ARPA-E, the government’s incubator for high-risk energy inventions, has its first graduate in the electricity area — a new energy storage technology — and on Thursday it announced a preliminary agreement to get it tested.

The agency, more formally the Advanced Research Projects Agency – Energy, modeled after the Defense Department’s longstanding program, said it had signed a memorandum of understanding with Duke, the big utility company, and the Electric Power Research Institute, the nonprofit utility consortium, to try out the inventions in the real world.

The agreement will “provide the connective tissue for ARPA-E,’’ said Arun Majumdar, the agency’s director, and “provide the test bed to see how to create value in the actual business.’’

The first candidate will probably be General Compression, a company to which ARPA-E directed $750,000; that advanced the technology enough for the firm to raise $12 million privately, Mr. Majumdar said. The company developed a way to pump air into an underground cavern, using electricity generated at inconvenient hours. When the energy is needed, the air flows back out again through a generator.



An older technology accomplishes this by adding natural gas to the exiting air and burning it to spin a turbine; General Compression uses no fuel at all. Its “round-trip efficiency,” meaning the amount of energy delivered versus the amount it takes in, is 70 to 75 percent, the company says.

Energy storage is considered a crucial complement to wind power and possibly solar power as well, smoothing out production and ensuring that the energy is available when it is most valuable, but today’s systems are expensive and thus are not in wide use.

Mr. Majumdar said that ARPA-E hoped the air compression technology can be scaled big enough to store a gigawatt-hour, equal to the entire output of a large nuclear plant for an hour. Price is a crucial consideration, and ARPA-E has determined that a utility could probably afford to pay $100 per kilowatt-hour of storage.

(A kilowatt-hour would run a microwave oven for an hour or so. It sells for an average of 10 cents nationally, but the price can vary from nearly nothing to 50 cents or $1, depending on the market. While $100 sounds like a lot to store a commodity worth 10 cents, the storage could be used over and over again.)

ARPA-E came up with the $100 estimate on its own, Mr. Majumdar said, but “in the future there may be other metrics we don’t know.” The partnership will help the agency figure that out more easily, he said.

Another early candidate for field trials may be semiconductors that can function as transformers, raising and lowering voltages, he said. ARPA-E has been operating on a one-time infusion of cash from the stimulus program, but the recently negotiated budget deal in Congress included $180 million. “We’re absolutely delighted to get our first appropriated budget,’’ Mr. Majumdar said.



An earlier version of this post misstated the given name of ARPA-E’s director. He is Arun Majumdar, not Arjun.