Musk said Tesla has ten years to pay back the $465 million loan, which it won back in the summer of 2009, and Tesla plans to reduce that time in half and get it repaid in under five years. Tesla already started paying back its loan, and made its first payment of $12.7 million to the DOE in the fourth quarter of 2012. It plans to make its second payment by March 2013.

During the discussion at ARPA-E, Musk said that if the DOE got so much attention for failures like Solyndra, it should get praise for its successes like Tesla.

Tesla has successfully been transforming from a small-scale electric car maker, into a company that’s producing its second electric car the Model S at a scale of 20,000 cars per year at a factory in Fremont, Calif. During the company’s earnings call last week, Tesla said it would turn its first profit ever (on a non-GAAP basis) in the first quarter of 2013. Musk said he was confident that Tesla could also be profitable for other quarters this year, too.

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While I will always remain dedicated to the missions of the Department, I informed the President of my decision a few days after the election that Jean and I were eager to return to California. I would like to return to an academic life of teaching and research, but will still work to advance the missions that we have been working on together for the last four years.

As we wrote last month, it’s an end of an era for the Obama administration’s green dream team. Chu accomplished a good deal during his time ushering in billions of dollars in stimulus spending for clean energy, electric cars and more. At the same time, the DOE has not been without controversy with high profile bankruptcies from companies, like Solyndra, that got stimulus money.

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If true, it’s an end of an era for the Obama administration, and as Mother Jones points out, it’s a farewell to Obama’s original Green Dream Team of its first term. Chu was a true scientist leader — he won the Nobel Prize in Physics — and he supported open collaboration in science; he even had a nerdy sense of humor.

At the same time Chu was criticized, and grilled, by House Republicans during the Solyndra hearings. And clearly not all the large loan guarantee bets made on clean energy companies through the stimulus package were home runs. He also didn’t always know how to play the politics of Washington D.C.

Regardless, Chu will be sorely missed by many in the cleantech sector, and clean power advocates. Here’s photos of Chu that we took over the years:

Solyndra’s ground breaking ceremony in 2009

Solyndra’s ground breaking ceremony in 2009

Steven Chu, Harry Reid

Steven Chu giving an interview in the hallways at ARPA-E

Chu & Brown on the solar factory tour

Steven Chu speaking at COP 15 in Copenhagen

Testifying before House Republicans

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Primus Power’s flow battery

The Department of Energy’s program that gives grants to early-stage energy projects — called ARPA-E — has allocated another $43 million for 19 battery projects, including grants for futuristic batteries made of new chemical mixes, using brand new architectures and utilizing nanotechnology. The ARPA-E program has been aggressively funding next-generation battery technologies over the years, and though these are small grants, the amount of innovation happening is substantial.

The funds go to projects that are very early stage, and are supposed to help bring disruptive R&D closer to commercialization. While Japanese and Korean conglomerates dominate the industry of producing small format lithium ion batteries for laptops and cell phones, these next-gen batteries are mostly targeted for electric cars and the power grid. Some of these projects also aren’t strictly traditional batteries, and a couple are flow batteries, which are large tanks of chemicals that flow into a containerized system and provide energy storage for the power grid (see Primus Power’s flow battery pictured).

Notable winners of the funds include big companies like Ford, GE, and Eaton, small startups like Khosla Ventures-backed Pellion, and projects out of the labs of Oak Ridge National Laboratory, Battelle Memorial Institute, and Washington University in St. Louis.

Here’s some of the winners (for the full list of 19 go here):

• Ford: $3.13 million for a very precise battery testing device that can improve forecasting of battery-life.
• GE Global Research: $3.13 million for sensors thin-film sensors that can detect and monitor temperature and surface pressure for each cell within a battery pack.
• Eaton: $2.50 million for a system that optimizes the power and operation of hybrid electric vehicles.
• Pellion Technologies: $2.50 million for the startup’s long range battery for electric vehicles.
• Sila Nanotechnologies: $1.73 million for the startup’s lithium ion electric car battery that it says has double the capacity of current lithium ion batteries.
• Xilectric: $1.73 million to “reinvent Thomas Edison’s battery chemistries for today’s electric vehicles.”
• Energy Storage Systems: $1.73 million for a flow battery for the grid, with an electrolyte made of low cost iron, and using a next-gen cell design.
• Battelle Memorial Institute: $600K for a sensor to monitor the internal environment of a lithium-ion battery in real-time.

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In Department of Energy Secretary Steven Chu’s speech on Tuesday, he said that battery innovation in the U.S. over the past three or four years has been “fantastic.” In numerous interviews with the CEOs of these battery companies at ARPA-E, executives referred to the emergence of new energy storage tech for the grid and EVs as a new boom.

In Chu’s speech he referenced a startup called Vorbeck Materials, which is working with Pacific Northwest National Labs (PNNL) and Princeton University, to develop next-gen lithium batteries using graphene. In a speech by former Wal-Mart CEO Lee Scott, Scott took the opportunity to talk about Fluidic Energy, an energy storage company in Phoenix, Arizona, that’s making rechargeable metal air batteries, and on which Scott is on the Board.

Silicon Valley battery maker Envia Systems made news at ARPA-E this week thanks to its breakthrough that it can build a high energy-dense battery that could create a 300-mile range electric car and could cost around $25,000 to $30,000. Envia is backed by venture capitalists, General Motors, and the Department of Energy. “There are three countries in the race for batteries for electric vehicles: Japan, Korea and the U.S.,” said Atul Kapadia, CEO of Envia Systems to me in an interview at ARPA-E. Envia is looking to partner with global battery manufacturers to license it’s tech or establish joint ventures.

Eos Energy Storage, a startup based in New Jersey, is building a low cost grid battery using air and zinc and is shooting to commercialize its battery in two years at a cost of $160 per kWh. Eos Energy Storage President Steve Hellman told me in an interview that he thought the U.S. was leading in terms of grid battery innovation, and that he thought other countries would be hard pressed to recreate the ARPA-E event, and have it be chock full of grid battery innovation.

Phil Giudice, CEO of Liquid Metal Battery — a startup building a sodium battery and backed by Bill Gates — told me he also thought the U.S. was dominating the grid battery space, and that there has been “10-fold more activity” in the U.S. compared to other countries in terms of grid battery innovation and investmtent. Liquid Metal Battery is looking to continue development on its battery, which sandwiches molten salt between two layers of liquid metal, this year.

Other energy storage companies I chatted with at ARPA-E include Pellion, which is developing magnesium battery tech, Recapping, which is developing high energy density capacitors, PolyPlus, which has an air and liquid battery, FlexEl, which makes flexible batteries, and Prieto Battery, which is developing a next-gen lithium ion battery. Government players like the Army, and corporations like Johnson Controls are also developing home-grown energy storage tech.

However, the way it works with early stage scientific innovation is that not many of the companies will likely be home runs. Bill Gates, in a speech on Tuesday, noted that the failure rate of these battery projects would probably be 90 percent, which is why the world needs to try thousands of these ideas.

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Underfunding energy research means there is a higher risk that we won’t be able to deliver the needed energy breakthroughs, said Gates. Gates pointed out that funding basic research naturally has a high failure rate: Potentially 90 percent of the projects in ARPA-E won’t make a dent in the future of energy technology, he said. “Look at the battery companies [at ARPA-E], and if you can find the one out of ten that will breakthrough, then great, go invest in it,” said Gates.

But the high failure rate is why we “literally need thousands of these companies to try this,” in order to get a dramatic solution, said Gates. Gates also noted that he thought the IT revolution has “morphed people’s minds” about how fast progress can be delivered. The energy revolution will be much slower than the IT revolution, said Gates.

Gates has expressed similar sentiments before. He is part of the American Energy Innovation Council, which about two years ago called for a government investment of $16 billion per year into basic research to deliver energy innovation. Since that foundation launched, he has said that he has been stunned that the government hasn’t been able to rise to the occasion.

Gates, seated next to Department of Energy Secretary Steven Chu, acknowledged that Chu’s hands have been tied for now, in terms of getting a larger budget for the DOE to spend on energy research. In an election year, clean energy (through Solyndra) has become a political issue. President Obama maintained part of the current levels of funding for clean energy and energy efficiency research in the recent budget proposal, including calling for $350 million for the ARPA-E program.

Photo from previous talk of Bill Gates

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The second half of 2011 hasn’t been a particularly easy time for raising a cleantech fund, thanks to macroeconomic conditions and a backlash against cleantech investments in the U.S. Silver Lake Kraftwerk has another almost $1 billion to close. Khosla Ventures has also managed to raise another billion dollar cleantech fund this year.

Silver Lake Kraftwerk has been able to put together a sort of cleantech dream team, bringing on Adam Grosser from Foundation Capital, Raj Atluru from Draper Fisher Jurvetson, and Cathy Zoi, who was formerly the Department of Energy’s second in command under Steven Chu. More of the team is now listed on the Silver Lake Kraftwerk site, including Bryce Lee from Credit Suisse, Martin Fichtner from Elevation Partners, and Josh Raffaelli from Draper Fisher Jurvetson.

Grosser and Silver Lake’s Managing Director Greg Mondre told me in an interview earlier this year they think a cleantech “renaissance” is coming. That second wave — or Cleantech 2.0 — will likely be more focused on private equity, will look to scale some of the already proven innovations past the so-called Valley of Death, and will be far more global in scale, said the partners.

The Silver Lake Kraftwerk team spent a year looking at what had worked and what hadn’t in cleantech investing and are trying to create a new investment thesis, including: 1) focus on growth scale financing; and 2) go global.

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So whatever happened to the dream deferred? It’s now thoroughly focused on industrial applications like to power forklifts and fleet vehicles. Pike Research estimates that there will only be 5,200 hydrogen fueling stations throughout the world by 2020. That’s a pretty low number given the time frame is almost a decade down the road.

The largest application for these industrial fuel cells is forklifts, which Pike estimates will take 36 percent of the available hydrogen fuel, and light duty vehicles are expected to consume another 33 percent. Back up uninterruptible power supply units (or UPS) are supposed to be responsible for consuming another 27 percent of hydrogen fuel, while buses and scooters will consume a small fraction of the fueled hydrogen.

So why hasn’t the technology taken off on a larger scale, and particularly as a power source for consumer cars? Partly because hydrogen fuel requires a whole new set of infrastructure and fueling stations, not to mention brand new fuel cell cars. Biofuels in contrast can be blended with gasoline and used in internal combustion engines, and electric vehicles can be plugged in via the power grid (though, the deployment of EVs also needs smart chargers to be optimized).

But even with all these hurdles, and delays some mainstream auto makers are still working on building fuel cell cars, like Mercedes-Benz (the luxury brand from Daimler). The company has made 200 of its F-Cell fuel cell sedans, which it’s renting out for $850 per month, for up to 36 months. See below our video test drive of the F-Cell fuel cell sedan:

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However, the new smart grid programs are noticeably light on funding commitments, which isn’t too surprising given the recent budget struggles.

It’s “important not to hurdle down this path without a plan,” said John Holdren, President Obama’s science and technology advisor and director of the White House Office of Science and Technology Policy, at the event on Monday. Nancy Sutley, Chair of the White House Council on Environmental Quality, pointed out at the event that creating smart grid projects and tools will create jobs in the U.S. that can’t be outsourced.

We’ve already installed 5 million smart meters nationwide, and we’ve deployed smart grid technology and research projects, and these new programs are a continuation of this commitment, said Department of Energy Secretary Steven Chu at the event.

So what are the new programs? Here’s 9 ways that the Obama administration is looking to spur the smart grid:

1. As part of the Department of Agriculture’s Rural Utility Service, the administration is offering a minimum of $250 million in loans for smart grid projects in rural places in the U.S., as well as a potential $106 million in upgrades.
2. The administration is launching a new non-profit program called Grid 21, which will focus on spurring consumer-facing tools that will enable consumers to reduce energy consumption, but also maintain privacy and security. The trade group the GridWise Alliance said in a release that Grid 21 will launch a new energy-savings contest called the “Biggest Energy Saver Campaign,” in conjunction with utilities Oncor, CenterPoint Energy, and San Diego Gas & Electric, smart meter makers Itron and Landis+Gyr and integrator IBM. The contest will deliver ways for consumers to reduce energy, and also will have prizes  for software developers that can create new tools.
3. The Department of Energy is working on new projects, including a crowd-sourced map to track progress of smart grid projects, a student competition around home energy efficiency, and an Energy Information Administration project on measuring energy efficiency progress.
4. The administration launched an initiative that will seek to share the lessons learned from the smart grid stimulus investments, will hold a series of stakeholder meetings, and has created a new website: www.SmartGrid.gov.
5. The administration unveiled a new “Renewable Energy Rapid Response Team,” that will review clean power and transmission line projects and improve “federal coordination” for getting clean power projects deployed. The team will be led by the White House Council on Environmental Quality, the Department of the Interior, and the Department of Energy.
6. The administration put an emphasis on grid security issues, and says it will create ways for grid operators to have access to information about threats to the power grid, help companies deliver new security tools, and create security standards.
7. In the President’s fiscal year 2012 budget, the DOE has asked for funds to build a “Smart Grid Innovation Hub,” that will be a collaboration of federal researchers, companies, and utilities representatives, and will support R&D and project deployments.
8. The DOE’s high-risk early stage program, the Advanced Research Project Agency-Energy (ARPA-E) will support new smart grid research and is working with utilities and military bases to test new tech.
9. The administration released a report that focuses on four ways to help modernize the grid, including how to better align economic incentives that will spur smart grid technologies, how to focus on standards and interoperability to boost innovation, how to help empower consumers with energy tools, and how to increase grid security and resilience.

Overall, the programs don’t offer much more funding commitments, in comparison to the smart grid stimulus funds, and utilities might find these new programs to be “smart grid lite.” According to a new report from Black & Veatch launched Monday morning, utilities think that one of the biggest barriers to deploying a smarter grid is that once the stimulus funds have been committed there is uncertainty about how much more federal funding will be available.

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On Monday morning the White House plans to hold an event focused on the smart grid that will discuss both new private and public initiatives for how to implement a smarter power grid. While I don’t know the details of any new programs, officials involved in the announcement will include Department of Energy Secretary Steven Chu, Chief Technology Officer Aneesh Chopra, and Secretary of Agriculture Tom Vilsack.

At the event the White House also plans to release a report written by the National Science and Technology Council on “A Policy Framework for the 21st Century Grid.” The report will look at smart grid technology, how IT can reduce the need for new power plants and can deal with power outages, and how to integrate clean power and electric vehicles into the grid.

The event, which takes place 7AM to 830AM PT, will be welcome attention for the smart grid from the U.S. federal government, now that the stimulus package funds for the smart grid have been allocated and are being spent. Utilities have expressed concerns that one of the biggest impediments to the deployment of the smart grid in the U.S. is that after the stimulus funding is gone, there has been great uncertainty about funding future smart grid initiatives.

We’ll bring you the news Monday morning!

Image courtesy of james_jhs.

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