[Senate Hearing 109-1120]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 109-1120

                    ALTERNATIVE ENERGY TECHNOLOGIES

=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON TECHNOLOGY, INNOVATION, AND COMPETITIVENESS

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 14, 2006

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation








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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
             Kenneth R. Nahigian, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director
                                 ------                                

      SUBCOMMITTEE ON TECHNOLOGY, INNOVATION, AND COMPETITIVENESS

                     JOHN ENSIGN, Nevada, Chairman
TED STEVENS, Alaska                  JOHN F. KERRY, Massachusetts, 
CONRAD BURNS, Montana                    Ranking
TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          JOHN D. ROCKEFELLER IV, West 
GEORGE ALLEN, Virginia                   Virginia
JOHN E. SUNUNU, New Hampshire        BYRON L. DORGAN, North Dakota
JIM DeMINT, South Carolina           E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas







                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 14, 2006....................................     1
Statement of Senator Dorgan......................................     2
Statement of Senator Ensign......................................     1

                               Witnesses

Corsell, Peter L., President/CEO, GridPoint Inc..................    34
    Prepared statement...........................................    37
Gotcher, Alan J., Ph.D., President/CEO, Altair Nanotechnologies, 
  Inc............................................................     4
    Prepared statement...........................................     6
Preli, Jr., Dr. Francis R., Vice President, Engineering, UTC 
  Power..........................................................    20
    Prepared statement...........................................    21
Raudebaugh, Daniel J., Executive Director, Center for 
  Transportation and the Environment (CTE).......................    42
    Prepared statement...........................................    44
Sridhar, Dr. K.R., Principal Co-Founder/CEO, Ion America.........    25
    Prepared statement...........................................    27
Taylor, Dr. George W., Chief Executive Officer, Ocean Power 
  Technologies, Inc..............................................    38
    Prepared statement...........................................    41
Werner, Thomas H., Chief Executive Officer, SunPower Corporation.    28
    Prepared statement...........................................    30

                                Appendix

Response to written questions submitted by Hon. John Ensign to:
    Alan J. Gotcher, Ph.D........................................    79
    Dr. Francis R. Preli, Jr.....................................    80
    Dr. K.R. Sridhar.............................................    81
    Dr. George W. Taylor.........................................    83
    Thomas H. Werner.............................................    83

 
                    ALTERNATIVE ENERGY TECHNOLOGIES

                              ----------                              


                        WEDNESDAY, JUNE 14, 2006

                               U.S. Senate,
       Subcommittee on Technology, Innovation, and 
                                   Competitiveness,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:03 a.m. in 
room SD-562, Dirksen Senate Office Building, Hon. John Ensign, 
Chairman of the Subcommittee, presiding.

            OPENING STATEMENT OF HON. JOHN ENSIGN, 
                    U.S. SENATOR FROM NEVADA

    Senator Ensign. Good morning, and welcome to today's 
hearing on alternative energy technologies. I would like to 
thank Chairman Stevens for allowing this subcommittee to 
address this important issue.
    In 2004, the United States consumed almost 21 million 
barrels of crude oil and refined products per day. 
Approximately 60 percent of this oil was imported from other 
countries. Today, approximately half of our oil imports come 
from OPEC nations, including Saudi Arabia, Venezuela, Nigeria, 
and Iraq. Oil supply disruptions pose a threat to our economy 
and national security, and that threat is compounded by the 
United States reliance on foreign sources of oil. Over the past 
2 years, world oil prices have increased substantially relative 
to historical levels, and American consumers have paid the 
price. Crude oil prices hovered between $15 and $25 per barrel 
for the mid-1980s until 2002. Recently, however, crude oil 
prices have exceeded $70 a barrel. As the U.S. Government 
determines how it should address the Nation's expanding energy 
needs, an examination of various alternative energy 
technologies is very important.
    Just yesterday, on the front page of the Wall Street 
Journal there was an article about China and its increase in 
energy needs. In Beijing, they have 1,000 new cars per day on 
their streets, literally tens of millions of new cars over the 
next several years. And, at that rate, it was at least 
mentioned in the article that the world's energy needs cannot 
be sustained with the increasing needs in China. As other 
nations consider alternative energy technologies, the United 
States should make sure that we remain the innovative leader in 
this sector.
    This hearing will highlight developments in lithium-ion 
battery technology, fuel cell technology, solar power, wave 
power, and intelligent energy management products. Several of 
these technologies can be used for multiple power purposes. For 
example, fuel cells can be used to power not only cell phones, 
PDAs, and other portable products, but also cars and buildings.
    While these technologies are not the only alternative 
energy technologies being developed, they offer us promising 
examples of the progress that has already been made, and which 
can be made in the energy field in the future. Imagine the 
tremendous possibility of using easily rechargeable and 
environmentally safe lithium-ion batteries or fuel cells to 
power cars, buses, or other vehicles, in more efficient ways 
than we do with petroleum products today.
    As a Nevadan, I also appreciate first-hand the potential 
positive impact the solar power technologies can have in 
improving the way homes and businesses are powered. We get a 
lot of sun out in Nevada, and we hope that we will be able to 
utilize solar power technologies in this fashion in the future.
    As I have said before in several subcommittee hearings, 
innovation is the key to future global competitiveness of the 
United States. Innovation in the field of alternative energy 
technologies is particularly important in ensuring our Nation's 
future economic strength, environmental health, as well as 
national security.
    We are pleased to have one panel of witnesses here to 
testify on alternative energy technologies.
    Without objection, for any of the Senators that wish their 
statements to be made part of the record, that will be done. As 
far as the witnesses are concerned, please keep your 
testimonies to around 5 minutes. This is not a hard-and-fast 
rule, but if you could keep your testimonies to approximately 5 
minutes, it would be wonderful for us, so we could have as much 
discussion back and forth as possible. But if you need a little 
extra time, feel free to take it.
    Senator Dorgan, would you like to make any opening 
statement?
    Senator Dorgan. Mr. Chairman, just briefly.

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. First of all, thank you for putting this 
hearing together. I have another hearing that's occurring at 
the moment, so I came over just to tell you that I think this 
is exactly what we should be doing. The subjects here are very, 
very important.
    I want to just mention two issues. One, something that I've 
been working on for a long while in the Energy Committee, and 
that is the hydrogen fuel cell issue. I'm a Co-Founder of the 
Hydrogen Fuel Cell Caucus, along with Senator Lindsey Graham, 
here in the Senate, and helped write the title that was 
included in last year's energy bill. It is critical that we 
find a way to pole vault to a new energy future, especially 
with respect to powering vehicles. We stick little straws in 
the earth in various places and suck 84 million barrels a day 
out of this planet. We use 21 million barrels of it in this 
country. The line that almost moves straight up is the 
transportation line. We need to find a way to convert.
    My first car was a 1924 Model T Ford that I bought as a 
young boy for $25, and restored.
    Senator Ensign. Was it new?
    Senator Dorgan. No, no, no.
    [Laughter.]
    Senator Dorgan. Let me take back my original compliments.
    [Laughter.]
    Senator Dorgan. No, but I bought it as a high-schooler, and 
restored it, and then sold it. I discovered it was hard to date 
in a 1924 Roadster.
    [Laughter.]
    Senator Dorgan. But the point is, you put gas in a 1924 
Model T exactly the way you put gas in a 2006 Ford. Nothing has 
changed. Everything else in the world has changed. Everything 
else about the car has changed. There's more computing power in 
a new car than there was on the lunar lander. And yet, we still 
stick the hose in the tank and put gas in the tank.
    And so, I'm very interested in this issue of hydrogen fuel 
cells. We need to have more resources devoted to it.
    The second issue is wind energy. We've been promoting wind 
energy. And now, what has happened is, in last year's DOD 
authorization bill there was a required study on wind turbines 
and their effects on radar systems and any impacts on military 
readiness. We've had two projects in North Dakota receive 
notice that they cannot continue. They just want to stop 
everything. The DOD and the Department of Homeland Security 
have found, the best way to mitigate whatever they think exists 
is just shut down these projects, and that makes no sense at 
all.
    I think that the Administration is concerned about the 
aggressiveness of the FAA and others to shut some of these 
projects down that were moving ahead. I am told that there is 
an attempt to work out a compromise, but, if there is not, I 
intend to offer an amendment on the Defense authorization bill, 
either this week or next week, because we have to solve this. 
You know, the fact is, a turbine 15 miles away from a 
commercial airport has no impact on the Department of Defense 
and no impact on the airport at all. So it's devoid of all 
common sense. As someone once said, common sense is genius in 
work clothes. I'm not asking for genius solutions here, but I 
am asking the Administration to use a little common sense. 
There was nothing in any amendment that was ever put in a bill 
that requires them to stop projects that are now underway in 
wind energy, and I hope, in the next couple of days, we can 
resolve this. If not, I intend to offer an amendment on the 
Defense authorization bill.
    But let me say this is the right subject, Mr. Chairman. I'm 
really pleased that you're into it and working hard on it. I'm 
going to have to spend my time at another Committee, as well. 
But thank you very much.
    Senator Ensign. Thank you.
    I am very excited about today's hearing. I would also like 
to thank all witnesses for being here this morning. I look 
forward to your testimony.
    We'll start with a Nevadan. Dr. Gotcher, if you could share 
with us what you are doing out in Reno, with some new 
technologies. Dr. Gotcher is the President and CEO of Altair 
Nanotechnologies. Altair is based in Reno, Nevada.

  STATEMENT OF ALAN J. GOTCHER, Ph.D., PRESIDENT/CEO, ALTAIR 
                     NANOTECHNOLOGIES, INC.

    Dr. Gotcher. Thank you, and good morning. I'd like to thank 
Chairman Stevens and Co-Chairman Inouye for their leadership 
and for holding this hearing on nanotechnology and alternative 
energy production in the United States. And, further, I'd like 
to thank Senator Ensign for his support to ensure that Nevada 
is a leader and a strong supporter of nanotechnology.
    I'm Alan Gotcher, President and Chief Executive Officer of 
Altair Nanotechnologies. I've been with Altairnano for nearly 2 
years. Prior to joining the company, I held senior management 
positions at two major corporations that manufacture both 
industrial and consumer products.
    Altairnano is a small, rapidly growing company which is 
creating advanced nanomaterials that exhibit unimaginable 
performance. We are Nevada-based, publicly-traded on NASDAQ, 
and have about 70 employees--research scientists, engineers, 
and, increasingly, manufacturing, marketing, and sales people--
located in Reno, Nevada and Anderson, Indiana.
    We perform research on the basic characteristics of nano-
structured metal-oxide nanomaterials and develop products for 
applications in a wide range of fields, from pharmaceuticals to 
sensors and energy production, including high-power lithium-ion 
batteries and advanced hydrogen production.
    Today, I want to describe how nanomaterials have made 
possible the first major breakthrough in battery performance in 
over two decades. And I'll indicate how the characteristics of 
nano-structured materials, such as those Altairnano has 
developed, and when used in lithium-ion batteries, will make 
possible significant advances in various forms of alternative 
energy production, storage, and consumption.
    Altairnano's electrodes, materials, and battery designs are 
based on our patented materials and manufacturing processes for 
nanomaterials and offer a unique combination of high power, 
long life, reliable performance at temperature extremes, 
affordable cost, safety, and environmental friendliness that 
exceeds other battery product technologies. Altairnano's nano-
structured materials offer a unique combination of performance 
properties.
    These advances are made possible by the unique 
characteristics of nano-structured particles of lithium 
titanite spinel that form the anode electrode of Altairnano's 
lithium-ion batteries. Altairnano's particles are 10 to 40 
times smaller than any other lithium titanite spinel and are, 
thus, better able to take advantage of the vastly improved 
electrical conductivity, low impedance, fast charge and 
discharge, longer cycle-life, and temperature performance 
offered by the material selection and the use of smaller, more 
uniform nanoparticles. We have the ability to engineer these 
particles to optimum size for a given application, and we can 
get extremely high, uniform particle size.
    Altairnano batteries can deliver power for vehicle 
acceleration, uninterruptible power supply, or emergency backup 
power, very rapid recharge times, a wide range of temperature 
performance, much longer lifetime than other batteries, 
inherently safe operation, and the use of no hazardous 
materials. Moreover, Altairnano's nanomaterial will be 
competitive with other commercial battery material costs.
    Almost half of the U.S. consumption of imported oil comes 
from a dependence on the internal combustion engine used today 
in conventional cars and trucks. Nanotechnology may provide 
significant new products that can break that dependence and win 
the quest for a practical alternative energy vehicle. Imagine a 
fully-electric 6-passenger car or a full-sized pickup truck 
offering conventional acceleration and cruising speeds, 
geographical range, quick fill-ups, and 100,000-plus-mile 
powertrain. Altairnano's nano-structured lithium-ion battery 
materials provide these attributes.
    For electric and hybrid electric vehicles, Altairnano's 
nano-structured lithium-ion batteries will provide abundant 
power for a 300-mile vehicle range, an under 8-minute recharge 
time, performance over a wide range of temperature, -40 +C to 
+65 +C, a 15-year life, with minimal decline in performance 
capabilities, low weight, and ease of design configuration, 
inherent safety--no fire, explosion, or environmental hazards--
and no CO2 emissions or use of hazardous materials. 
The technology is advanced enough that this battery technology 
could be used in vehicles within several years. The widespread 
adoption of the technology in the automotive sector would mean 
greatly reduced oil imports, greatly reduced CO2 
emissions, no need for complex, expensive, hydrogen or natural 
gas infrastructure, and increased national security and a more 
flexible foreign policy.
    Altairnano's lithium-ion batteries also are ideal storage 
devices for UPS and emergency backup power applications. Their 
performance characteristics exceeds the batteries now available 
for these applications, and they make it feasible for UPS and 
EBP sites to become reliable nodes in a national distribution 
system of mini-grids, enhancing energy security and electric 
reliability.
    Military applications, from individual soldier tactical 
needs to global power projection strategy, will be 
revolutionized by advanced battery capabilities. Early 
applications in the U.S. Navy include providing absolutely 
reliable, instantaneous power for single-generator ship 
operations, which could reduce ship fuel consumption by 15 to 
20 percent. For the Army, Altairnano's battery may answer the 
infantryman's increased need for lightweight, portable, safe, 
and reliable power for numerous power-hungry combat components 
the soldier will carry and use. The same battery design will 
provide planes, missiles, and satellites with longer endurance, 
weight savings for greater payloads and speed, extreme harsh 
environment performance, and higher safety margins.
    The Federal Government has provided policies, funding, and 
leadership to help the private sector invest confidently in the 
field of nanomaterials research and development. Altairnano's 
own NSF SBIR grant was crucial in assisting our company to 
develop its nanobattery material.
    With rising concerns over environmental health and safety 
issues involving nanomaterials manufacture and use, the 
Government now has an equally important role to play in helping 
industry to develop a roadmap that can, one, identify and 
appropriately deal with potentially harmful effects of 
nanoparticles, while, two, stimulate U.S. industry to proceed 
with developing products and applications that will sustain 
America's leadership in nanomaterials and nanotechnology.
    This is equally true for the field of alternative energy as 
for any other of the numerous fields in which nanomaterials 
will inevitably have a major impact and make significant 
contributions.
    What is needed now from the Federal Government to assist 
the nanoindustry in applying its potential to alternative 
energy are two thrusts. One, continued funding to U.S. 
companies for basic and applied R&D, including priority 
spending on nanomaterials and system solutions to replace or 
decrease the use of internal combustion engines, and, thus, 
decrease U.S. dependence on oil; and, two, increase funding for 
environmental health and safety R&D, including a broad, 
government-funded initiative aimed at establishing empirical 
data and models to predict and prioritize the environmental 
health and safety risks of commercially-interesting 
nanomaterials.
    I want to thank you for the opportunity to speak here 
today, and I invite you to visit our facilities in Indiana or 
Reno, Nevada. And I'll be pleased to try to answer any 
questions you might have.
    [The prepared statement of Dr. Gotcher follows:]

     Prepared Statement of Alan J. Gotcher, Ph.D., President/CEO, 
                     Altair Nanotechnologies, Inc.
[Slide 1. Altairnano `innovation at work']
    Mr. Chairman, members of the Committee, I want to thank you for the 
opportunity today to provide remarks concerning the potential of 
nanomaterials and nanotechnology to contribute significantly to the 
development of alternative energy technologies.
    I am Alan Gotcher, President and CEO of Altair Nanotechnologies, 
Inc. and of Altair Nanomaterials, Inc. The former is a holding company, 
while the later is the operating company incorporated and based in 
Reno, Nevada. We are a fully American company, with all of our assets, 
facilities, and employees located in Nevada and Indiana. Altairnano, 
the trade name we go by, is a development-stage company whose general 
business involves the development and production of nano-structured 
metal-oxides comprised of nano-sized particles. These nanomaterials, 
like our advanced battery-electrode materials for example, are being 
designed to dramatically improve existing products or stimulate the 
introduction of new products for unmet market needs.
[Slide 2. Altairnano Profile]
    In 2000, when Altairnano was a small business with little revenue 
and 27 employees; we began to realize the promise of nanomaterials and 
that our proprietary, patented manufacturing process was uniquely 
suited for the industrial scale manufacture of a range of metal-oxide 
nanomaterials. Since then, we have more than tripled our staff, 
increase revenues and plan to be cash-flow positive in 2007. Today, as 
a small publicly-traded company, Altairnano is pursuing research and 
product development based upon nano-structured metal-oxide 
nanomaterials in a number of fields, including pigments and coatings; 
sensors for chemical, biological and radioactive agents; 
pharmaceuticals for chronic kidney disease and enhanced drug delivery; 
and alternative energy storage products including high power lithium-
ion batteries and advanced hydrogen production.
    The foundation of Altairnano lies in our intellectual property, our 
unique, patented processes for manufacturing and composition of matter 
patents for nano-structured metal-oxides with unsurpassed quality, 
performance and cost. Today, Altairnano is a company lead by strong 
management with track records for commercializing new technology. We 
have over 70 employees the majority of whom are scientists and product 
developers complemented by strong manufacturing, marketing and sales 
personnel. It is the intellectual power of this team that has made our 
advances possible. Altairnano has 33 patents issued and over 100 patent 
applications have been based on Altairnano's own research and 
development. The quality of our market partners include, for example, 
Eli Lilly, Western Oil Sands, Sulzer Metco and other tier-one 
automotive suppliers and aerospace companies that confidentiality 
agreements prevent disclosure is testimony to the commercial promise of 
our products and the quality of our company. As Altairnano moves our 
nanomaterials from the laboratory to commercial-scale production, it is 
increasingly our intent to manufacture in the United States due to its 
policies that strongly support entrepreneurship and protects company 
intellectual property.
Nano Lithium Ion Batteries
[Slide 3. Altairnano, imagine the possibilities . . . ]
    Today, however, I want to focus on what has, in the past year, 
become Altairnano's leading effort and one that embodies the most near-
term potential for significant real-world applications. This effort is 
to develop an advanced nano-structured material and battery that will 
set a new baseline standard in energy storage and power delivery. 
Altairnano is developing the most advanced lithium-ion battery in the 
world: high performance, affordable and environmentally sustainable, 
Altairnano's high power, advanced Li-ion batteries outperform 
conventional and other experimental battery concepts.
    Altairnano's lithium-ion batteries have remarkable performance:

   Power for rapid vehicle acceleration (more power than NiCd, 
        NiMH, Li Ion or lead-acid batteries).

   Rapid battery recharge, in just a few minutes.

   Capable of operation over wide temperatures, as low as -40 
        +C to +65 +C.

   A long life battery, est. to be at least 15 years or five-
        times longer than most batteries.

   An inherently safe battery, with no catastrophic failures in 
        any safety test.

   And the batteries contain no hazardous materials.

    This is a major breakthrough in battery performance, a unique 
combination of attributes not seen in any competing battery technology. 
This battery performance has been measured in Altairnano's product 
applications labs and those of quality third party partners.
    I believe it will take such a major breakthrough in electrical 
storage and power management if our country is to make tangible, near-
term achievements in reducing our Nation's increasing dependence on 
foreign sources of petroleum and natural gas, and thereby enhancing 
national security, while also reducing the amount of carbon dioxide and 
other greenhouse gases that are produced by our growing energy 
consumption without curtailing our growing economy.
    Batteries, in a multitude of sizes and shapes, will be a major 
factor in reducing the wasteful use (and hence, wasteful production) of 
energy while allowing more-than-sufficient power to be stored where it 
is needed and available when it is needed. Batteries will also be key 
to the migration of the transportation sector to electricity, and away 
from liquid fuels, with all of the sourcing, production, transportation 
and storage issues associated with liquids, especially petroleum. Why? 
Batteries are energy storage and transfer media. Batteries enable end-
users of power to utilize the energy stored in and generated from of a 
wide variety of sources: solar, wind, biomass, geo-thermal, nuclear, 
natural gas, coal, or petroleum. Thus batteries are a major element of 
introducing flexibility into the entire electricity system, from 
generation through distribution, storage, and ultimately, end-use. 
Imagine a future where an electric vehicle has a range of 300 miles and 
the battery can be recharged in a few minutes. This would allow you to 
drive your all-electric vehicle from New York to Los Angeles 
recharging, or re-fueling, along the way using electricity generated 
locally, first from nuclear power, then from clean-coal and biomass or 
biofuels; moving further west you recharge with electricity generated 
at hydro-electric plant, a solar panel farm in the desert and a wind 
farm in the Rockies before moving to the coast and gaining the benefits 
of tidal and geo-thermal electrical generation.
    To fulfill this potential, batteries must meet a wide spectrum of 
operational and economic demands, which until now batteries have not 
been able to do with much success. This is where nanomaterials have a 
potentially huge contribution to offer across the whole range of 
alternative energy technologies.
Characteristics of Altairnano's Lithium Titanate Spinel-Based Lithium-
        Ion Batteries
[Slide 4. Altairnano Battery Performance]
    Although Altairnano's nano-structured materials have utility in a 
wide variety of market applications, for example as pharmaceutical APIs 
and in drug delivery, Altairnano's near- to mid-term business strategy 
is to exploit the unique characteristics of our nano-structured metal-
oxides in several fields of alternative energy. Here I would like to 
highlight what Altairnano's battery technology offers in the way of 
improved capabilities for storing electricity and providing immediate, 
high-quality, continuous power on demand in virtually any circumstance. 
Altairnano offers more power than competing battery technologies and 
the benefits of an inherently safe and light-weight lithium-ion 
battery.
[Slide 5. Altairnano nano-lithium titanate spinel]
    Our battery technology utilizes nano-structured lithium titanate 
spinel as the electrode material in the anode of a rechargeable 
lithium-ion battery. It replaces the graphite electrode used in 
conventional lithium-ion batteries, which is the source of performance 
and safety issues. Altairnano's technology produces 25 nm particles 
that are fused into 3 micron aggregates uniform in size and shape. This 
size is ten- to forty-times smaller than any other source of lithium 
titanate in the world.
[Slide 6. Altairnano battery comparison chart]
    Smaller particles provide increased surface area, which translates 
into vastly faster discharge and charge rates, meaning that the time 
for recharging the battery can be measured in minutes rather than in 
hours. Altairnano's electrode materials also improve the useful 
lifetime of a battery, called cycle-life as measured in thousands 
rather than hundreds of cycles, 10- to 20-times longer than current 
lithium batteries. The nano-structured materials also provide battery 
performance at -40 +C to provide power at far below freezing 
temperatures, expanding the operational temperature range beyond what 
is currently achievable--over 75 percent of normal power will be 
available at extremes of -40 +C and +75 +C. Because conventional Li-ion 
batteries can not charge at temperatures below 0+C and they explode at 
temperatures higher than +110 +C, this latter characteristic alone will 
permit Altairnano's lithium batteries to be used in physical 
environments that today cannot be served by lithium-ion batteries due 
to safety concerns or because they require complex, expensive 
electronic control circuitry and temperature maintenance. Altairnano's 
battery material is inherently safe for humans and the environment; it 
is not hazardous in any sense, there are no hazardous disposal issues 
involved in its use and it will not explode or catch fire under any 
circumstances.
Automotive Applications
    So what does this new material, lithium titanate spinel, mean to 
the commercial battery world? Let's take automotive design. Advanced 
batteries of the type Altairnano is developing will enable the U.S. 
auto industry to ``leapfrog'' the next generation of hybrid drive 
vehicles, where the U.S. industry and its technology are behind its 
Asian competitors. An Altairnano battery sized for an average 5-
passenger sedan will permit auto makers to design an all-electric 
vehicle with no sacrifice in the performance, comfort or carrying 
capacity of today's internal combustion engine cars. Think of this: a 
250-350 mile driving range, with maximum operational performance over 
that entire distance; a recharge time, from discharge to full recharge, 
in under 8 minutes (or about the time it takes to fill the tank of a 
large SUV); the ability to recharge from a 120-volt source; a battery 
that is completely safe from explosion or leakage of hazardous 
contents, eliminating those risk factors in the event of collisions; 
the ability to distribute the battery around various locations in the 
vehicle, meaning no reduction in passenger or luggage carrying space; 
and not least, no emissions of CO2. As an indirect benefit, 
we will not have to compromise technical and economic competitiveness 
in the auto industry in order to have cleaner air.
    Such vehicles are not 20 years away, unless the automotive 
manufacturers decide to take that long to design and produce them. 
Technically, they are just around the corner. What will the widespread 
adoption of such batteries mean for transportation, even accepting the 
intermediate step of hybrid-drive electric/gasoline vehicles? It means 
that cars and trucks can be fueled from electricity generated here in 
the U.S., rather than from petroleum pumped in other countries. It 
means safer, quieter, non-polluting vehicles that perform as well or 
better than today's vehicles. It means that the vast amounts of money 
required for new refineries, or for a national hydrogen fueling system, 
or for liquid natural gas terminals can be diverted to other purposes, 
private and public. Some of the money would be used to accelerate 
research into clean coal and to speeding up deployment of renewable 
energy technologies and improving them. But what it would mean most of 
all is greater security for our people--we would be much more in 
control of our transportation destiny, and thus of our economy and our 
national security. Our foreign policy would be that much freer from the 
specter of supply interruption, price manipulation, sabotage, wars, and 
outright blackmail that it currently has to contend with.
    How could Congress, and especially the Commerce Committee, have a 
seminal role in transforming our economy? If Congress could encourage 
the U.S. automotive industry to embrace the concept of electric 
vehicles, including a substantial component of all-electric vehicles in 
its production mix now--this is a classic chicken and egg situation--
such action would stimulate tremendous competition to supply the 
development of alternative energy production technologies that could 
serve immediate local demand. It would again be an exciting time to be 
an innovator and entrepreneur in the U.S.
Stationary Power Applications
    Let's take two other commercial applications for our advanced high-
power, lithium-ion battery, in the field of stationary power: 
Uninterruptible Power Supply (UPS) and Emergency Back-up Power (EBP). 
Present day UPS and EBP systems utilize mostly lead-acid batteries, for 
their low initial cost and their reliability. Yet lead-acid batteries 
must be replaced every 2-3 years, and there are hazardous materials 
issues around their manufacture, handling and maintenance. Lead-acid 
batteries are also unreliable and lose charge quickly in extreme 
temperatures (<0 +C and >50 +C). Also the quality of power declines 
steadily with use, as does the ability to accept a recharge. By 
comparison, early results on prototype batteries using Altairnano's 
nano-structured lithium titanate electrode materials show that such an 
advanced lithium-ion battery is virtually unaffected by temperature 
extremes; its charge is fully available, immediately, and can accept a 
full re-charge in a few minutes--thus acting much like a hybrid ultra 
capacitor; it has a much longer lifetime, with no decline in 
performance; there are no hazardous materials issues; and, using the 
Altairnano processing method, the battery material in wide production 
will be economically-competitive with lead-acid or other competing 
battery technologies.
    With these kinds of advantages, UPS and back-up systems could 
feasibly become reliable components of distributed mini-grids, linked 
to the national power grid in ways that would tremendously enhance 
electric reliability and national security. Batteries of the type being 
developed by Altairnano are necessary for the implementation of any 
large-scale alternative energy generation and delivery system. Storage 
of electrical power generated either by wind or solar power for use 
when the wind isn't blowing or the sun is not shining requires such 
batteries. And consider, such batteries incorporated into large 
buildings will enable these buildings to become nighttime storage nodes 
in a distributed grid system to even out supply & demand and enhance 
reliability during periods of excess demand.
Military Applications
On Sea
    Altairnano's nano-enabled lithium-ion batteries have tremendous 
prospects for moving alternative energy technologies into military 
applications, and thus into national security calculations and into 
both strategic and tactical operational planning. To offer one example, 
ships in today's Navy generally have three on-board generators that 
power the turbines that drive the ships. For security--to be absolutely 
sure that power is available and on tap instantly whenever needed--the 
ships run two of the generators at all times, one for operations and 
one for instant backup. If the Navy could install a battery system with 
the operational characteristics of Altair's battery, ships could forego 
having a second generator operating 24 hours a day, thus cutting their 
fuel use by 15-20 percent, or approximately $1 million for a six-month 
cruise by a single destroyer or frigate. One of the Navy's chief 
strategic operational goals over the next decade is to reduce fleet 
fuel consumption significantly. More fuel used means fewer ships at 
sea, fewer days of the year, in fewer parts of the world.
    Down the road, the Navy is contemplating a new generation of all-
electric drive ships that would use fuel cells as the power source for 
the ship's drive and all ancillary functions. For fuel cells to become 
feasible, however, there is a need for a source of instant power-on-
demand, sustainable for up to half an hour in order for the fuel cells 
to reach their normal operational temperature. Altairnano's new nano-
enabled lithium-ion battery materials can provide a near-term solution 
that will meet all of the future operational requirements of the Navy; 
all within a relatively small footprint and being very cost-competitive 
with battery technologies offering less operational capability.
On Land
    Moving down to ground level operations, the Army's Soldier of the 
Future will carry an array of electronically-powered equipment, from 
communications, to navigation, to all-weather vision, to climate-
controlled environmental body suits, to laser weapons. That means he'll 
have to carry his own power source--a lot of power, high-quality power, 
instant, reliable and safe in any environmental condition. Right now, 
the U.S. Army infantry moves on small primary lithium batteries, not 
rechargeable. During the invasion of Iraq, literally millions of 
batteries were used and discarded on the battlefield; and it was 
discovered after the invasion that the Army was within days of 
literally running out of batteries or power. Soldiers don't use 
rechargeable batteries today because the recharge time is too long and 
the depth of charge after the first use is unreliable. So a substantial 
portion of their personal gear and of logistics supply trains is 
devoted to carrying batteries. That becomes less and less sustainable 
as the individual soldier's needs, and those of the accompanying 
tactical vehicles, require more power. So the Army is very interested 
in batteries that can provide instant, reliable, high-energy power in a 
lightweight, rechargeable, low-cost, long-lasting format. Early testing 
of prototype batteries made using Altairnano's nano-LTO electrode 
materials show that this is an area where nanomaterials will provide 
game-changing performance: they will power the U.S. foot soldier of the 
future.
In the Air
    In another scenario, think of airplanes, missiles, and spacecraft, 
all need reliable power-on-demand, with very quick discharge rates, in 
batteries that can withstand temperature extremes without any serious 
degradation of capability and that will have greatly extended service 
and charge/discharge cycle lives. Testing results with early prototype 
battery designs have shown that Altairnano's nano-structured lithium-
ion batteries can be used to replace currently-used batteries, with no 
compromise in performance while significantly reducing power-pack 
weight and footprint, thus allowing for larger payloads, increased 
speeds, or extended range. What's the worth of an extra fifty pounds of 
payload for a satellite? Or, an extra 50 miles of range for a tactical 
missile? Or an extra few hours in the air for an unmanned observation 
plane?
The Role of Government
[Slide 7. Altairnano Imagine the Possibilities]
    I cannot end my statement without acknowledging the critical role 
of government in assisting companies like Altairnano to carry out the 
research and development that has brought nanomaterials development and 
nanotechnologies to their present state of viability. Without the 
foresight, planning and hard work of dedicated public servants in the 
Executive Branch and in the Congress, it is questionable whether 
private industry would have taken on the challenges and made the 
investments that are beginning to provide the world with the benefits 
of nanotechnology. The National Nano Initiative, which originated in 
the minds of a few professionals at the National Science Foundation, 
has laid the groundwork for private industry to take the risks of 
developing and bringing products to markets. In our own example, 
Altairnano's development of advanced lithium-ion battery materials 
benefited tremendously from the award of an NSF SBIR grant in 2004. 
Although our research on nano-LTO materials had been ongoing for 
several years, it was at a low level of effort. The NSF grant really 
kick-started our program. The results of that NSF-funded research led 
directly to our decision to hire a full-fledged battery team and make a 
commitment to nanoparticle-based battery materials as our top corporate 
priority. Without that small grant, we would not be here today. Similar 
stories can be told by many, many small, development-stage 
nanomaterials and nanotechnology companies working in the various 
fields of alternative energy.
    Increasingly, over the past 18 months, concerns have been raised 
related to the safety of some nanomaterials and calls for government 
oversight of the emerging nanomaterials industry in areas of 
environment, health and safety (EHS). Altairnano has chosen to be an 
industry leader in working voluntarily with agencies like the 
Environmental Protection Agency and the National Institute for 
Occupational Safety and Health (NIOSH) to identify possible issues of 
concern in the manufacturing processes for our nanomaterials. We are 
strongly committed to the principle that our workers, workers at our 
marketing partners who incorporate our enabling nanomaterials into 
their products and the consumers using those products will not come 
into contact with any even-potentially harmful materials during 
manufacture, use or disposal of such materials and products. We are 
working diligently to address whatever potential EHS issues might be 
related to those processes. NIOSH has not found any negative EHS 
factors involved in our nanomaterials or their manufacture and use, and 
we are confident that our products and processes will pass any 
reasonable standard of evaluation. The experience however has led us to 
think long and hard about how, not whether, nano-materials, products, 
and processes should be examined, evaluated and possibly regulated. We 
have submitted comments in response to the EPA's draft nano-EHS 
knowledge-gap white paper and are working with a broad coalition of 
partners to promote a joint industry-government effort to establish a 
``roadmap'' for EHS issues that sets priorities for identifying and 
dealing with potentially harmful nanomaterials, products, and companies 
while letting the United States' nanomaterials industry continue in its 
position of global leadership. If we collectively get this right, we 
will establish a global set of criteria for safe and sustainable 
development and use of nanomaterials in which U.S. companies and 
technologies will have economic dominance.
    We at Altairnano believe that nanotechnology will be the 
technological underpinning of economic growth in the 21st century, and 
that it must be developed and exploited in a manner that is responsible 
and sustainable. While a regulatory framework needs to be developed 
that protects the environment, workers and consumers, it must be done 
in a way that neither bogs down the regulatory agencies nor cripples 
the development of nanoscience and technology in the U.S. We have some 
ideas, along the lines used by the Food and Drug Administration for 
regulating the development of new prescription drugs, for example. This 
is an oversight paradigm that increases in stringency as ideas move 
from the researchers' minds, through development, and become 
incorporated into commercial products. A considered and future-friendly 
approach needs to be developed in partnership with all stakeholders. 
Time is critical; we are already seeing alternative energy technologies 
and products first developed in the U.S. go on to large scale 
deployment elsewhere--along with the economic benefit to industry that 
goes with scale.
    Our present lead in nanotechnology can, and will, help the United 
States gain the lead in alternative energy technologies and their 
deployment, and thus lead to energy security. But there are serious 
roles for government, in collaboration with industry to foster the safe 
and responsible development of new nanomaterials and nanotechnologies, 
and to do so in a manner that provides positive support for this infant 
industry at a critical stage of its development.
    Thank you, gentlemen for your time and your interest. And I invite 
you to visit our facilities in Indiana or Reno, Nevada. I'm prepared to 
answer any questions you may have.



    Senator Ensign. Thank you.
    Next, we will hear from Dr. Francis Preli, Jr., the Vice 
President of Engineering at UTC Power. I look forward to 
hearing your testimony.

    STATEMENT OF DR. FRANCIS R. PRELI, JR., VICE PRESIDENT, 
                     ENGINEERING, UTC POWER

    Dr. Preli. Thank you, and good morning, Mr. Chairman.
    My name is Frank Preli. I'm Vice President of Engineering 
for UTC Power, a United Technologies Corporation company.
    With more than 40 years of experience, UTC Power is the 
world leader, and the only company in the world, that develops 
and produces fuel cells for applications in each major market--
on-site power, transportation, and spaceflight applications.
    Fuel cells provide an opportunity to address a variety of 
U.S. energy needs, including reducing the dependence on foreign 
oil, delivering assured, high-quality, reliable power, 
decreasing toxic air and greenhouse gas emissions, and 
improving energy efficiency.
    UTC Power does not see any show-stopper technical barriers 
to the advancement of fuel cells, but continued U.S. commitment 
to research, development, demonstration, and market transition 
initiatives are essential to reduce cost, improve durability, 
and enhance performance.
    Hydrogen storage and infrastructure requirements 
representing challenging obstacles for automotive applications, 
but near-term opportunities exist with fleet applications such 
as transit buses. Stationary fuel cells for assured power 
represent another opportunity for near-term commercialization.
    Fuel cells are available today for transit buses and 
stationary markets. Near-term successes in these applications 
are required to create public awareness and acceptance, 
establish a viable supplier base, and stimulate continued 
investment. The Energy Policy Act provides the basic framework 
for a comprehensive strategic focus, but a sustained national 
commitment to robust funding will be critical to our success.
    Hurricane Katrina reconstruction efforts represent an 
opportunity to deploy assured-power fuel cells--to enable 
schools to serve as emergency shelters and hospitals, for 
example. Fuel cell deployment at government installations in 
the Gulf Coast Region could also help to kick off the Fuel Cell 
Government Procurement Program that was established in last 
year's energy bill.
    Fuel cell transit buses offer the best strategic, near-term 
option to address our energy needs. The zero-emission hybrid 
fuel cell buses currently powered by our fuel cells in service 
in California, are demonstrating greater than twice the 
efficiency of a conventional diesel bus. These vehicles 
represent an opportunity to begin to reduce oil imports and 
provide environmental benefits.
    As we enter the summer hurricane and electric grid blackout 
season, concerns regarding reliable assured power increase. In 
light of this vulnerability, we believe there is an opportunity 
to enhance the value of fuel cell vehicles by enabling them to 
provide power, during times of emergency, to shelters, 
hospitals, and critical infrastructure. UTC Power is currently 
working with the Department of Defense to validate this concept 
using our PureMotionTM 120 heavy-duty fleet fuel 
cell power system.
    Advanced vehicle technology proposals being considered by 
Congress should be revised to include the demonstration of 
export power capability for fuel cell vehicles.
    The basic concepts of fuel cell technology have been 
proven. Now we need to enhance key performance characteristics, 
reduce costs, validate the technology in real-world operating 
conditions, and identify and incorporate cost-effective 
solutions.
    Three strategies are necessary for cost reduction: public-
private partnerships to reduce costs through material 
substitution, longer life, and fewer parts; improved 
manufacturing processes and identification of high-volume 
manufacturing solutions; and incentives to help increase volume 
and spread costs over a larger product base.
    Last year's enactment of the Energy Policy Act establishes 
a framework for a comprehensive national strategy to achieve 
fuel cell commercialization, but more work needs to be done. 
Budget requests and appropriation figures for this year fall 
far short of levels authorized by Congress. We recognize that 
there are tight budget constraints, but, given the benefits of 
fuel cell technology and the price we pay today for imported 
oil, health costs associated with poor air quality, and lost 
productivity due to the lack of reliable power, substantial 
increases in fuel cell technology investment represent a 
fiscally-sound strategy.
    While we are pleased the Energy Bill provided a fuel cell 
tax investment credit, the term is only 2 years. We support 
legislative efforts, such as S. 2677, to extend the tax credit 
until 2016.
    We believe more attention needs to be paid to ensuring the 
successful commercialization of near-term fuel cell 
applications, such as transit buses, fleet vehicles, and 
stationary units. There are many opportunities today for 
government purchases of fuel cell technology to help 
commercialize, and these examples require serious 
consideration.
    Thank you, Mr. Chairman, for the opportunity to testify. 
I'd be happy to answer any questions.
    [The prepared statement of Dr. Preli follows:]

   Prepared Statement of Dr. Francis R. Preli, Jr., Vice President, 
                         Engineering, UTC Power
    Good morning, Mr. Chairman. My name is Frank Preli. I am Vice 
President of Engineering for UTC Power, a United Technologies 
Corporation (UTC) company. With more than 40 years of experience, UTC 
Power is the world leader and the only company in the world that 
develops and produces fuel cells for applications in each major market: 
on-site power, transportation and space flight applications. We are 
also the world leader in the development of innovative combined 
cooling, heating and power applications in the distributed energy 
market.
Summary
    Fuel cells provide an opportunity to address a variety of U.S. 
energy needs including:

   Reducing dependence on foreign oil;
   Delivering assured, high-quality, reliable power;
   Decreasing toxic air and greenhouse gas emissions; and
   Improving energy efficiency.

    UTC Power does not see any ``show-stopper'' technical barriers to 
the advancement of fuel cells, but continued U.S. commitment to 
research, development, demonstration and market transition initiatives 
are essential to reduce cost, improve durability and enhance 
performance. Hydrogen storage and infrastructure requirements represent 
challenging obstacles for transportation applications, but near-term 
opportunities exist with fleet vehicle applications such as transit 
buses that minimize these concerns. Stationary fuel cells for assured 
power represent another opportunity for near-term commercialization at 
lower cost targets.
    Fuel cells are available today for the transit bus and stationary 
markets. Near-term successes in these applications are required to 
create public awareness and acceptance, establish a viable supplier 
base and stimulate continued investment. Last year's Energy Policy Act 
provides the basic framework for a comprehensive strategic focus, but a 
sustained national commitment to robust funding will be critical to our 
success. Hurricane Katrina reconstruction efforts represent an 
opportunity to deploy fuel cells in schools to serve as emergency 
shelters, hospitals and other critical infrastructure facilities to 
demonstrate their ability to provide sustainable energy for assured 
power requirements.
    As we enter the summer hurricane and electric grid blackout season, 
concerns regarding reliable assured power increase. UTC Power believes 
there is an opportunity to enhance the value of fuel cell vehicles by 
enabling them to deliver power to the grid or other critical 
infrastructure such as emergency shelters. We are currently working 
with the Department of Defense to validate this concept with our heavy 
duty vehicle PureMotionTM 120 fuel cell power plant system.
Company Experience and Leadership
    UTC Power has led the development and introduction of fuel cell 
technology for more than four decades. We hold the unique distinction 
of having:

   produced all the fuel cells that provide electrical power 
        and drinking water for both the Apollo and Space Shuttle 
        missions;

   sold more than 255 stationary 200 kW units that have 
        produced more than 1.2 billion kilowatt-hours of electricity 
        and have accumulated more than 7 million hours of operating 
        time by customers in 19 countries;

   provided stationary fuel cells that have a stack life of 
        40,000 hours (an 80,000 hour life cell stack is in the final 
        stages of development);

   developed fuel cells for a number of automotive customers 
        including Hyundai, Nissan and BMW and working with almost all 
        of the major automobile manufacturers on fuel cell-powered 
        vehicles; and

   provided 120 kW fuel cell power systems that are currently 
        powering four zero emission transit buses in revenue service in 
        California.

    UTC Power has participated in public-private partnerships with the 
Departments of Defense, Energy and Transportation in the development of 
its technology solutions for the stationary and transportation markets. 
Our proprietary low pressure drop, internally-humidified natural water 
management proton exchange membrane (PEM) fuel cell technology has led 
to significant advances in efficiency, power density and cold weather 
performance.
    Our longstanding involvement in these varied markets and 
applications provides a unique vantage point to discuss how fuel cell 
technology can help address U.S. energy needs, the status of technology 
today and the barriers we face.
Need for Short-Term Successes
    Our dependence on imported oil is well documented and personal 
automobiles consume the lion's share. Deployment of fuel cell vehicles 
powered by renewable sources of hydrogen can break our dependence on 
imported oil and at the same time take transportation out of the 
environmental debate. The auto market also represents the highest 
volume market, which is another reason this sector has received so much 
attention. But fuel cell vehicles for private use in meaningful 
quantities are a decade away since they represent the most demanding 
application in terms of cost, packaging and infrastructure. Existing 
electrical infrastructure and state and Federal regulations create 
hurdles for any form of base load distributed generation to overcome.
    Nothing breeds success like success. We therefore need to increase 
our immediate focus on near-term applications that are available today 
such as stationary and fleet vehicles, including transit buses, to 
stimulate early volume and build the industry's supplier base. Since 
fuel cells represent a disruptive technology, the supplier base is 
reluctant to make the necessary investment. Early successes in the 
transit bus and stationary applications will help to overcome these 
fears.
    In addition, stationary and fuel cell fleet vehicles have less 
demanding requirements and can compete at costs higher than those 
required by autos. Concentrating on these applications would enhance 
our ability to establish a profitable industry today and create 
stepping stones to the most demanding longer-term auto application. Few 
companies can survive the next 10 years waiting for the high volumes 
offered by the car market. Instead, they must find applications where 
profits can be realized today that will support the development of a 
strong industrial base in preparation for the future auto market. 
Success in these early applications can build the necessary public 
awareness and public confidence.
Transit Buses and Fleet Vehicles
    Fuel cell transit buses offer the best strategic, near-term 
potential to address the energy concerns cited above. In 2002, transit 
buses consumed the equivalent of more than 43,000 barrels of crude oil 
per day. The fleet of zero emission hybrid fuel cell buses currently 
powered by our fuel cells in revenue service in California is 
demonstrating greater than twice the fuel economy of a conventional 
diesel bus. Transit buses and fleet vehicles present an opportunity to 
begin to reduce oil imports in the near-term while also improving air 
quality and reducing greenhouse gas emissions.
    Buses and heavy duty commercial vehicles travel a relatively low 
percentage of the Nation's vehicle miles, but they produce significant 
levels of toxic air emissions in densely populated urban areas. The 
transit buses equipped with UTC Power's PureMotionTM 120 
fuel cell power system significantly reduce overall emissions due to 
the zero-emissions technology inherent in hydrogen fuel cells.
    As we enter the summer hurricane and electric grid blackout season, 
concerns regarding reliable assured power increase. In light of this 
vulnerability, we believe there is an opportunity to enhance the value 
of fuel cell vehicles by enabling them to deliver power to the grid 
rather than from the grid as some people have proposed with the plug-in 
hybrid approach. The ``exportable power'' approach could improve 
reliability and provide assured power during times of emergency to 
shelters, hospitals and critical infrastructure.
    UTC Power is currently working with the Department of Defense to 
validate the ability of our PureMotionTM 120 fuel cell power 
system for heavy duty vehicles to export power to the grid or to 
provide power to emergency shelters. This approach would enable a 
transit authority, military base or school system to use their fuel 
cell buses to transport people in zero emission, efficient, hydrogen 
powered, quiet buses under normal conditions and provide emergency 
power during natural disasters or terrorist incidents.
    Bus durability requirements assume a life of more than 30,000 hours 
for a system that must operate up to 16 hours per day, but with 
frequent starts and stops. We offer a warranty of 4,000 hours for the 
four buses that are operating today in AC Transit and SunLine Transit 
revenue service in California and have a technology plan to increase 
the life of these power plants to 25,000 hours by 2010 and up to 40,000 
hours by 2015.
    Cost targets for buses are more forgiving than for autos and their 
infrastructure requirements are limited since they rely on centralized 
fueling and maintenance. The four buses produced last year cost over $3 
million per bus, but we have been able to reduce this cost to under 
$2.5 million and with volume of 100 units per year we can see a path to 
$1 million per bus. We are actively engaged in pursuing a number of 
worldwide opportunities to aggregate bus orders and achieve volume 
sales that will result in potential near-term commercialization of the 
technology in this strategically important application.
Stationary Fuel Cells
    We also view stationary fuel cells as another near-term opportunity 
to address air quality, climate change, reliability and energy 
efficiency concerns. The stationary fuel cell mission involves 24/7 
steady state operation and a life of at least 10 years or 80,000 hours.
    Early adopters have been attracted by the ability of these systems 
to operate as base load grid-connect or grid independent assets. We've 
deployed units at schools, hospitals, law enforcement, research, 
telecommunications and military facilities to address assured power and 
other customer concerns. In addition, one of our units is operating at 
a Connecticut high school that enables the school to be designated as 
an emergency shelter. This concept could be replicated in areas subject 
to natural disasters to provide additional community benefits.
    We also believe there's a significant opportunity in the Katrina 
reconstruction effort to rebuild with sustainable energy objectives. 
For example, we could reduce the environmental footprint of power 
generation and increase reliability by installing on-site, assured 
power fuel cells to help meet future emergency needs at schools serving 
as mass care shelters, hospitals and healthcare facilities, prisons, 
and other critical infrastructure facilities.
    Since fuel cells can be deployed at the point of use, in addition 
to not relying on the vulnerable transmission and distribution assets 
of the grid, customers can benefit from the ability to capture waste 
heat and put it to constructive use for space heating, domestic hot 
water heating and industrial processes. Our units operating in the 
combined heat and power mode can operate at 85-90 percent efficiency 
thus generating energy savings that can reduce the cost of electricity 
by four to five cents per kilowatt hour.
    Our PureCellTM stationary fuel cell power plant uses 
phosphoric acid technology and has demonstrated best in class 
durability with 27 of our units surpassing 40,000 hours without 
significant maintenance or replacement of the original cell stack. Our 
current high time unit has 60,000 hours and we are testing a new 
generation of technology that we plan to introduce to the market in the 
next several years that we are confident will achieve 80,000 hours.
    The cost of these units is currently around $4,500 per kilowatt, 
but at volumes of 500 units per year and with the aggressive cost 
reduction efforts we have underway, we expect our next-generation 
technology to be competitive at less than $2,000 per kW.
Automobiles
    Cars are only driven an average of 2 hours a day which means their 
life requirement is low compared to other applications, However, autos 
experience many starts and stops and changes in speed that create 
unique needs for a robust and durable system through many different 
duty cycles. The Department of Energy's (DOE) short-term durability 
goal for cars is 2,000 hours by the end of the learning demonstration 
program in 2008 with 5,000 hours as the ultimate objective.
    We are participating along with Hyundai in DOE's Hydrogen Fleet and 
Infrastructure Learning Demonstration program as part of the Chevron-
led team. Ten cars using our power plant are currently operational with 
a total of 32 vehicles planned.
    As part of this initiative, we have cars on the road today that 
have passed the 500 hour mark and are still accumulating hours. In the 
laboratory we have run stationary loads for 13,000 hours, auto stress-
test cycles of 5,000 hours and one million acceleration cycles, which 
gives us confidence that we can meet the goal of 5,000 hours in 
production vehicles.
    Fuel cell cars must be capable of both starting and operating in 
cold conditions if they are to gain broad market acceptance. The 
consensus performance criteria are the ability to survive at -40 +C and 
start at -30 +C. Great progress is also being made in this arena. For 
example, one of our cars has run 25 cycles from frozen conditions as 
low as -10 +C and we have demonstrated 43 cycles at -35 +C in the 
laboratory.
Barriers
    In short, technology development barriers for transportation fuel 
cells are being addressed at a rapid pace. At a small scale, we can 
meet the identified requirements and we don't envision any formidable 
show-stoppers. This doesn't mean, however, that we don't need to 
continue our public-private partnership research, development or 
demonstration efforts. We strongly endorse the continuation of these 
activities and increased financial commitment to accelerate the 
progress we have made in the last few years.
    The basic concepts of fuel cell technology have been proven. Our 
task now is to enhance key performance characteristics (such as 
durability); reduce costs; validate the technology in real-world 
operating conditions; identify hidden failure modes through extended 
operation; and then identify and incorporate cost-effective solutions. 
In the case of transportation applications, infrastructure and hydrogen 
storage still represent key challenges.
    Three strategies are necessary for cost reduction:

   Internal programs to reduce cost through material 
        substitution, longer life parts, and fewer parts. Examples 
        include less expensive membranes; better seals; reduced use of 
        platinum; enhanced performance materials for bipolar plates; 
        and reduced system complexity;

   Improved manufacturing processes to eliminate labor 
        intensive processes and identify high volume manufacturing 
        solutions; and

   Incentives to help increase volume thereby spreading costs 
        over a larger product base.

Recommended Actions
    When I testified before this committee in 2003, I called for a 
comprehensive national strategy to achieve fuel cell commercialization. 
Last year's enactment of the Energy Policy Act (EPAct) establishes such 
a framework, but more work needs to be done.
    Budget requests and appropriation figures for this year fall far 
short of levels authorized by Congress. We recognize there are tight 
budget constraints, but given the benefits of fuel cell technology and 
the price we pay today for imported oil, health costs associated with 
poor air quality and lost productivity due to lack of reliable power, 
substantial increases in fuel cell technology investment represent a 
fiscally sound strategy.
    While we are pleased that EPAct provides a fuel cell investment tax 
credit, the term is only for 2 years. We support legislative efforts to 
extend the tax credit timetable for the maximum length possible.
    In addition, as I stated earlier, we believe more attention needs 
to be paid to ensuring the successful commercialization of near-term 
fuel cell applications such as transit buses, fleet vehicles and 
stationary units. There are opportunities today for government 
purchases of fuel cell technology as part of Katrina reconstruction and 
pilot programs for schools powered by fuel cells to double as emergency 
shelters, as well as the concept of fuel cell vehicles exporting power 
to the grid or critical infrastructure that merit consideration.
    Thank you Mr. Chairman for the opportunity to testify. I would be 
happy to answer your questions.

    Senator Ensign. Thank you.
    Next we will hear from Dr. K.R. Sridhar. Dr. Sridhar is the 
Chief Executive Officer of Ion America Corporation. I had the 
honor of visiting your headquarters, and I look forward to 
hearing what new products you are coming up with and what 
progress you have made.

 STATEMENT OF DR. K.R. SRIDHAR, PRINCIPAL CO-FOUNDER/CEO, ION 
                            AMERICA

    Dr. Sridhar. Thank you, Chairman Ensign, for this 
opportunity.
    My name is K.R. Sridhar, and I'm the Principal Co-Founder 
and CEO of Ion America, a California-based fuel cell company 
that's intent on making a revolutionary change in America's 
energy future.
    Ion America's vision is to make distributed energy 
generation ubiquitous, providing clean, efficient, high-
quality, reliable power anywhere. Our technology can be 
extended to offer a viable energy storage solution. These 
storage solutions are required for solar and wind; and, also, 
an economical pathway to the hydrogen economy. That's what 
Senator Dorgan talked about, of being able to produce hydrogen.
    To realize this vision, Ion America has pioneered the 
development of the first commercially-viable planar solid oxide 
fuel cell system. This type of stationary fuel cell, operating 
at higher temperatures than the ones being developed for cars, 
offers the potential to be more efficient, more reliable, and, 
importantly, fuel flexible--we have shown that we can use 
natural gas, propane, ethanol, diesel, all these fuels in the 
same system--and the least expensive of all fuel cell 
technologies to manufacture in high volume and also to operate. 
So, it's the total cost of ownership.
    While the high temperature offers great benefits, it also 
had some inherent technical challenges. And what we have done 
at Ion America is solve these significant challenges, and we 
are in the cusp of releasing our first commercial units.
    My company can trace its roots to the Federal Government's 
commitment to innovation. My Co-Founders and I began our fuel 
cell research as part of the NASA mission to the Moon and Mars. 
So, there's a very clear role that the government can play, in 
terms of innovation, in these fields.
    When I left academia and NASA projects 4 years ago to found 
Ion America, I embarked on a new mission, which was to create 
an innovative, clean energy technology company with a world-
changing commercial product. The key there is creating a clean 
product that can compete with the grid, at a price point that 
can compete with the grid. But, in order to achieve that 
widescale adoption and get to those cost targets, it can only 
occur when economies-of-scale are reached.
    And how do we get there? The way I think the government can 
help, Mr. Chairman, is not in the classic tools that the 
government has used to foster innovation. In order to foster 
the adoption of new innovative energy technologies, the 
Government needs to take a completely different approach, an 
approach more about vision and leadership than about new tax 
policies or research grants.
    The Federal Government's key role in our generation's 
energy independence mission is to ensure two critical things. 
One, offer us a level playing field between new energy 
technologies and legacy petroleum-based solutions. So, that 
level playing field is number one. Number two, be an early 
adopter marketplace that can help take these new products to 
their economical sales volumes.
    So, let me highlight number two. The Federal Government is 
the single largest consumer of energy in this country, 
consuming almost 1 quadrillion BTU's of energy annually, and, 
in addition to that, spending over $200 billion on products and 
services. That fact gives it a lot of power and a lot of 
influence over the energy sector, a lot more influence, 
perhaps, than legislation ever could. The power of the single 
largest consumer to shape a market should not be 
underestimated.
    Given the market size and the opportunity, it is my belief 
that private capital will be readily deployed to develop 
innovative energy technologies. It's already happening. Venture 
capital investment dollars can usher new technologies up 
through product development and testing stages. That's not the 
bottleneck. But the U.S. Government needs to commit to help 
American clean-tech companies cross the proverbial chasm and 
become commercially-viable. This is post-product-development, 
pre-commercialization. The Federal Government needs to be an 
early adopter and leading consumer of viable, innovative 
alternative technologies. Congress should consider putting an 
alternative energy consumption quota in the Federal budget. If 
the government mandated that each year 25 or 50 percent of its 
energy spent will go to alternative energy sources that meet a 
minimum set of criteria, be it efficiency, or be it energy 
independence, it would signal a real commitment toward 
achieving a lasting energy solution. And, on this point, it is 
very important that the limit that you set is not a fixed 
limit, it's very dynamic. It is a moving bar; and keep raising 
that bar.
    This isn't a mandate on the private sector. Rather, it's a 
way for the Federal Government to lead by example; thereby, 
taking steps to commercialize emerging energy technologies. 
Once the public sector takes the lead helping technologies 
achieve scale, the private sector will follow, and we will be 
on our path toward energy security and independence.
    It is my belief that if the U.S. Government would exercise 
its buying power when buying power, it would be a monumental 
step toward supporting innovation and ending our addiction to 
oil.
    Thank you very much for this opportunity, Mr. Chairman.
    [The prepared statement of Dr. Sridhar follows:]

   Prepared Statement of Dr. K.R. Sridhar, Principal Co-Founder/CEO, 
                              Ion America
    Thank you, Mr. Chairman and members of the Subcommittee, for the 
opportunity to present testimony on the critical role of the U.S. 
Government in fostering innovation and technology development in 
alternative energies.
    My name is K.R. Sridhar and I am the Principal Co-Founder and CEO 
of Ion America, a California-based fuel cell company intent on making a 
revolutionary change in America's energy future.
    Ion America's vision is to make distributed energy generation 
ubiquitous; providing clean, efficient, high quality, reliable power, 
anywhere. Our technology can be extended to offer a viable energy 
storage solution and also an economical pathway to the hydrogen 
economy.
    To realize this vision, Ion America has pioneered the development 
of the first commercially-viable planar solid oxide fuel cell system. 
This type of stationary fuel cell, operating at higher temperatures 
than the ones being developed for cars, offers the potential to be more 
efficient, more reliable, ``fuel flexible,'' and the least expensive of 
all fuel cell technologies to manufacture in volume and operate.
    While the high temperature offers great benefits, it also poses 
inherent challenges that have inhibited the commercialization of Solid 
Oxide Fuel Cell technology . . . until now. Ion America has solved 
these significant challenges and is on the cusp of releasing our first 
commercial units.
    My company can trace its roots to the Federal Government's 
commitment to innovation. My Co-Founders and I began our fuel cell 
research as part of the NASA Mission to the Moon and Mars. For NASA, we 
were encouraged to look for innovative solutions. Our mission was clear 
and we knew we had the support of the Federal Government behind us.
    When I left academia and NASA projects 4 years ago to found Ion 
America, I embarked on a new mission: A mission to create an 
innovative, clean energy technology company with a world-changing 
commercial product: A fuel cell that produces clean, reliable, on-site 
electricity at a price competitive with the grid. But in order to 
achieve wide-scale adoption, products like ours need to achieve the 
cost reductions that can only occur when economies-of-scale are 
reached.
    How do we get there?
    I am here today to testify to the importance of the government's 
role in continuing to foster innovation--and help companies like mine 
in our national quest for a clean, secure, energy future. I am here to 
urge you, Mr. Chairman and Members of the Senate, to take the necessary 
steps to help commercialize the next generation of innovative energy 
technology.
    How can the government help?
    I don't think the answer lies in the classic tools that the 
government uses to foster innovation. In order to foster the adoption 
of new, innovative energy technologies, the government needs to take a 
different approach--an approach more about vision and leadership than 
about new tax policies, or research grants.
    The Federal Government's key role in our generation's ``energy 
independence mission'' is to ensure two critical things:

        (1) a level playing field between new energy technologies and 
        legacy petroleum-based solutions, and

        (2) an early adopter marketplace that can help take new 
        products to their economical volumes.

    The Federal Government is the single largest consumer of energy in 
the country, consuming almost 1 quadrillion BTUs of energy annually and 
spending over $200B on products and services. That fact gives it a lot 
of power and a lot of influence over the energy sector. A lot more 
influence perhaps than legislation ever could. The power of the single 
largest customer to shape a market should not be underestimated.
    Given the market size and opportunity, private capital will be 
readily deployed to develop innovative energy technologies. Venture 
capital investment dollars can usher new technologies up through the 
product development and testing stages, but the U.S. government needs 
to commit to help American clean-tech companies cross the proverbial 
chasm and become commercially-viable.
    The Federal Government needs to be an early adopter and leading 
consumer for viable, innovative, alternative energy technologies.
    Congress should consider putting an alternative energy consumption 
quota in the Federal budget. If the government mandated that each year 
25 or 50 percent of its energy spent will go to alternative energy 
sources that meet a minimum set of criteria, it would signal a real 
commitment toward achieving a lasting energy solution. This isn't a 
mandate on the private sector. Rather it is a way for the Federal 
Government to lead by example, thereby taking significant steps to 
commercialize emerging energy technologies. Once the public sector 
takes the lead helping technologies achieve scale, the private sector 
will follow and we will be on the path toward energy security and 
independence.
    In order to foster innovation, to enable new energy technologies 
that address the country's power needs, and to ensure the success of 
our energy-independence mission, the Federal Government must take the 
lead. If the U.S. Government would exercise its buying power when 
buying power it would be a monumental step toward supporting innovation 
and ending our addiction to foreign oil.
    Thank you.

    Senator Ensign. Thank you.
    Our next witness will be Mr. Thomas Werner. Mr. Werner is 
the CEO of SunPower Corporation.

                STATEMENT OF THOMAS H. WERNER, 
         CHIEF EXECUTIVE OFFICER, SunPower CORPORATION

    Mr. Werner. Thank you, Chairman Ensign. I'm honored to have 
the opportunity to discuss the rapid growth of the solar power 
industry and how, with strong policy leadership, we are poised 
for solar to become a mainstream energy resource for the United 
States within a decade.
    Let me start first by telling you a little bit about 
SunPower Corporation, just briefly. We are the fastest-growing 
U.S.-based publicly-traded technology company, as measured in 
terms of revenue growth over the last five quarters. We 
manufacture the world's most efficient solar cells and panels 
commercially available. What we do is, we convert sunlight into 
power. And we do that up to 50 percent more efficiently than 
anyone else in the world. And you can see, in the picture here, 
the applications--it's a wide variety of applications--
powerplants, built into new homes, residential retrofit, which 
is the mainstream market, and commercial applications. This is 
an example of--Microsoft has installed a large system on their 
building.
    Now, let me talk about the market next. The solar market 
today is a big market. It's a $10 billion market. And it will 
double, by 2010, to $20 billion. Significantly, the solar 
market hasn't had a decrease in growth in 25 years. It's grown 
20 percent, on average, for 25 years. And, since the year 2000, 
it's grown 40 percent per year. This is driven by policymakers 
looking for pollution-free fuel, risk-free, secure peaking 
power that is well matched to demand for the most expensive 
power.
    Last year, there was about 1,500 megawatts of solar 
installed. And, to put that in perspective, that's about the 
size of Pacific Gas & Electric Company's annual revenue, or it 
is \1/36\ of Exxon's revenue. Independent analysts agree that 
the--however, that the market will double in size by 2010.
    And we have about 30 years of market data for solar. And we 
can look at its ability to reduce cost. And from this data, we 
can see that if you were to fit a line that, for every doubling 
of market size, 20 percent of the cost comes out of the 
product. And, in fact, in 2002, the National Renewable Energy 
Lab predicted that within the next decade, solar would become 
economic compared to grid power.
    Let's look to an example of this in Japan, where Japan had 
a 10-year incentive program that just ended. And what we see 
here, by the bars, is that the blue bar indicates that the 
price after subsidy, after the 10-year program ended, is now at 
parity to what it was pre-subsidy. And then, by the triangles, 
we see that there are over 50,000 systems installed--solar 
systems installed in Japan without subsidy. So, we see that the 
idea of an incentive over 10 years--a declining incentive over 
10 years has worked in another market.
    So, how do we do that in the United States? Let's look at 
the economics as they exist today. The red line on this chart 
indicates the economics in Northern California of a 4-kilowatt 
residential system. And the Y axis indicates the capital cost 
of that system. And, on the X axis, we have time. And we see 
that a system today, with incentives, in California, pays back 
in about 9 years.
    Now, SunPower, and the solar industry, in general, is 
dedicated to creating a market where we don't need incentive. 
We believe we can accomplish that within the next 5 to 10 
years. And you see that in the yellow line. And you see that 
we'll be able to get to cash-flow breakeven for a consumer that 
would be less than 5 years. And, again, we think we can 
accomplish that within the next 5 to 10 years.
    Now, let me talk a bit more about SunPower, because we 
think it's a really good example of how public policy has led 
to private investment and to a very successful publicly-traded 
company.
    We were founded to develop high-concentration solar PV dish 
applications, which is to concentrate a lot of sunlight onto a 
piece of silicon. Those solar cells were very high efficiency, 
and they're unique in that as much as that their architecture 
is an all-back contact architecture. These unique high-
efficiency solar cells, however, were quite expensive, and were 
only good for--or were uniquely suited for applications like 
the NASA Helios solar plane.
    The company, throughout the 1990s, was seeking ways to pull 
cost out of the product. And, in early 2002, went to Cypress 
Semiconductor and created a relationship to move the product 
into high-volume manufacturing. And this relationship of taking 
mass production innovative approaches from a semiconductor 
company and applying them to a solar company has borne fruit. 
And SunPower has become quite successful marketing the product 
that you see here. And you see, on the left-hand side, because 
of the unique architecture, that we have an esthetic advantage, 
and you see, by the caption on the bottom, that our panel on 
the same-sized footprint creates more power, and up to 50 
percent more power.
    So, in summary, the solar power industry has hit commercial 
production volumes. Solar power is within a decade of achieving 
mass market adoption in the United States. Predictable policy 
is driving billions of dollars of private investment. Solar 
grew up with government research, but now, as we scale, private 
investment and innovation is moving it down the cost curve and 
making it economic with the grid.
    And let me end with--the most important thing that you 
could do to support us would be to extend the long-term solar 
investment tax credit.
    And I look forward to answering your questions.
    [The prepared statement of Mr. Werner follows:]

   Prepared Statement of Thomas H. Werner, Chief Executive Officer, 
                          SunPower Corporation
    Thank you, Chairman Ensign, Ranking Member Kerry, and members of 
the Subcommittee. I am honored to have the opportunity to discuss the 
rapid growth of the solar power industry. With strong policy 
leadership, solar power is poised to become a mainstream energy 
resource for the United States within a decade.
    As an example of the current pace of the solar industry, consider 
my company, SunPower Corporation. We are the fastest growing U.S.-
based, publicly-traded technology company in terms of revenue growth 
over the last 5 quarters.
    We design and manufacture the world's most efficient solar power 
cells and panels commercially available. Our solar technology is up to 
50 percent more efficient than conventional technology, meaning that 
our customers get up to 50 percent more power than conventional 
technology per unit area. As shown on Slide 1, SunPower solar is used 
in a wide variety of applications, from suburban rooftops in New Jersey 
and Japan, to the roof of Microsoft's Silicon Valley campus, to solar 
power plants in Germany and Spain.


    Our growth is tied to the overall development of the global solar 
market. Most of our solar panels are shipped to Europe and Asia, the 
location of the most advanced solar markets, while about a quarter of 
our panels will go to U.S. markets this year. The irony is that the 
world's two biggest solar markets, Germany and Japan, have far inferior 
sunlight as compared to most of the U.S.
    For the last 25 years, the global solar market has been growing 
consistently and admirably at a compound annual growth rate in excess 
of 20 percent. However, since 2000, the global solar market has 
exploded, growing a compound rate of over 40 percent annually. This 
very impressive growth started from a small base. In 2005, the about 
1,500 megawatts of new solar power were installed, the size of three 
new natural gas-fired power plants. This translates to about $10 
billion in revenue for the industry, a figure expected to double by 
2010, as shown in Slide 2. To put this in context, 2005 global solar 
revenues were comparable to those at Pacific Gas and Electric Company, 
and ExxonMobil's were 36 times higher.


    Driving the growth of the solar market are three long-term trends: 
the persistent decline in the price of solar power technology, the 
increasing cost of fossil fuels that results in increases in electric 
retail power rates, and policymakers' focus in increasing the diversity 
and lowering the risk of our electric power resource mix.
    Solar has features that are particularly valuable to energy 
policymakers. First, because solar is a peaking power resource that 
generates best when the sun is shining, it is well-matched to the air 
conditioning demand that drives our growing need for the most costly 
power in much of the country. As a peaking resource, solar can directly 
displaces natural gas to the tune of over 4 trillion cubic feet of 
natural gas, save consumers over $32 billion in the next 20 years. As a 
customer-sited resource that does not require new transmission lines, 
solar improves grid reliability and extends the life of current 
infrastructure. And as a domestic resource, solar is intrinsically 
lower risk which will reduce our demand for new LNG while creating tens 
of thousands of new, local jobs. Finally, solar is a particularly 
popular renewable energy resource. It creates no air pollution, carbon 
emissions, radiation, or noise, and requires no water.
    For just these reasons, much of the early research in solar 
electric, or photovoltaic, power was performed in the U.S. supported by 
both public and private funding. As a result, we have 30 years of high-
quality cost data showing a classic path of lower product costs 
achieved with greater manufacturing scale.
    This decade has seen a series of major milestones achieved due to 
the commercialization of solar power. Manufacturing scale has hit mass-
production quantities. Solar market success has squeezed our supply 
chain and suppliers are racing to catch up to demand for our primary 
feedstock--polysilicon. And a variety of new, entrepreneurial 
companies, like SunPower, have formed, begun production and gone 
public.
    All of these indicators support the analysis by the team of 
industry and academic researchers coordinated by the U.S. Department of 
Energy's National Renewable Energy Laboratory (NREL) in 2002 to assess 
when solar will meet cost parity with developed country retail electric 
rates. They predicted that nexus to occur between 2010 and 2015, as 
shown in Slide 3. We agree.


    With consistent market development policy, commercialization can 
occur quickly. I say that with confidence because last year Japan 
concluded their decade-long program of Federal incentives for 
residential solar systems. Japan's residential market now operates 
without any federal incentives, installing in excess of 50,000 
residential solar systems on existing and new homes annually, as shown 
on Slide 4.\1\
---------------------------------------------------------------------------
    \1\ Note that the Japanese federal solar program concluded before 
the end of 2005, so approvals are for a partial year only, which 
explains the apparent drop of approvals year on year in 2005.


    In the U.S., we have a federal investment tax credit of $2,000 per 
residential system and a variety of state programs. We are seeing the 
most market activity in states that have programs to supplement the 
Federal tax credit, which we are working with our national trade 
association to extend.\2\ With a decade of consistent policy, the solar 
industry will invest in the technology, manufacturing scale-up and 
customer delivery infrastructure to bring solar power into the 
mainstream in most of the country.
---------------------------------------------------------------------------
    \2\ The Solar Energy Industries Association supports S. 2677/H.R. 
5206.
---------------------------------------------------------------------------
    Consider the economics for a customer putting solar on their home 
today in Northern California, as shown on Slide 5. Based on Federal and 
state incentives and current electric rates, a customer's payback on a 
solar system can be about 9 years. With the system cost declines we 
project, and very modest increases in power rates, we expect that 
payback to drop to under 5 years within a decade. At that point, we 
believe solar will become a mainstream item that comes with the 
building, just like a water heater or air conditioning.


    Achieving this goal in this time-frame is dependent on policy. 
SunPower is the poster-child for how public and private research 
dollars lead to major private investments to commercialize technology. 
We were founded over 20 years ago by Stanford Engineering Professor, 
Dick Swanson. He was funded by both Federal and private research and 
development funds to work on very high-efficiency solar cells for use 
in utility-scale solar power plants. In the 1990s, SunPower developed 
the highest efficiency solar cells in the world, but they were hand-
crafted, expensive and used for specialty applications, like the NASA-
funded Helios aircraft. Helios set the world altitude record for an 
aircraft and was powered by SunPower solar cells.
    Success with these kind of projects drove SunPower to investigate 
whether mass manufacturing scale could drop costs to compete with 
conventional solar technologies. Initially, Dick and his team connected 
with Cypress Semiconductor for access to manufacturing scaling 
expertise. In 2002, Cypress bought a controlling interest in SunPower, 
contributing a total of $150 million of capital as well as 
manufacturing and management expertise. After proving our ability to 
commercially produce our high-efficiency solar cells on schedule and on 
budget, we went public on NASDAQ last November.
    Our technology is a step-change in sunlight-to-power conversion 
efficiency and our technological advantage is driving the competition 
to improve their solar cells efficiency as well. Improvements in solar 
cell efficiency combined with the move to thinner solar cells, better 
solar panel design and development of scalable customer delivery 
infrastructure will drive solar power costs to parity with retail 
electric rates within a decade in much of the U.S.
    In addition, the aesthetic improvement offered by our technology, 
an outgrowth of our all-back contact solar cell, has turned out to be a 
major competitive advantage, because customers prefer a solar panel 
that blends into their roof, as demonstrated by Slide 6. This kind of 
basic product design and marketing will be crucial as we move from the 
early stages of market adoption of solar power to mass-market adoption.


    Let me emphasize, the solar power industry will reach grid parity 
with incremental improvements in engineering and business processes. We 
do not need new breakthroughs in the science of sunlight conversion to 
power to achieve mass market adoption of solar. We do need to improve 
the packaging of solar cell into solar panels, a task SunPower is 
working on under a DOE contract, and we need to radically improve the 
customer's buying experience. We appreciate President Bush's interest 
and support of our industry, in the form of the Solar America 
Initiative, and strongly endorse extension of the solar investment tax 
credit.
    In summary:

   The solar power industry has hit commercial production 
        volumes.

   Solar power is within a decade of achieving mass-market 
        adoption.

   Predictable policy is driving billions of dollars of private 
        investment.

   Solar grew up with government research; it now needs 
        engineering.

    Senator Ensign. Well, thank you very much.
    Next we'll hear from Peter Corsell. Mr. Corsell is the 
President and CEO of GridPoint, Incorporated.

 STATEMENT OF PETER L. CORSELL, PRESIDENT/CEO, GridPoint, INC.

    Mr. Corsell. Good morning, Mr. Chairman. Thank you for 
inviting me today and for giving GridPoint the opportunity to 
discuss our perspective on the emerging clean energy industry 
and how these technologies can benefit the American consumer, 
as well as the country's energy infrastructure and the broader 
U.S. economy.
    My name is Peter Corsell, and I'm President and CEO of 
GridPoint, an intelligent energy management company 
headquartered here in Washington, D.C. We are a privately-held 
company and have funded our product development entirely with 
private equity.
    Mr. Chairman, with your permission, I would like to insert 
my written statement in the hearing record, and I will provide 
a brief summary.
    We, at GridPoint, believe the----
    Senator Ensign. By the way, all of your full statements 
will be made part of the record.
    Mr. Corsell. We, at GridPoint, believe the energy industry 
can adopt some of the same models used in the personal 
computer, Internet, and telecommunications markets to empower 
users with information and communication tools that will reduce 
energy costs and increase energy efficiency. At GridPoint, our 
mission is to introduce a transformative technology for the 
energy industry, one that applies intelligence to energy 
consumption and empowers the consumer to enjoy cleaner, more 
reliable, and more affordable energy.
    GridPoint has developed a suite of intelligent energy 
management products that integrate renewable energy sources, 
reduce energy costs, increase reliability, and automatically 
manage energy consumption. In doing so, we have created an 
entirely new product category, applying the same logic used by 
digital video recorders to energy. For this reason, our initial 
product offering has often been described as a ``TiVo for 
energy management.''
    GridPoint's flagship energy management product is an 
elegant turnkey appliance that serves as an intelligent hub 
between the customer, the electric power grid, and a renewable 
energy source. The appliance combines batteries, power 
electronics, and a computer that makes intelligent decisions in 
a real-time, data-rich environment to optimize energy usage. 
The appliance provides four key benefits to the consumer: a 
simple way to integrate solar panels, wind turbines, and fuel 
cells; a significant reduction in electricity costs; instant, 
clean, silent backup power in the event of an outage; and the 
ability to monitor and automatically control energy 
consumption.
    The GridPoint appliance is about the size of a small 
refrigerator and is installed in the basement, garage, or 
storeroom of a home or business. It connects to a renewable 
energy source, electric utility meter, the main circuit-breaker 
panel, and GridPoint's network operations center over a 
broadband or dial-up Internet connection. Just like TiVo, each 
GridPoint appliance is in constant communication with our 
network operations center, obtaining up-to-the-minute 
information on utility rate schedules, weather forecasts, and 
more. Users access the system by logging onto a personal 
account on our website, similar to online banking, which 
provides clear and detailed information on the user's energy 
consumption and production, aggregate savings, and 
environmental impact.
    GridPoint's intelligent energy management technology works 
hand-in-hand with various renewable energy generation 
technologies, such as those represented on today's panel. Our 
goal is to empower mainstream consumers to more easily 
integrate and benefit from these brilliant innovations. For 
example, in the context of a solar photovoltaic installation, 
the GridPoint appliance serves as an advanced operating system 
and meets an emerging need in the market for renewable energy 
integration.
    Traditionally, solar energy pioneers have been hobbyists 
who build custom systems for specific applications. As we've 
just heard, that's changing, and solar is going mainstream. 
This former approach resulted in unnecessary costs and 
complexities, and did little to fuel the mainstream adoption 
for solar panels. These systems generally took days to assemble 
and lacked any meaningful safety or performance monitor. In 
contrast, GridPoint has integrated the various pieces and parts 
associated with the traditional solar installation into an 
advanced turnkey appliance that is easy to install and safe to 
operate.
    GridPoint also allows customers to create a personal energy 
profile to automatically manage energy consumption based on 
their individual preferences. For instance, when a home or 
business is unoccupied, users can select a profile to interrupt 
high-energy-consuming devices, or, conversely, to operate key 
appliances during periods when utility rates are low.
    In short, GridPoint's technology transforms consumers from 
passive energy users into active energy market participants. 
For example, GridPoint products have the capability to 
automatically leverage time-of-use pricing, purchasing 
electricity when utility rates are low, and tapping stored 
energy when utility rates are high. The Energy Policy Act of 
2005 passed by Congress mandates that utilities provide such 
rate schedules to their customers by February 2007. This is an 
important capability, because a utility's prices can change as 
much as 7--as much as 37 times during a single day. A typical 
average would be 8 cents at off-peak, and 31 cents at peak, but 
it can rise to more than $1 per kilowatt-hour during critical 
peak-pricing events.
    Electric utilities also benefit from our technology, 
because they can draw upon the stored power in each GridPoint 
appliance; thereby, reducing their peak-demand costs, enhancing 
grid reliability, and introducing a measure of network 
elasticity into the electric grid. For example, a group of 
5,000 GridPoint appliances can deliver approximately 36 
megawatts of power into the electric grid for several hours, 
the equivalent of a modest powerplant operating at peak 
capacity.
    Rather than attempting to address the enormous and costly 
issues associated with strengthening our aging electrical 
system at the transmission level, GridPoint is using advanced 
technology to enhance the grid's reliability at the point-of-
use, in the home and business.
    Once thousands of GridPoint appliances have been deployed, 
our company will become an important enabler of the emerging 
``Smart Grid,'' which uses computing technology to dramatically 
improve the reliability and efficiency of the electric power 
grid.
    The government can play a key role in the adoption of 
alternative technologies, especially by establishing programs, 
rebates, and tax incentives to stimulate the adoption of 
renewable energy systems. For example, the ENERGY 
STAR Program, implemented by the 
Environmental Protection Agency to help customers choose 
energy-efficient appliances, equipment, and homes, is a 
terrific program with which GridPoint is proud to be 
associated.
    We, at GridPoint, believe that empowering consumers to take 
control of their energy consumption is critical to solving our 
current and future energy supply challenges, as well as 
reducing our negative impact on the environment. We are pleased 
to offer our expertise and experience to Congress and the 
Administration as you address these issues.
    Thank you, again, for allowing me to testify. I look 
forward to answering any questions you might have.
    [The prepared statement of Mr. Corsell follows:]

 Prepared Statement of Peter L. Corsell, President/CEO, GridPoint Inc.
    Mr. Chairman, Ranking Member, and other members of the Committee, 
good morning. Thank you for inviting me today and for giving GridPoint 
the opportunity to discuss our perspective on emerging clean energy 
technologies and how they can benefit the American consumer, as well as 
our country's energy infrastructure and the broader U.S. economy.
    My name is Peter L. Corsell and I am President and CEO of 
GridPoint, an intelligent energy management company headquartered here 
in Washington, D.C. We are a privately held company and have funded our 
product development with private equity. Mr. Chairman, with your 
permission, I would like to insert my written statement in the hearing 
record, and I will provide a brief summary.
    We at GridPoint believe the energy industry can adopt some of the 
same models used in the personal computer, Internet, and 
telecommunications markets to empower users with information and 
communication tools that will reduce energy costs and increase energy 
efficiency. At GridPoint, our mission is to introduce a transformative 
technology for the energy industry, one that applies intelligence to 
energy consumption and empowers the consumer to enjoy cleaner, more 
reliable and more affordable energy.
    GridPoint has developed a suite of intelligent energy management 
products that integrate renewable energy sources, reduce energy costs, 
increase reliability, and automatically manage energy consumption. In 
doing so, we have created an entirely new product category, applying 
the same logic used by digital video recorders to energy. For this 
reason, our initial product offering has often been described as the 
``TiVo of energy management.''
    GridPoint's flagship energy management product is an elegant, 
turnkey appliance that serves as an intelligent hub between the 
customer, the electric power grid, and a renewable energy source. The 
appliance combines batteries, power electronics, and a computer that 
makes intelligent decisions in a real-time, data-rich environment to 
optimize energy usage. The appliance provides four key benefits to the 
consumer: (1) a simple way to integrate solar panels, wind turbines, 
and fuel cells; (2) a significant reduction in electricity costs; (3) 
instant, clean, silent backup power in the event of an outage; and (4) 
the ability to monitor and automatically control energy consumption.
    The GridPoint appliance is about the size of a small refrigerator 
and is installed in the basement, garage, or storeroom of a home or 
business. It connects to a renewable energy source, the electric 
utility meter, the main circuit breaker panel, and GridPoint's network 
operation center over a broadband or dial-up Internet connection. Just 
like TiVo, each GridPoint appliance is in constant communication with 
our network operations center, obtaining up-to-the minute information 
on utility rate schedules, weather forecasts, and more. Users access 
the system by logging on to a personal account on our website, similar 
to online banking, which provides clear and detailed information on the 
user's energy consumption and production, aggregate savings, and 
environmental impact.
    GridPoint's intelligent energy management technology works hand-in-
hand with various renewable energy generation technologies, such as 
those represented on today's panel. Our goal is to empower mainstream 
consumers to more easily integrate and benefit from these brilliant 
innovations. For example, in context of a solar photovoltaic 
installation, the GridPoint appliance serves as an advanced operating 
system and meets an emerging need in the market for renewable energy 
integration. Traditionally, solar energy pioneers were hobbyists who 
built custom systems for specific applications. This approach often 
resulted in unnecessary costs and complexities, and did little to fuel 
the mainstream adoption of solar panels. These systems generally took 
days to assemble and lacked any meaningful safety or performance 
monitoring. In contrast, GridPoint has integrated the various pieces 
and parts associated with traditional solar installations into an 
advanced, turnkey appliance that is easy to install and safe to 
operate.
    GridPoint also allows customers to create a personal energy profile 
to automatically manage energy consumption based on their individual 
preferences. For instance, when a home or business is unoccupied, users 
can select a profile to interrupt high energy consuming devices or, 
conversely, to operate key appliances during periods when utility rates 
are low. In short, GridPoint's technology transforms consumers from 
passive energy users into active energy market participants.
    For example, GridPoint products have the capability to 
automatically leverage time-of-use pricing, purchasing electricity when 
utility rates are low and using stored energy when utility rates are 
high. The Energy Policy Act of 2005 passed by Congress mandates that 
utilities provide such rate schedules to their customers by February 
2007. This is an important capability because a utility's prices can 
change as much as 37 times during a single day. A typical average would 
be 8 cents at off-peak and 31 cents at peak, but it can rise to more 
than $1 per kilowatt-hour during critical peak pricing events.
    Electric utilities also benefit from our technology because they 
can draw upon the stored power in each GridPoint appliance, thereby 
reducing peak demand costs, enhancing grid reliability, and introducing 
a measure of network elasticity to the electric grid. For example, a 
group of 5,000 GridPoint appliances can deliver approximately 36 
megawatts of power to the electric grid for several hours--the 
equivalent of a modest power plant operating at peak capacity.
    Rather than attempting to address the enormous and costly issues 
associated with strengthening our aging electrical system at the 
transmission level, GridPoint is using advanced technology to enhance 
the grid's reliability at the point-of-use--in the home and business. 
Once thousands of GridPoint appliances have been deployed, our company 
will become an important enabler of the emerging Smart Grid, which uses 
computing technology to dramatically improve the reliability and 
efficiency of the electric power grid.
    The government can play a key role in the adoption of alternative 
energy technologies, especially by establishing programs, rebates, and 
tax incentives to stimulate the adoption of renewable energy systems. 
For example, the ENERGY STAR Program--
implemented by the Environmental Protection Agency to help consumers 
choose energy-efficient appliances, equipment, and homes--is a terrific 
program with which GridPoint is proud to be associated.
    We at GridPoint believe that empowering consumers to take control 
of their energy consumption is critical to solving our current and 
future energy supply challenges, as well as reducing our negative 
impact on the environment. We are pleased to offer our expertise and 
experience to Congress and the Administration as you address these 
issues. Thank you again for allowing me to testify. I look forward to 
answering any questions you might have.

    Senator Ensign. Thank you.
    Our next witness, Dr. Taylor, is the CEO of Ocean Power 
Technologies.
    Dr. Taylor?

  STATEMENT OF DR. GEORGE W. TAYLOR, CHIEF EXECUTIVE OFFICER, 
                 OCEAN POWER TECHNOLOGIES, INC.

    Dr. Taylor. Thank you, Chairman Ensign.
    Senator Ensign. Dr. Taylor could you please pull the 
microphone closer to you. Thank you.
    Dr. Taylor. OK. Thank you, Chairman Ensign. I am very 
honored to be here today and to be able to share with you the 
progress that we have made toward the commercialization of wave 
energy conversion technology as a means of supplying clean, 
renewable, and much-needed power to our Nation's grid.
    While significant progress has been made, there is much 
more to do to realize the potential of the energy stored in the 
Earth's oceans. I hope that in the next few minutes I can 
impress upon you that the wave energy is commercially-viable, 
that it has the potential to supply significant amounts of 
power in areas where it is needed most, and that the Federal 
Government can, and should, play a role in encouraging and 
supporting the growth of this rapidly advancing technology.
    Let me start by saying why we believe wave energy makes 
sense for the United States. More than 53 percent of the U.S. 
population live near the coast, so, in the future, where are we 
going to put new power stations? We contend that the ocean is 
one of the best answers. In fact, the world's energy demand 
could be met if only 0.2 percent of the ocean's untapped energy 
could be captured. And while we do not propose that all the 
Nation's power needs can be supplied from wave power, we 
believe that a significant portion can. A good example of this 
is California. Several hundred square miles of surface area of 
the ocean off the long coastline of California could supply the 
electrical power needs for all the homes in California.
    The Electrical Power Research Institution, EPRI, has 
conducted a comprehensive economic study of wave power 
generation. This study concludes that the economics of wave 
energy could be at least as favorable as wind generation if the 
same resources that have been invested in wind and solar energy 
were invested in wave energy. We believe that the cost of wave-
generated energy has the potential, with the proper investment, 
to approach that of conventional fossil fuel energy in the next 
5 years.
    Wave energy has several distinct advantages over other 
types of renewable energy. It has the highest power density, 
excellent availability, and predictability. Water is about 
1,000 times more dense than air, and this allows smaller, 
lower-cost wave energy conversion devices to extract more from 
a smaller footprint.
    Think of waves as a natural means of storing energy. Solar 
radiation creates the wind, and the wind creates the waves. 
Long after the wind subsides, the waves continue across the 
ocean until they reach the shoreline. And waves don't know 
night from day, which is why, on some parts of the coast, the 
availability of wave power stations can be as high as 80 to 90 
percent.
    One of the major advantages of wave power is that at 
nighttime, when the electrical energy usage is low, wave energy 
can be used for economically powering desalination plants using 
the saltwater where the electricity is being generated. Equally 
well, it can be used, with an electrolyzer, to convert the 
water into hydrogen and oxygen, and, thereby, provide the 
hydrogen needed for fuel cells.
    Wave propagation is also highly predictable. As much as 24 
hours in advance, one can tell what the wave energy is going to 
be. And these two advantages, of availability and 
predictability, have caught the attention of electrical 
utilities as they search for emerging technologies that can 
supply reliable power to our Nation's grid.
    While there has been much debate concerning the aesthetics 
of other forms of renewable energy, our wave power systems are 
primarily concealed below the surface of the ocean. They have a 
very low surface profile, making them almost invisible from the 
land. In discussions that we've held with coastal residents in 
different parts of the U.S. and other parts of the world, we 
have learned that the low visual impact of our system is seen 
as a tremendous benefit.
    I'd now briefly like to give you an overview of our 
company, where--and particularly where we are from the 
standpoint of commercialization.
    Ocean Power Technologies, or OPT, is based in New Jersey. 
It's focused on commercializing our device, which we call our 
PowerBuoyTM, for both utility-scale wave power 
stations that are connected to the grid, as well as autonomous 
remote systems for ocean-based defense and security. From 1994 
to 2003, our company was primarily focused on research and 
development. Since then, we have been developing, for the U.S. 
Navy, a wave power station at the Marine Corps Base in Hawaii 
that will be connected to the Oahu grid. This project has 
received strong support from the Hawaiian and the New Jersey 
Congressional delegations, for which we are very appreciative. 
And I'd particularly like to point out that we've had 
tremendous encouragement from Senator Inouye in what we have 
been doing in Hawaii.
    It's also worth noting that an independent environmental 
assessment was conducted in Hawaii, with a finding of no 
significant impact. In September of 2004, we successfully ocean 
tested, off the State of Washington, a prototype of an 
autonomous PowerBuoyTM system for a contract that 
Lockheed Martin has with the Navy.
    Various governments in Europe have put into place strong 
initiatives to foster wave energy projects. Recognizing the 
European demand for renewable power, we have signed agreements 
with Total, the large French oil company, and with Iberdrola, 
the utility in Spain which is the largest utility in Europe, in 
terms of its usage of renewable energy. These two projects to 
build prototype wave power stations in France and Spain are 
underway. The British Government, interestingly enough, has 
recently set aside 50 million pounds to encourage wave energy.
    We also received a contract from the Department of Homeland 
Security this year to provide power for ocean-based security 
systems. And we are currently evaluating opportunities in the 
U.S. for utility-scale wave power stations.
    However, as we seek to progress from demonstration to the 
implementation of large commercial wave power stations, we 
believe there needs to be a more cohesive national policy to 
facilitate the commercial roll-out of wave power. As I noted, 
other countries, such as the U.K., are doing this. We have the 
momentum here in the U.S. And, while Europe has profited, in 
the early years of wind-energy development, we believe the U.S. 
is in a strong position to lead the world in wave energy 
commercialization.
    We request that this committee include, or help to include, 
wave energy in the Nation's comprehensive policy to use 
renewable energy. This will give a strong message to the 
Nation's utilities, capital markets, and investment community 
that wave power is recognized by the government as an important 
source of renewable energy.
    To this end, I would like to encourage Congress, and this 
committee, to consider the following actions to provide support 
for wave energy commensurate with that which has been provided 
previously for wind and solar, include wave energy in the 
production tax credit, modify the FERC's statutes to allow for 
the rapid permitting of wave power stations, and ensure that 
the MMS rules that are being developed allow for the timely 
development of wave power systems.
    In conclusion, I'd like to thank you for your judgment to 
include wave energy in this hearing. The success of new 
technologies is about vision, leadership, and courage to do 
what has never been done before.
    Thank you.
    [The prepared statement of Dr. Taylor follows:]

 Prepared Statement of Dr. George W. Taylor, Chief Executive Officer, 
                     Ocean Power Technologies, Inc.
    Good morning, Chairman Ensign, and distinguished Committee members. 
My name is Dr. George Taylor and I am the Chief Executive Officer of 
Ocean Power Technologies, Inc. I am honored to be here today to share 
with you the progress that has been made toward the commercialization 
of wave energy conversion technology as a means of supplying clean, 
renewable--and much needed--power to our Nation's electricity grid. And 
while significant progress has been made, there is much more to do to 
realize the potential of the energy stored in our Earth's oceans. I 
hope that in the next few minutes I can impress upon you that wave 
energy is commercially-viable, that it has the potential to supply 
significant amounts of power in areas where it is needed most, and that 
the Federal Government can and should play a role in encouraging and 
supporting the growth of this rapidly advancing technology.
    Let me start by saying why we believe wave energy makes sense for 
the United States. More than 53 percent of the U.S. population lives 
near the coast. So in the future, where are we going to put the power 
stations?
    We contend that the ocean is one of the best answers. In fact the 
world's energy demand could be met if only 0.2 percent of the oceans' 
untapped energy could be captured. And while we do not propose that all 
of the Nation's power needs can be supplied from wave energy--we 
believe that a significant portion can. For example, several hundred 
square miles of area off the California coast, could supply the 
electrical power needs for all of California's homes.
    The Electrical Power Research Institute, EPRI, has conducted a 
comprehensive economic study of wave power generation. This study 
concludes that the economics of wave energy could be at least as 
favorable as wind generation if the same resources that have been 
invested in wind and solar energy were invested in wave energy. We 
believe the cost of wave generated energy has the potential--with the 
proper investment--to approach that of conventional energy in the next 
5 years.
    Wave energy has the distinct advantage over other renewable energy 
sources, in that it has high-power density, excellent availability, and 
predictability. Water is about 1,000 times more dense than air allowing 
smaller, lower cost wave energy conversion devices to extract more 
energy from a smaller footprint. Think of waves as a natural means of 
storing energy. Solar radiation creates wind. Wind creates waves. Long 
after the winds subside, the waves continue. And waves don't know night 
from day--which is why on some parts of the coast the availability of a 
wave power station could be as high as 80 to 90 percent. One of the 
major advantages of wave power is that at nighttime, when electrical 
energy usage is low, wave energy can be used for economically powering 
desalination and hydrogen production utilizing the surrounding water. 
Wave propagation is also highly predictable as much as 24 hours in 
advance. Availability and predictability are two features that have 
caught the attention of electric utilities as they search for emerging 
technologies that can supply reliable power to our Nation's grid.
    While there has been much debate concerning the aesthetics of other 
forms of renewable energy, our wave power systems are primarily 
concealed below the surface of the ocean. They have very low surface 
profiles, making them almost invisible from land. In discussions with 
coastal residents we have learned that the low visual impact of our 
system is seen as a tremendous benefit.
    I would now like to give you a brief overview of our company, with 
emphasis on where we are from the standpoint of commercialization. 
Ocean Power Technologies, Inc. (OPT), based in New Jersey, is focused 
on commercializing its proprietary PowerBuoyTM technology 
for both utility-scale wave power stations that are connected to the 
grid, as well as autonomous remote power systems for ocean-based 
defense and security systems.
    From 1994 to 2003, our company was primarily focused on research 
and development and ocean testing of small PowerBuoysTM.
    Since then, we have been developing for the U.S. Navy a wave power 
station at Marine Corps Base Hawaii, that will be connected to the Oahu 
grid. This project has received strong support from the Hawaii and New 
Jersey Congressional delegations, for which we are very appreciative. 
It is also important to note that an independent environmental 
assessment was conducted, with a finding of no significant impact. In 
addition, in September of 2004 we successfully ocean-tested off the 
State of Washington a prototype of our autonomous 
PowerBuoyTM system with Lockheed Martin, under a Navy 
contract.
    Various governments in Europe have put in place strong initiatives 
to foster wave energy projects. Recognizing the European demand for 
renewable wave energy, we have signed agreements with Total and 
Iberdrola to develop wave power stations in France and Spain. Total is 
one of the largest oil and gas companies in the world, and Iberdrola is 
Europe's largest utility in renewable energy. These projects are now 
moving forward.
    In 2005, we completed the installation of a PowerBuoyTM-
off-the-coast of Atlantic City, New Jersey to further validate the 
viability of the technology. This project was funded by the New Jersey 
Board of Public Utilities as part of their significant support of green 
energy.
    In early 2006, we received a contract from the Department of 
Homeland Security for the first phase of a project to provide power for 
ocean-based security systems.
    Today, our company is evaluating additional opportunities in the 
United States for utility-scale wave power stations. However, as we 
seek to progress from demonstrations to the implementation of large, 
commercial wave power stations, we believe there needs to be a more 
cohesive national policy in place to facilitate the commercial roll-out 
of wave power technologies. Other countries are doing just that.
    Today we have momentum. While Europe profited in the early years of 
wind energy development, we believe that the U.S. is in a strong 
position to lead the world in wave energy commercialization.
    We request your action to include wave energy in this Nation's 
comprehensive policy to increase utilization of renewable energy. This 
will serve to give a strong message to the Nation's utilities, capital 
markets and investment community that wave power projects are 
recognized by the government as an important source of renewable 
energy. With the resulting commitment of all those parties, will come 
the development needed to make wave energy commercially competitive.
    To that end, I encourage Congress and this committee to consider 
the following actions:

        1. Provide support for wave energy commensurate with that which 
        has been provided previously for wind and solar energy.

        2. Include wave energy in the Production Tax Credit (PTC).

        3. Modify FERC statues to allow for the rapid permitting of 
        wave power stations.

        4. Insure that the MMS rules that are being developed allow for 
        the timely development of pilot-scale wave energy projects.

    In conclusion, let me thank your for your judgment to include wave 
energy in this hearing. The success of new technologies is about 
vision, leadership, and courage to do what has never been done before.

    Senator Ensign. Thank you.
    Our final witness today, Mr. Daniel Raudebaugh, is the 
Executive Director of the Center for Transportation and the 
Environment.

               STATEMENT OF DANIEL J. RAUDEBAUGH,

                 EXECUTIVE DIRECTOR, CENTER FOR

            TRANSPORTATION AND THE ENVIRONMENT (CTE)

    Mr. Raudebaugh. Thank you, Mr. Chairman, for the 
opportunity to address the Committee today about the challenges 
related to alternative energy technologies.
    I appreciate your focus on this important topic in these 
days of challenging gas prices and the struggles related to our 
dependence on foreign oil. As the Executive Director of a 
transportation-focused nonprofit consortium, my members address 
these challenges on a daily basis and appreciate the larger and 
more comprehensive issues we face.
    I am the Executive Director for the Center for 
Transportation and the Environment. CTE has played a pivotal 
role in the development of many clean, advanced transportation 
technologies throughout the United States. Our nonprofit is a 
facilitator for research and has managed more than $80 million 
in cost-shared research, demonstration, and development 
projects in partnership with more than 100 businesses, 
universities, and government entities.
    CTE is also recognized nationally for our expertise in the 
design, measurement, and evaluation of transportation demand 
management programs. CTE conducts research in Georgia, Arizona, 
and Montana, and manages the National Association for Commuter 
Transportation.
    In 2004, CTE expanded our efforts and initiated the 
Southern Fuel Cell Coalition, a member-based organization 
established to promote and accelerate hydrogen fuel cell 
transportation technology development in the Southeastern U.S.
    As you know, the U.S. consumes 25 percent of the world's 
petroleum, two-thirds of which is consumed by the 
transportation sector. Some of the transportation technologies 
our members have been working on offer a great promise to 
reduce our petroleum dependency by bringing electric, hybrid 
electric, and fuel cell-powered vehicles into the marketplace.
    A couple of examples I'd like to mention today:
    First, a flywheel battery system developed by the 
University of Texas and tested by Test Devices, Inc. in 
Massachusetts. This flywheel system has the potential to become 
an enabling technology to bring hybrid and fuel cell vehicles 
into the marketplace. It offers unmatched power recovery and 
delivery profile, and it shows the potential to have a cycle-
life greater than the life of the vehicle itself. A computer-
controlled active suspension system, also developed at the 
University of Texas, that not only improves ride and handling, 
but can extend the life of the critical vehicle systems and has 
the potential, in a hybrid vehicle configuration, to recover 
energy typically lost as heat in mechanical suspension systems. 
A hybrid electric drive developed by SK International, a 
Georgia-based small business, that achieves 17.5 miles per 
gallon in a 35-foot, 30,000-pound bus, as tested by our testing 
and research partner, ATTI, in Chattanooga. A bus this size 
typically gets approximately 6 miles to the gallon. A hybrid 
vehicle developed by DRS, in Huntsville, Alabama, that, when 
tested on a Humvee for the military, delivered twice the power 
of a traditional Humvee, and also demonstrated twice the fuel 
efficiency. DRS is now focusing, as one of my colleagues from 
United Technology Corporation mentioned earlier, on the ability 
of a hybrid-powered vehicle to provide amounts of electric 
power to electric-consumer loads. This is of significant 
importance to both the Departments of Defense and Homeland 
Security. Hybrid-powered buses, trucks, and civil government 
vehicles can easily provide emergency power for traffic light 
operation, emergency shelters, emergency operation centers, and 
hospitals.
    CTE has just been named as one of the four finalists to 
manage the FTA National Fuel Cell Bus Program. Our portfolio is 
highlighted by a fuel cell bus demonstration project in Hawaii 
that leverages both--work done by the Air Force and the Hawaii 
Center for Advanced Transportation Technologies. Some other CTE 
members focusing on fuel cells for transportation include 
Stennis Space Center, in Mississippi, Georgia Tech, United 
Technologies, in Connecticut, and Savannah River National Lab 
and Oak Ridge National Lab, in Tennessee.
    Beyond the technologies, my full statement provides 
additional information on four key areas we would like to see 
more emphasis placed as we move down the path toward energy 
independence. One, we must bridge the gap between basic 
research and commercialization. Two, we must take advantage of 
the tremendous potential that lies outside the major automobile 
manufacturers and energy suppliers. Three, we must not overlook 
the value of the heavy-duty vehicle industry, particularly the 
transit bus market. As Congress considers the best agency to 
increase discretionary research funding, the FTA's a great 
place to start. And, four, we must increase our focus on 
developing prototype vehicles and getting them into the 
marketplace.
    To make sure the United States is a leader in the clean 
transportation market, it will require a commitment on the part 
of the U.S. Government to support more than just pure research. 
We must invest heavily in getting our products out of 
university laboratories and onto the streets. We must invest in 
prototype development, market appraisal, and manufacturing 
analyses. We must increase funding to encourage collaborative 
efforts between government, utilities, and industry, including 
incentives for small businesses to partner with the 
universities to capture the potential for innovation that lies 
within each. We must focus more on the heavy-duty vehicle 
market, not only for its impact on petroleum use, but because 
the bus market offers the best testbed for new transportation 
technologies. CTE works to establish the needed industrial/
university/government relationship to bridge the gap between 
basic research and commercialization and to bring the best 
transportation research ideas to market.
    We look forward to working with the Senate Subcommittee on 
Technology, Innovation, and Competitiveness from both a public-
policy and a technology research and demonstration perspective 
as we pursue energy independence for the United States and 
cleaner air for our citizens.
    Once again, thank you for the opportunity to share our 
progress with you today, and I'm happy to take questions.
    [The prepared statement of Mr. Raudebaugh follows:]

    Prepared Statement of Daniel J. Raudebaugh, Executive Director, 
          Center for Transportation and the Environment (CTE)
About CTE
    Since its founding in 1993, the Center for Transportation and the 
Environment (CTE), formerly the Southern Coalition for Advanced 
Transportation (SCAT), has played a pivotal role in the development of 
many clean, advanced transportation technologies throughout the United 
States. A 501(c)(3) nonprofit, CTE has managed a portfolio of more than 
$80 million in cost-shared research, demonstration, and development 
projects in partnership with more than 100 businesses, universities, 
and government entities involved in the advanced transportation 
industry. These projects have included a broad range of transportation-
related challenges including technology development, testing, public 
awareness campaigns, educational programs, marketing research, and 
commuter behavior studies. CTE has facilitated funding for these 
projects from the Departments of Defense, Energy, Interior, and 
Transportation, U.S. Army, and NASA as well as from state and local 
sources.
    The following is a sample list of a few of the more than 70 
Electric and Hybrid Electric Vehicle Demonstration programs CTE has 
successfully managed over the past 12 years:

        Flywheel Safety and Containment Program--Resulted in flywheel 
        systems with known lifetimes and known margins of safety at the 
        end of their specified lifetimes. This information provides a 
        solid technical basis for emerging flywheel applications for 
        transportation and for space.

        Development of Advanced Technologies for a Hybrid Electric 
        Bus--Working with the University of Texas Center for 
        Electromechanics, this project developed and/or integrated four 
        advanced technologies (flywheel battery, wheel motor, active 
        suspension, and vehicle management system) onto an advanced 
        technology transit bus originally developed by Northrop 
        Grumman.

        Advanced Locomotive Propulsion System--Working with six public 
        and private team members, developed a fossil fueled locomotive 
        capable of sustained speeds of 150 mph with acceleration 
        comparable to an electric locomotive, improved reliability and 
        efficiency, and reduced emissions.

        Accelerated Fleet Integration of Medium- and Heavy-Duty EV/HEV 
        Technologies--Launched an aggressive technical support program 
        to accelerate the introduction of electric vehicle and hybrid 
        electric vehicle technologies into fleets in Atlanta and 
        surrounding regions.

        Georgia Bus Project--Designed, manufactured, and tested a low-
        speed industrial motor system in a heavy-duty, 34-foot Blue 
        Bird bus owned and operated by Georgia Power.

        Fast Charge Evaluation--Over a twelve-month testing period at 
        Hartsfield-Jackson Atlanta International Airport, demonstrated 
        the viability of industrial rapid charging and the cost 
        effectiveness of electric ground support equipment in a high 
        demand application for airlines.

        Integrated EV/HEV Drive System for Enhanced Vehicle Performance 
        and Range--Significantly increased the performance of electric 
        and hybrid electric transit buses and military vehicles in 
        terms of range, longer battery life, and the ability of the 
        vehicle to climb significant grades of 12 percent or higher.

        Advanced Battery Charge Management--Using a newly patented 
        fuzzy logic methodology in combination with known electronic 
        diagnostic techniques, this program reliably determined state 
        of charge in lead-acid batteries, ultimately as a means to 
        improve the accuracy of electric vehicle ``gas gauges.''

        Hybrid Electric HMMWV--Developed and tested a hybrid electric 
        tactical vehicle (Humvee) for the U.S. Armed Forces that 
        exhibited superior automotive performance, increased fleet 
        average fuel economy by 30 percent, and provided 30 kW of 
        mission and/or off-board auxiliary power, thus eliminating the 
        need for towed generators and certain prime movers.

        Advanced Hybrid Electric HMMWV--Incorporated numerous advanced 
        technologies and components into the existing hybrid electric 
        HMMWV developed under DARPA funding to improve and expand 
        various capabilities such as mobility, silent watch, 
        survivability, active suspension, and advanced electronic 
        concepts.

        Solid State Heat Capacity Laser Mobility Platform and Pulse 
        Forming Supply--Provided a close-in air defense advanced laser 
        weapon system mounted on a suitable mobile platform for 
        increased protection of the front-line troops.

        Improved Cost and Performance EV/HEV Powertrains--Developed an 
        improved cost and performance inverter for electric/hybrid 
        powertrains in conjunction with GE and Analog Devices.

        Diesel Auxiliary Power Unit (APU)--Developed a natural gas APU 
        using the Unique Mobility 75 kW traction motor and a John Deere 
        engine.

        Back Bay Project--Developed a transportation system to move 
        visitors to a state park and Federal wildlife refuge. This 
        system uses all-electric trams and a custom-developed all-
        terrain beach vehicle.

        Computer Controlled Suspension--Demonstrated concept in a 
        single wheel test rig, developed 4-corner algorithm, and then 
        developed a linear actuator which significantly exceeded its 
        goals. The system, developed by the University of Texas is now 
        being tested on a HMMWV with impressive results to date.

        APU for 22, Bus--Integrated a Capstone Turbine into an AVS 22, 
        electric bus.

        Efficient EV Lighting--Developed, built and tested LED light 
        fixtures to replace less efficient incandescent bulbs for EV 
        light sources. The program was led by the Florida Solar Energy 
        Center.

        31-Foot All Electric Bus--Developed AVS 31, Electric bus; 
        includes 2 Solectria A/C drive motors and Saft Ni-Cad 
        batteries. The bus was placed in service with the Chattanooga 
        Area Regional Transit Authority (CARTA).

        Electric Shuttle Bus--Developed and evaluated a 32, all 
        electric shuttle bus. This Blue Bird bus was equipped with a 
        Northrop Grumman drive train and demonstrated on Georgia 
        Institute of Technology's campus.

        Brush Testing--Developed and tested fiber brushes for use on 
        magnetically levitated trains. The University of Texas led this 
        project.

        Climate Control System--Developed a compressor motor (Fisher) 
        for use on A/C and heat pump system for EVs.

        EV/HEV Virtual Test bed--Developed models and simulations on 
        critical EV/HEV components. Program led by Georgia Institute of 
        Technology.

        Monitoring EVs in Various Climates--Tested an EV in Vermont in 
        the winter and Florida in the summer.

    CTE's centralized management of work programs enables team members 
to concentrate on exceeding project goals and ensure production of 
deliverables in a clear and well-coordinated manner. CTE has in place a 
proven project management approach based on key principles that have 
emerged from our collective experience in managing large government 
contracts and cooperative agreements. These principles include:

   Establishing and maintaining a high degree of involvement of 
        government staff;

   Installation of controls to ensure proper tracking of 
        information flow, timely completion of tasks requiring multi-
        disciplinary approaches, and excellent quality assurance of 
        products developed by the project team; and

   Ensuring access to the most highly-qualified and 
        internationally-recognized partners and their staffs.

Focused Hydrogen Research: The Southern Fuel Cell Coalition (SFCC)
    In 2004, CTE initiated the Southern Fuel Cell Coalition, a member-
based organization begun in partnership with the Federal Transit 
Administration to promote and accelerate the development and 
demonstration of hydrogen and fuel cell transportation technologies. 
SFCC has a particular focus on attracting attention and funding 
opportunities to the southeastern region of the United States. 
Currently funded through 2009, the SFCC will provide seed funding to as 
many as eight demonstration projects throughout the region and its 
activities are at the center of a growing network of universities, 
corporations, nonprofit organizations, and individual entrepreneurs 
working in partnership with Federal, state, and local governments to 
develop new industrial and manufacturing capacities in response to a 
market that is expected to exceed $7 billion by 2015.
    The following is a sample list of Southern Fuel Cell Coalition 
related programs CTE is successfully managing:

        Atlantic Station Fuel Cell Implementation Plan--Assembled a 
        panel consisting of six fuel cell experts from around the 
        country to develop a 10-year implementation plan for installing 
        3.6 megawatts of fuel cell capacity at the Atlantic Station 
        brownfield redevelopment site in Midtown Atlanta.

        Chattanooga Fuel Cell Bus Demonstration--Completed evaluation 
        and data collection to determine feasibility and sizing of a 
        replacement fuel cell pack for an in-service dedicated electric 
        bus. Design and development of the fuel cell pack is in 
        progress.

        Texas DOT Strategic Hydrogen Infrastructure and Vehicle Plan--
        Leading a panel of experts in the creation of a Strategic Plan 
        with recommendations for Texas DOT's adoption of hydrogen 
        vehicle and refueling infrastructure technologies.

        Development of Hydrogen Fuel Cell Industrial Vehicles--Working 
        with three private team members in development, demonstration, 
        and evaluation of a fuel cell system as a direct battery 
        replacement in a forklift application as well as an industrial 
        tow tractor.

        Development of Hydrogen Fuel Cell Airport Tow Tractor--Working 
        with three private team members and one university in 
        development, demonstration, and evaluation of a fuel cell 
        system as a direct battery replacement in an airport tow 
        tractor application.

        Stennis Space Center (SSC) Hydrogen Refueling Station--Working 
        to establish a plan for hydrogen fueling station installations 
        that takes advantage of SSC's existing hydrogen infrastructure. 
        The station would be part of SSC's hydrogen initiative project 
        and has potential to tie into the I-10 corridor and the 
        Discovery Center.

Beyond Technologies: Managing Transportation Demand
    During the energy crisis in the 1970s, nationwide efforts provided 
commuting alternatives to ease the energy strain. From the energy 
crisis came a practice known as demand management. Demand management 
programs nationwide arose promoting the use of transit, vanpools, and 
carpools as alternatives to driving alone.
    The practice of demand management has emerged to encourage the use 
of travel options for work commutes but also for daily travel. They 
have become an integral part of our transportation system, helping to 
create efficiencies, reducing congestion by feeding travelers into 
public transportation, vanpools, carpools, and high occupancy vehicle 
networks, or removing the overall need to travel. These strategies are 
becoming even more important as the costs of congestion rise. According 
to a recent Texas Transportation Institute study, congestion problems 
cost the country more than $63 billion in 2003. In terms of lost fuel, 
congestion costs more than 2.3 billion gallons per year.
    Demand management has become both simple and sophisticated sets of 
tools that help manage and operate transportation systems to impact 
route choice, mode choice, time choice, travel location or travel 
demand. It has also become a key preparedness business continuity tool 
that allows employers and employees to continue business operations 
through the use of travel options during events that significantly 
impact travel.
    CTE has expanded its expertise from a pure technology focus to 
include the measurement and evaluation of transportation demand 
management (TDM) programs and since 1999 has led the Georgia Department 
of Transportation's (GDOT) analysis of TDM programs in the Atlanta 
region. CTE's recommendations serve GDOT program managers in making 
appropriate decisions for funding, program focus, and asset allocation.
    CTE, under contract, manages the Association for Commuter 
Transportation (ACT), an international trade association representing 
transportation professionals involved in TDM activities. ACT has more 
than 800 members across the country who develop and manage commute and 
alternative transportation programs that provide congestion relief, 
improve air quality, and reduce energy dependence.
    Other TDM-related projects that CTE has managed or partnered on 
during the past 7 years include:

        CarShare Atlanta--Managed a pilot to implement a shared car 
        program in the Atlanta region. The pilot program allowed 
        registered users access to electric city cars. Also led the 
        creative process to brand this initiative, developing a name 
        and logo based on input from all partners in the project.

        Missoula in Motion--Partnered to develop a TDM Project 
        Strategic Plan for Missoula in Motion (Missoula Office of 
        Planning and Grants with the Montana DOT). Completed an 
        inventory and review of existing Missoula in Motion programs 
        and provided guidance and recommendations for improving 
        programs, with a specific emphasis on using program evaluation 
        and monitoring to improve programs.

        TMA Measurement--Led a team of TDM experts in conducting a TDM 
        opportunity analysis for Transportation Management Associations 
        (TMAs) in the metropolitan Atlanta region. The team conducted 
        regional commuter surveys, compiled and analyzed existing 
        research data, and held focus groups to develop key opportunity 
        strategies for each TMA.

        Arizona Ridesharing and Vanpool Program--Currently researching 
        the potential for a statewide ridesharing and vanpool program 
        for Arizona. The product of this research will be an 
        implementation plan that includes key corridors, start-up 
        considerations, staffing, and operational guidelines, as well 
        as funding options for capitalizing the statewide program.

The Transportation Sector--Defining the Energy Problem
    The transportation sector constitutes a large part of the United 
States' total energy consumption. It is a logical place to begin 
looking for ways to reduce the amount of energy consumed and to use 
that energy more efficiently. Twenty-eight percent of the United 
States' energy is used by the transportation sector alone, second only 
to the industrial sector, which uses approximately 33 percent of total 
energy consumption. Of the 28 percent of the total energy consumption 
that is used by the transportation sector, more than 96 percent of that 
energy is in the form of petroleum, which is mainly derived from places 
outside the United States.
    The fact that the United States is so dependent on foreign sources 
for oil, and that the demand for it continues to grow is an alarming 
trend. In fact, with only 4 percent of the world's population, the U.S. 
uses more than 25 percent of the world's oil. Although it is never wise 
to be fully dependent on foreign resources, the U.S. relies on the oil 
from foreign countries to keep up with the growing demand as Americans 
continue to crave bigger and less efficient cars, not taking the 
necessary steps to decrease its dependency. In 1973, the year of the 
oil embargo, the U.S. imported 35 percent of its oil and today the U.S. 
imports 56 percent of its oil from foreign sources. The U.S. Department 
of Energy estimates that by 2020 the U.S. could be importing as much as 
65 percent of its oil from foreign sources.
    While the demand for oil increases in this country, it is growing 
even faster in other parts of the globe, especially in Asia. China is 
the fastest growing consumer of oil in the world with other countries 
such as India, Thailand, and Indonesia expected to add to the 
increasing need for oil. These countries' growing need to import oil 
could potentially compromise U.S. relations as we all compete for the 
supply of foreign oil.
U.S. Consumption of Petroleum and Use by Mode

   U.S. transportation petroleum use as a percent of U.S. 
        petroleum production: 202.4 percent (2005)

   Net imports as a percentage of U.S. petroleum consumption: 
        59.8 percent (2005)

   U.S. consumption of petroleum is 20.5 million barrels per 
        day or 24.9 percent of world consumption (2004)

   Transportation share of U.S. petroleum consumption: 66.8 
        percent (2005)

   Transportation share of U.S. energy consumption: 28.0 
        percent (2005)

   Petroleum share of transportation energy consumption: 96.4 
        percent (2005)

   Transportation energy use by mode (2003):

          -- Light-duty vehicles (cars, light trucks, motorcycles): 
        61.5 percent.

          -- Medium- and heavy-duty trucks and buses: 19.7 percent.

          -- Non-highway (including air, rail, water, pipeline): 18.8 
        percent.

Economic Impact
   In the Costs of Oil Dependence: A 2000 Update, authors 
        Greene and Tishchishyna indicate that the oil market upheavals 
        caused by the OPEC cartel over the last 30 years have cost the 
        U.S. in the vicinity of $7 trillion (present value 1998 
        dollars) in total economic costs, which is about as large as 
        the sum total of payment on the national debt over the same 
        period.

   The latest study conducted by the National Defense Council 
        Foundation 2003 puts a price of $49 billion dollars/year for 
        the defense of oil in the Middle East.

Trade Deficit

   In calendar year 2005, the U.S. trade deficit in goods 
        totaled nearly $782 billion, with nearly half (47.5 percent) 
        attributed to transportation-related activities (petroleum 
        (29.3 percent) and vehicles, engines, and parts (18.2 
        percent)).

   Since 1989, the transportation sector alone has used more 
        petroleum than the United States produces. The current 
        projections indicate that by the year 2020, the transportation 
        sector will consume about twice as much petroleum as 
        domestically produced.

Trucking Contribution

   Between 1991 and 2002, heavy truck energy use grew at a 
        faster rate than for any other mode.

   Combination (Tractor-trailer) trucks and buses accounted for 
        5 percent of vehicle miles traveled in 2003.

   Heavy-duty trucks represent only 2.7 percent of trucks in 
        use but consume 21.6 percent of fuel used by the truck sector.

   Trucks moved more than $6 trillion dollars worth of goods in 
        2002.

Buses

   In 2003, 78,000 transit buses and trolley buses traveled 
        2,435 million miles and 21,438 million passenger-miles.

   In 2003, there were more than 631,000 school and intercity 
        buses in operation.

Introducing Clean Transportation Technologies to the Marketplace
    There is a tremendous opportunity for alternative energy 
technologies in the United States, but we run a very serious risk of 
importing these technologies from abroad if we fail to capture the 
benefits of our technology and innovation. Domestic technology and 
innovation are impressive, ranging from hybrid vehicles today to 
improved mass transit and fuel cell vehicles tomorrow.
    It is in our national interest to do more to facilitate appropriate 
research and technology transfer of these promising technologies to 
introduce them into the marketplace. The following are four areas where 
more emphasis should be placed as we move down the path toward energy 
independence.
1. Bridge the Gap Between Basic Research and Commercialization
    Given the importance of energy, its rising cost, and concern over 
the potential impact on the environment, alternative energy 
technologies are being pursued worldwide. This was underscored during 
the visit of Chinese President Hu to the U.S. last April. One of the 
key themes he chose to stress, in accepting President Bush's invitation 
to visit, was clean energy and increasing bilateral trade in clean 
energy technology.
    Alternative Energy Technologies is a broad field encompassing the 
production, distribution, and use of energy. My experience and focus is 
on the use of energy for transportation. In the U.S., transportation 
accounts for about 28 percent of our energy use and about 97 percent of 
that energy is from petroleum (2003 data).
    There are outstanding examples of transportation research, 
development and innovation producing world-leading technologies. An 
important challenge is to get these technologies through the ``Valley 
of Death'' in the U.S. The figure below shows the Valley of Death as 
visualized by Congressman Vern Ehlers.


    While he was interested in innovation as an outcome from basic 
research, I'd like to focus our attention on a subset of that 
innovation, commercialization. The Center for Transportation and the 
Environment works to establish the needed industrial-university-
government consortia to bridge the valley and bring research ideas to 
market. The Senate should consider two particular attributes of this 
valley, the first of which is general and the second particular to 
transportation.
A Combination of Public Policy and Market Forces Are Widening the 
        Valley
    U.S. public policy over the past couple of decades has in most 
areas of technology, including transportation, focused on basic 
research. A key justification for the focus was that the commercial 
sector could do a better job of anticipating what could be commercially 
successful than could the government. Without the proper ``technology-
to-commercialization bridge,'' the more mature research programs, which 
were those closest to the Valley of Death tended to be discontinued. 
This widens the valley. At the same time, the corporate business model 
has changed to focus research and development investment on 
commercialization steps rather than on extracting new products from the 
research laboratory. Thus, their investment has focused closer to 
commercialization, further widening the valley. This wider valley can 
be bridged in at least two ways. First, companies can shop globally for 
promising new technology if they have the capital needed over a long 
enough time to bring the technology across the valley. A second 
approach, and that embraced by the Center for Transportation and the 
Environment is to establish a university-industrial-government 
consortium to reduce the commercialization path.
Internationally, Transportation Investment Capital Tends To Allow More 
        Time for Technology To Develop Than in the U.S.
    In much of the developed world, provision of mass transportation is 
considered to be a governmental function. As a result, governments play 
a large role in the development of mass transit technology to fit their 
specific needs. The countries consistently invest in new technology and 
testing of their systems to a much greater extent than in the U.S. 
Consequently, offshore companies with patient capital can extract the 
best of U.S.-developed transportation technology. This results in the 
U.S. importing much of its mass transit technology from abroad. These 
countries are looking for the best basic research, nurturing it through 
the Valley of Death, and then exporting it to the world.
    The U.S. has the pieces in place to capture more of this emerging 
technology for the benefit of the U.S. Specific actions are needed to 
turn these pieces into a coherent program that benefits the U.S. These 
actions include:

   Expand funding for the industrial-university-government 
        consortia that is bringing emerging transportation technologies 
        to market.

   Develop incentives for smaller companies to partner with 
        universities to capture the innovation potential in each of 
        these types of organization.

   Initially focus on the heavy-duty vehicle sector of 
        transportation where the U.S. is competitive, and then try to 
        capture back a larger share of the mass transit market.

    It appears the Nation is at a tipping point in this technology. 
Program increases now of tens to hundreds of millions of dollars can 
grow markets of billions of dollars per year as the technology matures. 
This approach will not only help to assure our energy future, it will 
also stimulate the growth of good manufacturing jobs in the U.S. and 
increase exports.
2. Take Advantage of the Tremendous Potential That Lies Outside of the 
        Major Automobile Manufacturers and Energy Suppliers
    The United States should not count on the ``Big Three'' U.S. 
automakers and the major energy suppliers to develop all of our next-
generation transportation technologies. Universities, small businesses, 
laboratories, and others offer collaborative partnerships, research 
investments, and quick-to-market solutions for transportation and 
energy challenges.
    That is not to say that cooperative research with automakers and 
energy suppliers is not very productive and valuable; it certainly is. 
However, there is tremendous potential with small, medium, and large 
companies throughout the United States to work in partnership with 
universities, trade associations, and our national labs to bring new 
and innovative clean transportation technologies to market.
3. Do Not Overlook the Value of the Heavy-Duty Vehicle Market
    The heavy-duty vehicle market is the fastest growing market within 
the transportation sector over the past fifteen years. One segment of 
the heavy-duty vehicle market, the bus market, is an excellent place to 
demonstrate new technologies:

   Buses are centrally refueled, so it is not necessary to 
        provide extensive infrastructure. One refueling station will 
        suffice.

   There are less space and weight restrictions on a bus than 
        on smaller vehicles, making these vehicles exceptional test 
        beds.

   As buses are often on fixed routes, new technologies can be 
        engineered and optimized to meet specific route requirements, 
        making it an easier proposition than for vehicles with the 
        requisite flexibility to travel anywhere at any time.

   Transit buses are not mass-produced in the same manner as 
        passenger vehicles. They are built in quantities in the tens 
        and hundreds, as opposed to passenger vehicles that are built 
        in tens of thousands of units. Therefore, a single prototype 
        transit bus can be purchased reasonably close to the market 
        price of existing transit buses. A prototype passenger vehicle 
        simply cannot be produced at a price point that comes anywhere 
        close to that of an existing mass-produced passenger vehicle.

    Eighty percent of the cost of buses purchased for transit use in 
the United States is paid for by the Federal Government, through the 
Federal Transit Administration (FTA). If the U.S. Government wants to 
set the right example for encouraging the electric and hybrid electric 
vehicle market, the transit bus market offers a great opportunity to do 
so.
    Given that the bus market is such an ideal place to develop and 
test prototype vehicles and transportation technologies, the FTA is an 
excellent candidate for a significant increase in discretionary 
research funds. The FTA is not always viewed as the ideal place to 
spend research dollars. This perception needs to change.
4. Focus on Prototype Development
    The best way to bring ideas outside the research laboratory and 
into the marketplace is through prototype development. The United 
States Defense Department (DOD) has made a fundamental change in the 
way they do business in developing new combat vehicles and technologies 
over the past 20 years. Instead of specifying the next-generation 
vehicle, taking several bids and working with the winning bidders to 
build hundreds, the military has emphasized a process under which all 
bidders must first build prototypes. This process allows the customer, 
in this case the DOD, to test the prototypes and choose the best one 
for the application. This method results in a much higher-quality 
product and generates input and ideas from a wider sector of 
participants.
    As we move into the next generation of transportation technologies, 
building prototypes is a critical element to connect industry with 
university research and ultimately with the market. Technologies that 
work in the university research laboratory may not work in real-world 
applications. University researchers are then forced to look more 
closely at the environment of the marketplace in designing a solution.
    Prototype development brings all component suppliers together, 
establishes relationships and often generates a synergy that cannot be 
found in the lab. Occasionally, enabling technologies are developed 
through the prototype development process to allow lab-tested parts to 
work properly in the vehicle. These technologies would not be available 
to us without the prototype development phase.
    Building prototypes also brings smaller component manufacturers and 
their new technologies to the market and allows them to demonstrate 
their technologies on a vehicle. For smaller suppliers, building an 
entire vehicle to demonstrate only a very small part of the vehicle is 
cost prohibitive. Last, prototypes allow the end-user to work closely 
with the researchers and component suppliers to ensure the final 
product meets market demands.
Alternative Transportation Technologies: Select CTE and SFCC Member 
        Highlights
    CTE and SFCC members represent efforts to develop solutions to the 
transportation sector's energy and petroleum consumption challenges 
through technology development and deployment.
    Following are examples of CTE and SFCC member initiatives currently 
underway:
University of Texas Center for Electromechanics--Austin, Texas
Texas DOT Strategic Hydrogen Infrastructure and Vehicle Plan
    The University of Texas at Austin is currently teamed with the 
Southern Fuel Cell Coalition and the Texas Department of Transportation 
to plan a series of steps that could be taken to introduce fuel cell 
vehicles to develop the experience and patterns-of-use that are needed 
to stimulate both technology and infrastructure development.
Flywheel Battery System Development
    A prototype hybrid bus that incorporated flywheel energy storage 
and an engine fueled by compressed gas was developed and demonstrated 
by staff at the University of Texas at Austin. The flywheel is an 
energy storage system that lasts the life of the bus as contrasted with 
chemical batteries, which carry a $10,000-$20,000 annual replacement 
cost for urban transit buses, depending on the route. This hybrid 
technology is currently proposed under the Department of 
Transportation's National Fuel Cell Bus Program for use with a fuel 
cell powered bus to minimize the size and cost of the fuel cell 
required. European organizations, as early adopters, are moving ahead 
to capture these fuel-savings benefits for themselves.
    The University of Texas at Austin is also demonstrating the 
flywheel battery system on a larger system, a hybrid passenger train. 
The program has developed a high-speed generator that couples directly 
to a gas turbine, an energy-storage flywheel, and the associated power 
electronics needed to power such a train. Portions of this system are 
being demonstrated at the Philadelphia Navy Yard. This system provides 
an effective high-speed locomotive with storage capability so that 
little energy is wasted stopping and starting the train at stations. 
Simulations show this approach saves 10 0920 percent of the fuel 
depending on the specific route. Much of the technology is also 
applicable to commuter trains where the energy savings should be 
larger. European organizations are aggressively pursuing similar 
approaches.
Computer Controlled Active Suspension System
    Researchers at the University of Texas at Austin have also made a 
significant advance in another technology that reduces wasted energy in 
vehicles. In today's vehicles, the springs and shock absorbers convert 
the relative motion between the wheels and the body of the vehicle into 
heat. The researchers have developed an electromagnetic suspension that 
provides better performance while allowing this energy to be reused. 
The system is currently being developed for a range of military 
vehicles. In tests by the U.S. Army, vehicles with this new suspension 
system reduced by 90 percent the unwanted motion of a conventional 
vehicle, could go three to four times faster in off-road conditions, 
had twice the carrying capacity of the same vehicle with a conventional 
suspension, had improved high-speed handling, and saved about 15 
percent on fuel in off-road testing. With the military making early use 
of the technology, it should be making its way into commercial markets 
soon.
SK International, Inc.--Athens, Georgia
Hybrid Propulsion System Technology
    SK International (SKI) became a small-business leader in hybrid 
electric bus technology in the 1990s. SKI's primary business is to 
build hybrid electric buses, including the design and integration of 
the bus systems and its components. SKI was awarded a contract to 
develop two hybrid electric buses in the U.S. by the Pollution Control 
Department of Thailand. The buses were one of the strategies the Royal 
Thai Government pursued to address Bangkok's air quality problems. The 
proven performance of the SK International drive system over several 
years of service in Thailand demonstrates the functionality and 
reliability of the hybrid electric drive system design.
    SKI's successful venture in Thailand exemplifies the key role small 
businesses can play not only in the domestic development of advanced 
transportation technologies, but also in developing products that can 
be exported to the world market. However, small businesses face 
significant challenges in bringing viable emerging technologies to 
market largely due to cost issues. Raising sufficient capital funding 
is a barrier for many small businesses with promising ideas or 
products.
    SKI continues to lead the way in the development of hybrid 
propulsion system technology. SKI's business model of incorporating 
existing, proven components into design is allowing this small business 
to leverage its resources and bring a reliable and, in turn, viable 
technology to the market. SKI's design and continued improvement of its 
hybrid propulsion system technology is focused on three main 
objectives:

   maximize reliability;
   maximize fuel efficiency; and
   minimize cost.

    SKI approaches the reliability issue from two fronts: component 
level and system level. The component reliability issue is addressed by 
using off-the-shelf, heavy-duty, industrial motor drives with many 
years of proven records. On the system reliability issue, SKI relies on 
thorough testing before introduction of the product and quick-response 
improvement thereafter.
    Hybrid systems provide substantial fuel savings. A series hybrid 
system can realize fuel savings of 30-40 percent while the parallel 
hybrid system can achieve around 15-20 percent savings. The parallel 
system is more suitable (more efficient) for long distance arterial 
service routes while the series system is more suitable to central city 
urban routes. SKI is currently focused on series hybrid systems. SKI is 
able to push the series hybrid technology further by using the smallest 
internal combustion engine possible to minimize the fuel consumption. 
According to a transit authority feedback, SKI hybrid trolleys achieve 
14 miles per gallon (mpg) while the conventional diesel counterparts 
average 8-10 mpg. Like most of the hybrid systems in the market today, 
the SKI system is capable of increasing energy efficiency by idle 
reduction and regenerative braking. Also, the use of a hybrid 
configuration allows the engine speed to be managed within its most 
efficient operating range to obtain more fuel savings. SKI is 
developing a System-Wide Power Flow Management Unit. The unit manages 
the power generation unit (engine and generator) according to the load 
requirement and energy storage condition. Analytical results show that 
an additional 10 percent fuel savings can be realized over an unmanaged 
series hybrid system. Opportunities also exist to modify the engine to 
operate on renewable, emissions-friendly, domestic fuel sources 
including ethanol or biodiesel. The hybrid buses can be equipped with 
engines tailored to meet customer fuel preferences.
    Cost is the third issue for this emerging product. While cost 
issues are usually resolved with volume production, the U.S. bus market 
will not likely generate sufficient demand to significantly reduce 
costs. Currently, the capital costs of a hybrid bus ranges from 140-200 
percent of its comparable diesel counterpart. The life-cycle cost of 
the hybrid buses can match that of conventional diesel buses. SKI 
addresses the cost issue by using off-the-shelf components that are 
already in mass production for other industries. Furthermore, SKI 
invented a unique Battery Management System that allows its hybrid 
system to use maintenance-free lead-acid batteries. Advance-technology 
batteries, such as nickel-metal hydride (NiMH), may account for 30 
percent of the total propulsion system cost while the lead-acid 
batteries account for only 10 percent.
DRS Test and Energy Management, Inc.--Birmingham, Alabama
Providing Electric Power and Energy on Future Battlefields and for 
        Homeland Security and the Role of Hybrid Vehicles and Energy 
        Sources
    Hybrid electric powered vehicles are demonstrating their ability to 
improve domestic transportation fuel economy every day. This is being 
achieved through application of new technologies and the inherent 
ability of a hybrid to optimize its operation for lowest fuel 
consumption. What has not been as evident is the ability of hybrid-
powered vehicles--if properly designed--to provide large amounts of 
electric power to electric consuming loads. This is of significant 
importance to both the Departments of Defense and Homeland Security as 
they address the many new operational requirements brought on by the 
GWOT and the transformation process.
Impact on the Army and the Department of Defense
    Providing high quantities of high-quality conditioned electric 
power for use on current and future battlefields is becoming more and 
more difficult as the power requirements of new weaponry and supporting 
intelligence equipment continues to escalate. Tactical Operation 
Centers, Radars, Directed Energy Weapons and general utility power is 
on an ever increasing spiral that has already strained available 
resources and increased the size of operational units when the 
objective is to reduce its footprint. Traditional means of providing 
electrical energy via mobile and fixed generators is becoming 
ineffective because of the increased size of these higher power 
devices, the lack of available trucks to tow or haul these large 
devices and poor overall performance of the conditioning and 
distribution systems. Furthermore, new directed energy weapons and 
support systems present new requirements for extremely high-pulsed 
power that is not within the normal operating envelope of these 
existing power systems. The provisioning of this power is further 
complicated by the tactical need for light, highly mobile and 
transportable, self-sustaining weapon and support energy systems as 
required by our transformational objectives.
    By addressing these power issues with a holistic, systems approach 
to an integrated energy system enabled by the use of hybrid electric 
vehicles and power systems, it is possible to address this new spectrum 
of power needs while significantly reducing the footprint of current 
and future forces and improving their ability to move (and survive), 
shoot and communicate. At the same time, the fuel efficiency of these 
vehicles can be significantly improved as has already been demonstrated 
in the U.S. through commercial hybrid passenger vehicle use.
    DRS Test and Energy Management, Inc, located in Huntsville, AL, has 
been addressing this issue for more than 15 years through its work with 
hybrid powered vehicles and associated integrated power and energy 
management and distribution systems for military applications. In this 
work, DRS has developed, tested and demonstrated prototype hybrid 
electric vehicles (a hybrid electric High Mobility Multipurpose Wheeled 
Vehicle (HMMWV) with exportable electric power capability) and powered 
transportable platforms that support an exportable electric power 
architecture that has promise of significantly impacting the theater of 
operations with its intrinsic power provisioning capability. DRS has 
also been working with several energy dependent system developers and 
U.S. Army and Air Force users to develop continuous and pulse power-
conditioning systems that work with hybrid powered vehicles and support 
these energy dependent military systems. Applications investigated to 
date have included Tactical Operation Centers, Radar Systems, Command 
and Control Systems, Land Warrior Battery Charging Systems, and several 
directed energy systems including tactical Lasers, Non-Lethal High 
Power Millimeter-wave Active Denial Systems, and other systems. This 
work has successfully demonstrated the capability of hybrids to support 
these increased energy requirements while providing significant savings 
in the size, weight, and volume of the total power system.
    The basis of this holistic power approach lies in the use of the 
intrinsic power generation capability of hybrid electric vehicles and 
their robust embedded energy conditioning systems. Typically, these 
hybrid vehicle systems consist of one or more power generation sources 
such as a diesel (or other) fueled generator, turbine generator (or 
future fuel cell) that provide the average energy level required, and a 
second energy storage device such as battery, capacitor or flywheel 
that supports the peak power needs for acceleration of the vehicle, for 
pulsed-type loads and for uninterruptible electrical power (UPS). With 
suitable system designs, these vehicles can intrinsically produce power 
levels that dramatically exceed the vehicle's ability to tow or 
transport a trailer-mounted generator of equivalent capability. In the 
case of the Army's hybrid electric powered HMMWV the vehicle is capable 
of providing 75 kW of continuous power and over a megawatt of power for 
short duration pulses using the HE equipment located ``under the hood'' 
and within the vehicle's frame. This same vehicle powered 
conventionally with a diesel engine can only tow a generator capable of 
15 kW when mounted on a trailer which also dramatically reduces 
mobility and its transportability. In a similar fashion, the Army's 
conventionally powered FMTV truck is capable of transporting a 60 kW 
generator but converted to hybrid drive it will be capable of producing 
approximately 225 kW of continuous power. Along with this power 
capability, a hybrid vehicle provides many advanced operational 
features such as silent watch, silent move, instant response to battle 
action, uninterruptible power, and other mission capability 
improvements
    An example of the impact of such concepts on the theater of 
operations is best seen by examining the U.S. Army's Stryker Brigade 
Combat Team (SBCT) Tactical Operation Centers. These assemblies of 
various intelligence gathering equipment configured in many different 
physical configurations require significant levels of high-quality, 
uninterruptible electric power for support of computer systems, video 
displays, radios, and other sophisticated equipment. In addition, large 
air conditioning and heating systems are required to maintain tolerable 
ambient environments for equipment and personnel. These systems require 
significant manpower, vehicles, and equipment to field and maintain. In 
the case of the SBCT's TOC, an impressive list of equipment can be 
eliminated if 3 to 4 of the existing HMMWV vehicles are converted to 
hybrid drive and this energy used to power the TOC. In this case study, 
it is estimated that the footprint of the TOC could be reduced by at 
least 16 percent. Considering all of the TOC's within an SBCT unit, the 
total impact to the brigade's compliment of TOC's is estimated to yield 
a 20 percent reduction in air sorties needed to transport these TOCs to 
the theater. In addition, the inherent ability to produce power more 
efficiently will result in better fuel economy resulting in an even 
larger logistic and operational footprint reduction.
    In a similar case studying the impact on a prolific Army radar 
system, the footprint of a single operational unit was reduced from 3 
vehicles to two, from 3 trailers to 1, and the number of transport 
aircraft from 2 to 1 when the conventionally powered HMMWVs being used 
were converted to hybrid drive.
    In near-term future battlefield environments, directed energy 
weapons, active defense and other electric-based systems requiring 
extreme levels of pulse power are envisioned. A hybrid-based power 
architecture is uniquely suited to support these systems through the 
pulse energy capability of the system's load leveling battery. Again, 
DRS has been working on a number of prototype systems that have already 
demonstrated the impact of hybrid systems in this area. In one tactical 
solid state laser weapon concept (demonstrated at Lawrence Livermore 
Laboratory), a prototype hybrid vehicle power system is supplying 10 
megawatt pulses for 0.5 msec. to fire this tactical solid state laser 
capable of cutting a hole in a one inch piece of steel in about two to 
3 seconds. This integrated power system is projected to be 80 percent 
lighter than a conventional industrial power supply. Here, this 
technology affords a total laser system design that could fit on a 
HMMWV-sized vehicle rather than a semi-truck.
    In another prototype system, DRS has provided a full mobility 
solution to a High Power Microwave non-lethal weapon system providing 
300 kW of power while on the move and firing this advanced directed 
energy weapon.
    Using hybrid vehicles for provisioning of electric power, there are 
numerous other benefits affecting the mobility of the vehicle including 
increased fuel economy, silent move, extended silent watch, operation 
of the system without starting of the main engine, enhanced mobility, 
and the ability to remain self-sustaining on-site for extended periods.
    Much of this energy-centric work has been focused on the Hybrid 
Electric HMMWV as a ``Point of the Spear'' in moving toward acceptance 
by the U.S. Army. However, the mobile power concepts apply to any 
number and size of ground vehicles, ships, and aircraft applications 
whether wheeled, skid mounted, or semi-transportable and are scaleable 
over the full spectrum of military power needs anticipated for the 
foreseeable future. Importantly, these power and mobility concepts are 
equally germane for Homeland Security.
Impact on the Department of Homeland Security
    While the impact of hybrid electric vehicles on DOD battlefields 
has potential to dramatically affect its operations, deployability, 
mobility, mission effectiveness, and the fuel economy of our forces, 
the potential for similar impact on Homeland Security operations is of 
equal or even greater significance. Homeland Security has a myriad of 
responsibilities to protect our borders, our ports of entry, to protect 
against terrorist activities, and to provide emergency response to 
natural disasters, such as floods, hurricanes, earthquakes, and even 
civil unrest. All of these activities require copious amounts of mobile 
and transportable electric power to support these activities either in 
a mobile or semi-permanent installation or in locations that may have 
been ravaged by natural disaster with resulting loss of local 
infrastructure.
    The application of a holistic approach to providing energy in 
support of these activities enabled by hybrid vehicles has far reaching 
implications in maintaining and restoring the viability of local 
infrastructures (known as Nation Building) as well as providing 
enabling technology for new non-lethal directed energy weapons.
    Similar to military applications, the support of mobile command 
posts, radar (weather/airline) and communications must be provided that 
can quickly move into a setting and establish command centers with full 
communication capability and ``islands-of-power'' that service these 
operations. Hybrid-powered vehicles can provide all of this power even 
to include air conditioning and heating power while also providing the 
transport of equipment into a given area.
    Hybrid-powered buses, trucks, and civil government vehicles can 
easily provide emergency power for traffic light operation at 
individual roadway intersections, emergency shelters, emergency 
operation centers, hospitals, communication centers, and kitchens. 
Vehicles suitable for support of these operations include National 
Guard HMMWVs and FMTVs, garbage trucks, mass transit buses, to name a 
few. These vehicles are widely distributed in almost all municipalities 
making them readily available for provisioning of power when and where 
they are needed.
    Included in this power architecture is the ability to form micro 
utility networks where one or more vehicles can be used to power a 
local utility network to distribute higher levels of power to a broad 
geographical area to provide electric power to homes and other 
installations.
    When not involved in specific Homeland Security operations, these 
same hybrid powered vehicles will go on to provide enhanced normal 
operations with improved fuel economy and operational performance in 
the many daily tasks required of these vehicles.
Summary
    Hybrid-powered vehicles are finding increased public acceptance as 
fuel efficient passenger cars as is evident by their rapidly increasing 
national sales and demonstrated improvement in fuel economy. This trend 
is expected to continue as fuel prices continue to rise throughout the 
world and as the cost of this hybrid technology continues to be 
reduced. What is not as readily recognized is the ability of these 
vehicles to provide high levels of electric power and energy to on-
vehicle payloads and off-board electrical loads at levels that far 
exceed a given vehicle's ability to tow or carry conventional 
generators and with little additional cost to the basic hybrid-powered 
vehicle. In many applications, this capability to provide electric 
power can result in significantly higher overall cost savings than that 
of the fuel economy savings alone.
    Within the U.S. Army, this exportable power capability of hybrids 
has direct application and favorable impact to the transformation of 
our force structure by reducing the logistics footprint of the deployed 
force through elimination of vehicles, equipment, maintenance 
personnel, and transporting aircraft. It also improves the operational 
effectiveness of the force by providing tactical grade power to the 
battlefield with the first deployment of troops. It also enables the 
effective fielding of lethal and non-lethal weapons that are so 
dependent on mobile high density, high peak power energy systems. These 
benefits, along with the improvement in fuel economy, have potential to 
have a significant impact in the operational effectiveness of our 
forces and, in turn, the cost of these operations.
    In a similar way, the impact of hybrid electric vehicles supporting 
Homeland Security functions is expected to yield significant 
improvements in responding to border and port security and in rapidly 
and effectively responding to natural disasters. It is important to 
consider the impact to the aftermath of Katrina in New Orleans if every 
vehicle driven into the area by the National Guard could have also 
provided exportable electric power to the equipment it brought in, to 
surrounding installations and to emergency shelters and buildings in 
the area, the plight of New Orleanians could have been dramatically 
improved much more quickly and at nominal cost.
    Efforts continue within the industry and within the U.S. Army to 
evaluate exportable power concepts which can be applied to the DOD and 
Homeland Security. Key to this continuing effort is the treatment of 
these vehicles as an ``energy delivery system'' and not just as another 
``hybrid-powered vehicle.'' With this energy mindset, a holistic 
approach to providing energy can be applied and supported effectively 
by these vehicles. What is needed today is additional funding that 
permits maturation of these energy centric prototype vehicles and 
related components into pre-production products suitable for extended 
field evaluation. Second, additional testing and acceptance of these 
concepts are needed by DOD and Homeland Security.
    Using this energy centric approach, hybrid vehicles can have an 
even greater impact on our economy and on our ability to address 
current and future issues of the global war on terrorism and Homeland 
Security.
University of Alabama Birmingham--Birmingham, Alabama
The Hydrogen Fuel Research Program (Sponsor: U.S. Department of Energy)
        Research Partner: Argonne National Laboratory

    This program supports several parallel lines of research related to 
the use of hydrogen as a vehicle fuel. The research projects are 
interrelated and support the overall goal of understanding what impacts 
a large scale deployment of hydrogen-fueled vehicles would have on air 
quality and the vehicle fueling infrastructure. Specific tasks include:

   Emissions testing of hydrogen-fueled vehicles, both fuel 
        cell and internal combustion, to obtain emissions profiles and 
        vehicle performance characteristics.

   Development of models that incorporate the results of the 
        emissions testing to generate performance and emissions 
        profiles for a wide range of potential hydrogen-fueled 
        vehicles.

   Incorporation of the modeled vehicle profiles into larger 
        air quality models to assess what impacts a large-scale 
        hydrogen vehicle deployment would have on regional air quality 
        and overall vehicle emissions in the Southeast. Current models 
        lack good data on the performance characteristics of hydrogen 
        fueled vehicles or hydrogen production methods.

   A realistic assessment of the fueling infrastructure 
        required to support a large scale hydrogen vehicle deployment. 
        No vehicle deployment plan can succeed without adequate 
        infrastructure, and this task is looking at the most efficient 
        ways to manufacture and transport hydrogen for given vehicle 
        deployment levels, as well as the types and number of fueling 
        stations that will be required. Life cycle costs for a hydrogen 
        infrastructure are being calculated.

   An assessment of the potential uses of fuel cells for 
        stationary power generation.

    This research is ongoing and includes a public education component. 
UAB has teamed with the Center for Transportation and the Environment 
to co-sponsor a conference in Atlanta that will highlight the results 
of this research.
Fuel Cell Bus Demonstration Program (Sponsor: Federal Transit 
        Administration)
    The goal of this program is to design, build, and demonstrate a 
fuel cell bus with the ultimate goal of advancing the commercialization 
of fuel cell transit vehicles. Transit agencies provide an ideal 
environment for demonstrating emerging hydrogen technologies because 
they have trained personnel, centralized fueling facilities, and their 
own maintenance resources. Giving transit agencies hands-on experience 
with these vehicles facilitates eventual commercialization. Transit 
agencies also provide an excellent forum to educate the public on 
hydrogen technologies. There is currently some public resistance to 
accepting hydrogen technologies, largely due to misconceptions about 
the fuel itself. Introducing hydrogen-fueled buses in regular transit 
service will help the public become accustomed to their use.
    This program is ongoing and is currently in the design phase. When 
complete, one or two fuel cell-powered buses will be demonstrated in 
Birmingham and likely in another city in the Southeast. The 
demonstration will also include design and construction of a hydrogen 
fueling station in Birmingham, one of the first in the Southeast. 
Throughout the demonstration we will gather data on the performance and 
reliability of the test vehicles and assess their viability for broader 
deployment.
General Hydrogen Corporation--Gallatin, Tennessee
How New Technologies Can Help in Addressing U.S. Energy Needs
    Hydrogen Fuel Cell Power Packs are a commercial reality now in that 
they are being sold in direct competition to conventional batteries 
without subsidies. The principal applications for the Hydrogen Fuel 
Cell Power Pack are as a drop-in replacement for conventional lead-acid 
batteries in electric forklifts (800,000 in the U.S. alone), automated 
guided vehicles, tuggers, other airport electric vehicles, and electric 
shuttle buses.
    Key points about their current positive and potential benefits can 
be highlighted thus:

   Stimulating the switch from fossil-fueled small/medium 
        industrial vehicles to electric power;

   Stimulating productivity and competitiveness of U.S. 
        industry (tripled run-times at high output);

   Stimulating the proliferation of an industrial vehicle-based 
        fueling infrastructure;

   Providing a viable start to the Hydrogen Age in the U.S. 
        based on sound economics now;

   Potential to introduce APU's to slash the billion-gallon 
        annual wastage of diesel fuel by trucks; and

   Potential for use in 22, electric shuttle buses to encourage 
        people to leave their automobiles garaged.

    There is a growing adoption trend for electric industrial vehicles, 
particularly those that work in enclosed spaces. Typically, outside 
forklifts, airport ground support equipment are diesel or LPG fueled. 
Currently, in high-use, multi-shift working environments, where the 
case has been made to switch from LPG fueled forklifts to battery-
powered units, the economics for going directly to fuel cell power 
equipped ones, is a sound value proposition/economic case now. Typical 
payback is 2 to 3 years. New U.S. tax incentives of $1,000 per kW will 
reduce that payback by about a year.
    Many U.S. airports are under intense pressure to zero any increases 
in emissions and, indeed, lower them. Unions are pushing hard to 
protect workers from the harmful effects of carbon monoxide and 
particulates, by demanding that only electric vehicles be used where 
vehicles have to enter buildings such as baggage facilities and 
hangars.
    In the case of manufacturing plants and distribution centers, 
companies not only desire higher productivity to stay competitive, they 
also want to lower energy costs and enhance the work environments not 
only in terms of safety but also health.
    Fuel cell power packs triple run-time performance. An average 
forklift lead-acid battery only lasts 4 to 6 hours and throughout its 
use, the voltage is dropping causing productivity to decline. With fuel 
cell power packs, voltage is constant until the last molecule of 
hydrogen is exhausted and the only emission is invisible water vapor. 
Furthermore, they eliminate the need for large number of lead-acid 
batteries (three sets per vehicle in high use), the charging 
infrastructure, thus freeing-up large areas of internal space that can 
be put to more productive use.
    In the case of automated guided vehicles (AGV) equipped with fuel 
cell power packs, they can run for more than 24 hours instead of going 
offline every 35 minutes for a seven-minute charge. Anecdotally we have 
been told by one operation that fuel cell power packs in AGV use, will 
save the operation millions of dollars annually as the productivity 
increases has been rated at over 30 percent.
    Fuel cell technology is also potentially applicable for Auxiliary 
Power Use, most particularly for super-heavy trucks (Classes 8/9) where 
idling is a major concern in the U.S. Truckers run their engines to 
provide their cabs with ``hotel'' power for air conditioning/heating, 
television, etc. According to the EPA heavy truck idling accounts for 
the waste of 800 million to a billion gallons of fuel a year. General 
Hydrogen has produced a 3 kW APU for a super-heavy truck. While not 
price competitive yet, demand could bring prices down considerably.
    Perhaps what is not well understood is that industrial hydrogen has 
been a commonly available gas for decades as it is in widespread use in 
vast volumes by the petro-chemical and food industries. It can 
literally be dropped off in your drive at home in large K bottles 
(tall, slim steel bottles at 4,000 psi). Current fueling stations can 
be replenished by a truck-borne liquid hydrogen tanks, or the gas can 
be produced simply by on-site electrolysis.
    What is envisaged is that as the industrial use grows, the fueling 
infrastructure will eventually proliferate to big box stores in 
shopping malls (they use narrow aisle electric forklifts), where the 
fueling will be made available to the general public, thus working both 
sides of the equation as automotive fueling stations start to grow in 
number as a result of state, commercial or even Federal initiatives.
    We also see some significant potential for the adoption and 
extension of small shuttle bus systems. Current transit electric buses 
have certain power limitations (e.g., CARTA in Chattanooga). CARTA is 
proposing a significant extension of its popular downtown services, but 
lead-acid batteries do not have the capacity for one particular hilly 
section. Fuel cell power packs will provide more than adequate power.
Oak Ridge National Laboratory--Oak Ridge, Tennessee
Development Centers and Laboratories
    The National Transportation Research Center (NTRC) is a window to 
transportation research programs at ORNL and the University of 
Tennessee (UT). NTRC offers one of the most diverse concentrations of 
transportation researchers in the United States. The center provides 
access to ORNL and UT expertise in fuels, engines and emissions; power 
electronics; logistics; ITS; GIS; policy and data analysis; modeling 
and simulation.
    The High Temperature Materials Laboratory (HTML) is a National User 
Facility that helps solve materials problems that limit the efficiency 
and reliability of advanced energy conversion systems. HTML has 
extensive capabilities for characterizing the microstructure, the 
microchemistry, and the physical and mechanical properties of materials 
over a wide range of temperatures.
    The Fuels, Engines, and Emissions Research Center houses ORNL's 
vehicle and engine dynamometers and unique analytical equipment used in 
research, development, and evaluation of advanced fuels, engines, 
vehicles, and emission control systems.
    The Heavy Vehicle Safety Research Center (HVSRC) is a major 
initiative of the National Transportation Research Center (NTRC). It 
will contribute to meeting national goals related to the reduction of 
truck-related fatalities, while maintaining and enhancing the economic 
viability of the U.S. trucking industry.
    Researchers in the Power Electronics and Electric Machinery 
Research Center develop and prototype the next generation of cost-
effective converters, adjustable-speed drives, electric utility and 
distributed-generation applications, motor controls, and efficient, 
compact electric machines.
    ORNL conducts extensive materials R&D from theory to prototype 
development on lightweight structural materials and functional 
materials (e.g., propulsion materials, catalysts, batteries materials, 
and thermoelectric materials for waste heat recovery).
Example of Current ORNL Validation/Demonstration Activity
    ORNL is currently conducting the Heavy Vehicle Duty Cycle (HVDC) 
Project for the Department of Energy (DOE) which involves collecting 
more than 90 channels of data including data on fuel usage, emissions, 
situational status (temperature, precipitation, wind velocity, etc.), 
and vehicle dynamics. This data will be utilized to generate real-world 
duty cycles that can be utilized as a common basis for comparing 
vehicle technology performance, and will contribute to the development 
of the DOE-sponsored Powertrain Systems Analysis Toolkit. A field-
operational test with a reduced set of performance measures will be 
initiated in late-Spring/early Summer 2006 utilizing a fleet of up to 
ten class-8 tractor-trailers operating in their normal long-haul 
vocation.
Fuel Cell R&D
    Fuel cell research projects underway at ORNL include:

   Microstructure Characterization of PEM Fuel Cells (this was 
        the top DOE laboratory program this year and is currently 
        supporting nearly all fuel cell OEMs to determine degradation 
        mechanisms in their cells and stacks).

   Cost-Effective Metallic Bipolar Plates Through Innovative 
        Control of Surface Chemistry (program demonstrated viability of 
        metallic plates in fuel cells. Plates have run for more than 
        5,000 hrs in stack tests).

   Compact Carbon-based radiators for Fuel Cell Power Systems 
        (woven carbon fiber radiators).

   Development of a Robust Fiber-Optic Temperature Sensor for 
        Fuel Cell Monitoring (developing optical fiber based sensors 
        for temperature and humidity measurements in stacks).

   Selective Catalytic Oxidation of Hydrogen Sulfide (this 
        project has successfully developed a catalyst that can reduce 
        H2S and COS levels in fuels to the parts per billion 
        level. Removes sulfur species by oxidation forming solid 
        sulfur-emissionless process avoids SO2 which can 
        lead to acid rain).

   High-Temperature PEM Membrane Development (have incorporated 
        nanocrystalline inorganic materials into Nafion which have 
        resulted in increased proton conductivity and stable 
        performance at 120 +C-40 +C higher than its current use 
        temperature).

   Successful Technology Transfer: ORNL developed a fibrous 
        carbon composite bipolar plate and have licensed the technology 
        to Porvair, who is currently scaling-up a process to makes tens 
        of thousands of plates per year.

Demonstration Project
    The National Transportation Research Center (NTRC) has in operation 
a UTC phosphoric acid fuel cell to provide heating, cooling, and 
electricity to a building. It is currently supplying up to half of the 
building's power supply. Hydrogen is generated from an on-site natural 
gas steam reformer and a SEMCO desiccant wheel recovers energy (heating 
or cooling) and controls humidity from exhaust air.
Hydrogen Production & Delivery
    ORNL is the lead laboratory in developing delivery technologies:

   Work is ongoing in both metallic and polymeric materials for 
        pipelines, failure mechanisms, welding, and materials 
        understanding. Additional work is ongoing in tribology to 
        understand hydrogen effects in turbomachinery (compressors) and 
        other moving devices.

   ORNL is playing a leading role in developing a strategic 
        model (HYTRANS) to determine scenarios for a transition from 
        our current NG infrastructure to a hydrogen-based economy.

   ORNL is recognized as a leader in the development of 
        hydrogen purification and separation technologies. Ongoing 
        projects include microporous membranes, ceramic proton 
        conducting membranes, polymeric proton conducting membranes, 
        and metallic membrane materials.

   One last area of significant development and interest is in 
        Development of Efficient and Robust Algal H2 
        Production Systems. An ORNL researcher has developed a 
        genetically engineered algae that under anaerobic conditions is 
        able to produce hydrogen. They have recently been able to grow 
        a new version of this algae and are on the way to solving four 
        of the five major mechanistic issues limiting algae's ability 
        to produce large quantities of H2.

    Our society's power and energy demand is met largely through the 
combustion of fossil fuels. The world economy relies upon on a limited 
resource; trends suggest that global energy use is expected to double 
in the coming decades. At the same time, concerns about the effects of 
anthropogenic carbon dioxide and criteria pollutants and about energy 
security continue to mount. Meeting our energy needs in a sustainable 
manner is an historic challenge that will cause us to diverge from the 
pattern of the last couple of centuries. Storage and conversion of 
energy becomes increasingly relevant as we move toward greater reliance 
on renewable energy sources. Fuel cells are an efficient means to 
convert chemical energy into electrical energy with little or no 
emissions. Fuel cells are therefore expected to be an important energy 
technology for the future.
Savannah River National Laboratory--Aiken, South Carolina
    The Savannah River National Laboratory (SRNL) has a long-standing 
history of hydrogen technology development and deployment. SRNL has 
more than 90 scientists and engineers dedicated to hydrogen research 
and is recognized as a world-class leader in the development of safe 
handling systems for hydrogen. CTE, then known as SCAT, worked with 
SRNL in 1993 on one of the first fuel cell bus demonstrations in the 
U.S.
    SRNL has comprehensive capabilities in the area of hydrogen effects 
on materials and selection of materials and components for pressurized 
hydrogen systems. This work includes fundamental studies and applied 
research for the development and improvement of hydrogen production, 
handling, and storage system materials. SRNL also has extensive 
experience in the development and start-up of hydrogen process systems. 
The development of these systems requires the application of national 
codes and standards to insure safety margins comply with established 
consensus levels. SRNL staff is actively involved in the development of 
new national standards for hydrogen storage vessels and leakage 
management methodologies for hydrogen systems.
SENTECH, Inc.--Bethesda, Maryland
    SENTECH, Inc. is a small, energy and environmental consulting firm 
which specializes in energy efficient technologies, renewable energy 
technologies, and advanced transportation technologies. They assist 
Federal, state and private sector clients by providing a full spectrum 
of technology management services, including strategy development and 
program execution; technical assistance; economic, regulatory and 
market analysis; and project development. SENTECH also provides the 
critical element of refining the tangible and intangible benefits of 
these clean energy options. They develop strategies for communicating 
such benefits to stakeholders.
    SENTECH is a successful graduate of the 8(a) program and is 
grateful for the foundation it provided as the company established 
itself. Today the company is comprised of more than 45 professional 
staff and maintains offices in Bethesda, Maryland and Knoxville, 
Tennessee. SENTECH takes great pride in being able to sustain its 
growth independently.
    SENTECH is very pleased to be a member of the Center for 
Transportation and the Environment (CTE), and are grateful to CTE for 
identifying potential opportunities and more importantly assisting us 
in forming strong teams to respond to those opportunities. The diverse 
membership of CTE provides a great opportunity to assemble the 
different capabilities that are often needed to respond to complex 
projects rapidly and efficiently. Currently, SENTECH is participating 
with CTE and its members in competing for the fuel cell bus 
demonstration projects that will likely be funded through the 
Department of Transportation (DOT).
    SENTECH's core business involves providing technical, management 
and communication/outreach services to Federal agencies. Their primary 
client is the Office of Energy Efficiency and Renewable Energy (EERE) 
of the U.S. Department of Energy (DOE). SENTECH provides technical and 
management support to several of the EERE programs in renewable energy, 
hydrogen and fuel cell systems, advanced transportation systems, and 
energy efficiency. SENTECH also has contracts with the Oak Ridge 
National Laboratory and the National Renewable Energy Laboratory 
through which they provide technical assistance to national 
laboratories. SENTECH's Federal business is not restricted to DOE. The 
company also provides communication and outreach services to EPA's 
ENERGY STARTM Program and has worked with USAID in providing 
technical assistance to recipient countries in electric utility 
restructuring and in developing and implementing energy efficiency 
projects.
    SENTECH's business model assumes that clean energy technologies 
developed with Federal funding support will ultimately be implemented 
mainly through the leadership at the state level. With this in mind, 
SENTECH has been aggressively building relationships with the states. A 
few years back, the State of Hawaii contracted with SENTECH to develop 
a roadmap addressing how the state could to use its renewable resources 
and play a role in a hydrogen economy. SENTECH has continued its 
partnership with the state since then and today is assisting the state 
in developing partnerships with both large and small industries and 
demonstrating clean energy technologies in the state. SENTECH's state 
activities currently include energy efficiency projects in Maryland, 
technology due diligence for the State of Massachusetts, and hydrogen 
road mapping for the State of Texas and the Commonwealth of Virginia.
    SENTECH holds extensive knowledge regarding DOE programs and has 
developed in-depth experience in multiple industry sectors. Senior 
managers each have decades of experience with DOE, and their 
experiences with industry provides a plethora of knowledge important to 
the private sector as it develops and commercializes new clean energy 
technologies. SENTECH provides services to private companies ranging 
from technical due diligence in mergers and acquisitions to market 
research and project management. This is a small part of SENTECH's 
business currently but is expected to grow rapidly in the future as 
many of the new technologies being developed today become commercial.
    In conclusion, SENTECH is a consulting firm focusing exclusively on 
energy efficiency and clean energy technologies for both stationary and 
transportation applications. The company continues to see rapid growth 
in business with its Federal, state and private sector clients. Their 
credibility and growth comes from the high quality of the staff and the 
systems level approach taken when solving clients' problems. SENTECH's 
business provides a link between technology development and 
commercialization. Their staff must understand the technology, policy/
regulatory issues, and markets. SENTECH maintains a multi-disciplinary 
staff with a variety of expertise but recognizes that, as a small 
company in today's complex global markets, it is difficult to encompass 
all of the needed expertise in-house. Teaming with other firms with 
complimentary capabilities is therefore critical to SENTECH, and 
membership in CTE helps immensely in identifying those partners.
Hawaii Center for Advanced Transportation Technologies--Honolulu, 
        Hawaii
    CTE has recently established a relationship with the State of 
Hawaii to partner in the Department of Transportation's National Fuel 
Cell Bus Program. Our interest is based on Hawaii's ongoing initiatives 
and needs in advanced energy technologies, specifically in the 
development of fuel cell technologies and hydrogen infrastructure with 
a goal to establish a hydrogen-based economy.
    The Hawaii Center for Advanced Transportation Technologies (HCATT) 
is a program of the High Technology Development Corporation (HTDC), an 
agency of the State of Hawaii. Its mission is to focus on energizing 
the transportation technologies industry in Hawaii to support military 
and commercial applications and improve economic competitiveness. Under 
previous U.S. Departments of Defense and Transportation programs, HCATT 
partnered local companies with Mainland companies to develop advanced 
transportation technologies for both military and commercial 
applications.
    In 2001, HCATT began a partnership with the Advanced Power 
Technology Office (APTO) at Robins Air Force Base (AFB). Through HCATT, 
APTO established a National Demonstration Center at Hickam AFB to 
facilitate demonstration and validation of the latest fuel efficient 
and environmentally-compliant technologies for use in Air Force support 
equipment, Basic Expeditionary Airfield Resources (BEAR), and ground 
vehicle fleets. This program is focused on development and evaluation 
of advanced transportation technologies and supporting infrastructure 
with both military and commercial applications for eventual production 
and acquisition. Initially, the program evaluated light- and heavy-duty 
electric drive vehicles and battery charging systems. The current goals 
of the National Demonstration Center include the introduction of fuel 
cell technology, development and evaluation of fuel cell-powered 
vehicles and support equipment, determination of hydrogen 
infrastructure requirements, and development of deployable hydrogen 
refueling stations. In partnership with power management technology 
developer Enova Systems, and hydrogen and fuel cell technology 
developer Hydrogenics Corporation, HCATT delivered a fuel cell/battery-
powered hybrid electric 30-foot flight crew shuttle bus in 2004, and 
followed with a fuel cell/battery powered hybrid electric step van in 
2005. The bus was the first fuel cell vehicle in both Hawaii and the 
Air Force.
    More recently, HCATT partnered with HydraFLX Systems to design and 
develop a modular, deployable hydrogen fueling station for transport on 
a flatbed truck or tactical aircraft to any location in the world. The 
station consists of three modules: a fuel processor; a pressure 
management system; and a pressure storage module. Each module is 
configured to fit on a standard aircraft pallet. This station will 
serve as a model for the rest of the Air Force for building deployable 
systems to meet future contingency operations. These initiatives at 
Hickam lead both the State of Hawaii and the Air Force in the 
application of fuel cell vehicles and hydrogen infrastructure.
    HCATT will continue to expand the fuel cell vehicle fleet and 
infrastructure at Hickam AFB, to demonstrate and validate technologies 
for future Air Force procurement. Future vehicles and equipment 
include:

   Fuel cell/battery-powered MB-4 Tow Tractor.

   Fuel cell powered-light cart using metal hydride storage 
        technology.

   Fuel cell augmented-flight line maintenance support vehicle.

   Lithium battery-powered pick-up truck.

   Lithium battery-powered step van.

   Hybrid electric dump truck.

   Plug-in parallel hybrid electric step van with continuously 
        variable transmission.

    The U.S. Department of Energy (DOE) and its National Renewable 
Energy Laboratory are participating in the Hickam bus evaluation as 
part of DOE's Hydrogen, Fuel Cells and Infrastructure Technologies 
(HFCIT) Program. This Program integrates activities in hydrogen 
production, storage, and delivery with transportation and stationary 
fuel cell activities. The ultimate goal is a future in which hydrogen 
energy and fuel cell power are clean, abundant, reliable, and 
affordable and are an integral part of all sectors of the economy in 
all regions of the U.S.
    The Hickam AFB bus evaluation is one of several HFCIT projects that 
support the research and development of highly efficient, low- or zero-
emission fuel cell power systems, which serve as alternatives to 
internal combustion engines. The U.S. Department of Transportation is 
also supporting this project through the Federal Transit 
Administration's Hydrogen and Fuel Cell Bus Initiative.
Hawaii Fuel Cell Test Facility
    The Hawaii Natural Energy Institute (HNEI) of the University of 
Hawaii in collaboration with industrial partners has developed the 
Hawaii Fuel Cell Test Facility (HFCTF). This 4,000 square foot 
facility, opened for business in April 2003. It houses six fuel cell 
test stands including three stands designed for full size single cells 
or short stacks and one specifically designed for high-speed dynamic 
testing as the first step toward Hardware-in-the-Loop and rapid 
prototyping capabilities. With support from the Office of Naval 
Research, DOE, and industry, efforts at this facility include testing 
of advance-membrane materials and component materials, and 
characterization of the effects of fuel and air impurities on fuel cell 
performance and durability. The results of this work will help fuel 
cell developers design higher performance, more durable devices. 
Hardware for testing is currently provided by several major fuel cell 
developers. In 2006, this facility will be expanded to allow testing of 
stacks up to 5 kW, including cyclic testing consistent with 
transportation applications. In light of the fact that fuel cells still 
are not as durable as they need to be, testing as is done at the HFCTF 
is of value to both government and private sector organizations 
involved in fuel cell development.
Hawaii Renewable Hydrogen Economy
    As noted above, Hawaii, like other states, is developing public-
private partnerships to facilitate the deployment of alternative energy 
technologies, specifically for fuel cell applications and the pursuit 
of a hydrogen-based economy. The State of Hawaii is strongly committed 
to the development of these technologies as is evidenced by recent 
legislation to establish a renewable hydrogen program to manage the 
state's transition to a renewable hydrogen economy. This legislative 
initiative also includes the establishment of a hydrogen investment 
capital special fund to provide seed capital for and venture capital 
investments in private sector and Federal projects for research, 
development, testing, and implementation of the Hawaii renewable 
hydrogen program.
    The program will design, implement, and administer activities that 
include:

        (1) Strategic partnerships for research, development, testing, 
        and deployment of renewable hydrogen technologies;

        (2) Engineering and economic evaluations of Hawaii's potential 
        for renewable hydrogen use and near-term project opportunities 
        for the state's renewable energy resources;

        (3) Electric grid reliability and security projects that will 
        enable the integration of a substantial increase of electricity 
        from renewable energy resources on the Island of Hawaii;

        (4) Hydrogen demonstration projects, including infrastructure 
        for the production, storage, and refueling of hydrogen 
        vehicles;

        (5) A statewide hydrogen economy public education and outreach 
        plan focusing on the Island of Hawaii, to be developed in 
        coordination with Hawaii's public education institutions;

        (6) Promotion of Hawaii's renewable hydrogen resources to 
        potential partners and investors;

        (7) A plan, for implementation during the years 2007 to 2010, 
        to more fully deploy hydrogen technologies and infrastructure 
        capable of supporting the Island of Hawaii's energy needs, 
        including:

           (a) Expanded installation of hydrogen production facilities;

           (b) Development of integrated energy systems, including 
        hydrogen vehicles;

           (c) Construction of additional hydrogen refueling stations; 
        and

           (d) Promotion of building design and construction that fully 
        incorporates clean energy assets, including reliance on 
        hydrogen-fueled energy generation;

        (8) A plan, for implementation during the years 2010 to 2020, 
        to transition the Island of Hawaii to a hydrogen-fueled economy 
        and to extend the application of the plan throughout the state; 
        and

        (9) Evaluation of policy recommendations to:

           (a) Encourage the adoption of hydrogen-fueled vehicles;

           (b) Continually fund the hydrogen investment capital special 
        fund; and

           (c) Support investment in hydrogen infrastructure, including 
        production, storage, and dispensing facilities.

Center for Innovative Battery and Fuel Cell Technologies--Georgia 
        Institute of 
        Technology, Atlanta, Georgia
    Hydrogen and electricity are the only carbon-free energy carriers 
under serious consideration. Therefore, for transportation applications 
in a future hydrogen economy, the key competition to fuel cells will be 
batteries. The source of hydrogen for a fuel-cell system may be from 
the electrolysis of water using energy from nuclear power or a 
renewable source, thermolysis or photolysis of water, or from a 
reformed hydrocarbon fuel. The fuel cell stack, pumps, blowers, etc. 
along with a hydrogen-storage system are an energy-storage system 
equivalent to a battery. The battery will be more efficient in 
converting electrical energy into chemical and back, achieving round-
trip efficiencies of 80 percent or more. However, rechargeable 
batteries have a specific energy of about 100-120 Wh/kg with a long-
term goal of 200 Wh/kg, and typical vehicle requirement of near 300 Wh/
kg. The key advantage for the fuel-cell system will be greater energy 
density, which translates directly to better range. This comparison is 
shown in Figure 1 for a 100 kW fuel cell assuming 0.65 kW/kg (DOE 2010 
goal). More than likely the vehicle system will be a hybrid--the extent 
of hybridization and specific system architecture will depend on the 
relative successes in improving hydrogen storage, reducing fuel-cell 
costs, and in increasing the energy density of secondary batteries.


    So which approach will be successful? The two most difficult 
barriers are improving the energy density of batteries (EV) or 
improving the hydrogen storage (FCV). Both are challenges of comparable 
difficulty. In both cases, researchers must select from elements on the 
periodic table. Today most of the emphasis is on fuel cells and a 
better balance between batteries and fuel cells is needed.
    Tremendous progress has been made in the development of low-
temperature fuel cells. Two noteworthy advancements were the 
introduction of perfluorinated ionomer membrane and the improvement of 
electrode structures that increase catalyst utilization. At the same 
time, numerous incremental improvements have been made. Nonetheless, it 
is clear that present technology falls far short of the ultimate 
requirements, and significant effort in fundamental understanding is 
warranted.
    The key barriers for PEM fuel cells for transportation applications 
are cost and durability. The approach taken at Georgia Tech has been to 
focus on durability. This strategy is particularly relevant to the 
heavy-duty transportation segment. Any transportation application is 
going to require many hundreds of thousands of power cycles and 
thousands of start/stops. These transients exacerbate many of the 
failure mechanisms. Further, for heavy-duty vehicles the operational 
life (40,000 hours) is much higher than for automobiles (5,000 hours). 
Since the fuel cell is a large fraction of the vehicle cost, durability 
and reliability of the cell stacks is critical.
    From a detailed understanding of the mechanisms and root causes of 
failure two approaches are taken at Georgia Tech. The first is a system 
solution. By careful design of the system architecture and control 
strategy of a hybrid system, for example, some degradation mechanisms 
can be mitigated. The second approach, the development of new 
materials, is more elegant but also much more difficult.
    The major failure mechanisms that are being worked are (1) 
degradation of the membrane separator materials, (2) stability of 
precious metal catalysts, and (3) corrosion of carbon support 
materials. We are also working on hybrid systems to understand better 
how the power management and control strategies affect the life of the 
fuel-cell stack and batteries.
    Another barrier for fuel cells for transportation is their low 
temperature of operation. Just like today's internal combustion 
engines, a significant amount of heat must be rejected to the 
atmosphere. The low temperature of operation (80 +C) increases the size 
of the radiator. It is estimated by the auto companies that an 
operating temperature of 120 +C is needed to maintain the same radiator 
size as for ICEs. However, present ionomer membranes don't work well at 
these temperatures. This is another area that is being investigated at 
Georgia Tech (supported by Toyota). Professor Meilin Liu's group is 
developing new membrane materials (triazoles) that show promise at 
elevated temperatures.
EVamerica--Chattanooga, Tennessee
    EVamerica is CTE's newest member. They are embarking on the 
electric and hybrid electric shuttle bus market, starting with 22-foot 
buses. EVamerica is an example of how entrepreneurial operations are 
starting up throughout the United States to address our energy needs 
through clean transportation technologies.
    EVamerica was founded as a Limited Liability Company on March 16, 
2006, to own the assets, provide space, management staff, and 
employees, to design, develop, manufacture and assemble electric and 
hybrid electric medium to heavy-duty vehicles. The company was publicly 
announced by Congressman Zack Wamp, 3rd District Representative of 
Tennessee at the Tennessee Valley Corridor 2006 National Summit in 
Chattanooga, Tennessee on June 1st.
    EVamerica will become the premier designer, developer and 
manufacturer/assembler of electric and hybrid electric medium- to 
heavy-duty vehicles in the United States. Additionally, the company 
will offer hybrid systems for installation in other manufacturer's 
vehicle's through the integration of S.K. International into EVamerica 
as the Power and Propulsion Division of the company.
    The company will employ individuals with a strong knowledge of the 
electric and hybrid-electric vehicle industry, a clear understanding of 
the benefits and challenges of advanced technology vehicles, and 
experience in public transportation; the initial market for EVamerica.
    The organization has begun by developing 22-foot electric buses 
with the latest and best technology comparable to those already 
operating in Chattanooga, Tennessee. The company will grow, in a 
controlled and systematic process, to develop three or four more 
variations of the 22-foot design that will include the use of auxiliary 
power units for hybridization. The company will also be developing a 
family of designs that can be powered with a number of electric power 
systems and hybrid electric systems from internal combustion engines to 
hydrogen fuel cells.
Conclusions
    As energy consumption and dependence on foreign petroleum supplies 
becomes a more critical concern in our society, the U.S. must continue 
to address potential solutions. The transportation sector offers 
opportunities for significant advances in technological solutions, 
resulting in significant benefits to the market and to the environment. 
The U.S. is poised to become the worldwide leader in the clean 
transportation technology arena. The work conducted through the Center 
for Transportation and the Environment and its members demonstrates the 
capabilities and potential for moving the U.S. to the forefront of 
electric, hybrid electric, and fuel cell vehicle development.
    To make the United States a leader in the clean transportation 
market, it will require a commitment on the part of the U.S. Government 
to support more than just pure research. We must invest heavily in 
getting products out of university laboratories and onto our streets. 
We must invest in prototype development, market appraisal, and 
manufacturing analyses. We must take advantage of the tremendous 
potential that lies outside of the major automobile manufacturers and 
energy suppliers. We must increase funding to encourage collaborative 
efforts between government, universities and industry, including 
incentives for smaller companies to partner with universities to 
capture the potential for innovation within each. We must focus more on 
the heavy-duty vehicle market, not only for its impact on petroleum 
use, but because the bus market in particular offers the best test bed 
for new transportation technologies.
    The Center for Transportation and the Environment works to 
establish the needed industrial-university-government consortia to 
bridge the gap between basic research and commercialization and to 
bring the best transportation research ideas to market.
    We look forward to working with the Senate Subcommittee on 
Technology, Innovation, and Competitiveness from both a public policy 
and a technology research and demonstration perspective as we pursue 
energy independence for the United States and cleaner air for our 
citizens.

    Senator Ensign. I want to thank all of you. I think this is 
an exciting hearing. You know, I would love all of America to 
be able to hear some of the exciting new developments that are 
being made around the country, especially in the private sector 
in some of these applied technologies. In addition, I think 
that the folks here today are representing some of the most 
exciting things happening out there in the marketplace.
    I want to explore some of the issues discussed today in a 
little further detail. I also want all witnesses to feel free 
to comment on something that I ask about. But I want to start 
with Dr. Gotcher. Dr. Gotcher, you were talking earlier about 
ion battery technology and one of the problems that we have 
heard with some of these new technologies--whether they are 
hybrids or electric cars--is the degradation of the batteries. 
With a lot of these technologies we have to examine how long 
these things last. Today, we understand approximately how long 
a petroleum-powered car lasts today. We also know how long 
power plants last. I'm going to try to get each one of you to 
address, as best you can, the lifespan of the products that you 
are offering. Do we have any of the research on some of the 
products that you are developing? Can you discuss your research 
on how that makes it more viable to the marketplace.
    Dr. Gotcher, could you start with the ion battery 
technology and discuss some of the advances that you have made 
that will help make battery technology more viable?
    Dr. Gotcher. I'd love to answer that question.
    First, today's battery technology, are lead-acid batteries 
for starting, lighting, and ignition, and mainly nickel metal 
hydride batteries that used in HEV, or hybrid electric 
vehicles. The lead-acid battery has a typical life of 3 to 5 
years, and nickel metal hydride batteries used in HEV, the 
expected life is 5 to 7 years. Now, in both cases, the life of 
the battery is substantially less than the life-design of an 
automobile.
    Now, we've been focusing on lithium-ion batteries----
    Senator Ensign. In your answer, please also address, if you 
would, how a battery degrades over time. It isn't that a 
battery just all of a sudden quits working. It degrades over 
time, correct?
    Dr. Gotcher. That's correct.
    Senator Ensign. So a battery loses ``X'' percent of 
capacity per year.
    Dr. Gotcher. That's correct. It does lose capacity, and its 
design capability and capacity deteriorates over time.
    The batteries that we've been focusing on are lithium-ion 
batteries, which today are not used in vehicles, primarily 
because as the lithium-ion battery grows in size, its safety 
hazard becomes unmanageable. And that's the primary reason that 
lithium-ion batteries are not used in vehicles today, which is 
why we've placed so much emphasis on the safety testing of the 
Altairnano battery. And, to date, in every single test we've 
run, when our batteries have failed, they fail safely, in large 
format. And so, with the Altairnano battery one of the major 
reasons for not using lithium-ion battery material in vehicles 
has been addressed by the materials selection and the use of 
nanomaterials.
    Second, with respect to lifetime, typical batteries will 
have a few hundred cycles of charge and discharge. Typically, 
they're limited at about 500 to maybe as many as 900 cycles. 
Our batteries have been tested, both in our facilities and 
third-party facilities, and have obtained 9,000 cycles of 
charge and recharge at 20C rates, which means charging the 
battery in 3 minutes. So, we believe that the design-life of 
our batteries approximates 15 years, which is clearly within 
the design spec of automotive cars. So, we feel that----
    Senator Ensign. OK, how much have these batteries degraded 
in that 15 years?
    Dr. Gotcher. In 15 years, our--well, in the 9,000 cycles--
end-of-life is measured, within the battery industry, at 80 
percent of first-charge capacity. So, after 15 years of life, 
9,000 cycles of charge and discharge, we'll still have 80 
percent of the battery's capacity remaining in the battery 
pack.
    Senator Ensign. And if the battery was used in a car, how 
many miles would the car be able to travel?
    Dr. Gotcher. The range of an automobile depends on the size 
of the battery, the amount of energy stored in the battery. And 
we believe that we'll be able to have ranges of 250 to 300 
miles in a reasonably sized battery pack. The number of charge 
cycles indicates: How many times do you recharge the battery 
after you've depleted that energy? And so, from several 
different perspectives, our battery technology appears to have 
the safety features, the recharge cycle-life, which also 
includes calendar life, as well as the range, to make an 
electric vehicle or an alternative energy vehicle behave much 
like an internal combustion engine-driven car. It'll have a 
range of 300 miles. It'll be able to be recharged in 6 or 8 
minutes, which is typically the amount of time that it takes to 
refuel a gasoline-powered vehicle. And it'll, importantly, have 
a lifetime comparable to today's cars; you'll expect the 
powertrain, based on a battery-powered car, to last as long as 
an internal combustion engine.
    Senator Ensign. And you would be able to charge these 
electric vehicles at home or at a charging station?
    Dr. Gotcher. That's correct. It will take a little longer 
at home, only because the voltage available typically in a home 
is lower.
    Senator Ensign. OK.
    Dr. Gotcher. And so, the length of time to a full charge is 
a function of the amount of power that you can deliver to the 
battery. It can take the power very rapidly.
    Senator Ensign. Right. I was just thinking, if you had fuel 
cells or if you had an intelligent energy management product 
like Mr. Corsell's company manufactures, at nighttime you could 
take power off the grid at different times to maximize 
efficiency and hook it up with an electric vehicle. You could 
really start playing with some of these various devices and 
become very energy efficient.
    We can just go down the line, if you want. I invite all 
witnesses to make comments if you would along this line of 
questioning.
    Dr. Preli. I can comment on the durability of fuel cells. 
The most successful case of fuel cells right now is in the 
stationary market. We've produced over 250 of these 200-
kilowatt fuel cells, and they're in the field. The highest-time 
unit in the field in the customer's hand has now surpassed 
60,000 hours. Our goal is 80,000 hours, which is approximately 
10 years of continuous runtime. So, great progress has been 
made in that arena.
    In the auto market, the life requirement is only 5,000 
hours. The average internal combustion engine in your car only 
really needs to run for about 5,000 hours, but it's a much more 
difficult mission. At UTC, in the laboratory, we've achieved 
those results: greater than 5,000 hours--in fact, greater than 
13,000 hours. In the field, though, the DOE infrastructure 
program is starting to prove capabilities of fuel cells in the 
hands of customers, so we'll get a lot more information over 
the next couple of years. But we're confident that today we're 
at least in the 1,500- to 2,000-hour range. And, shortly, we'll 
be able to achieve the 5,000 hours.
    Transit buses require a lifetime of about 25,000 to 30,000 
hours. And, again, it's a fairly difficult mission. However, 
you're allowed more space than you are in an automobile in a 
transit bus, so we can put in design features to extend the 
life. We currently offer buses with at least a 4,000-hour 
lifetime on the fuel cell system, and that soon will be 
ratcheted up to 10,000 hours. So, we're making good progress 
meeting those goals, as well.
    Senator Ensign. Thank you.
    Dr. Sridhar. I think you hit upon a very important 
question. When you go from the centralized powerplant on the 
grid to many of these technologies that you're talking about 
here today, you're suddenly changing the way you buy energy. 
Rather than buy electric as a commodity, you're buying an 
appliance that sits at your place that's supposed to meet that 
need. So, the way you look at the economics changes. Rather 
than buy a commodity at that price at that point in time, in 
addition to some commodity like fuel that you may buy that way, 
you're also buying the initial fixed-cost appliance, and it's 
the total cost of ownership that matters. And then, the total 
cost of ownership, maintenance, beginning-of-life to end-of-
life performance all become very important aspects of the 
economics.
    It took 100 years of evolution before which now we are 
seeing every 100,000 miles we can change the spark plug. It 
didn't happen overnight, even though there was no inherent 
physics associated with it. It was cost, engineering evolution.
    In any of these new technologies, if you want to get to the 
grid price point in terms of economics, achieving the kind of 
lifetimes that you heard about the fuel cell will be very, very 
difficult. It'll be very difficult in most of these 
technologies, initially. If you're very aggressive on cost, 
something's going to give. That's inherent. And so, the 
question is: Is it a predictable maintenance, as opposed to an 
unpredictable maintenance? Can you make it very serviceable and 
make it very cheap? Can you monitor it constantly, so it's 
opaque to the customer? Even before they know that they need to 
have it serviced, it's in the maintenance contract, you can go 
fix it. This is the way that we are looking at this technology, 
as a complete economic situation.
    Our guess is, for the economical fuel cells, a 5-year 
lifetime or 60,000 hours in a stationary fuel cell, you will be 
able to get a very good total cost of ownership. And that 
number is not a magic number. It's that total cost of ownership 
versus grid power. What is your payback period? If the payback 
period is 3 years or less, it's a very attractive buy. If it is 
anything more, it's not. So, there is no magic number to the 
life. It is more the economics. But for what we are doing, we 
think it's about 5 years. We think our initial products will 
not have that. But our model will be able to sustain that. Our 
guarantees will be able to sustain that. That's how we are 
approaching it.
    Senator Ensign. Mr. Werner, as you address this question, 
too, could you maybe comment on how something like Mr. 
Corsell's product could decrease the payback period of time on 
your products?
    Mr. Werner. Sure. And this question really plays to solar 
power's strengths. Today, we ship hundreds of systems. And you 
can buy one in Nevada that we'll warrant for 25 years. So, 
we'll sell a system, and if it drifts in power rating more than 
10 percent, we'll replace the system. So, you get a payback of 
9 years, which means you have 16 years of profitable cash-flow. 
And that's the product that we sell today.
    So, fundamentally, the challenge is, how do you innovate 
and continue to support a 25-year warranty, because it's kind 
of hard to test for 25 years. It would be a long development 
cycle. So, a lot of our innovation is in terms of accelerated 
testing. So, as we pull cost out of the end product, we need to 
be able to test that new product quickly, so we can introduce 
it into the field and still have the 25-year warranty.
    Now, in terms of using Mr. Corsell's product, the power 
costs a lot more, depending on when it's generated. So, if you 
can optimize the use of solar, which happens to pretty much 
match when power costs the most, but when you can level the use 
of a building or a residence, then you can optimize the use of 
that peak power generation. So, I have a system on my house, 
and I generate more power than I use in the summer, and less 
than I use in the winter, and so in the summer I have excess 
power, and his product would help the utility use that excess 
power effectively. So, there are a number of ways of using the 
power when it costs the most, and balancing the grid.
    Senator Ensign. Thank you.
    Mr. Corsell?
    Mr. Corsell. This is all about economics and payback period 
and the tremendous implications of moving from a model where 
you are essentially renting power from the electric power grid, 
and moving toward distributed clean generation. It makes 
rational sense for storage to go along with that. GridPoint is 
not a producer of storage technologies. Of course, we purchase 
batteries from other companies and are constantly looking for 
better batteries. But like SunPower, which I do believe makes 
the world's greatest solar modules, we are in the consumer 
marketplace. The same dealer in Nevada that sells Mr. Werner's 
product will sell ours. And the issues that we have to address 
are cost and physical footprint--how many kilowatt hours of 
storage are you getting in how large a physical space? People 
only have so much room in their homes. Weight is a big issue. 
When you get down to installation, taking a system like this 
through a doorway and down stairs to a basement, there are all 
sorts of practical issues.
    Senator Ensign. Do most of your products get installed 
indoors or outdoors?
    Mr. Corsell. Indoors. In basements, garages or storerooms. 
And so, there are all these issues that come down to how robust 
the storage is, how many times can you discharge it, how long 
will it last? GridPoint, of course, as an appliance provider, 
has to warranty and stand behind the performance of the entire 
device, so our on-board computing power is significant. With 
advances in storage technology, we will be able to deliver much 
greater value to our customers by leveraging that storage 
intelligently, the same way users will benefit from further 
advances in the efficiency of Mr. Werner's solar panels. But 
the cost of storage technology has to be driven down. We use 
telecom-grade deep-discharge VLRA batteries right now. I've 
seen more impressive technologies both in and out of the lab, 
but price performance is the principal issue. Solar panels face 
the same challenge--the economics are attractive in California, 
they are more attractive in New Jersey or Austin, Texas, where 
there are high subsidies, and they are not attractive in 
Kentucky. Eventually, the regulatory environment and improved 
economics will drive adoption of intelligent turnkey systems 
that encompass generation, storage, and local control at a 
reasonable cost with a payback period that consumers will 
accept. Otherwise, people just won't buy it, and--although it's 
wonderful when the Government promotes clean technology, we, 
like SunPower, believe that our success depends upon 
competition in the consumer marketplace.
    Senator Ensign. Thank you. Just a little observation--if 
the nanotechnology ion batteries that Dr. Gotcher is talking 
about meet the costs--you guys may want to get together.
    [Laughter.]
    Senator Ensign. Dr. Taylor?
    Dr. Taylor. Wave power stations, have a projected lifetime 
of 30 years. A conventional coal-burning power station has a 
lifetime of about 25. The reason why we can project a lifetime 
of 30 years is that the basic unit, the PowerBuoyTM, 
is encased inside a device somewhat like a navigation buoy. And 
NOAA, for example, has a regular maintenance program on their 
navigation buoys, which will be the same program that we will 
use. This program requires, every 4 years, each buoy is taken 
out of the water, the algae and the barnacles are scraped off, 
and it's repainted and put back in. The smart part of the 
system that does the conversion of the mechanical motion of the 
waves into electricity is encased inside a watertight 
compartment filled with dry nitrogen. We, therefore, expect 
that the maintenance will be--every second time the buoy is 
taken out of the water (i.e., every eight years), there will be 
maintenance on the parts inside the buoy.
    So, overall, the lifetime of the wave power station, we 
believe, is 30 years. Utility partners who have looked at it 
with us agree that that is probably right. Obviously, the 
maintenance cost is built into the total cost of the energy. 
Because it is a modular system, a power station consists of an 
array of buoys, making it easy to take each buoy out 
separately. And so, if you have a field of 50 buoys, you take 
one out, you only have a decrease of 2 percent while you're 
doing the maintenance. And it gets even easier than that, 
because the small tugboat that takes the buoy out to the site 
will take a refurbished one out, and it just will be a quick 
exchange over a short period of time.
    Senator Ensign. Mr. Raudebaugh, do you want to comment? 
Because I think that your organization is looking at all these 
private technologies and what the government is doing from the 
outside. Could you provide an outside perspective on some of 
the things that we have been talking about?
    Mr. Raudebaugh. Sure. Well, from a vehicle market 
perspective, as alluded to earlier, that market has been around 
for 80, 90, 100 years, and I don't know if there's been a more 
capital-intensive market in the world than the worldwide 
automotive market. So, it's very tough to compete, given that 
they've got an 80-year headstart and millions of times as much 
capital as we have on that electric vehicle side or the hybrid 
electric vehicle side. But we have advantages. Electric motors 
are much more efficient than an internal combustion engine is. 
Electric motors are a much better fit for a vehicle. What we 
have to do is, we have to get our products into the 
marketplace, because--the reason they're so good is, they've 
been in the marketplace, they've gotten feedback from all over 
the world on what works, what doesn't work. And I talked 
earlier about doing prototypes. We need to do prototypes. Five-
thousand hours in a lab is impressive, but if we don't build a 
prototype, how will we know how it does in the field in an 
automotive duty cycle or even a transit bus duty cycle, a 
transit bus duty cycle is much easier, because you have central 
refueling space and weight is not as much of an issue. The 
transit bus market is large, I think there are 80,000 out 
there, about 6,000 sold a year. Eighty percent of those are 
paid by the Federal Government, by the FTA. So, it's an 
excellent place for the government to bring these new 
technologies to the marketplace and to get the experience we 
need.
    One of the technologies I mentioned earlier, flywheel 
battery, is a mechanical battery. So, we have talked about 
batteries that do well to get 5,000-9,000 cycles over their 
lifetime. We've done tests on a flywheel battery that did 
106,000 cycles, which is--far exceeds the lifetime of a 
vehicle. And we had to quit testing, because we ran out of 
money to keep testing it. But, basically, as a mechanical 
battery, it works as long as the vehicle works, and then some. 
Now, you can't power a vehicle on a flywheel. It's a high-
power, low-energy device. But if you put a flywheel in 
conjunction with a fuel cell, and the flywheel does the 
acceleration for the fuel cell, then the duty cycle for the 
fuel cell is much easier. If you put it in conjunction with 
lithium-ion batteries, and you take the acceleration part out 
of the duty cycle for those batteries, they're--they will last 
longer, and you put less batteries onboard, because they have 
to provide the nominal power, not all the power to accelerate.
    So, these type of technologies are what are improved when 
you build prototypes, and what the fuel cell manufacturers find 
out, and what the battery manufacturers find out, is, maybe, 
given that you have an electrical system, the duty cycle for an 
automobile or a bus isn't that bad, because there are so many 
enabling technologies that will help you make the system work.
    Senator Ensign. I would like to make one comment; when we 
talk about some of the technologies that we are discussing 
today, many folks mention--as I did in my opening statement, 
the millions of barrels a day that we consume as petroleum 
products. Some of the technologies we're talking about today 
involve stationary power, some involve automotive power, but it 
would seem to me that, even with the battery technologies we're 
talking about here, when you combine the stationary with 
automotive or portable power--whether they're the fuel cells, 
the hybrids, or whatever, especially if you can charge them at 
home and you can use some of the products that you're using at 
off-peak times we can become less dependent on foreign oil, 
even through the stationary market. And the technologies that 
we have been talking about today, I think, are very exciting, 
and we have not even touched on the environmental benefits of 
all of these things. One of the problems that they are 
confronting in China right now is that--because they have very 
high sulfur fuels, there are a lot of complaints not only with 
traffic, but with the increased air pollution. Air pollution is 
very, very bad in China, particularly in urban centers. If 
you've been to China for any period of time, you feel such 
pollution in your collar. They use a lot of coal, but even now 
they are starting to get a lot of the sulfur problems that we 
have dealt with in this country. And China just does not have 
the economics yet to be able to change the refining capacity to 
lower sulfur types of fuel.
    So, I think the progress that has been made on alternative 
energy technologies in the United States is very exciting. I 
agree with some of the suggestions that have been made by this 
panel about the government's role. From my perspective, we 
subsidize petroleum and the auto industry in a lot of different 
ways, not just, necessarily with tax credits, like what we do 
to encourage the development of these new technologies. 
Consider, how much money do we spend with our military right 
now to make sure that oil flows to America? And we have 
exploration tax credits. We even have some things in our tax 
code that keeps that petroleum coming.
    The reality is that we will be dependent on petroleum 
products for quite some time. We all agree on that point. But 
how can we decrease that over time, especially as demand for 
energy in China is increasing, we had better be decreasing our 
use of petroleum products, or the cost of using such products 
is going to continue to skyrocket. I believe, as this committee 
and subcommittee, especially, is focused on the competitiveness 
aspects of America--the less dependent we can be on petroleum 
products, in general, I think that the more competitive we are 
going to be as our economy evolves and as our demands--in 
computing power, etc., increase. If we can satisfy some of 
those energy needs with a lot of what you all are doing, and 
other technologies that are out there, I believe that will put 
us in a better position in the global marketplace to be 
competitive. So, I'm very excited about some of the things that 
you all are doing here, and I want to encourage you to not only 
continue to pursue some of the things that you are doing, but 
also to give us the feedback that we need here at the Federal 
level. We could probably do a hearing per week on this topic 
for the next 50 weeks and barely scratch the surface of what is 
going on out there. But these kinds of hearings that bring the 
issues up and help educate some of us that are policymakers up 
here, I think, are very important.
    Maybe we can just spend a couple of minutes talking about 
one of the things that I hear from my colleagues. When we are 
talking about some of these new technologies, and we see op-eds 
sometimes written that state that the promise of solar 
technology, for instance, ``Oh, it's right around the corner.'' 
Some of these technologies--wind, wave technology, and battery 
technologies--have demonstrated advances. In fact we have seen 
advances in all of these technologies, But the issue of 
commercial viability remains and that is why I've spent some 
time on that. Maybe each of you could take 30 seconds on it, to 
answer the critics who would say that, ``America is just 
basically wasting this money that we're going to be investing 
in new alternative energy technologies--whether it's tax 
credits, whether it's subsidies, whatever it is, we're going to 
be wasting some of our money into the future, because the 
promises have been there, but these technologies still can't 
compete.''
    Dr. Gotcher. The competitiveness issue, or the price 
performance issue, is really a key challenge for businesses 
when they're bringing a new technology to market. As was said 
earlier by the panel, the playing field isn't really level. The 
in-place or entrenched technology has years of engineering and 
cost-reduction efforts, and it's been fine-tuned over a number 
of years. So, the challenge for a small company, like 
Altairnano, as we bring this new battery technology to market, 
is to pick the first battleplace in the market very carefully. 
And we need to pick a small opportunity, where we can exploit 
the advantages of the technology and where the marketplace is 
willing to pay for that improved performance. And I think 
that's, frankly, one of the reasons why so many new 
technologies don't succeed commercially. It's not because of 
the technology challenges. The technology works. It's the 
economic equation, price/performance. And when you have a large 
company that has been competing for a number of years, and they 
have significant market share, they have a lot of weapons to 
bring to the battle in the marketplace. And so, that first 
battle is really important. And I think we're trying to be very 
clear about where our entry point to that market will be, and 
the strategies that we use, trying to exploit the performance 
of our technology, which means we're going to try to exploit 
the weakness of the entrenched technology. But it's a tough 
battle, and it's not a level playing field.
    Dr. Preli. My thoughts are along the same lines. I think, 
first, what you need to do is look at the payoff we're trying 
to achieve. If you first look at, for example, an internal 
combustion engine or a diesel engine, versus a fuel cell or 
wind or solar, you'd say, ``Well, it's a tough economic 
proposition at first. Once you have volume, you can get 
there.'' So, I think you have to look past that into what the 
true payoff is. And you've touched upon it. We don't really pay 
the true cost of oil and petroleum to provide power. You 
mentioned military costs, but you didn't mention healthcare 
costs. It's hard to attribute exactly how much of our 
healthcare costs result from environmental effects, but I think 
we all are, more and more, agreeing that it's significant, and 
we're also concerned about climate change in the future. These 
costs are not added to the price of a gallon of gasoline. The 
motivation really is the ultimate payoff. And if you agree that 
these technologies will get you to where you want to be, then 
what you're really doing is incentivizing and providing a means 
to grow the volumes so the technologies can stand on their own.
    In the end, they'll not only be very economically-viable, 
but probably more so than a lot of the mechanical components we 
use today, and fuel cells will also provide these additional 
benefits that you've mentioned.
    Senator Ensign. OK.
    K.R.?
    Dr. Sridhar. Senator Ensign, if you look at just stationary 
power generation in the world, it's roughly a $2 trillion 
market, growing at about a 10-percent rate. And, given that we 
can't meet the global electricity needs, as it's being 
projected, with a few billion people coming out of abject 
poverty to even lower middle class, we know that the existing 
solutions, as they go, are not going to scale, they're not 
sustainable. So, the market pull is enormous. So, be it a small 
start-up like us, Ion America, or be it the large guys, like 
United Technologies or General Electric, there's no reason for 
Federal dollars to go into R&D to be able to do this. The 
market opportunity is so large. If we believe something can 
work, we don't need R&D dollars. By putting R&D dollars into 
any of these things, at the industry level--I'm not talking 
about academia and national labs--at the industry level, we're 
trying to pick winners and losers, and I don't think we should 
be doing that. That's not the role of the Federal Government. 
However, if you take established industries and look what the 
government has done in the past, which has been very 
successful, you build a backbone for them to grow. If it is the 
Internet and everything that we look at, it is the ARPANET. 
And, you know, that was put in by the government. It was the 
highways, it was the transmission/distribution infrastructure. 
For this particular industry, it is going to be going from 
feasible, demonstrable projects to commercialization, that 
chasm. Because without the economies-of-scale, you can't get to 
cost. That is the place to help. So, the government as an early 
adopter is the single best place that the government can put 
its money.
    And you should be technology agnostic. You must say, 
``These are the criteria. It is efficiency, it is emissions, it 
is dependence on oil,'' and keep raising that bar so we go do 
that. I think that's the best help we can get.
    Senator Ensign. I wish there was another Senator here, 
because I have to step out just for a moment to take a phone 
call. I will be right back. So, if you could just hold on, 
because I would like to finish this discussion. OK? Thank you.
    [Recess]
    Senator Ensign. Sorry.
    Mr. Werner?
    Mr. Werner. OK. So, once again, I think solar is in a good 
situation here. First of all, what I would say is, SunPower is 
the fastest-growing technology company for the last five 
quarters, in terms of revenue growth, so solar is real, and 
even in North America. But when you look outside of--or when 
you look at the economic-viability, I don't think it's a 
question of ``When''--I'm sorry--I don't think it's a question 
of ``if,'' I think it's a question of ``when'' and ``who.'' 
When, as in the next 5 years, in the next 10 years? And, who, 
is it going to be, American companies, or is it going to be 
Germany or Japan? Those are the other leading countries. And, 
just briefly, how do you get economically-viable--let me use 
our company as an example. We convert more sunlight to power 
than anybody in the world. Today we convert 20 percent of the 
sunlight that hits our product into power. We can get that up 
to 25 percent. So, in just that one measure, 20 to 25 percent, 
we can lower the cost of solar power by 25 percent. All of the 
value changes divided by the number of watts you produce, just 
by one metric, one innovation metric, which is what we excel 
at, we can pull 25 percent of the cost out. And we estimate we 
need 40 percent of the cost to go mainstream to address the $1 
or $2 trillion electricity market. So, on one innovation 
factor, we get over halfway there. And, of course, as you 
scale, then you get manufacturing efficiencies, and you get 
more than the balance. So, it's not a question of ``if'' you'll 
be--``if'' solar goes mainstream, it's a question of ``when'' 
and ``who.'' And with a predictable market, of course, we hope 
that'll be an American company--namely, us.
    Senator Ensign. Mr. Corsell?
    Mr. Corsell. Senator, three quick points. First, on the 
technology. Obviously, we would all agree here that the 
technology is real. The issues we're facing have to do with 
market adoption and existing methods of producing energy and 
consuming energy, and how we compete on a price/performance 
basis. As we have seen with the solar industry of late, and the 
rise in hybrid cars, these technologies have penetrated the 
market, and are now beginning to benefit from cost reductions 
at large volumes of production.
    On the issue of energy itself, we have an entrenched power 
generation infrastructure that has a negative environmental 
impact. And I think everyone on this panel is here, in large 
measure, because we care about clean energy. If we're going to 
accord value to the fact that energy produced from solar panels 
is clean, where energy produced from a coal plant is 
substantially less so, it only makes economic sense to allow 
that cost to surface so that customers deal with it. If you 
subvent the price of dirty power so that the customer has no 
economic incentive to choose clean power, then we, as a 
society, are saying, ``There is no value to having reduced air 
pollution.''
    Finally, a lot of this has to do with information and 
educating the customer. And that's why GridPoint focuses on the 
information component. Our systems provide customers with 
visibility, for the first time, to say, ``Here's what I'm 
spending per month on each appliance.'' That opaque electric 
bill, which is going up all across the country--it's driving 
people nuts, it's something they have to pay, just like taxes, 
and they don't really understand it. We provide a window 
through GridPoint Central, which is our online web portal, into 
how that money is being spent. We say, ``Here is the actual 
economic benefit of those solar panels you've put on your 
house, in real dollars.'' We say, you know, ``Power doesn't 
really cost the same throughout the day. Here are the decisions 
we're making to purchase you less power when it's expensive and 
more power when it's cheap.'' And that education component is 
significant, because as people realize that there's something 
they can do to take control of their energy situation, they 
begin to think, ``Well, you know, maybe I should invest in 
solar panels, now that I see how much they can save me.'' You 
know, ``Maybe I should allow the system to run my clothes dryer 
at night, or run my pool pump when utility rates are 
cheapest.''
    So, just going to market-based pricing for utilities makes 
a whole lot of sense, because if you place customers in a 
framework where they have to pay different prices for power 
based on the underlying economic and environmental 
considerations, they'll adopt technology to make those choices 
all on their own. But if you subvent the true costs--you 
mentioned the cost of military supporting the existing oil 
economy--when you have a system like we have now, people aren't 
forced to deal with those costs directly. And if they're not 
forced to pay the price, they're going to have less incentive 
to adopt these new technologies. We believe that education and 
transparency are critical for customers to chose conservation 
with minimum government support.
    Dr. Taylor. I'd agree with several of the other panelists 
in their comments about the need to get into volume 
manufacturing of one's renewable technology. In our case, we 
believe that in the next 3 years we should be able to have 50 
megawatts of wave power systems in the ocean; and we believe, 
once we've got to that level of manufacturing, our economics 
will come down to the point that we're competitive against 
fossil fuel such as oil at $30 a barrel. So, I think this 
crossover, in our case, will occur, and, for all the other 
renewable technologies, will occur quicker, just because of the 
market forces in the oil industry and also the coal industry.
    One interesting metric that perhaps is unique about what 
we're doing is that if you have an oil lease of a million 
barrels of oil, that million barrels of oil if used in a oil-
burning power station, will produce 100 megawatts in 1 year. 
Compare that with taking 100 acres of surface area, literally a 
drop in the bucket, as it were, on the--given the size of the 
ocean--but 100 acres of surface area where there's good wave 
energy will produce 100 megawatts per year, but it will keep 
producing it forever. So, you can say--you can draw a direct 
relationship between the amount of wave energy that's out 
there, versus the barrels of oil that we are rapidly depleting 
around the world.
    Mr. Raudebaugh. I'm going to speak to the transportation, 
and primarily automotive market, again. And trying to get into 
that market's tough, because our automobiles work. They work 
well, obviously. And gasoline, even at $3 a gallon is cheap. 
But what is the advantage for electric vehicles, battery 
vehicles, hybrid vehicles, fuel cell vehicles? The advantage is 
efficiency. We're more efficient. The internal combustion 
engine, when converting the potential energy in a gallon of gas 
to power is about 25-percent efficient, at best. Fuel cells--
and if I'm low--correct me, but a PEM fuel cell can achieve in 
the 40- to 50-percent range of converting potential energy in 
hydrogen to motive power. An electric vehicle can convert in 
the neighborhood of 80 to 90 percent of the potential energy in 
batteries to power. And because we're more efficient, that 
means our operating costs are lower. So, when gas is $1 a 
gallon, lower operating costs don't make a lot of difference. 
And as gas continues to rise, those operating margins become 
more significant--that delta becomes bigger and bigger, and 
there's more of a market. And that's why hybrids are starting 
to jump into the market now.
    Our disadvantage is volume manufacturing, period. In 1994, 
my boss at the time went and visited with Chrysler, to talk 
about electric vehicles and before they took him into the 
conference room, where they had encased in glass, a 3.3-liter 
Mitsubishi engine that they put in their minivan at the time, 
and they said, ``Our cost at volume on that engine is less than 
$700.'' If you were to try to build one of those engines in the 
numbers that we're building fuel cells, which are, ten at a 
time when we're lucky, you would be looking at hundreds of 
thousands of dollars to design the engine, machine the parts, 
and do it, but it--in a volume manufacturing situation, you 
just really can't jump into the market until your operating 
advantage becomes great enough that people will pay a premium 
to get you there. And you find niche markets to try to get your 
volume up, which--we've talked about the bus market, the heavy-
duty vehicle market as an example of how we can do that.
    And one thing we know is, as demand for petroleum continues 
to increase faster than supply is available, at some point--we 
don't know when, everybody would probably have a prediction 
that's different--but, at some point, worldwide oil production 
will level off and start decreasing. Whether that's 5 years 
away or 20 years away, when that happens, the market will 
explode. Our operating-cost advantage will be huge.
    So, the question is, what have you done between now and 
then? If it's 5 years away or if it's 10 years away, is it 
going to be the European market, is it going to be the Japanese 
market that's going to invest the capital, some winners, some 
losers, in these technologies, so that we're ready for that 
day, so that when that happens, and all of a sudden $3 a gallon 
looks dirt cheap, are we going to be ready?
    So, you've got to invest money in these technologies. 
You've got to find niche markets for them. The heavy-duty 
vehicle market is what we are suggesting you invest in. You've 
got to get prototype vehicles out there, so that they can get 
the volume up, so, when this operating advantage becomes big 
enough, the market will be there, and we'll have success, and 
we'll have clean-burning, more-efficient vehicles on the road.
    Senator Ensign. I have more questions than we have time 
today. And if I could submit to each one of you the rest of the 
questions that we have, if you could get back to us, so that we 
can have those for the record and be able to go through those, 
I would appreciate it.
    I have truly enjoyed this panel, and appreciate you all 
being here. I think this has been very valuable, and I look 
forward, also, to reading some of the written responses to the 
questions. They're fairly detailed, and that's the reason we 
don't have--you know, each one of the answers will probably 
take 20 minutes. So, I'd appreciate if you could get back to 
us. But I really appreciate each one of you being here and 
taking the time out to spend some time with us.
    Thank you. And this hearing's adjourned.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]
                            A P P E N D I X

    Response to Written Questions Submitted by Hon. John Ensign to 
                         Alan J. Gotcher, Ph.D.
    Question 1. Lithium ion battery technology has revolutionized the 
portable device market. Deploying the technology to the automotive 
industry, however, is a large-scale undertaking. One challenge, faced 
by large automakers incorporating hybrid technology into their 
production mix, is that they are looking for a battery company to 
deliver a finished integrated system, not just the component pieces. 
How is Altair Nanotechnologies poised to address the demands of 
automobile companies, like Toyota and Honda, as they begin to market 
new hybrid technologies?
    Answer. The current state of lithium-ion battery technology, as 
used in the portable device market (e.g., cell phones) has inherent 
safety, longevity, and performance issues that inhibit its direct 
application in the large size and format configurations required by the 
automotive industry. Altairnano' s lithium titanate spinel technology 
has successfully addressed these issues and offers economically- and 
technically-viable solutions that are ideal for large format 
applications, both automotive and stationary market applications. (See 
Dr. Gotcher's testimony to the Senate.)
    Altairnano is rapidly validating the use of nanomaterials in EV, 
HEV and PHEV applications, in conjunction with various automotive 
component partners, while ramping up the production capability for 
these materials, securing battery cell production capacity and 
installing battery module and battery pack capacity, in order to make 
them readily available as soon as the vehicle manufactures design and 
set production schedules for their EV/HEV/PHEV vehicles. Given that OEM 
vehicle design programs take a minimum of two to 4 years to implement 
new component technology, Altairnano has taken the necessary steps 
create the awareness and to make the technology and products available 
to the major global OEMs through well established contacts and 
relationships.
    Altairnano has the total transportation market in view, and the 
company recognizes that it will take many alliances and partnerships to 
organize the supply chain that will be necessary for the automotive 
supplier network to provide finished, integrated systems. Altairnano's 
business development staff has established numerous contacts and 
relationships to be prepared to initiate its part of the supply chain 
when the OEMs are ready to make the transition. That said, however, the 
timing and pace of market introduction and the relative speed of market 
penetration by EV/HEV/PHEV vehicles will be determined by the 
automotive companies, public transportation polices, and international 
energy markets. Altairnano's ability to initiate capital investment and 
resource development for making their new lithium-based batteries for 
automotive applications will depend entirely upon the decisions of 
downstream automobile manufacturers, government policymakers, and those 
who buy vehicles.

    Question 2. Unmanned aerial vehicles (UAVs) have become a very 
important component in both the global war on terror and in the efforts 
to secure our Nation's borders. Improving the performance of a UAV 
could determine the success of a mission, like the one used to track 
and kill Abu Musab al-Zarqawi in June of this year. Can companies like 
Altair Nanotechnologies, develop technology fast enough, and at a large 
enough scale, to meet the quickly evolving needs of our industries--
including our military and homeland security needs?
    Answer. Many people have argued that only small, highly innovative 
companies--such as Altairnano--can move quickly enough, and can push 
research and development sufficiently ``outside the box,'' to 
effectively meet emerging or only recently anticipated threats and 
opportunities. Using the UAV example, Altairnano's new nanobattery 
technology, based upon nano-lithium titanate spinel, could prove both 
lightweight enough and long-endurance enough to permit small, field-
portable UAVs to fly for many hours without landing for fuel, and then 
to be fully recharged (from a light truck or field generator) and 
returned to flight duty within minutes. Such capability would provide 
an infantry unit or a reconnaissance patrol with virtually constant 
``eye in the sky'' capability to survey the terrain around within 
miles. Larger size UAVs, flying for hours on end, could function 
constantly to locate and track enemy movements, surveil fixed positions 
or suspected hideouts, or attack with munitions repeatedly as necessary 
over the course of many hours. Moreover, being driven by an electric 
motor, the noise emitted by an electric UAV would be minimal, adding a 
stealth component to its attributes.
    Altairnano has also been performing R&D, in partnership with 
Western Michigan University, to develop nanosensors that are capable of 
detecting chemical, biological or radiological agents or explosives 
materials from a distance. Our nanosensors, which are being prototyped 
and uniquely are virtually free of false-positive reactions, are 
designed to be embedded in or attached to Altairnano's titanium 
nanocrystals, providing the sensors with tremendous physical protection 
and longevity. In one application being considered, these sensors could 
be applied to the skin of a UAV to act as a ``phased array sensor'' 
that could detect and locate the source of a wide range of hazardous or 
dangerous chem./bio/rad agents, even when those agents are present in 
the air in only minute quantities.
    In both these examples, Altairnano's materials are, or will be when 
in full production, cost-effective and economically-competitive with 
less capable alternatives. The real question for small companies like 
ours is whether we can attract sufficient capital investment to 
graduate from being innovators to being large-scale producers of 
materials and products. That is difficult, because institutional 
investors generally insist on seeing product-line revenues from a 
company before they will make investments. It becomes a chicken-and-egg 
situation. Help from the Federal Government, such as the EPACT 2005 
authorization for loan-guarantees to companies seeking to manufacture 
products embodying new energy generation technologies or technologies 
for greater energy efficiency, is absolutely critical. Yet the Energy 
Department's program to provide those guarantees, which is just now 
being rolled out, is woefully inadequate in the size of its funding 
pool to make more than a tiny drop in the country's need for capital 
that is available for highly innovative, quick turn-around, fast start-
up new technological opportunities.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John Ensign to 
                       Dr. Francis R. Preli, Jr.
    Question 1. In your testimony, you state that, ``Deployment of fuel 
cell vehicles powered by renewable sources of hydrogen can break our 
dependence on imported oil and at the same time take transportation out 
of the environmental debate.'' You add, however, that, ``fuel cell 
vehicles for private use in meaningful quantities are a decade away.'' 
Please elaborate on why this is so?
    Answer. Three key issues need to be addressed in order to enable 
the full-scale deployment of fuel cell vehicles for personal 
transportation: (1) Technology readiness of the fuel cell power plant 
that must be able to operate with the same robustness and in the same 
environments as today's vehicles, (2) Hydrogen storage capacities that 
currently are not sufficient and require further development, and (3) 
Hydrogen infrastructure that must be built to allow convenient fueling 
of the vehicles. Great progress is being made with respect to 
technology readiness of the fuel cell, but much more work is required 
to adequately address the hydrogen storage issues. The infrastructure 
issues do not present a large technology challenge but will require 
significant investment over a period of time to build the fueling 
stations.
    We believe municipal transit buses represent the nearest-term 
transportation opportunity for deployment of fuel cell vehicles. The 
three barriers to developing the personal vehicle market mentioned 
above are not as significant for transit buses. For example, more space 
is available on the bus for the fuel cell and the hydrogen storage and 
the buses are routinely fueled from a single location, alleviating the 
need for big investments in hydrogen infrastructure. Today, the main 
barriers to deployment of fuel cell technology in the bus market are 
cost and durability. Cost issues are volume dependent and great 
progress is being made in fuel cell durability, so large scale 
deployment of buses could begin more quickly with the support of the 
public and private sector.

    Question 2. Do you feel that any state and/or Federal regulations 
make it unreasonably difficult for fuel cell technology to compete with 
more established energy providers?
    Answer. Regulations sometime hamper the deployment of stationary 
fuel cells due to the variety of state regulations relating to grid 
interconnect and restrictions on utility ownership of distributed 
generation equipment at the customer facility. Also, high standby 
connect charges for customers that choose to produce their own power 
can sometimes negate an otherwise attractive value proposition. So far, 
state/Federal regulations have not hampered the bus and automotive 
markets. In fact, California's Zero Emission Bus mandate has been a 
positive force in the development and commercialization of fuel cell 
technology for this specific market.

    Question 3. In your testimony, you discuss how fuel cells can 
improve the Hurricane Katrina reconstruction efforts. As we enter 
anther hurricane season, how do you think fuel cells should be used to 
help populations recover from the destructive powers of nature?
    Answer. Stationary fuel cells currently operate primarily on 
natural gas. Generally, the natural gas grid remains intact during a 
hurricane. In the cases where the natural gas grid is disrupted, the 
damage is usually much less severe than the damage to the electrical 
grid. So these stationary power plants could remain operational, for 
example at hospitals, fire and police stations and emergency shelters 
even after a severe hurricane. Fuel cells have a relatively small 
footprint and low noise, which allows them to be installed within 
buildings to further maximize their ability to provide continuous power 
in the event of flooding.
    Another use of fuel cells for disaster relief would be to drive 
fuel cell powered buses to critical buildings after a storm. UTC Power 
has a contract with DOD to validate the capability of our 
PureMotionTM fuel cell bus power plant to export power to 
the electric grid or other critical infrastructure. The fuel cell 
electricity, normally used to power the bus, could be used to provide 
these key buildings with power until the grid is restored. The bus 
power plant can continue to provide power as long as hydrogen is 
available. The hydrogen could be delivered along with the bus or the 
buses could rotate duty until the crisis passes.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John Ensign to 
                            Dr. K.R. Sridhar
    Question 1. In your testimony you mention that to facilitate the 
adoption of new, innovative energy technologies, the Federal 
Government, ``needs to ensure a level playing field between new energy 
technologies and legacy petroleum-based solutions.'' Please elaborate 
on the factors that you think make the playing field between new energy 
technologies and legacy petroleum-based solutions unequal.
    Answer. The legacy petroleum-based industries benefit from the 
combination and accumulation of decades of Federal assistance. Federal 
support comes in the form of direct subsidies, beneficial tax 
incentives, and other legislative and regulatory assistance. The 
Federal aid that the utilities and oil and gas companies receive dwarfs 
the amount of support that has gone to alternative energy technology 
research, development and deployment over the years. Subsequently, an 
uneven playing field has been created resulting in an uphill battle for 
new technologies trying to provide viable alternatives to the incumbent 
utility, oil and gas industries.
    In 2000, the U.S. Government Accounting Office released a report 
comparing the petroleum tax incentives with the incentives provided to 
the ethanol industry (GAO/RCED-00-301 R--Tax Incentives for Petroleum 
and Ethanol Fuel). This report states that the largest component of 
Federal support for the petroleum industry comes in the form of 
allowing an arcane accounting procedure that allows oil and gas 
producers to depreciate capital investments as a percentage of revenue 
rather than in relation to actual costs. This has amounted to a tax 
break of $82 billion dollars over 32 years. In addition to allowing 
this unique accounting procedure, the GAO lists over $50 billion in tax 
incentives and subsidies that the petroleum industry has received over 
the years. The GAO compared the over $130 billion in Federal support 
for the petroleum industry to the approximately $11 billion that the 
ethanol industry has received to highlight the uneven playing field as 
it relates to biofuels.
    In addition, the 2005 EPAct further exacerbates the discrepancy 
between the Federal Government's support for the incumbent oil and gas 
industries relative to alternative energy technologies. The Joint 
Committee on Taxation reported to Congress about the extent of 
subsidies contained in the law (http://www.house.gov/jct/x-59-05.pdf). 
That report concludes that of the $11.525 billion in the 2005 EPAct, 
close to $8 billion goes to the electric utilities and the oil and gas 
industries.
    Most recently, the Federal Government waived approximately $7 
billion in royalty payments to encourage the petroleum companies to 
drill in the Gulf of Mexico. All the while, the companies receiving 
these billions of dollars of aid are reporting unprecedented earnings 
to Wall Street.
    Furthermore, the billions of dollars in direct and indirect support 
that the Federal Government provides the legacy petroleum industry does 
not even begin to address the ancillary costs we bear for buttressing 
our continued dependence on foreign oil. The hidden costs we pay to 
subsidize the petroleum companies come from the military costs 
associated with socio-political instability, as well as the unmonetized 
air pollution costs that come from the combustion of fossil fuels.
    Meanwhile, the International Energy Agency estimates that less than 
$30 billion has collectively been spent internationally on renewable 
energy RD&D over the 30 years from 1974-2003 (Renewable Energy: RD&D 
Priorities, Insights from IEA Technology Programmes). That 
international figure pales in comparison to the subsidies the U.S. 
Federal Government pays to the petroleum industry. If just a portion of 
the United States Federal support for the legacy petroleum industries 
was dedicated to promoting renewable energy, it could help level the 
playing field and lead to significant advancement toward the goal of 
ending our Nation's addition to oil.

    Question 2. You mention in your testimony that your company, ``can 
trace its roots to the Federal Government's commitment to innovation.'' 
Do you think that the Federal Government's continued investment in 
basic research will help the development of your industry?
    Answer. The United States Federal Government needs to promote 
innovation in alternative energy by working with industry to help 
foster and commercialize innovative energy solutions with the same 
sense of national purpose that we had when working on the mission to 
the moon a generation ago. The Apollo mission was driven by political 
necessity, commitment of leadership, strong public support, and the 
need to demonstrate technical prowess and superiority. A similar 
convergence of factors is at play today in the energy arena. The stakes 
are energy security and independence, sustainable growth, environmental 
impact, quality-of-life, and economic leadership.
    But what is the best way for the Federal Government to help the 
development of this industry? How should precious Federal dollars be 
spent to commercialize clean energy technologies? Providing basic 
research funding to academia is important to foster innovation and to 
nurture the young American scientists who we will rely upon to succeed 
in the twenty-first century. University research is very important to 
promote American competitiveness. However, I do not believe that the 
Federal Government should invest in specific technology development; it 
is not the government's role to pick winning and losing technologies in 
the research and development stage. Private capital is flowing into 
clean energy and the private sector is already dedicating funds to 
support promising technology development. Now that the clean energy 
technology sector has become the third largest recipient of private 
venture capital investment dollars, tax payer dollars should not be 
allocated to clean-tech R&D.
    Instead, the Federal Government needs to be an early adopter and a 
leader in purchasing viable-innovative energy technologies.
    Venture capital investment dollars can usher new technologies up 
through the product development and testing stages, but the U.S. 
Government needs to commit to help American clean-tech companies cross 
the chasm and become commercially-viable substitutes for traditional 
petroleum-based electricity generation. The major challenge for this 
industry is to evolve from feasible, demonstrable projects to 
commercial products that are cost-competitive with the grid. Without 
economies-of-scale, clean energy technologies will struggle to achieve 
the cost reductions that will enable them to compete. In order to 
achieve wide-scale adoption in the United States, viable alternative 
energy solutions need a temporary benefactor.
    The Federal Government needs to exert its buying power to signal 
its commitment to ending our Nation's addiction to oil. Although it 
means that the Federal Government will sometimes need to pay ``pre-
production'' prices for some emerging energy technologies, it will 
signal a willingness to share the risk with the innovators and 
entrepreneurs for the benefit of national security. In order to foster 
innovation and encourage new solutions to our energy problems, the U.S. 
Government needs to lead by example and flex its consumer muscle.
    The Federal Government is the single largest consumer of energy in 
the country, consuming almost one quadrillion BTUs of energy annually 
and spending over $200 billion on products and services. That fact 
gives it a lot of power and a lot of influence over the energy sector. 
A lot more influence perhaps than legislation ever could. The power of 
the almighty dollar is strong.
    While basic academic research is fundamental to promoting American 
innovation, the single best place that the government can spend Federal 
dollars to promote the development of the clean energy industry is to 
be an early adopter of clean energy technologies.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John Ensign to 
                            Thomas H. Werner
    Question 1. In your testimony, you note that private sector 
investment is increasingly driving your company's technology advances 
and scale-up. Please elaborate on why this is so, especially in an 
industry that has traditionally obtained major support from the Federal 
Government and state governments.
    Answer. The solar manufacturing capital investment is not directly 
supported by U.S. state and Federal rebate and tax credit programs. 
Capital costs per manufacturing line run in the $25-$50 MM range within 
plants containing 4-10 manufacturing lines. Thus, in order to invest in 
new capacity, hundreds of millions of dollars of capital are required. 
SunPower, and a dozen other major publicly-traded solar manufacturers, 
are now able to raise money in the equity and debt markets to fund this 
level of investment, a situation that did not exist 5 years ago. The 
ability of public companies to raise capital is tied to the emergence 
of stable, long-term market development policies in states across the 
U.S., the Federal investment tax credit and other countries' programs 
in Europe and Asia.

    Question 2. In your testimony, you discuss the fact that SunPower 
is, ``the fastest growing U.S.-based, publicly-traded technology 
company in terms of revenue growth over the last 5 quarters.'' Please 
elaborate on how your domestic success is linked to the overall 
development of the global solar market?
    Answer. SunPower's financial market success is directly tied to 
investors' confidence that that U.S. state and Federal market 
development policies, aimed as dropping the installed cost of solar 
systems to customers, and similar programs in other countries, are 
sufficient in duration and scale to bridge the solar market to price 
parity with retail electric rates. These programs are proliferating 
around the world and demonstrating success in creating the demand that 
is drawing capital into the industry to rapidly scale manufacturing 
additions to drop costs.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John Ensign to 
                          Dr. George W. Taylor
    Question 1. In your testimony, you indicate that wave energy is the 
most concentrated form of renewable energy and can be transmitted to 
on-shore power grids via underwater cable. How far inland is it 
feasible to transmit wave energy? What is the potential power 
generation?
    Answer. The energy from any power station, including a wave power 
station, can in theory be transmitted any distance by high voltage 
transmission lines (i.e., the grid ). However the cost of long-distance 
lines makes it uneconomic to use long lines. The shorter the distance 
between the power station and the location of the users of the 
electricity the smaller the transmission costs for the electricity. In 
the USA, and also in many other countries, wave energy has the 
intrinsic advantage that more than 50 percent of the population live 
within 50 miles of the coast. Thus wave power stations will be located 
very close to where the electricity will be consumed. As a result 
transmission costs to connect the wave power station to the on-shore 
grid will be minimum.
    The potential for wave power is enormous. It has been calculated 
that wave power in the oceans of the world could produce two Tera Watts 
of electricity. This is twice the world's current usage. The British 
Government has calculated that wave power could produce 20 percent of 
the UK's electricity needs. California, Oregon, Washington State, 
Hawaii and Alaska and some of the northeastern states of the USA have 
excellent wave energy resources capable of producing a large portion of 
their electrical power needs.

    Question 2. One of the challenges cited with wave technology is the 
reliance on a certain level of wave activity to generate energy. How 
has the technology developed by your company overcome this hurdle? Does 
the supply feed the grid at a continuous rate, regardless of real-time 
generation? Does the technology require a location with consistent wave 
generation?
    Answer. Of all the types of renewable power, wave power comes 
closest to being able to produce base load power generated by 
conventional fossil fueled power stations. Unlike wind or solar power, 
wave power is very predictable and consistent. It is possible to know 
hours and even days in advance from satellite photography what the wave 
power and hence the amount of electricity that will be generated by a 
wave power station.
    The OPT PowerBuoyTM is designed to produce electricity 
efficiently and economically from waves in the range 1 to 4 meters in 
height and for periods from 3 to 20 seconds. This is achieved with 
OPT's patented technology, which is able to tune the system 
automatically to varying wave conditions. There are many sites 1 to 3 
miles off the U.S. coastlines that have waves with amplitudes and 
periods that are in the ranges listed above. These potential sites for 
wave power stations typically are capable of producing and feeding into 
the grid electrical power 90 percent of the time. The non-productive 10 
percent of the time takes into account the calm periods (less than 1 
meter waves) and storm waves (greater than 4 meter waves). An OPT Wave 
Power Station would have a load factor of between 30 and 45 percent 
depending on the specific site. By comparison the comparable numbers 
for wind are 25 to 35 percent and for solar 10 to 20 percent.

    Question 3. Another challenge associated with wave technology is 
the construction of devices that can withstand Mother Nature. 
Previously deployed designs have suffered interrupted activity due to 
broken welding or snapped mooring lines. How has the 
PowerBuoyTM developed by Ocean Power Technologies met this 
challenge: to remain sustainable without creating a device that is too 
overbuilt to harness the energy from the waves?
    Answer. Since Ocean Power Technologies (OPT) began operations in 
1994, it has focused on the design of wave power conversion systems 
that can survive the enormous forces that occur in the ocean during 
storms and hurricanes and at the same time can be built economically.
    OPT's design approach has been to utilize a buoy like structure to 
house its wave energy conversion system. Buoys are a well proven and 
ocean tested devices, that the U.S. Coast Guard and other maritime 
authorities have shown can, if properly maintained, have a 40-year 
life.
    The OPT PowerBuoyTM is designed to automatically ``lock-
down'' when the waves exceed 4 meters and to survive storm waves of up 
to 20 meters in height and then to automatically begin operating again 
when the waves return to 4 meters.
    OPT began ocean testing its PowerBuoysTM off the coast 
of New Jersey in 1997. Since then it has undertaken many tests of its 
PowerBuoysTM in both the Atlantic and the Pacific Oceans. 
The tests have shown that OPT's PowerBuoysTM can 
successfully survive hurricane and winter storms.

                                  
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