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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.

In 19ventional techinto make this of these perature a

Thank you very much, Mr. Chairman. Senator Evans. Dr. Ridgeway? STATEMENT OF DR. STUART L. RIDGEWAY, PROGRAM MANAGER,

R&D AND ASSOCIATES 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 between 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

y reduce the not payoderment risk som i

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 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. 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 ceased 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.

Utilities would have little or no 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

He is reluctant to take the risk--his potential payoff is small and could even be negative.

sobe.

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 of 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.

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