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Research and Renewables: Funding at the National Energy Labs

Fortnightly Magazine - August 1996

of NREL's success in dealing with its shriveling budget and staff can be attributed to Gay, who arrived there in January 1995. He came from UNISUN, a California consulting firm that specialized

in financing renewable energy. Gay has also been president of Siemens Solar Industries.

Gay has squeezed $26 million out of his budget by "enhancing" productivity, eliminating expenses, and creating a leaner, more responsive, and diversified organization. Signing a contract with the lab used to take up to 10 months; it now takes about 30 days. Supervisors have been pared from 10 to 2.5 percent of the staff.

Yet Gay still pictures his ideal funding and staffing levels at $200 million and 800 employees.

Gay doesn't think the budget cuts will hurt NREL's industry relationships. He recently met with PV industry executives in Washington, DC. "They like what they see," he says of the changes at NREL. "They like the motivation they see in the employees. They like the way we've created some new ways of outreach, and they've been especially pleased by our ability to help bring new sources of capital to their organizations."

From what industry says, the changes seem to be working. Wayne Gould, SCE's manager of dispersed energy systems, sits on NREL's Enterprise Growth Forum, which directs companies to new capital and advises on marketing. "It's a wonderful forum," he says. Soon, he says, NREL will sponsor a similar forum in China.

But Prabhu says he'd like to see how the cuts play out before passing judgment. "They're putting the best face on the inevitable," he notes. "Charlie Gay is a nice guy and he's got to tighten his belt and do it with a smile. But as everyone tightens their belts, the price is going to come in the weakening of the emphasis on renewables."

At ORNL, Schaffhauser has seen his renewables budget drop from $18.7 million in fiscal 1995 to $14.6 million in fiscal 1996. Fifteen jobs were cut. The $5.2-million transmission and distribution program was "zeroed out." However, over the same period, research in high-temperature superconductivity and in hydrogen increased. Funding for superconductivity, for example (em clearly a pet project for some legislators (em grew $400,000, to $4.9 million.

"They talk about corporate welfare, but government money often acts as a corporate catalyst," says James VanCoevering, who heads ORNL's Efficiency and Renewables Research Section. "In several projects I'm thinking of, the government funding wasn't all that large, but without the fact of its existence, the players would have never gotten together."

Like Gay, Schaffhauser is working with a consultant, Ernst & Young. A restructuring plan is expected October 1. Other recommendations include taking out financial systems, eliminating a level of management, and centralizing procurement services. Travel is now booked through commercial agencies. Schaffhauser says the lab already sees cost savings.

"A lot of people are skeptical [of the Ernst & Young study]," Schaffhauser says. "But from what I've seen, and I've been involved in some of the teams, I think there are going to be some significant efficiency and productivity improvements."

Meanwhile, as the