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American Superconductor Awarded $5.35 Million Department of Defense Follow-on Contract for Acceleration of Manufacturing of Second Generation High Temperature Superconductor Wire
Westborough, MA., Jan. 3: American Superconductor Corporation (NASDAQ:AMSC), a leading electricity solutions company, today announced that it has been awarded a $5.35 million follow-on contract from the Department of Defense (DOD) Title III Program for accelerating the scale-up of its manufacturing of second generation (2G) high temperature superconductor (HTS) wire. The Title III program was established by the DOD, and is supported by the Department of Energy (DOE), with the objective of developing a United States-based 2G HTS wire manufacturing capability that can provide sufficient wire quantities for near-term military and commercial applications.
The funding is being provided through the Air Force Research Laboratory and will run until June 30, 2008. AMSC expects its expenses under this 2G HTS wire manufacturing scale-up program to be approximately $13.6 million, of which $5.35 million will be covered by Title III cost-sharing funds, thereby reducing AMSC's investment for this program to approximately $8.2 million. As required by government contract accounting guidelines, funding from government cost-sharing agreements is recorded as an offset to research and development and selling, general and administrative expenses, rather than as revenue. This is the latest in a series of Title III contracts that brings cumulative funding provided by this program to AMSC from $1.75 million to $7.1 million.
The new Phase III program award will assist AMSC in extending its current 2G HTS wire manufacturing operation to a full production facility with wire lengths up to 1,000 meters and a capacity of 300,000 meters per year by December 2007. By the end of the Phase 3 program, this production facility is expected to demonstrate the technical and economic feasibility for expansion to even larger production levels. The program also includes the establishment of essential manufacturing infrastructure, including standard operating procedures, quality control, preventive maintenance, failure analysis and statistical control.
Under previous Title III funding, AMSC has developed a proprietary manufacturing process to produce 4-centimeter wide strips of 2G HTS material in lengths up to 100 meters. When slit and laminated with copper tapes into a final 0.44 cm width, it becomes a very robust and environmentally stable product called "344 superconductors."
AMSC's chief executive officer, Greg Yurek, commented that the Title III funding will continue to be very important in reducing the company's investment in its accelerated manufacturing scale-up of 344 superconductors. "We started regular processing of 100-meter lengths of 4-centimeter wide strips and of 344 superconductors made from the wide strips on schedule in September 2005," he said. "At that time, we also began to order new full- scale manufacturing equipment for our pilot manufacturing line -- ahead of our original schedule. We expect to achieve a manufacturing capacity of 300,000 meters per year of 344 superconductors by December 2007."
HTS wire offers high power density and high efficiency compared to conventional copper wire, thereby opening up a broad range of applications in the military and commercial sectors. First generation (1G) HTS wire is commercially available and is being tested in a number of military and electric power applications; however its incorporation into a broader range of applications is limited by cost constraints. The availability of a substantially lower cost 2G HTS wire is expected to accelerate significantly broader use of HTS technology in both military and commercial markets. Electrical systems that incorporate HTS wire are dramatically smaller, lighter and more cost effective than systems based on copper wire.
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