U.S. GOVERNMENT PUBLISHING OFFICE

25–977 WASHINGTON : 2018

S. HRG. 115–36 

COST REDUCTIONS IN EMERGING ENERGY TECHNOLOGIES WITH A SPECIFIC FOCUS ON HOW 

RECENT TRENDS MAY AFFECT TODAY’S ENERGY LANDSCAPE 

HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JUNE 8, 2017 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://www.govinfo.gov 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

CORY GARDNER, Colorado 

LAMAR ALEXANDER, Tennessee 

JOHN HOEVEN, North Dakota 

BILL CASSIDY, Louisiana 

ROB PORTMAN, Ohio 

LUTHER STRANGE, Alabama 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

TAMMY DUCKWORTH, Illinois 

CATHERINE CORTEZ MASTO, Nevada 

COLIN HAYES, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

DR. BENJAMIN REINKE, Professional Staff Member 

CHESTER CARSON, Professional Staff Member 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SCOTT MCKEE, Democratic Professional Staff Member 

BRIE VAN CLEVE, Democratic Professional Staff Member 
(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska .................. 1 

Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from Washington .................................................................................................................... 3 

WITNESSES 

Donge, Lily, Principal, Business Renewables Center, Rocky Mountain Institute ........................................................................................................................ 10

Greeson, David, Vice President, Development, NRG Energy, Inc. ...................... 15 

Merritt, Greg, Vice President, Marketing and Public Affairs, Cree, Inc. ........... 25 

Simonton, Steve, Vice President, Drilling & Completion Operations, Cimarex 

Energy Co. ............................................................................................................ 30 

Vare, Russell, Manager, Business Development, Mercedes-Benz Energy Americas, LLC ............................................................................................................... 34 

Yates, Kevin, President, Energy Management Division, Siemens USA ............. 38 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Cantwell, Hon. Maria: 

Opening Statement ........................................................................................... 3 

Written Statement ............................................................................................ 5 

Donge, Lily: 

Opening Statement ........................................................................................... 10 

Written Testimony ............................................................................................ 13 

Responses to Questions for the Record ........................................................... 58 

Greeson, David: 

Opening Statement ........................................................................................... 15 

Written Testimony ............................................................................................ 17 

Responses to Questions for the Record ........................................................... 65 

Merritt, Greg: 

Opening Statement ........................................................................................... 25 

Written Testimony ............................................................................................ 27 

Responses to Questions for the Record ........................................................... 67 

Murkowski, Hon. Lisa: 

Opening Statement ........................................................................................... 1 

Simonton, Steve: 

Opening Statement ........................................................................................... 30 

Written Testimony ............................................................................................ 32 

Responses to Questions for the Record ........................................................... 69 

Vare, Russell: 

Opening Statement ........................................................................................... 34 

Written Testimony ............................................................................................ 36 

Responses to Questions for the Record ........................................................... 71 

Yates, Kevin: 

Opening Statement ........................................................................................... 38 

Written Testimony ............................................................................................ 40 

Responses to Questions for the Record ........................................................... 75 

(1) 

COST REDUCTIONS IN EMERGING ENERGY 

TECHNOLOGIES WITH A SPECIFIC FOCUS 

ON HOW RECENT TRENDS MAY AFFECT TODAY’S ENERGY LANDSCAPE 

THURSDAY, JUNE 8, 2017 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:08 a.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. Good morning, everyone. The Committee will 

come to order. This is an oversight hearing to consider cost trends 

in emerging energy technologies. I appreciate everyone being here 

this morning. It is kind of quiet on this side of the dais. I think 

that if we had suggested that this was the overflow room for the 

Senate Intelligence Committee, we might have a bigger crowd out 

there. 

[Laughter.] 

But I do recognize and appreciate that the conversation that you 

will have with us this morning is one that I think should generate 

a level of excitement, an opportunity, particularly for young people, 

as they think about our energy future and how they can be participants in it. So I appreciate the fact that you are here this morning. 

This hearing is meant to provide us with a better understanding 

of what is happening in the energy marketplace, how federal energy policies may be affecting those changes and what more we can 

do to keep energy affordable. A stronger grasp of what is happening will help us develop what to expect going forward and the 

best ways for the Federal Government to be involved as we continue our policymaking efforts. 

The big story in recent years has been sustained and historically 

low prices for electricity rates and consumers at the pump, and this 

has been driven by technological innovation in the oil and gas industry which has dramatically expanded our nation’s energy supply 

and more recently by decreases in the cost of production. 

The cost of renewable energy has also decreased drastically. According to the Department of Energy (DOE), the cost of wind turbines decreased by 27 percent from 2009 to 2015, and the cost of 

installing solar panels decreased by 60 percent over the past dec-
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ade. These technologies are challenged because of their intermittent nature, but the cost of energy storage technologies are coming 

down as well and we recognize the great potential there. 

Although much work still needs to be done to commercialize the 

array of storage options that will be needed for our grid in the future, the decrease in lithium-ion battery prices is a big first step. 

According to McKinsey and Company, the cost of lithium-ion batteries per kilowatt-hour has dropped by 77 percent since 2010. 

That drop is also making new vehicle technologies more competitive. Hybrids and electric vehicles rely on high-capacity lithium-ion 

batteries to operate, and those batteries need to be less expensive 

for those vehicles to be directly cost competitive with traditional 

combustion-powered vehicles. This is occurring right now even as 

traditional vehicles are increasing efficiency through the adoption 

of lightweight materials and advanced manufacturing techniques. 

Although less well-known, the semiconductor industry might be 

the most impressive story to date when it comes to decreasing 

costs. Semiconductors are the base of all of our electronic technologies and costs per transistor have continued to decrease at a 

rapid rate, including three orders of magnitude over the past decade alone. New devices can now be used in more extreme environments and are more energy efficient, and this has led to drastic decreases in LED prices for consumers, leading to further decreases 

in energy consumption and costs for consumers. 

The innovation taking place right now is good news for our energy future, particularly in my state of Alaska, where we pay far 

more for electricity than the average U.S. consumer. In some of our 

smaller, more remote communities, we see as much as $1.00 per 

kilowatt-hour paid by our families. That is simply not sustainable. 

We have dozens of communities that are not connected to the 

main grid, and actually that is not quite an accurate statement. 

When you have 80 percent of your communities in the state that 

are not connected by a road, think about what that means then for 

any kind of an energy grid. When we talk microgrids in Alaska, 

they are micro microgrids. We recognize that more often than not, 

when we are looking at how we power our communities, we rely 

on diesel generation. That is equally not sustainable. So new and 

more affordable technologies offer tremendous promise for us. 

Today is also a good opportunity for us to consider whether federal policies are keeping up with the changes we are seeing in the 

energy industry. As you have heard the two of us say here, it has 

been a full decade now since the last major energy bill was signed 

into law. We are well overdue to update and modernize so many 

of our energy policies. 

So I intend that this hearing will be the first in a series that we 

will hold in Congress with a focus on innovation. My hope is that 

it will both set the stage and serve as a jumping off point so that 

we can develop meaningful policy that continues to drive cost reductions and promote affordable energy for the American people. 

I will note that Senator Cantwell and I will be heading to Senator Cantwell’s state tomorrow, where we will have an opportunity 

to look at some of the high-tech, cutting-edge developments when 

it comes to efficiencies and to energy. I am really excited about the 

day tomorrow. On Saturday, we will have a field hearing up in a 
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small fishing community, Cordova, Alaska, where we will have a 

chance to take a look at how microgrids are helping us with our 

energy. 

I am so proud of the work this Committee is doing and very 

proud of my partnership with my Ranking Member. 

Senator Cantwell, I now turn it over to you. 

STATEMENT OF HON. MARIA CANTWELL, 

U.S. SENATOR FROM WASHINGTON 

Senator CANTWELL. Thank you, Madam Chair, and thanks for 

scheduling this hearing. Maybe we are the alternative hearing, 

both in energy alternatives as well as to other things that are happening here in the Senate today. But it is an important hearing, 

as you mentioned, to examine how energy technologies and recent 

trends are helping to change the landscape, and particularly how 

new technologies are helping us drive down the cost of energy. 

Obviously, we have seen a revolutionizing way in which consumers consume and how businesses generate energy, and this has 

affected millions of Americans, certainly in creating new jobs. According to the International Energy Agency, global spending on all 

renewable resources totaled $313 billion in 2015. And although the 

investment level has been relatively flat, the annual amount of renewable energy capacity installed has increased 33 percent since 

2011, and it is because it costs less to buy more. So global energy efficiency investment has reached $221 billion, 

and of that, the amount of energy efficiency investments in the 

building sector, including appliances, lighting, was $118 billion in 

2015. This gives America a leadership and entrepreneurial position 

on these important sectors. Renewable electricity investments in the U.S. were nearly $40 

billion in 2015. Wind and solar power now account for more new 

domestic electric generation than any other source, and those investments translate into jobs. The U.S. wind industry supports 

over 100,000 jobs. The American wind power added jobs nine times 

faster than the overall economy. So we are where we are today 

with over 370,000 workers in the solar industry, and one out of 

every 50 new jobs in the United States in 2016 was created by the 

solar industry. 

So the fact that we have seen such incredible job growth—we are 

here to discuss this morning what we need to do to make sure we 

continue that. There are 2.2 million Americans employed in whole 

or in part in the design, installation and manufacturing of energy 

efficiency products and services, and these trends are expected to 

continue. According to the International Energy Agency, global investment in renewable energy will total $4.2 trillion over the period 

of 2015 to 2030, and around $8 trillion in energy efficiency including $3 trillion in building efficiency. That is why it is so important 

we look at these issues. 

Now, I know I have heard Secretary Pruitt on numerous shows 

these past few days talking about why we are not committing to 

further global climate reductions and saying that we will leave it 

up to the private sector, but I am pretty sure it was not the private 

sector that did all the R&D that we needed to do on solar chemical 

equations to help us get a solar industry, nor did they have all the 
4 

incentives that we passed as far as renewable energy tax credits. 

I am not sure they would have complied with the fuel efficiency 

standards that we were also able to pass in a big package giving 

consumers more fuel-efficient automobiles. 

That is what our businesses know. That is why companies like 

Amazon and Microsoft and REI and so many others wanted to remain part of a climate agreement. That is because they know that 

these investments in emerging energy technologies help us drive 

down costs. 

Wind capacity has tripled in the United States since 2008 with 

enough to power 17 million U.S. homes, and that is more homes 

than in California and Texas combined. That is thanks to the 

prices reaching all-time lows and power purchase agreements for 

wind have fallen from rates of up to $0.07 per kilowatt to $0.02 per 

kilowatt in certain regions. 

So these efficiencies are mattering to consumers and to businesses, and the drastic drop in the cost of utility scale solar PV has 

dropped more than 64 percent since 2008 and has been able to 

grow sufficient to power 2.1 million American homes. At the same 

time, a 54 percent reduction in the distributed solar PV cost has 

resulted in more than one million units being installed in American 

homes. 

So all of these things, Madam Chairman, are important public 

policies that we have helped to drive, and I am sure today’s discussion will help us drive more. I think I am going to stop there and 

just reiterate what your comments were, and submit the rest of my 

very detailed statement on statistics about the changes in energy 

for the record. 

But I wanted to reiterate tomorrow we will be at the Bullitt Center in Seattle, which is the most energy-efficient building on the 

entire planet. Obviously we will have a discussion with those who 

are driving policies for more types of development like that and to 

understand how smart buildings and smart grids can help, on a 

distributed basis, all of our communities to keep moving forward. 

So we are very excited about that. 

Obviously we are going to have a chance to also talk about cybersecurity and making sure that as we get a more distributed grid, 

how we also protect our consumers and businesses from that as 

well. So I very much look forward to it. Someone told me that 

maybe it is the Copper River Salmon Run, but I don’t even know 

that you and I will get to enjoy that, but we will be close by for 

the Copper River Salmon Run in Cordova. 

Thank you. 

[The prepared statement of Senator Cantwell follows:] 
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The CHAIRMAN. Thank you, Senator Cantwell. I am very much 

looking forward to both parts of our energy tour tomorrow. 

I thank you all for being here this morning. I appreciate your 

contributions at different levels, and this morning we will hear 

from each of you. I would ask that you try to limit your comments 

to about five minutes. Your full statements will be incorporated as 

part of the record, but then I hope we will have a good opportunity 

for dialogue after the conclusion of your initial remarks. 

We will begin this morning with Ms. Lily Donge, who is the Principal at the Business Renewables Center for the Rocky Mountain 

Institute. 

Mr. David Greeson is with us this morning. He is the Project 

Lead at Petra Nova and the Vice President of Development at NRG 

Energy. 

Mr. Greg Merritt is with us, and he is the Vice President of Marketing and Public Affairs for Cree, Incorporated. Welcome. 

Mr. Steve Simonton is the Vice President for Drilling and Completion at Cimarex Energy Company. Welcome. 

Mr. Russell Vare is the Manager for Business Development at 

Mercedes-Benz Energy Americas. 

Finally, Mr. Kevin Yates is also with us, and he is the President 

for Energy Management at Siemens USA. 

Again, welcome to each of you. 

Ms. Donge, if you want to begin with your comments, then we 

will just proceed down the line after that. 

STATEMENT OF LILY DONGE, PRINCIPAL, BUSINESS 

RENEWABLES CENTER, ROCKY MOUNTAIN INSTITUTE 

Ms. DONGE. Thank you. Good morning, Chairman Murkowski, 

Ranking Member Cantwell, and members of the Committee. Thank 

you for inviting me to share the views of the Rocky Mountain Institute and its Business Renewables Center. 

My name is Lily Donge, and I am Principal at the Rocky Mountain Institute where I help lead the Business Renewables Center 

(BRC). The BRC is a membership-based organization that helps 

streamline and accelerate corporate purchasing of large large-scale 

offsite wind and solar energy. The BRC currently works with over 

200 companies both on the buyer and the developer side. BRC’s 

corporate membership includes companies like Amazon, Walmart, 

Owens Corning, FedEx, and GM. 

The BRC provides an independent collaborative platform for companies to come together to understand and improve the market for 

purchasing renewable energy. We keep track of these deals, nearly 

40 companies announcing transactions for over 7.5 gigawatts of 

wind and solar projects across North America since 2012. BRC 

members account for about 93 percent of this. 

Corporate renewable procurement is a big trend and here to stay. 

The new business reality is that corporate America wants to take 

back control of its electricity supply. They are asking for choice of 

technology, cost-competitive economics, transparency, and new renewable projects to be added to the grid. 

According to what we hear from market participants, we know 

a lot more is on the way this year. As we track these deals in 

North America, three things to note. First, 2017 is already out-
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pacing 2016, and we’re at one gigawatt. Second, the Fortune 500 

dominate these deals; they represent two-thirds of the companies, 

three-fourths of the deals and the megawatts. The third trend is 

the newcomers. Since January 2016, 11 of the 18 companies are 

first-time buyers, like Lockheed Martin, Anheuser-Busch InBev, 

and Johnson & Johnson. 

Diversification also extends to the supply side. During the same 

timeframe, out of 21 developers we have welcomed 10 developers 

closing in on their first major corporate deal. We also have dozens 

of financiers, law firms and consulting firms creating an intermediary network and a transactioning market like never before. 

Sustainability commitments is a major driver for these buyers. 

Sixty-six percent of Fortune 100 and 40 percent of Fortune 500 

have public sustainability commitments. In conversations with 

BRC members, it is also clear that most of these companies would 

not seriously consider renewable energy investment if costs were 

not competitive. 

It is not just a matter of cost, it is also a matter of speed of delivery. Energy efficiency is more cost effective, but it takes longer to 

deliver on climate goals, which are necessary and urgent for these 

companies. 

Large-scale renewable deals allow companies to make material 

progress on their sustainability targets quickly. It is a combination 

both of speed and reasonable affordability. We are finding out that 

power purchase agreements in wind are in the low twenties and 

solar in the south in the low thirties and high twenties in the dollar-per-megawatt-hours range. 

Because companies care about economics and cost, my team is 

rolling out a fair-value tool next week so that companies can understand the economics of a wind and solar project at over 4,300 grid 

connection nodes across seven electricity markets. With projects in 

19 different states, BRC companies are making decisions based on 

market opportunity. In fact, for companies that want power operations in your states with clean energy, open-market conditions are 

a key factor in their decision-making process of where to purchase. 

They care about transparency, where they can create new and additional jobs and community impacts. 

Now what is true in these market and state levels is true at the 

country level. If the policy environment is unfavorable, multinational companies will not choose to procure complex renewable 

deals. 

As President Trump moves to exit the Paris Climate Agreement, 

the United States faces fewer leadership opportunities in the clean 

energy industry that has seen much more demand, not less, from 

the most significant multinational companies around the world. 

The cost curves for renewable technologies continue to point downwards, and without the United States’ leadership, companies will 

naturally seek out more vibrant and growing markets. 

For us at the Rocky Mountain Institute, the next frontier are 

batteries, as Senator Cantwell had noted, high-voltage lines, IT for 

DER (distributed energy resources), smart buildings, EVs, and we 

even have an effort to link blockchains to the Ultra-C [ph] system 

to track electrons. 
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All of these moving forces will need the right market conditions, 

but also the right policy conditions. We look forward to a Senate 

that supports market forces to create a clean, prosperous and secure future. Again, I would like to thank the Committee for the opportunity to testify here today. 

[The prepared statement of Ms. Donge follows:] 
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The CHAIRMAN. Thank you, Ms. Donge. 

Mr. Greeson. 

STATEMENT OF DAVID GREESON, VICE PRESIDENT, 

DEVELOPMENT, NRG ENERGY, INC. 

Mr. GREESON. Thank you, Chairman Murkowski and Ranking 

Member Cantwell and Committee members. My name is David 

Greeson. I am Vice President of Development for NRG Energy. As 

you may know, NRG is a Fortune 250 company dual headquartered 

in both Princeton, New Jersey, and Houston, Texas. 

We are one of the largest power generators in the United States 

with almost 50,000 megawatts of conventional natural gas, coal 

and nuclear power, and in renewables we’re one of the largest 

owner-operators of solar technologies in the United States, and we 

have wind generation in 13 states. 

We also directly serve about three million retail customers. I am 

based in our Houston office, where I have spent the last seven 

years developing and bringing online the world’s largest carbon 

capture system attached to a power plant. The project is called 

Petra Nova, and I’m happy to report that it came in on time and 

on budget. 

As I appear before you today, the project is online and capturing 

5,000 tons of CO2 per day that is being injected into an oilfield. 

That same oilfield before Petra Nova was nearly played out and 

was producing less than 300 barrels per day. I’m pleased to announce to you today that with only five months of injecting CO2, 

this oilfield is now producing 3,400 barrels per day, a more than 

10X increase in production. 

It’s important to have some context into how we had to think 

about this project. NRG is a competitive company, not a utility. 

That means that the Petra Nova project, like all NRG assets, needs 

to be profitable in a competitive energy market. We don’t rely on 

rate base, where customers are locked into paying the costs no 

matter what. Rather, NRG bears the risk of a successful project. 

So for the Petra Nova project, we not only had to design the carbon 

capture system to be profitable, but we also had to ensure that the 

host coal unit that the carbon capture system is attached to did not 

increase the cost of electricity or change the way it’s dispatched in 

the market so that it could remain competitive. 

We accomplished these goals with a lot of creative thinking. For 

example, instead of taking steam and electricity from the power 

plant to run the carbon capture system, we installed a combined 

heat and power system that was tailored just for our needs, and 

therefore was a lot more efficient than extraction steam and power. 

In the end, these creative solutions and others allowed us to simultaneously reduce the carbon emissions of the coal plant while preserving the cost competitiveness of that unit in the market, and all 

of this was at no risk to electric consumers in Texas. 

But with that as a backdrop, I’d like to talk about the specifics 

of the finances. The Petra Nova project was a $1 billion project 

funded 55 percent by private capital contributions, 25 percent from 

loans by Japanese government export agencies and a 20 percent 

grant from the U.S. Government under the Clean Coal Power Ini-
16 

tiative managed by DOE’s National Energy Technology Laboratory 

in Morgantown, West Virginia. 

I’d like to say thank you to you and the members of Congress for 

this grant. I can’t tell you how important this grant was to the success of this project. Especially early on in the project, even though 

the dollars weren’t big, they’re the riskiest dollars you spend on 

any endeavor like this, and so I just wanted to say thanks. 

My written testimony has more details about the project, and I’ll 

refer you to those for a more in-depth explanation. 

So why do this at all? Well, consider the fact that because of the 

Petra Nova project, we did two really good things. First, we’ve reduced the emissions of a coal-fired power plant to be the same as 

a gas-fired power plant. Second, we’re producing U.S. crude to supply domestic demand. 

In the near-term, carbon capture economics will continue to be 

challenging. The volatility of the price of oil and the upfront capital 

costs are the two biggest challenges. That’s why I’d like to thank 

the members of this Committee who have supported the 45Q CCS 

tax credit. This program, if extended, would help the Petra Nova 

project and future CCS projects through those two tough challenges. The industry is working on bringing down costs. The government support of this low carbon domestic energy source, just 

like wind and solar, is essential for success. 

There are new technologies on the horizon. Membranes show a 

lot of promise, and there are more effective formulations of aiming 

scrubbing systems that are now moving out of the laboratory and 

into field tests. So with your continued support, carbon capture can 

be on a trajectory for being competitive on its own. 

Thank you, and I look forward to answering your questions. 

[The prepared statement of Mr. Greeson follows:] 
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The CHAIRMAN. Thank you, Mr. Greeson. 

Mr. Merritt, welcome. 

STATEMENT OF GREG MERRITT, VICE PRESIDENT, 

MARKETING AND PUBLIC AFFAIRS, CREE, INC. 

Mr. MERRITT. Good morning. I would like to thank Chairman 

Murkowski and Ranking Member Cantwell and the rest of the 

Committee for the invitation to speak with you this morning. 

Cree, Inc., is a leading U.S.-based developer and manufacturer of 

LEDs, LED lighting systems, and also advanced power and wireless semiconductors. We are headquartered in Durham, North 

Carolina. We also have facilities in Wisconsin, Arkansas and California and have about 6,300 employees worldwide. Since our founding 30 years ago, Cree has been focused on innovation, pushing the 

boundaries of technology in order to enable people to do more while 

they consume less energy. 

So let’s talk a little bit about LED technology. Cree introduced 

the first LED technology that met the stringent requirements of 

what we call general illumination, or you might think of it as white 

lighting in spaces, in about 2006. This enabled the first commercially viable LED lighting products beginning in 2007. 

I would like to point out that, importantly, our focus has always 

been on efficiency, but also on the quality of the light that’s provided by these products. If we don’t meet people’s expectations for 

the appearance of light and the quality of light, they won’t adopt 

it. I think we very clearly focused on not repeating the failures of 

the compact fluorescent bulb, which people didn’t adopt because 

they didn’t like the way it looked. 

These early products were relatively expensive compared to the 

products they were intended to replace, and even though they paid 

for themselves through energy and maintenance savings, adoption 

was more limited. Payback periods were often seen in three to five 

years, sometimes even as high as seven to nine years in some applications. I would contrast that to the fact that most commercial 

organizations are looking for returns on their investment in 18 to 

24 months. 

Therefore, to make the economics work and to drive and increase 

adoption we went back to the lab, effectively to invent new technology to not only reduce the cost but also to improve the performance. This invention and innovation was required at multiple levels 

throughout an LED system. However, the LEDs themselves had 

the greatest initial impact. Through innovation and technical advancement, we have been able to increase the performance of LEDs 

by over four times since 2006, and we’re not finished yet. 

So how does this work? A higher performance LED which is more 

efficient and, in fact, smaller, enables us to generate more light 

and use less power. That results in reduced cost throughout the 

system: smaller power supplies, smaller heat sinks, et cetera. 

In addition to the product innovations, which are important, 

adoption was also aided by utility incentive programs that were 

available throughout the country, and also the associated energy 

efficiency certifications that go along with those. Think ENERGY 

STAR. Those rebate programs were available to reduce the initial 

first cost of what I had already mentioned were expensive products. 
26 

I would also like to point out that in the consumer market, ENERGY STAR served a very important role by offering consumers 

confidence to buy what was a new technology for them. Essentially, 

people trust the ENERGY STAR brand when they see it on the 

shelf. 

I would also like to point out the role that the Department of Energy played in helping to get LED technology to market in volume. 

Because of these continued innovations, we can now see certain 

LED streetlights that are available for under $100 that use 70 percent less energy than the technology they’re replacing and pay for 

themselves in less than two years. 

In the consumer market, LED bulbs are available that pay for 

themselves in around six months and then last another two decades under normal usage, saving an average of over $150 a bulb. 

I would also like to point out an area we see of real promise, and 

that is of going beyond individual product efficiency to look at systems efficiency. In our case, this means intelligent lighting systems. These systems use integrated sensors to sense occupancy and 

ambient light. Combine that with communications, you may have 

heard of it referred to as the Internet of Things, and software data 

analytics in order to reduce the energy used by lighting systems by 

over 80 percent. What’s more important is we can actually go beyond just making the lighting more efficient to make the buildings 

themselves more efficient, the people in them more productive, and, 

in fact, the organizations more profitable. 

Thank you for your attention. 

[The prepared statement of Mr. Merritt follows:] 
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The CHAIRMAN. Thank you, Mr. Merritt. 

Mr. Simonton. 

STATEMENT OF STEVE SIMONTON, VICE PRESIDENT, DRILLING & COMPLETION OPERATIONS, CIMAREX ENERGY CO. 

Mr. SIMONTON. Chairman Murkowski and Ranking Member 

Cantwell, members of the Committee, it’s an honor to be with you 

this morning. My name is Steve Simonton. I’m the Vice President 

of Drilling and Completion Operations for Cimarex Energy Co., a 

publicly-traded oil and gas exploration company with operations 

primarily in Oklahoma, Texas and New Mexico. 

The majority of our current activity is in the Permian Basin of 

West Texas, New Mexico and the Anadarko Basin in Western 

Oklahoma. We pride ourselves on having strong technical teams 

with a common goal of adding shareholder value through drilling 

and production. Simply stated, our business strategy is to maximize our cash flow from producing oil and gas properties and effectively redeploy the cash flow in drilling projects to grow the company. 

In order to be competitive and ultimately be successful in our 

business strategy, it is imperative that we stay ahead of the technologies that continue to evolve in our industry. Over the last decade, our industry has made tremendous advancements to improve 

the productivity of the wells we drill. 

Years ago, we drilled vertical wells into the earth to extract oil 

and gas from rock intervals which were, in general, 20 to 300 feet 

thick. These ‘‘vertical completions’’ only allowed us to extract the 

oil and gas from the vertical section of the interval we contacted. 

With the evolution of horizontal drilling technology, we are now 

able to drill the vertical section of the well down to the rock interval we are targeting, and then drill horizontally out into the interval, thereby contacting up to 10,000 feet of rock section from which 

to produce. 

With more of the rock interval now contacted, producing rates 

from horizontal wells are multiples of those in vertical producing 

wells from the same rock interval while producing—reducing impacts to landowners, wildlife and other surface resources. Horizontal drilling now dominates the U.S. oil and gas industry landscape. Today, approximately 85 percent of North America’s active 

drilling rigs are drilling horizontal wells, opening a new window of 

opportunity for the industry. 

With more rock interval now encountered in horizontal wells 

came the advancements in completion technology, mostly derived 

from empirical testing. Surprisingly enough, the industry downturn 

allowed industry participants to try many experiments which otherwise would have been too costly to attempt prior to the downturn. Low commodity prices resulted in lower cost of services. With 

lower costs for service came lower costs to experiment, especially 

in the completion or frac design of horizontal wells. The experimentation proved larger and larger frac designs would more efficiently 

contact horizontal rock interval and further improve well productivity. As a result, although today’s total cost to drill and complete 

a well may be just at or below before the downturn, we are com-
31 

pleting better and better wells, allowing us to drill economic wells 

and compete in today’s low oil and gas price environment. 

Our industry has made tremendous advancements over the 

years. My world is drilling and completing these wells, and I have 

over 40 years of oilfield experience. I want to share just a few of 

the technological advancements that have allowed us to more efficiently drill and complete our wells. With these examples, I’ll just 

be scratching the surface on advancements our industry has made, 

but hopefully will leave you with a flavor of the technology gains 

the industry has accomplished. 

Modern drilling rig design has played a large role in our ability 

to drill wells faster. The rig designs enhance safe drilling operations, allow for a digital data acquisition of all drilling parameters, and are fit-for-purpose to drill horizontal wells. They have 

the capability to ‘‘walk or skid’’ from well to well on multi-well pads 

to accelerate project timelines and lower mobilization costs. 

Data gathering and communication technology has allowed us to 

make tremendous strides to drill our wells faster. Downhole rotary 

steering tool technology now allows us to ‘‘point and steer’’ the 

downhole drilling tools from the surface using real-time data. Technology gains in drill bit material and cutter design have resulted 

in faster drilling with longer run times for the bits we use to drill 

our wells. The bottom line is reduced time to drill equates to reduced cost. 

We are utilizing technologies to understand the oil and gas reservoir rock we are penetrating to optimize our completion design. 

Digital data obtained from fiber-optic recording tools provide us 

with real-time temperature and acoustic information to evaluate 

the effectiveness of frac operations and completion designs. With 

this data, we have the means to recalibrate our completion design 

with a goal of maximizing well productivity. 

Resources once considered out of reach are now the targets of the 

‘‘Unconventional Revolution.’’ Because of advancement in technology, in our view, this revolution is uniquely American. Through 

technology, creative trial and error and perseverance, the U.S. oil 

and gas industry has been able to change forever the landscape of 

our industry. 

And with that, I would welcome any questions. 

[The prepared statement of Mr. Simonton follows:] 
32 
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34 

The CHAIRMAN. Thank you, Mr. Simonton. I had an opportunity 

just last week to take a couple members of this Committee, along 

with Secretary Zinke, to Alaska’s North Slope where we viewed 

much of what you have just discussed with regards to the technology. So seeing it firsthand is pretty impressive. 

Mr. Vare, welcome to the Committee. 

STATEMENT OF RUSSELL VARE, MANAGER, BUSINESS 

DEVELOPMENT, MERCEDES-BENZ ENERGY AMERICAS, LLC 

Mr. VARE. Thank you. Good morning, Chairman Murkowski, 

Ranking Member Cantwell, and members of the Committee. Thank 

you for the opportunity to participate in today’s meeting. My name 

is Russell Vare and I’m Manager of Business Development for Mercedes-Benz Energy Americas, headquartered in Sunnyvale, California. I appreciate the Committee’s interest in how innovation is 

advancing new energy technologies to help drive down costs. 

As a major global automaker, our parent company, Daimler, 

plans to continue our leadership in innovation by adopting a strategic framework called CASE, which stands for Connected, Autonomous, Shared & Service, and Electric. Our new vehicles and services will focus on connectivity, autonomous driving, flexible use, 

and electric drive systems. 

So we’re taking a holistic approach to electrification of transportation during this truly fundamental shift in the automotive industry. We will have ten plug-in hybrid models available in 2018, and 

ten all-electric models available in 2022. 

Beyond electrifying our cars, vans, buses, and trucks, we are investing in electric mobility solutions beyond the vehicle, including 

stationary energy storage, shared mobility services, and electric vehicle charging infrastructure. Globally, we are investing around 

$10 billion euros in our technological competence and new electric 

fleet. 

Mercedes-Benz Energy was established last year to directly support the electrification strategy behind CASE, providing innovative 

energy storage and EV charging solutions for homes, businesses 

and utilities to manage resources more efficiently and sustainably. 

What we are doing is unique to others in the automotive space. 

We recognize the value of electric vehicles that they can have on 

the grid, and we’re using the same automotive grade battery technology used in Mercedes-Benz electric plug-in hybrids and electric 

vehicles for stationary storage applications. Mercedes-Benz stationary energy storage systems can optimize solar consumption, reduce expensive peak electric loads, provide back-up power, and 

offer a variety of other grid services, such as frequency regulation, 

transmission and distribution deferral, renewable integration and 

other ancillary services. 

Just three weeks ago, we launched our home energy storage solution in the U.S. with the Utah-based residential solar company, 

Vivint Solar, to bring clean energy solutions to American homes. 

We are excited by the growing demand for clean energy technology. In 2016, revenue from the U.S. energy storage market 

surged by 54 percent from the previous year to reach $427 million. 

By 2022, the U.S. energy storage market is expected to be worth 

$3.2 billion. 
35 

One of the major drivers of this growth is the rapid decline in 

battery prices. As also mentioned earlier this morning, since 2010 

the price of lithium-ion batteries fell roughly 80 percent, from more 

than $1,000 a kilowatt-hour down to $227 a kilowatt-hour at the 

end of 2016. We are driving this price reduction by increasing scale 

production. Two weeks ago we announced the expansion of our battery factory in Kamenz, Germany, to 80,000 square meters to 

produce more electric vehicle batteries at scale. 

In addition to the decreasing prices, advancement in battery efficiency is rapidly improving. From 2012 to 2016, we’ve seen a 64 

percent improvement in cell energy density. Such economic and 

technological improvements will lead to faster and greater adoption 

of electric vehicles and energy storage into our transition to a clean 

energy economy. 

According to Bloomberg New Energy Finance, between 2020 and 

2030, electric vehicles will become cheaper to own than cars with 

internal combustion engines, and this matches our internal predictions as well. 

We are strongly committed to innovating electric drive technology for further cost reductions on vehicles and batteries. And 

we’re also committed to continue to work with agencies at national, 

regional, and city levels to support electrification of our transportation systems. 

So thank you for the opportunity to participate in today’s hearing. I’m happy to answer any questions. 

[The prepared statement of Mr. Vare follows:] 
36 
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38 

The CHAIRMAN. Thank you. I appreciate that update. 

Mr. Yates, welcome. 

STATEMENT OF KEVIN YATES, PRESIDENT, ENERGY 

MANAGEMENT DIVISION, SIEMENS USA 

Mr. YATES. Thank you, Chairman Murkowski and Ranking Member Cantwell and members of the Committee. I’m Kevin Yates, 

President of Siemens Energy Management Division here in the 

U.S., and it is a privilege to testify today on behalf of Siemens’ 

50,000 employees in the U.S. represented in all 50 states. 

In the past 15 years, Siemens has invested $40 billion in the 

U.S., and we invest $1 billion annually in U.S.-based research and 

development. So while we’re a global company, we are proud to say 

that we’re U.S. local, setting a high expectation for advancing critical technology in the fields of energy, health care, mobility and 

manufacturing efficiency. 

Specific to the energy space, since our first day in the U.S. more 

than 160 years ago, Siemens has been inventing, optimizing and 

reengineering machines capable of generating electrical energy at 

all levels. One might conclude that our DNA has a foundation of 

electrifying the world. It’s because of this deep-rooted foundation in 

electrification that we continue to invest in innovation around 

power generation, transmission and distribution. 

I would like to spend my opening remarks this morning to share 

a few examples of technology that enable the development of not 

only a reliable and an affordable electrical infrastructure, but also 

a sustainable future. 

First, Siemens offers wind and solar solutions for various operating environments. In fact, in Alaska we are proud to provide 

technology that enabled the Cold Climate Housing Research Center 

to be fueled almost exclusively by solar energy. In Iowa and Kansas 

today, Siemens Gamesa Renewable Energy designs and manufactures equipment that make wind energy production more efficient, 

innovation that has had a U.S. influence and a contribution which 

has enabled wind production to be very competitive. 

Now while wind and solar generation offer advantages in terms 

of sustainability, they do present new challenges, two specifically. 

How do we efficiently transmit renewable generation to consumers? 

And how do we manage the intermittency of renewable energy? 

Siemens is responding to this challenge as well by advancing 

transmission technology to move electrical energy across vast distances while using software to effectively plan assets and help 

manage intermittency. In fact, next year we expect to start work 

on a new transmission line that will carry wind energy from Texas 

into the Southeast U.S. And this project will not only provide sustainable generation to reach consumers, but it will inject about $4 

billion into the economies of the two states that that wind energy 

crosses, Louisiana and Mississippi. 

Third, Siemens is involved in another key trend in the electrification landscape, distributed energy resources. You might think 

about this as the other end of the spectrum. This is where energy 

is now being generated on a much smaller scale and in much closer 

proximity to the consumer. In these cases, Siemens is working with 
39 

cities, manufacturers, hospitals and universities alike to help them 

build a more reliable and efficient electrical infrastructure. 

And finally, Siemens is focused on modernizing our grid. Our nation’s power grid is one of the most complex, massive machines the 

world has ever seen. In fact, someone once said that our utility grid 

is the great enabler. I happen to agree with this perspective, but 

the grid, the great enabler, is aged and needs to be renewed, rebuilt, rewired, but also made more intelligent. Whether we’re talking about large-scale renewable generation or localized, distributed 

small power, Siemens is focused on helping our customers manage 

these assets in a more reliable and efficient manner through automation and software. 

As an example, we recently celebrated a successful microgrid installation of a low carbon community at a Native American reservation in California. The project not only helped the reservation 

solve an issue of regular brownouts, but our software has enabled 

the connection of four different types of electricity generation— 

including solar and storage technology—with a result to save the 

community $200,000 per year in energy costs, reduce CO2 emissions by 150 tons per year and increase tribal clean energy jobs by 

10 percent. 

So I’ll just close with this final point. At Siemens, we work closely with our customers in a wide variety of industries to develop 

new technologies that help move the industry forward without losing focus on the next big advancement. A critical component of 

what enables us to do this in the U.S. is a culture of innovation 

at work in this country. We think of it as an energy ecosystem, and 

we do believe in an energy future that is affordable, reliable, and 

sustainable, but the ecosystem transcends any one entity. 

We look forward to helping foster a more collaborative energy 

ecosystem of the future. Thank you for your time. And I look forward to your questions. 

[The prepared statement of Mr. Yates follows:] 
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42 
43 
44 
45 
46 
47 
48 

The CHAIRMAN. Thank you, Mr. Yates, and thank all of you. This 

has been a very interesting hearing this morning, and I appreciate 

what each of you is contributing. My husband and I just put solar 

on our home here in Washington, DC, rooftop solar, and we actually argue over who gets to open the bill each month now to see 

what it is that we are, quote, ‘‘saving.’’ But it has been an eyeopener for us as a family. 

I would invite my colleagues to come to my office upstairs on the 

fifth floor here. Just yesterday, we installed our own little, we call 

it a ‘‘grow tower.’’ It is comprised of several orange buckets from 

Home Depot, and we have hydroponic lettuce growing in it with a 

small circulating pump. It is a system that costs about $200 overall. We are utilizing some LED lights to really help demonstrate 

what it is that we can grow. We encourage everyone in the office 

to have a little bit of fresh salad every day. 

What we are trying to demonstrate is that even in a cold and a 

dark remote place we can, as Alaskans, grow some healthy things 

in a space that is very, very limited utilizing the efficiencies that 

we have with these LED light strips. So I think about the different 

things that individuals can do to spark that imagination. It is kind 

of fun on top of it all. 

I would like to take my questions to you this morning to a higher 

level instead of what we, as individuals, are doing. Let me just ask 

generally to each of you, because you all bring a different perspective here. I mentioned in my opening that we really have not updated our energy policies around here for about a decade now. Can 

you give me some examples of where we have either impeded the 

progress in the areas that we are seeking to develop these enhanced efficiencies, or our opportunities, or reduce our costs? Or, 

if you can’t think of those areas where the Federal Government has 

been in the way, can you provide us some examples where technical assistance or funding from DOE or from the Federal Government has made the difference? 

I think, Mr. Greeson, you mentioned in your comments a 20 percent grant from DOE, a very specific example of how that financing 

helped kick your project over. So I am throwing this out to each 

of you because I think it is important for us to understand what, 

from the federal perspective, we can be doing more of or less of to 

help these opportunities advance. I do not care who starts. 

Ms. Donge. 

Ms. DONGE. Thank you. Just two very specific points, when it 

comes to corporate renewables and what the buyers are thinking, 

are definitely the PTC and ITC extensions. It is not necessarily 

that the tax credits are helpful, it is the certainty of when they 

phase out, so that planning and OEMs can ensure their capital 

costs meet the demands of the developers. That’s one example. 

Then the second example is the DOE’s SunShot Initiative, which 

has reached its goal a few years ahead of time—reached its goal 

this January—of reducing costs to $1.00 per kilowatt-hour. I think 

that’s a very significant way to, technical way, to prove that the 

cost reductions can go further for these technologies. 

Thank you. 

The CHAIRMAN. Others? Mr. Yates? 
49 

Mr. YATES. Yes, ma’am. Thank you. A two-part answer to the 

question. The first would be as we look at the implementation of 

even further renewable assets, the key is going to be connecting 

those generation sources with consumers. And sometimes that 

crosses state utility types of jurisdictions, and so the permitting 

process, and how we can make that more expedient, more streamlined is, I think, a key opportunity. 

And then the second comment that I would make is we absolutely—we have a great relationship with renewable—some of the 

national labs. And one specific example, we worked with a renewable energy lab on some e-car charging technology to help automate 

that there in Colorado, working with an auto manufacturer and a 

utility. And so, I think a collaborative environment and a collaborative ecosystem is key to continuing to move our energy sector forward. 

The CHAIRMAN. Good. Anybody else? Mr. Simonton? 

Mr. SIMONTON. Thank you. As far as the Federal Government 

impeding our progress, I would say, and second, the regulatory 

turnaround is what really is impeding us, and trying to schedule 

all of our drilling and completion permits in the federal acreage 

that we operate in. It’s not the expectation of the federal requirements, and we’re certainly willing and able to do that, but it’s absolutely the turnaround is delayed by many, many months. And I 

think there is an understaffing issue that the regulatory body is 

having in the different regions that we operate. 

The CHAIRMAN. Good. I appreciate that. 

Mr. Vare? 

Mr. VARE. I would say that I don’t see anything that’s been in 

the way, but as energy storage is a new technology, right now the 

federal Investment Tax Credit for solar does have some applications to energy storage, which is good, but I would just suggest for 

any future energy policy that was created, that energy storage fits 

into renewables as in the way that it can help with distributed generation. 

The CHAIRMAN. Great. 

Mr. Merritt, you get to wrap up the question. 

Mr. MERRITT. Yes. So I would like to point out three key areas 

I think are important for the role the Federal Government plays. 

One is, and I mentioned this earlier, early R&D funding and support for projects that have long lead-times and potentially high levels of risk. These are projects that often won’t be undertaken at the 

same scale or perhaps as soon if private industry does not have the 

support of federal research dollars. I think the role of the Federal 

Government in terms of demonstrations and trial projects and, in 

fact, early adoption is also a very key role. It does a few things. 

It validates the technology in the marketplace. It also provides 

early revenue for those companies that are trying to justify continued investment. And then lastly, I would mention the certifications 

and standards to encourage adoption, such as what’s happened in 

the ENERGY STAR program are important. 

I would highlight going forward, I would mention systems efficiencies and the potentially very large gains that are available 

there. I think the government, the Federal Government, can have 
50 

a very key role there in terms of demonstration and trial activities. 

Thank you. 

The CHAIRMAN. Great. Thank you. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Madam Chair. 

Mr. Yates, not to put you on the spot, but I actually think everybody here talked about various aspects that the government is involved in, technology and R&D, but are we the leaders? You are 

a global company. Is the United States the leader in renewable energy? 

Mr. YATES. I would say the United States is absolutely at the 

forefront, and I would go and point to the advances that we’ve 

made in the wind energy market as an example. Some of the numbers that you and the Chairman cited earlier today, as well as 

some of my colleagues on the panel have cited, the tremendous improvements in production costs, and that is a direct result of the 

investments that we’ve made both domestically here in the U.S. in 

our own wind energy facilities as well as abroad. So I think we absolutely have the environment to continue to do that, and we look 

forward to working both with the Administration and with Congress as well as the Department of Energy on ways to continue 

that evolution in the wind and renewable markets. 

Senator CANTWELL. So now would not be the time to pull your 

punch on the leadership. 

Mr. YATES. As far as the Administration goes, I mean, from our 

standpoint, we have a corporate sustainability target to be carbonneutral by 2030, Siemens Global. 

Senator CANTWELL. Yes. I am not even talking about Paris. I am 

just talking about maybe, more specifically, the Office of Energy Efficiency and Renewable Energy (EERE), the President suggesting 

a 70 percent cut. 

Mr. YATES. Well, again, we would be interested in moving technology forward, and I would say that we see the Department of Energy as a key part of that. It’s not the only part of that moving forward, but we would ask that Congress and the Department of Energy reach out to the private sector and engage in public-private 

partnerships that could help continue to advance technology. 

Senator CANTWELL. So if we want to keep being a leader, we 

need to keep our investments in R&D and deployment going. 

Mr. YATES. We need to keep fostering environments where we 

have collaborative partnerships with the Federal Government and 

the state governments as a part of that but also reaching into the 

private sector to do that. 

Senator CANTWELL. What do you think on grid development— 

from the context of how big that opportunity is if we were the pioneers in the next phases of that grid technology—how big is the opportunity around the globe for that kind of technology? 

Mr. YATES. I don’t know that I would specifically say that I know 

what the opportunity is from a dollars and cents standpoint. What 

I would say is that geographically across the globe there are different types of energy challenges. And at Siemens, we focus on not 

only innovation here in the U.S., but how we can take that abroad. 

And to get on a global scale, I think technologies are going to be 

developed in different regions of the world that are applicable. But 
51 

I think creating an environment in the U.S. where we continue to 

innovate energy infrastructure not only is going to help us domestically but give us a platform to take technology global. 

Senator CANTWELL. I would agree. The United States has a huge 

opportunity for other parts of the world that are so energy inefficient and whose grids are so elementary to take and create the 

smart grid and smart building platform for the future and really 

capitalize on those jobs and investments. 

I wanted to point out, Madam Chair, I think we are getting a letter today from all the former leaders of the Office of Energy Efficiency and Renewable Energy—from the Clinton Administration, 

Obama Administration, both Bush Administrations—saying not to 

gut the EERE office. And so certainly I know one of the things that 

has been highlighted here are all the great ways in which that 

agency has been working with so many of these partners here. We 

definitely want to bolster that organization. Thank you, Madam 

Chair. 

The CHAIRMAN. Thank you, Senator Cantwell. 

Senator Hirono. 

Senator HIRONO. Thank you, Madam Chair, and thank all of you 

for your testimony. 

I am glad that Senator Cantwell has focused on EERE, the Department of Energy’s Office of Energy Efficiency and Renewable 

Energy, and the huge cuts that the President’s budget reflects on 

that program. And as I observed Secretary Perry, during his nomination hearing, the Department of Energy has been a key supporter of Hawaii’s efforts to transition from importing oil to renewable energy, including a goal of 100 percent renewable electricity 

by 2045. 

This is a question that maybe Mr. Merritt could respond to. Can 

you comment on the importance of public investments and clean 

energy technology and what the impacts could be of the major 

funding cuts to DOE, in the case of EERE, a two-thirds cut, on the 

pace of clean energy technology innovation and working with a 

state like Hawaii to move us off reliance on fossil fuels? 

Mr. MERRITT. Surely. So I think, as I mentioned earlier, there 

are a couple of key roles that EERE and the Department of Energy 

play. One is early R&D funding. You know, in our case, I would 

argue R&D technology have moved beyond the point where it’s now 

past the tipping point and is fully self-sufficient. 

However, what I would point to would be the next generation of 

technologies which are going to be required for us to achieve the 

goals you highlighted. The early long lead-time investment and 

perhaps higher-risk investment that’s required for these technologies absolutely requires, or if not requires, benefits from public 

funding and public support. Would it happen anyway? Potentially, 

but it would take longer, and it would not be as powerful. 

Senator HIRONO. I would agree with that. I think that that is a 

rather tactful response because in the area of moving toward clean 

energy and energy self-sufficiency, tax credits and other kinds of 

support that governments at both the state and federal levels have 

been very much relied upon, which takes me to the question relating to energy storage. 
52 

This is for Mr. Vare. You mentioned that your company just 

launched a home energy storage service in the U.S. with a Utahbased residential solar company. Many people in Hawaii see energy 

storage as potentially a big help in reaching our goal of 100 percent 

renewable electricity by 2045. What are your company’s forecasts 

for the long-term cost savings for customers installing residential 

storage systems? And how is your company reaching out to residential customers to explain the potential benefits to them of energy 

storage? 

Mr. VARE. Yeah, we absolutely see Hawaii as one of the leaders 

in renewable energy integration and see the residential home storage market as one of our key markets that we’re focusing on. 

In terms of the cost savings per customer, we would need to 

look—we look individually at that customer’s utility rate structure, 

so it’s hard to give a specific number, but we do see a financial benefit and we are planning with Vivint Solar, as you mentioned, to 

launch in Hawaii. There are some specific requirements for the Hawaiian market for zero net export that we’re looking to be able to 

have our systems function there, so—— 

Senator HIRONO. It sounds as though you are already interacting 

with folks in Hawaii? 

Mr. VARE. Absolutely, yes. 

Senator HIRONO. That is good to know. And, of course, you mentioned that you would like energy storage to be part of discussion 

around investment tax credits. 

Mr. VARE. Correct. 

Senator HIRONO. As you know, there are bills to do that. 

Mr. VARE. Correct. 

Senator HIRONO. I am certainly supportive because when you are 

talking about intermittent energy, storage is a huge part of how we 

can actually bring all of that online. 

Again for you, since 2006 Hawaii has cut its annual use of petroleum by 41 percent, or 22 million barrels, while renewable energy 

grew from 9.5 percent of the electricity market in 2010 to 26.6 percent in 2016. I would like to see a similar transition in the transportation sector because we are focusing, in Hawaii particularly, on 

the electricity sector. What policies do you recommend to accelerate 

the transition to electric vehicles that you referred to in your testimony? 

Mr. VARE. I believe the electric vehicle charging infrastructure 

support would be a key policy, and where Mercedes-Benz Energy 

fits within Daimler is, how can we support this vehicle electrification? So for the residential energy storage, we see that as the customer purchases an electric car, as they have solar in their home, 

they have residential battery storage, that they can efficiently manage the energy at their home. So in order to help increase that 

transition to full electrification at the home, they need the electric 

car, and I think that more EV charging infrastructure would help 

make that decision easier to transition to electric drive. 

Senator HIRONO. Thank you. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you. We have some really great projects 

going on in some of our smaller communities. Our capital city in 

Alaska—Juneau—is on an island, primarily powered by—the en-
53 

ergy is generated by hydropower. We are looking to do some interesting things with distributed heat generation. And when you think 

about the opportunity for islanded communities, whether it is a 

state like Hawaii or communities like Juneau, they are just perfectly brilliant prototypes for doing some of what we are talking 

about, particularly in areas where you are a renewable energy 

base. 

The island of Kodiak is about 98 percent renewable between its 

wind, its hydro and the storage capacity that they have there. And 

when you think about that island community, it is our second largest community in terms of the volume of seafood that comes in. 

You have a processing industry that is a pretty big consumer. You 

can look at these small towns and say, well, anybody can make success happen, but when you think about the demand during the season, it is pretty high. 

We are demonstrating significant progress as we look to the energy assets that are there rather than trying to bring things—although you know, we would like to do more with our natural gas 

to share with Hawaii. But the reality is the more that you can use 

what is around you, whether it is these villages like Kongiganak 

that take a little wind and combine it with some other interesting 

applications and figure out ways to get off diesel-powered generation, these are some breakthrough innovations that we are seeing. 

It is not on large scale, but if you can prove it out in high-cost 

places like Alaska and Hawaii, I think we just have extraordinary 

potential. 

Mr. Merritt, you mentioned intelligent lighting. As I look to some 

of the real cost drivers in our villages, again, these are communities that are not connected by roads, everything has to be flown 

in. When you think about anything that needs to be frozen in a 

grocery store, you have the expense of the freezer, and you are running it by diesel, but you also have the cost of that little grocery 

store. If you have the technologies that recognize that the light 

does not need to be on in that display case or the light does not 

need to be on in the refrigeration unit, these small little operators 

save money and thus are able to help, in a little way, reduce the 

cost to the consumer when it comes to the goods that are provided 

to them. 

I think about some of these lighting applications that we have 

out there, again, where you have streetlights that are using outdated and inefficient lighting, the incremental gains that we can 

make in just the lighting application I think is really quite considerable in these remote, high-cost areas. 

I wanted to ask just a couple more questions, and then I will let 

everyone kind of throw into the conversation anything that you had 

hoped to get on the table but were perhaps not asked. 

Mr. Simonton, you described a lot of the technological innovations. I mentioned that we had an opportunity up north a couple 

weeks ago to see for ourselves and really get a better understanding of where the industry is headed, how you can use the digital data that is really helping us be smarter, quicker and more efficient. But as we see those efficiencies, what does that do to the 

workforce? Does this mean that there is a different requirement for 

this skilled worker? Instead of the roughneck that we all, or those 
54 

of us that come from oil-producing states, called the guys that were 

making it happen, is it now the computer technicians? Are we seeing that we need fewer workers out in the oilfield? What are you 

seeing? 

Mr. SIMONTON. Yes, thank you. The innovation of technology in 

the oil and gas industry has certainly accelerated the whole process 

across the board. One of the things, for instance, the drilling rigs 

that we have today are modern drilling rigs that are all computerized, and what we find is the younger generation of employees are 

acclimated to this technology. They grow up with the technology, 

so it really is an easy acclimation and a process for them to develop. 

As far as, are we needing fewer and fewer employees in the industry? I would tell you in my career today the complexity of the 

type of wells that we drill is requiring more personnel, more people 

on location, more than ever in my career. So I would say that we’re 

an accelerated industry, things are getting faster. The investment 

for the unit of hydrocarbon that we find, we’re finding more and 

able to produce more efficiently more hydrocarbons per dollar of investment. 

So I think quite to the contrary, we’re actually a fast-paced and 

faster-paced industry with a young workforce that is acclimated to 

the technology, and they’re thriving. 

The CHAIRMAN. Great. 

Mr. Greeson, as you discussed, the innovation that you are advancing with the Petra Nova project and all that we are seeing 

with that commercialized CCS project, have you been working with 

other groups who are interested in pursuing this technology either 

here in the United States or abroad? Are you kind of working on 

your own or are others viewing this as a future opportunity? 

Mr. GREESON. Thank you, Chairman. We are seeing worldwide 

interest. I hosted the Australian Energy Minister on a tour of the 

facility about three weeks ago. I just returned this week from 

spending time in India, who is interested in CCS EOR, enhanced 

oil recovery. I think the last total was we’ve hosted eight international delegations on tours of the facility to see how we were able 

to achieve this project on time, on budget and get the commercial 

structure set so that oil pays for everything we did and electric customers don’t have to pay for reducing carbon emissions. 

The CHAIRMAN. Great. 

Mr. Yates, as we are considering the opportunities and the challenges that we face in developing some of these really small 

microgrids and bigger expansions, you mentioned the involvement 

with the Cold Climate Housing Research Center in Fairbanks and 

what you had done to help facilitate the solar generation there. 

What do we need to be doing to structure partnerships between 

industry, between our communities, our universities, the Department of Energy and our national labs to build out more when it 

comes to the innovation that we might see within this space of 

microgrids? 

Mr. YATES. Thank you, Chairman. I believe that, as you rightfully pointed out in your question, there is a partnership aspect to 

it. And I would point to the best case that I would give you is this 

project that I mentioned earlier in my opening remarks, the Blue 
55 

Lake Rancheria project out of Northern California where we had 

a Native American reservation that was dealing with brownouts on 

a regular basis. They were at the end of a large utility transmission and distribution grid. And it wasn’t just about dealing with 

the brownouts, it was also—once we started to talk partnerships 

with the local university, the utility, the tribe itself, and some 

other technology partners—it was really about, how do we give 

them energy independence but also do it in an affordable way? And 

the answer to that and to many of the questions that we’ve talked 

about is software. 

And so I think that whether we’re talking about the integration 

of 200 megawatts of wind and transmitting it 250 miles to a core 

consumer base, or we’re talking about a very small microgrid with 

10,000 metered customers, the enabler of both of those and many 

of these challenges is technology specifically around software. I 

think the key is, how do we create an environment where all the 

parties come to the table with a common goal to not only implement these renewable energy technologies or the various types of 

energy-generation technologies, but do it in the most reliable, affordable and sustainable way? 

The CHAIRMAN. Your comments remind me that in many parts 

of my state, and you get into areas of whether it is Africa or other 

parts of the world, where the biggest complicating factor here is 

that we don’t have that broadband capacity. That software that is 

so necessary to allow us to really capitalize on this, we cannot 

make work yet. So we are filling in the gaps in Alaska, we are 

making some headway there. That is not our problem here in this 

Committee, that is Commerce, but it does remind me how connected this all is and how important it is that we have that level 

of access when it comes to our ability to communicate. 

Mr. Vare, I want to ask you a question because you mentioned 

how the reduction in costs that we are seeing with the lithium-ion 

batteries has really helped to advance movement within the electric 

vehicles and the home energy storage systems. We recognize that 

is significant. Is it all about cost? Is that what the consumer wants 

to see? That is what my husband wants to see, I will tell you. But 

how much of it is just an awareness and understanding and just 

kind of some of the human behavior that we need to change in 

order to move to some of these different approaches? 

Mr. VARE. I think that some of it still is about cost, so when we 

hear these numbers of battery price declines, it’s easy to think that 

it’s cost competitive. But, for example, an energy storage system 

has power, electronics, energy management software. So as a system, it’s still expensive and it’s still a new market. So I think there 

is still further justification for incentives and cost declines that are 

needed. 

For maybe on the electric vehicle side, I think that there is this 

maybe a mental shift or paradigm shift that needs to happen. 

We’re still at one percent. We’ve been growing every month in 

terms of electric vehicle sales in this country, but it’s still one percent market share in terms of new vehicle sales. So there is, I 

think, an additional maybe mindset shift needed there to help transition people to electric drive. 
56 

The CHAIRMAN. Okay. Last chance for anyone to add for the good 

of the order any comments that you may want the Committee to 

be aware of. 

[No response.] 

All right. You are all happy. We are happy. I am pleased that 

you were with us this morning. 

Again, I do not think the Committee attendance this morning is 

at all reflective of an interest in this subject. It is, let us just say, 

an interesting day here in the United States Senate, and there is 

a lot going on. Know that the Committee members will have an opportunity to review everything that has been presented here as 

well as, again, your full statements. I would imagine that Committee members will be submitting questions to you for the record 

so that we can have further information as to that. 

I thank you for being here this morning, making the trip and for 

all of your contribution. I think we are making a difference, and 

that is a good thing for the country. 

With that, we stand adjourned. 

[Whereupon, at 11:25 a.m., the hearing was adjourned.] 
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