rection the country is going right now. It's just not headed toward these riskier things, regardless of the amount of payoff at the end. Senator EVANS. Maybe we ought to send some of our people to different MBA schools than Harvard and Stanford that are turning out that kind of management. On the Stirling engine, this is, I know, at least the third report I've sat in on where you have testified on the progress which, in each case, appears to be quite substantial. But what is your outlook again on this one? How far are we away? You say the progress has been very substantial. You are getting the transitional process from Government funding to private sector investment in commercialization. But it will all be lost if fiscal 1987 funding is not forthcoming. How much funding would be required for a continuation from Government in your company for this particular product? Dr. LLOYD LAWRENCE. We have been consistent for the last 2 years in that, I believe, Mr. Chairman. We are consistent one more time. Fiscal 1987 would be the last year for the main program. We are asking for $8 million for fiscal year 1987. I might point out that we expect the private sector to pick up the additional $4 million that would be needed to complete the program in fiscal year 1987 through a variety of sources. Senator EVANS. To finish the program? Dr. LLOYD LAWRENCE. Yes. We have been consistent in that in the last 2 years and we are consistent again. Fiscal 1987 will be the last year of the automobile Stirling engine program. I might point out that- Senator EVANS. What do you have in hand for fiscal year 1987? Dr. LLOYD LAWRENCE. At the end of fiscal year 1987 we will have the MOD II pretty well developed. It should be to the point where it would be attractive enough to the private sector that we can move on with that. We feel it truly will be. I have a chart on page 10 of the testimony basically showing the kinds of progress we have made in the 8 years of the program, reducing things like the weight power from 14 pounds of horsepower down to 5.5, reducing the costs way down and taking a lot of the unreliable aspects of the engine into making them reliable. So we truly feel that we will be there. It will be time for the private sector to pick it up in fiscal 1988. I might point out at this time, Mr. Chairman, we are under the deferral thing, and we have in fact gone through a layoff last week. So we had laid off some of the folks that represent the world's leading group in this technology. If the deferral is not reversed, then I don't think any of this makes too much sense because we will simply have to eliminate what the country presently has in this capability. Senator EVANS Do you have an interest at this point an interest to the degree of providing any resources for continued advancement from any of the three major automobile companies in the country? Dr. LLOYD LAWRENCE. The General Motors Corp. tends to kind of reflect who you ask there. We have had exactly the kind of support we would hope for from them to date. They have taken one of our automobiles with an engine in it and fully tested it 11⁄2 years ago and have indicated they would do the same with the MOD II. I think they have a very large corporation and a tremendous amount of product at stake and for them to do much more than that at this point in time would be unrealistic, I think. The other two, both Chrysler and Ford have been watching and have been participating with us occasionally and have been sitting and waiting to see whether we could do what we claim we can with the Mod II. Senator EVANS. Apparently, that same attitude does not prevail in Japan, where you say in your testimony that two major Japanese automobile companies, which presumably have just as much at stake in current technology and production, are moving quite rapidly. Is that accurate? Dr. LLOYD LAWRENCE. I think it's even worse than that, Mr. Chairman. We personally right now find ourselves under a great deal of pressure from a couple of large Japanese companies who have approached us and have offered us a great deal of money to transfer this technology to Japan. We have taken the position that this country has paid for the technology; people like yourself have supported us for a number of years, and we think this should be something to help our competitiveness and not hurt it. As long as that is possible, that is the way we are going to go with this. Senator EVANS. So, as I understand it, two comparable automobile companies, national overall leaders-I don't know which Japanese companies they are, but I would guess they are probably some of the big ones. Dr. LLOYD LAWRENCE. There are two major Japanese industrial firms. Neither is an automotive company. They both have manufacturing capabilities for engines. Senator EVANS. Well, whether you put it alongside the American engine company, automobile company, or whatever, it seems to me that there are parallels in both the heat pump as you mentioned and now in this engine, that the attitude of the American company is wait and see until it's proven so there is no risk to us. And then we might be interested in doing something. Whereas, the Japanese are saying, this is a new idea; we are trying to do something better to keep a technological edge. So we are willing to put an investment, even if there is risk. Is that a pretty fair estimate of the attitude? Dr. LLOYD LAWRENCE. I think it really is, Mr. Chairman. Unfortunately, I do not know of a corporate entity in the United States that has national benefit as an investment criteria. In Japan it is different. Senator EVANS. But in this case, whether the national benefit flows out of that. But it is also, I guess, they are looking at least primarily to some commercial benefit, potential commercial benefit. They just have a longer time on it, in terms of their attitudes. Dr. LLOYD LAWRENCE. I think that is certainly true. Senator EVANS. That is a sad commentary on our own industrial leadership, it seems to me. Thank you very much for coming. It is interesting each year. I hope one of these years you will drive one of your cars up to the door and thumb your nose at General Motors on the way. Dr. LLOYD LAWRENCE. It will happen. Thank you very much, Mr. Chairman. STATEMENT OF DR. STUART L. RIDGEWAY, PROGRAM MANAGER, Dr. RIDGEWAY. Mr. Chairman, I thank you for this opportunity to present this testimony to the subcommittee. I am Dr. Stuart Ridgeway, program manager at R&D and Associates and I will talk about this engine and its experiences in DOE. The purpose of the Ocean Thermal Energy Program in the U.S. Government is to develop the technology to exploit enormous energy resource in tropical oceans. The temperature difference be tween the surface and the depths of these oceans can be used to power a heat engine to make electricity. So far the engines that use conventional technology have been far too expensive. In 1977 the mist lift process, a new inexpensive heat engine concept to harness the OTEC resource, was introduced to the OTEC community. DOE research support of about $600,000 bore fruit in 1980-81 and the technical feasibility was demonstrated in laboratory scale experiments. Operation on the ocean resource was accomplished in a Solar Institute Research Institute supported experiment in 1983 at Ke-ahle Point, HI. However further development has ceased due to budgetary constraints. A recent cost study shows that the mist lift powerplant will cost about $1,500 per kilowatt. This cost is competitive with the cost of a coal-fired plant with scrubbers, considerably less than that of a nuclear plant, and less than half of the costs anticipated for other OTEC schemes. Therefore, simple economics dictate that the develop should resume. At present, DOE funds for OTEC are inadequate, particularly when the appropriated money is not spent. The development of an advanced OTEC technology is an appropriate area for Government research and development. The largest rewards of the successful development and commercialization of OTEC will fall mostly to the consumers of electricity or energy-intensive products, so it is right and reasonable that they take on the development risks. Utilities would have little or not payoff since their regulatory commissions will only reduce their rates if such a development succeeds and may not even allow the sunk R&D costs into the rate base if it fails. The equipment manufacturer has slightly more incentive since he will profit by selling the new equipment. However, he is already profiting by selling oil, coal, or nuclear power generator technology and he will lose some business as he gains some. He is reluctant to take the risk-his potential payoff is small and could even be negative. The benefits of a successful OTEC development will be reaped by all of us, so we, the consumers, should take the risks. The blanket cuts in DOE programs under Gramm-Rudman have the effect or restricting the accomplishment of the established programs, and preventing support of significant new innovative developments. We will fall behind in what we are best at, the innovation of new technology, if the present policies in the support of research are allowed to continue. We increase tomorrow's deficit in the attempt to reduce today's deficit. I urge the Congress to support OTEC research and to encourage DOE to adequately support innovative breakthrough OTEC technology that can have a high economic return. Thank you. Senator EVANS. Thank you, Dr. Ridgeway. [The prepared statement of Dr. Ridgeway follows:] TESTIMONY OF DR. STUART L. RIDGWAY TO BE DELIVERED BEFORE THE SENATE SUBCOMMITTEE ON ENERGY RESEARCH & DEVELOPMENT The Ocean Thermal Energy (OTEC) program of the United States Government hopes to develop the technology to exploit the enormous energy resource of the tropical oceans. There is a temperature difference between the surface and the depths of these oceans that can be used to power a heat engine to make electricity. So far the engines that use conventional technol ogy have been far too expensive. In 1977 the Mist Lift process, a new inexpensive heat engine concept to harness the OTEC resource, was introduced to the OTEC community. Department of Energy (DoE) research support of about $600,000 bore fruit in 1980-81 and the technical feasibility was demonstrated in laboratory scale experiments. Operation on the ocean resource was accomplished in a Solar Institute Research Institute (SERI) supported experiment in 1983 at Ke-ahole Point, Hawaii. Further development has cease due to budgetary constraints. A recent cost study shows that Mist Lift power plants will cost about $1,500 per kilowatt. This cost is competitive with the cost of a coal-fired plant with scrubbers, considerably less than that of a nuclear plant, and less than half of the costs anticipated for other OTEC schemes. The development of advanced OTEC technology is an appropriate area for government research and development. The largest rewards of the successful development and commercialization of OTEC will fall mostly to the consumers of electricity or energy-intensive products, so it is right and reasonable that they take on the development risks. |