinking
partnerships, but one notable example is the Smart
Energy Enterprise Development Zone (SEEDZ), which
will incorporate and showcase Silicon Valley’s latest
innovaƟons in energy reliability. The SEEDZ iniƟaƟve
is led by Joint Venture Silicon Valley, an organizaƟon
that “provides a neutral forum for collaboraƟve
regional thinking and leadership from both the public
and private sectors.”72 In keeping with this mission,
all the major local energy stakeholders are
represented in the SEEDZ iniƟaƟve: energy customers
(e.g. Google, NASA ARC), energy providers (e.g.
Pacific Gas and Electric), government (e.g. ciƟes of
Mountain View and Sunnyvale), research/academic
insƟtuƟons (e.g. LBL), and technology developers
(e.g. SunPower). It is noteworthy to find posiƟve,
producƟve collaboraƟon toward a common goal
among such a diverse set of actors.
Further informaƟon sharing occurs through
networking and educaƟonal events. Frequent
conferences, academic lectures, research
presentaƟons, and product showcases (e.g.
Stanford’s Cool Products Expo) provide much needed
‐exposure for new technologies. Many networks,
both formal and informal, facilitate collaboraƟon; for
example, StartX fosters student innovaƟon through
an acƟve community of Stanford‐affiliated
entrepreneurs, who offer encouragement, advice,
and resources to young start‐ups. The universiƟes
and naƟonal laboratories are natural venues for these
events, but industry – both start‐ups and larger
corporaƟons, such as Google – oŌen contributes as
well.
owned warehouse, which will provide affordable
manufacturing, laboratory, and office space for
Silicon Valley manufacturers to develop prototypes. It
will be supported by LBNL resources.71
5.3 Silicon Valley Culture
A variety of factors drive the historic and conƟnued
success of Silicon Valley‐based technologies and
innovaƟon. While difficult to directly measure, a
crucial component these successes is the uniquely
invenƟve, entrepreneurial Silicon Valley culture. This
is a key discriminator reason other well‐resourced
high‐tech corridors have failed to replicate Silicon
Valley's success. All the major players in industry,
academia, finance, and government discussed above
operate in a culture of risk‐taking that encourages
innovaƟon in the face of seemingly intractable
challenges. This entrepreneurial spirit is vital for the
cleantech industry, which can require years and
heavy capital investment to realize new technologies.
Silicon Valley innovaƟon tradiƟonally has emphasized
early design and manufacturing. Rapid prototyping
and a results‐oriented approach to product
development are common industry pracƟces honed
by years of experience. This aligns well with the
mission and goals of DoD organizaƟons such as the
Special OperaƟons Command (SOCOM) and the Army
Rapid Equipping Force (REF), which value the same
approach toward the development and procurement
of new and breakthrough technologies to enhance
the capabiliƟes of the warfighter and effecƟvely
counter enemy agility and adaptability on the field.
CollaboraƟon and informaƟon sharing are also
71 Joint Venture Silicon Valley, hƩp://www.jointventure.org/index.php?opƟon=com_content&view=arƟcle&id=325&Itemid=330
72 Cleantech MoneyTree Report Q1 2013

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