2012 GFF Globe ImageIndustrial R&D in the energy sector comprises a broad portfolio of technologies, including fossil, nuclear, and renewable generation; smart grid or other transmission and distribution; and energy-efficiency technologies. Energy-related research sponsored by U.S. utilities, manufacturers, and technology providers will reach nearly $6.7 billion in 2012. This remains a much smaller level of investment than other innovation-based segments of the economy, and it is also small in comparison to energy's major role in U.S. GDP and national security. Even so, industrial energy R&D investment is growing, and it will continue to be shaped by external forces including federal policies and energy investments, supply and demand in the global energy market, and technology developments.



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Energy. Source: Battelle, R&D Magazine

Blueprint for U.S. Energy R&D
At least as much as any other sector except perhaps life science, federal research, funding, regulation, and energy policy have a significant influence on industrial energy R&D. In September 2011, the U.S. Department of Energy (DOE) released a review panel's findings on prioritizing energy R&D and programmatic efforts. This report, the Quadrennial Technology Review (QTR), provides a blueprint for the direction and future of U.S. energy R&D. The QTR identified six key R&D areas where DOE program and investment can play a significant development role, including a number where DOE has historically underinvested. The six areas address both energy supply and demand and relate to both stationary power (deploying clean electricity, modernizing the grid, and increasing building/industrial efficiency) and transport power (deploying alternative hydrocarbon fuels, electrifying the vehicle fleet, and increasing vehicle efficiency). The QTR calls on DOE to "maintain a mix of analytic, assessment, and fundamental engineering research capabilities in a broad set of energy-technology areas" while seeking to "balance more assured activities against higher-risk transformational work." The QTRalso notes that these efforts must be relevant to the private sector, while recognizing that "(t)here is a tension between supporting work that industry doesn't—which biases the Department's portfolio toward the long term—and the urgency of the Nation's energy challenges."


Energy 2009 2010 Q1-Q3 2011
Top U.S. R&D Expenditures Millions, U.S.$
GE - Energy Infrastructure (e) 1,531.1 1,741.3 1,425.3
Exxon Mobil 1,050.0 1,012.0 963.4
Chevron 603.0 526.0 497.2
ConocoPhillips 190.0 230.0 218.6
Itron 122.3 140.2 120.0
USEC 118.4 110.2 86.2
Cree 75.1 95.9 95.5
First Solar 78.2 94.8 102.6
Babcock & Wilcox 53.2 69.2 74.5
A123 48.3 60.7 57.0
Source: Battelle/R&D Magazine/Company information; (e) = estimated

Utilities' Role in R&D
In this 2012 assessment of energy industry R&D, we have included public electrical power utilities (also known as electric investor–owned utilities or IOUs). Unlike most public companies that engage in R&D activities, public utilities have different financial reporting requirements. As a result, they do not detail the level of their R&D activities, making it more difficult to describe these firms' efforts versus public technology companies or DOE energy investments.

To gauge the size of public utility R&D activities, we estimated the overall recent R&D expenditures by public electric utilities. This estimate is constructed using data reported in the Electric Light & Power journal nearly a decade ago, yet still among the most recent regarding electric IOUs' R&D investment. These data, combined with both historic and current data on the utilities' net income, provide some perspective on investment levels. Based on available data, we estimate that electric IOUs currently invest between 1.5% and 2.2% of net income on R&D activities. By applying these investment levels to 2009 industry net-income data (the most recent available from the Energy Information Administration), our estimate of R&D investment from the public electrical power utilities ranges from $478 million to $701 million.


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Key energy technology development areas by 2012. Source: Battelle, R&D Magazine Survey

We also wanted to promote understanding of the many energy-related R&D activities in which utilities participate. Though little information is available from the individual utilities, an examination of the planned 2012 Research Portfolio of the Electric Power Research Institute (EPRI) provides some insights. EPRI conducts R&D related to the generation, delivery, and use of electricity, with membership representing more than 90% of the electricity generated and delivered in the U.S. It was founded to allow utilities to pool their resources in order to perform industry-relevant R&D. With a total budget of $279 million, EPRI represents, according to its annual Research Portfolio, a likely significant share of overall industry R&D. EPRI is also partnering with the DOE's Advanced Research Projects Agency-Energy (ARPAE) to provide test-bed facilities relating to transmission and distribution research and electronics/smart grid component testing.

2012 EPRI Research Portfolio Millions, U.S. $
Environment $35.2
Including research into water and ecosystems, air quality, global climate change, and other environmental issues
Generation $55.9
Including major component reliability, environmental controls, advanced coal plants, carbon capture/storage, renewables, and other generation issues
Power Delivery & Utilization $58.6
Including transmission lines, distribution, energy utilization, grid operations and planning, and other power delivery issues
Nuclear $129.2
Including materials degradation and aging, equipment and fuel reliability, NDE and material characterization, advanced nuclear technology, and other nuclear issues
Total $278.9

Private-Sector Renewable R&D
As shown in the Top U.S. companies table, GE Energy Infrastructure leads all U.S. firms in energy-related R&D. With its substantial investments in wind and solar technology, GE also likely leads the U.S. in private-sector investment in specific renewable energy technologies.

Beyond GE's Energy Infrastructure segment, there are other U.S. firms reporting significant growth in R&D relative to their size. First Solar, one of the three largest global pure-play renewable energy companies in terms of R&D efforts, will significantly exceed its 2010 R&D investments. In fact, it had already surpassed its 2010 investments by nearly $6 million through the first three quarters of 2011. Both A123 and Advanced Energy Industries are also on track to substantially exceed their 2010 investments. This growth in U.S. private-sector renewable R&D, combined with significant research efforts within the DOE national laboratories and academia, keeps the U.S. among the global leaders in renewable energy R&D and innovation. As with other research intensive segments of the economy, commercializing this research activity into a competitive domestic manufacturing capability, and ultimately deploying the technologies to diversify U.S. energy inputs is the ultimate challenge.