Decisionmaking for Demonstration Projects

On March 30th, 2023, Resources for the Future (RFF) held a workshop on decisionmaking for demonstration funding, exploring how the Department of Energy (DOE) can make decisions funding demonstration projects from the many programs included in the Bipartisan Infrastructure Law and the Inflation Reduction Act. Demonstration funding focuses on late-stage energy technologies, which is a departure from DOE’s typically earlier-stage research and development (R&D) funding programs. Our workshop covered three issues that largely set demonstration funding apart from earlier-stage R&D: (i) Type of Metrics, (ii) Risk and Portfolio Analysis, and (iii) Community Benefit Plans. The first session discussed metrics, which describe the criteria used to judge individual demonstration projects and capture not only the direct costs and benefits, but also spillover benefits such as knowledge spillover and network effects. These individual demonstration projects make up a portfolio of selected projects, and the second session discussed how to maximize benefits in a portfolio while accounting for risk and uncertainty. Finally, the third session dealt with community benefits plans, a requirement in recent demonstration funding opportunities accounting for 20 percent of the overall technical merit review of a proposal. In this paper, we summarize the results of the three sessions and expand on the findings in each session with additional research and commentary.