Green Power Retail Marketing in California

Green Power Retail Marketing in California
August 25, 1997

Dr. John Schaefer, a good friend and professional colleague of mine, has long experience in the utility industry and in renewable energy in particular. Some of you may know him from his time at EPRI.

As you know, January 1, 1998 will mark the opening of the California retail market, and John has established a new company, Clean Power Works (CPW), to be an “Energy Service Provider”, marketing “green” electric power.

The note attached below was prepared by John, who is interested in collaboration with and consulting for utilities elsewhere. I thought CPW and John could provide a useful window into the workings of the green power market as it is evolving in California. CPW might conceivably offer a foothold in green power and an opportunity for a learning experience (not unlike the education U.S. utilities are getting in the UK, though obviously on a vastly smaller scale).

Feel free to contact CPW directly.

(Note: I have no business relationship with CPW nor has any been discussed, though the possibility at some point in the future is not precluded. EB)

Clean Power Works at a Glance

Clean Power Works (CPW) is initiating a program to sell pollution-free, renewable (wind, solar, geothermal, hydro, biomass and biogas) electricity to customers who are willing to pay a few cents extra per kilowatt-hour. Residential electricity sales in California are approximately $7 billion, and CPW intends to capture $36 million of this market by 2003. Greater penetration is possible if supplies expand rapidly enough.

Selling renewable electricity is a new business because until now electricity customers have had no choice; electricity has always been supplied by conventional electric utilities operating as regulated monopolies. As of 1998, restructuring in California and soon in other states will offer customers the opportunity to choose their preferred electricity supplier, in the same way that telephone customers now choose long distance telephone service. Electricity will be delivered physically through the existing grid, for which the distributing utility will charge its cost of service. For CPW’s expected market in California, monthly electric bills will be 10 to 20 dollars higher than they would be with polluting sources.

When offered an informed choice, evidence shows that many customers will switch away from polluting sources. For more than ten years, customers have shown in survey after survey that a majority prefers and is willing to pay extra for electricity that does not pollute. This fraction ranges as high as 70 per cent, depending on which survey and where it was taken. In successful small scale green pricing programs, three utilities (Detroit Edison, SMUD and Traverse City) with programs like CPW’s have had more willing buyers than the utilities had capacity to serve them.

CPW will contract with the most economic of the renewable electricity sources, add a margin to cover costs and profits, and sell electricity aggressively to customer segments with a known interest in environmental issues.

Clean Power Works has immediate access to tens of thousands of such customers who have already demonstrated by their buying habits their preference for environmentally friendly sources. Beginning with those customers and intense sales efforts in areas where response is expected to be most positive, CPW expects to attain a strong market position by the end of 1998.

The tumultuous 1997 deregulation experience in California demonstrates that lessons must be learned by participating but that they need not be costly or risky. CPW has concluded that the pollution-free or “green” market can be more effectively and profitably served in cooperation with utilities than in competition with them. As a result, Clean Power Works seeks both consulting opportunities and collaboration with utilities in other states, where deregulation lessons can be applied with less risk.

CPW was incorporated as a California C corporation in 1997. Its founders are:
— John Schaefer, a Ph. D. engineer with 20 years experience
in utilities and renewable energy R&D; and
— David Katz, founder of Alternative Energy Engineering, one of
California’s largest suppliers of renewable energy products.

P. O. Box 1225, Santa Cruz, California, 95061 . 408-471-9337 fax: 408-471 9336.

Web site at

NY Times article: The Private-Sector Life of a Government Lab

RECOMMENDED READING — On the front page of (8/23) Saturday’s NY Times business section, there was an extensive article on the relationships between DOE National Labs and private industry.

August 23, 1997 The Private-Sector Life of a Government Lab By CLAUDIA H. DEUTSCH

[G] oodyear Tire and Rubber Co. wanted to predict, without weeks of test drives, how its tires would perform under various conditions. So it went to the Energy Department’s Sandia National Laboratories in Albuquerque, N.M., for help. “Their computer models show how a nuclear weapon will react to different conditions, so why shouldn’t they show how a tire will react?” said William Sharp, president of Goodyear’s global support operations.

A federal weapons laboratory might seem an unlikely partner for a tire maker, but with the Cold War over and military spending shrinking, Sandia is putting out the welcome mat to private industry. And U.S. corporations, which have emerged in this era after downsizing as far more willing to turn to outside sources, are lining up to tap into its technology storehouse.

They are using Sandia to develop new manufacturing processes, to run what-if simulations on new products, to solve environmental problems. In the process, they are helping Sandia move beyond its once single-minded focus on the arms race.

For example, a consortium of 17 casting and forging companies, recognizing that few young engineers were joining their industry, asked Sandia to help it simplify software so that employees who were not engineers could create and test new casting equipment. “None of us have the time or money to do this ourselves,” said Robert Kervick, chief executive of Komtek, a casting company in Worcester, Mass.

And Motorola asked Sandia to run reliability tests on computer chips without using the standard chemical cleaning agents — the chlorofluorocarbons that destroy the atmosphere’s ozone layer. “Customers feel more comfortable buying a product whose reliability is verified by a government lab,” said James Landers, a manager in Motorola’s Space and Systems Technology Group.

For Sandia, the money pouring in from its corporate partners helps keep many of its 7,642 employees — about 800 fewer than two years ago — gainfully employed. But the real winner, Sandia insists, is the U.S. economy. “National security starts with economic security, and that means helping our industries compete,” said Paul Robinson, Sandia’s president.

Sandia (pronounced san-DEE-uh) is not the only Energy Department lab sounding that theme. Although documents emerged last week indicating that some of the labs, including Sandia, are still hard at work on new or modified designs for nuclear arms, private-sector projects are nonetheless occupying an ever-larger share of their time.

Los Alamos, Oak Ridge, Lawrence Livermore — the heart, lung and brain of the Manhattan Project’s atomic bomb and its progeny — all have been accelerating their industrial endeavors since 1989. That was when Congress removed many of the legal impediments that had kept them from transferring intellectual property or licensing technologies to private industry.

Brookhaven National Laboratory on Long Island, N.Y., which is grappling with environmental problems caused by the leak of radioactive tritium from a research reactor’s storage tank, is looking to commercialize its medical and environmental technologies.

In the last eight years the labs have written more than 3,000 Cradas — the acronym for cooperative research and development agreements — that spell out who pays for what, and how the results can be used. Some call for companies to foot the entire bill in return for proprietary rights to anything that is developed.

But more typically, the labs chip in some cash, retain the rights to the resulting technology and give the corporations that contributed several years of free, exclusive use.

The federal labs, even when shrouded in secrecy, have always intermingled with industry. Many of them have been managed by private corporations — under contract to the Energy Department and its predecessors — for several decades. Sandia, for one, was run by AT&T for nearly 44 years and is now managed by Lockheed Martin.

But while all of the labs are devoting more time and resources to projects in the private sector, the effort seems most crucial at Sandia. Unlike Oak Ridge, which has always been a multipurpose energy lab, Sandia’s raison d’etre has always been the arms race.

And Sandia, which designs the non-nuclear components of nuclear weapons, also is responsible for stockpiling spare parts and for maintaining the existing supply of nuclear weapons. So, unlike Lawrence Livermore and Los Alamos, which design and develop nuclear warheads, its duties have not lessened much with the end of the Cold War.

Even so, Sandia’s operating budget is slowly being whittled away. It was down almost $50 million this year, to about $1.28 billion, and Sandia expects it will drop to $1.1 billion in 1999. And a lot of those cuts have come out of the money available for use as matching funds for industrial projects.

In 1995, Sandia got about $100 million from the government for those purposes; it received $56 million last year and $20 million this year. Warren Siemens, Sandia’s director of technology partnerships, doubts it will rise above that again. “Apparently Congress has said, ‘Oops, this is corporate welfare,”‘ Siemens said.

So, while most of the laboratories are looking for ways to apply their existing technologies to corporate use, Sandia is the most willing to develop new processes for industry, with the hope that the companies will kick in most of the costs.

Right now, for example, Sandia is working with a consortium of electronics companies on a project to miniaturize certain types of semiconductor chips to handle 30 times more functions than they typically do now. It is collaborating with numerous manufacturers on ways to cast tools directly from powdered metals.

And it is encouraging industry to tap into its supercomputer — a machine that Sandia says is 300 times more powerful than Deep Blue, IBM’s chess-playing champion — not only to answer questions about products and processes but also to suggest what questions should be asked.

“We hold the record for speed of computing,” Siemens said. “We have great strength in microelectronics, and these are exactly the areas companies look to for help in making products more reliable.”

Progress in convincing industry to chip in has been slow. Five years ago, about $9 million of Sandia’s funds came from industry. Last year corporations provided $27 million. But Siemens thinks private funding will hit $35 million this year, and soar to $100 million by 2000.

And Sandia wants more from industry than simply money. Since it can no longer afford to hire many new researchers, it must rely on industry to keep abreast of new technologies.

Moreover, industrial projects often have implications for the military. “It’s a lot cheaper to maintain an Air Force whose planes need less rebuilding or repairing,” said Gernant Maurer, vice president of technology for Special Metals Corp., a maker of nickel-based superalloys that is part of a consortium working with Sandia to develop defect-free alloys for engine aircraft.

Similarly, weapons and satellites are loaded with semiconductor chips. “Our nation’s defense systems rely on semiconductors, and it would not be great if they had to buy all those chips from overseas,” said Chris Daverse, manager of national resources for Sematech Inc., a nonprofit research consortium of semiconductor makers and equipment suppliers, which has signed on for numerous projects to develop lower-cost production methods and contamination-free chips.

Sandia’s new reliance on industry comes at an opportune time. Companies have grown more comfortable with the idea of outsourcing all kinds of tasks, so letting outsiders work on their research is not as radical as it would have been in the do-it-yourself ’80s. Moreover, many have formed strategic alliances with suppliers and competitors, which has made them less averse to sharing their technologies with others.

“The thinking is, it is better to get half the rights to a product that is first to market, than all the rights to one that comes in late,” said Mary Good, a former undersecretary of commerce who helped set up a project for the auto industry and several national laboratories to develop a fuel-efficient car.

If repeat business is a sign of satisfaction, the corporations that have tried it clearly believe they have gotten their money’s worth. Goodyear, which has completed four cooperative projects in which it used computer modeling to predict how different tread designs and materials would perform, just signed on for its fifth Sandia project. It is aimed at analyzing and improving rubber processing technology.

A deal between Delphi Saginaw Steering Systems, an arm of General Motors Corp., and Sandia to develop better finishing processes for auto parts has metamorphosed into a Detroit-wide project to develop electronic controls for industrial heating and hardening processes.

“We’ll save tens of millions just by eliminating destructive testing,” said James Farago, Delphi’s supervisor of controls engineering. “And we’re going to get better insights into the materials we use.”
Copyright 1997 The New York Times Company

Battery Market Studies from Sandia

Battery Market Studies from Sandia
Aug 14, 1997

Sandia has issued two new reports on markets for batteries:

“Photovoltaic Battery and Charge Controller Market and Applications Survey”, Hammond, Turpin,, SAND96-2900, December 1996

Surveys were conducted with PV system integrators, battery makers, and PV charge controller makers, to a) quantify the market for batteries shipped (in 1995), b) quantify market segments by type and application, c) characterize controllers used in PV systems, d) characterize operating environments for storage components in PV systems, and e) estimate the market in the year 2000.

In 1995, worldwide shipments for PV batteries totalled $300 million, with a U.S. accounting for just over 10%. In either case, system integrators account for no more than 14% of batteries sold for PV.

“Battery Energy Storage Market Feasibility Study”, Akhil and Kraft, SAND97-1275/1 and SAND97-1275/2, July 1997. (The first, 1275/1, is a short version of 25 pages. The second, 1275/2, is the long version, with about 200 pages, which will be available sometime in September.)

The purpose of this study was to quantify the energy storage market for utility applications by surveys of electricity providers, battery storage system vendors, and others. Specifically, goals were a) to gather perceptions in the battery energy storage (BES) and utility industries on desired features and comparison with other storage options; b) to estimate BES markets through the year 2010; and c) to provide Sandia and DOE with inputs to the Energy Storage System Program effort.

Reports can be obtained through NTIS or directly from Sandia. Send requests to Imelda Francis, 505-844-7362, fax 505-844-6972, or:

UFTO Various – August 1997

Several items of general business—-

| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 650-328-5670
| Palo Alto CA 94301-3041 fax 650-328-5675

UFTO, along with most of the 415 area code except San Francisco, has a new area code, 650. The new code took effect August 2, but the old code will continue to work for several months.

2. Reminder: I’ve received just one set of revisions to the UFTO “Technology Needs of Utilities” document. Everyone committed to doing at least a quick edit of this June 95 document, to bring it up to date. Take it with you on vacation!

3. We’ve had some very positive comments the EdF Electrical Equipment report (sent to UFTO companies in early July), which is most gratifying. Thus far, however, there’ve been no takers for the “SME Catalogue”. Surely somebody in your company wants to see it, right? Let me know who to send it to.

4. Several conferences are set for this month and next.
Here are some reminders.

—-Aug 25-29——–Washington———-
EPRI-DOE-EPA Combined Utility Air Pollution Control Symposium; ;
(See UFTO Note June 3)
Details at

—–Aug 26-28———Morgantown WV——–
“Fuel Cells ’97” Review Meeting
This is the annual DOE-EPRI-GRI Fuel Cell conference
Complete information and agenda at: –>”Events”

—–Sept 29-30———Washington——–
Dawnbreaker 97
Recall the 40 or more technology startup stories sent to you in an UFTO Note Oct 23, 1996? (Also in the UFTO database). This is an annual DOE sponsored investors conference to present SBIR awardee companies who are looking for money, partners and customers. The crop of deals this year doesn’t look particularly exciting, and I’m not currently planning to attend. However, if one or more of you do think it worthwhile (and would be able to cover expenses) I’d certainly go on your behalf.

The complete set of abstracts (tantalizingly without company names) can be found at

—–Sept 22-24———Boston——–
Technology 2007
I am tentatively planning to attend on behalf of UFTO. This has always been a great opportunity to talk to lab and government reps in person and to meet promising startups.