Recently I posted about a late 2007 podcast featuring the X PRIZE Foundation's Tom Vander Ark discussing various initiatives at the Foundation, including (to quote my paraphrase of the interview) "4 to 6 energy generation, storage, distribution, and efficiency prizes with a Bay Area energy-related organization potentially sponsoring $100M+ in prizes".
Now, the X PRIZE Foundation news ticker points to an article by the Santa Monica Daily Press about a Biofuels Prize announced at WIREC 2008 (Washington International Renewable Energy Conference 2008) to be run by the Foundation and Lee Stein's Prize Capital. The Biofuels Prize is meant to
spur the creation of a new technology that is energy and cost-efficient, sustainable, versatile, easy to scale and decentralized.
It sounds like the prize isn't going to be a pure "innovation prize", but rather a combination of innovation prize plus investments - perhaps similar to how the DARPA Urban Challenge was implemented - to allow certain contestants with a good idea but without capital a better chance to make productive advances:
The $10 million prize purse will be awarded to the team that wins a series of challenges designed to test efficiency, scalability and sustainability of new biofuel liquid transport technology. To finance the Biofuels Prize and other prizes, Prize Capital will be creating a series of investment funds to provide capital for select contestants. For investors, this reduces the risk of having to seek out suitable investment candidates.
Of course this mixes the pros and cons of prizes and grants to some degree. It would be interesting if the prize were designed in such a way that contestants with great ideas but little funding could "earn" investment money in the "prize" sense (rather than the "grant" sense) by demonstrating easier versions of the main prize to show they're serious and capable. In Lunar Lander Challenge terms, maybe a few ~$50,000 prizes could be awarded for, say, a single 45 second, low payload up-over-down in one piece flight to get low-budget but inspired teams a chance to win some cash to work with, to say nothing of getting more teams into the competition for the fans to see.
You can read more about the Biofuels Prize at Lee Stein's Bio:
“Somebody affiliated with the GEF, the Global Environment Facility [the largest independent financier of environmental projects worldwide] was visiting and we shared with them confidentially what we were doing with the X Prize and the risk mitigation model and how we were going to apply it to prizes dealing with energy and the environment.”
Since its inception in 1991, the GEF has disbursed nearly $7 billion in grants to developing countries for more than 1,300 projects implemented by UN agencies and the World Bank Group.
As a result in June 2007, the GEF gave a $50 million green light for the formation of a pilot public private partnership (PPP) to jointly fund global prize competitions. That led to tying the GEF and X-Prize together directly. The X-Prize board in October of 2007 agreed to the implementation of planning as the prize awarding entity for the GEF/Prize Capital biofuels prize.
The first GEF/Prize Capital competition will focus on bringing second generation biofuels for transport production technology to developing countries.
The GEF document Second Meeting of the GEF SAG has some notes about the prize as it was being considered at that time:
30. The GEF Secretariat presented the GEF’s progress in engaging the private sector. The evolving private sector strategy complies with previous guidance of the GEF Council, and has the following requirements for its operations: absorption of risk that the private sector will not absorb on its own to generate global environmental benefits; using GEF resources to leverage high levels of private investment; catalyzing new investment areas and mechanisms for financial and other institutions to then adopt; and a focus on specific environmental problems. Examples of proposed platforms for this engagement were given: a $10m biofuels prize which would generate a series of technological innovations through a $100m investment fund managed by a fund manager; a water purification system for coastal areas prize; and financial instruments to influence the creation of portfolios and risk mitigation instruments upstream (for example contingent grants through energy efficiency portfolios).