American Superconductor and Electric Power Research Institute form strategic alliance to develop next-generation wire technology; Alliance to explore commercialization of 'IBAD' technology with Los Alamos National Laboratory; Marketing and manufacturing rights licensed to American Superconductor.

WESTBOROUGH, Mass.--(BUSINESS WIRE)--March 28, 1996--American Superconductor Corp. (Nasdaq:AMSC) and the Electric Power Research Institute (EPRI) have formed a strategic alliance to develop and commercialize next-generation high temperature superconducting (HTS) wire to be used in products for electricity production, transmission and use.

The alliance combines American Superconductor's expertise in developing, manufacturing and marketing its current generation of HTS wire technology with EPRI's leadership in identifying and pursuing advanced technology to help U.S. electric utilities and their customers compete.

The American Superconductor-EPRI alliance will collaborate with the Department of Energy (DOE), which supports a national effort to develop HTS technology for electric power, and the Los Alamos and Lawrence Berkeley national labs. Additional collaborators will include various academic institutions, corporations and agencies of the Department of Defense (DOD).

Wires made of HTS materials, the most efficient conductors of electricity known, are expected to be widely used for electric power and utility applications such as underground transmission and distribution cables, large generators, transformers and current limiters in addition to end-use functions employing powerful electric motors and power conditioning equipment involving superconducting magnetic energy storage.

An initial focus for the alliance will be the significant research advances demonstrated last year under DOE funding by Los Alamos in "coated-conductor" HTS wire technology.

Coated conductors, composed of highly textured thick films of HTS materials deposited on flexible tapes, have been under investigation by several institutions worldwide for the last six years. In April 1995, Los Alamos achieved record levels of electrical current conduction by using ion beam bombardment -- a processing technology called "IBAD" (Ion Beam Assisted Deposition) -- to prepare short samples of tape substrates for coating with thick HTS films. The IBAD technology demonstrated by Los Alamos, which is a major participant in the DOE Applied Superconductivity Program, will be among a variety of HTS technologies that will be explored and assessed by the alliance for eventual industrial scale-up.

"The alliance's work on coated conductors provides American Superconductor with a potential second generation of wire technologies for additional business growth in the next decade," said Greg Yurek, American Superconductor's CEO. The company, which has developed patented processes for commercial-scale manufacturing of HTS wire, will introduce significant electric power product lines based on its current generation of wire technology over the next one to four years.

The alliance is projected to extend four years. Initially, the organizations intend to provide combined internal and external funding of approximately $5 million over two years. Program details for the subsequent two years will depend on progress achieved during the primary phase.

American Superconductor will receive exclusive marketing and manufacturing rights from EPRI to technologies developed in the alliance program. EPRI will receive warrants for American Superconductor common stock issued in proportion to EPRI's investment in the alliance's technology development. The warrants will be granted and become exercisable over the next four years.

Kurt Yeager, EPRI's executive vice president and chief operating officer, said that the next-generation wire technologies that will result from the alliance should provide a competitive edge for all companies involved in the electricity enterprise.

"Superconductivity already has achieved commercial success in specialized areas like diagnostic medical magnetic resonance imaging, an application with enormous social impact," Yeager said. "These markets, as well as new opportunities that coated HTS conductors will embody for generation, transmission and use of electricity, will greatly expand with the advancements we expect."

To carry out its goals, the alliance will work with the Los Alamos and Lawrence Berkeley national labs as well as Inco Alloys International, Stanford University, and the Applied Superconductivity Center at the University of Wisconsin. The alliance also plans to work with the Wright Laboratory at DOD's Wright Patterson Air Force Base, the Massachusetts Institute of Technology and the Texas Center for Superconductivity at the University of Houston.

The alliance and its broad-based team will focus on choosing those processes showing greatest probability for coated conductor scale-up to high-volume, low-cost manufacturing.

"Our collaboration with the alliance means we will dramatically accelerate the major development effort necessary to move coated-conductor technologies out of the lab and into the marketplace," said Dean Peterson, leader of the Superconductivity Technology Center at Los Alamos. "The end result will be more efficient, lightweight electric power products offering performance advantages for utilities and the industrial sector."

The U.S. Department of Energy is providing significant support for the development of HTS technology for electric power systems. "The collaboration of the American Superconductor-EPRI alliance with Los Alamos and Lawrence Berkeley labs is an exciting example of how basic technologies successfully developed under the DOE Superconductivity Program can lead to commercial applications," said Charles B. Curtis, deputy secretary, Department of Energy.

John Rowe, a member of the Board of Directors of EPRI and CEO of New England Electric System, the second-largest electric utility in New England, also said that the alliance has critical implications for U.S. utilities, which will use advanced technologies like HTS as competitive tools in a dynamic business environment.

"EPRI's decision to work with American Superconductor was easy because they have an established working relationship and American Superconductor is clearly the leader in developing HTS technology for commercial electric power applications," Rowe said.

EPRI founded in 1972, manages technical research and development programs for the electric utility industry to improve power production, distribution and use. Some 700 utilities are members of the Institute.

American Superconductor is the leader in developing commercial applications of high temperature superconductor technology for the global electric power industry. With world-class expertise in electromagnetics, cryogenic integration, power semiconductors and power engineering as well as high temperature superconductors, the company is driving the evolving market for advanced electric power equipment and power quality products.

CONTACT: EPRI

Lori Telson, 415/855-2272

or

American Superconductor

Bob Cavosi/Gary Terpening, 212/508-9645/9643