IN THE BOARDROOM™ with...

Mr. Ram Ambatipudi
Sr. Business Development Manager,
Renewable Energy
Chevron Energy Solutions
A Division of Chevron USA, Inc.
www.Chevron.com
NYSE:CVX

SecuritySolutionsWatch.com: Thank you for joining us again today, Ram. Please give us an overview of your background and your role at Chevron? May we also have a brief history of Chevron Energy Solutions (“CES”)?

Ram Ambatipudi: I am focused on developing renewable energy projects for CES. I work primarily with solar technologies such as photovoltaics (PV) and concentrating solar power (CSP) to develop projects with customers across the Western United States. I have more than 10 years of experience in the energy industry.

CES was formed in 2000 when Chevron acquired the value-added energy services business of PG&E Corp. Since then, CES has acquired other firms in the energy services industry, such as Viron and Energy Masters International, and now has more than 300 employees across the country.

SecuritySolutionsWatch.com: One will read on ChevronEnergy.com that “Chevron Energy Solutions offers customized, comprehensive products and services that help institutions and businesses manage their energy use more efficiently, reduce energy consumption, and lower energy-related costs while improving operations and asset values.” What types of energy solutions does CES offer? Are energy efficiency, solar, wind, and biomass all a part of it?

Ram Ambatipudi: CES offers its clients a comprehensive approach to energy management that includes energy efficiency, energy conservation, facility modernization and self-generation technologies. We typically perform a thorough evaluation of a facility’s existing energy usage, and then recommend measures that can improve energy efficiency and lower energy costs. Our energy efficiency capabilities include installing high-efficiency lighting, HVAC, energy management systems and other technologies that help reduce a facility’s existing energy usage. Increasingly, our customers are interested in installing self-generation systems such as PV, fuel cells, wind, biomass or biogas to generate electricity using clean technologies.

SecuritySolutionsWatch.com: What are the main target markets for CES and what is your perspective of the market drivers at this time? What is your market place advantage?

Ram Ambatipudi: CES’s primary markets – in addition to Chevron’s operating companies – include public agencies such as school districts, community colleges, universities, utilities, city/county facilities and federal agencies. These customer segments are faced with budget constraints, and require careful management of their energy expenditures. In addition, they have a strong interest in setting a positive example in their communities by implementing energy efficiency and renewable technologies such as PV. While public-sector customers generally have a higher tolerance for longer payback periods than commercial customers, there are many aspects to public-sector financing that need to be considered in structuring a successful project. CES brings technical, project management, construction management and financial structuring expertise to this segment, which helps us to differentiate us in the market.

SecuritySolutionsWatch.com: Congratulations on the recent announcement regarding the San José Unified School District, which entered into a unique partnership with Chevron Energy Solutions and Bank of America to establish what is believed to be one the largest solar power and energy-efficient facilities program in K-12 education in the United States. Please tell us about the Performance Contracting side of the business. How does it work? What are the benefits?

Ram Ambatipudi: Performance contracting generally means that energy efficiency measures can be installed and paid for through the energy savings that they generate. Many of CES’s projects are structured as performance contracts whereby CES identifies the energy savings opportunities, designs the project, installs the agreed-upon technologies and arranges for financing of the project. CES often provides performance guarantees and also trains the customer’s staff on proper operation and maintenance of the systems. Since the projects are wholly or partially funded by the future energy savings provided by the energy efficiency and self-generation technologies, customers’ valuable capital investment dollars are retained for investment in other parts of their operations.

SecuritySolutionsWatch.com: We also noted that CES recently announced that it has begun engineering and construction of an innovative system at the City of Rialto's wastewater treatment facility that will transform wastewater sludge and kitchen grease from local restaurants into clean, renewable power. Care to elaborate?

Ram Ambatipudi: This is an innovative project that will increase municipal revenues, reduce landfill wastes and lower greenhouse gas emissions while decreasing the city’s energy costs by about $800,000 a year. Wastewater sludge generated during the wastewater treatment process will be combined with kitchen grease delivered by area restaurants. The mixture will be fed into a digester. The biogas generated by the breakdown of bacteria within the digester will be used to power three 300kW fuel cells. The waste heat from the fuel cells will be used to heat the digester, resulting in a system that will be more efficient than a comparable utility power plant.

SecuritySolutionsWatch.com: Are there one or two other success stories or projects you’d like to mention?

Ram Ambatipudi: We are currently installing the largest solar parking structure project in higher education in the United States – a 1 MW PV carport shade structure at California State University, Fresno. This project is located in a highly visible campus parking lot and will provide shaded parking for hundreds of cars while generating clean, renewable electricity for the campus. We structured an innovative financing package consisting of a Power Purchase Agreement (PPA) for the solar generation, while utilizing tax-exempt financing for parking lot infrastructure improvements.

Also, next month we will begin construction of a 261kW solar project for Glendale Water & Power (GW&P), in Glendale, CA. The PV panels will be installed on the roof of a parking structure at Glendale Community College. The power generated from this plant will help GW&P meet its Renewable Portfolio Standards goals, which require that it generate 20 percent of its power from renewable sources by 2010.

SecuritySolutionsWatch.com: Solar technology is improving and costs are coming down but tax incentives are still needed to develop solar projects. What are the current tax incentives in the U.S. Market for solar projects?

Ram Ambatipudi: The Federal Investment Tax Credit, in the Energy Policy Act of 2005 provides a 30 percent tax credit for solar generating assets. This tax credit currently runs through 2008, and there are efforts under way in Congress to extend it further. In addition, some states provide state tax credits for solar generation, including Oregon and New Jersey. Several other states, including California, offer rebates or incentives to install solar energy systems.

SecuritySolutionsWatch.com: What resources such as White Papers and Case Studies are available for end-users on www.ChevronEnergy.com?

Ram Ambatipudi: There are articles, videos and data sheets available on www.chevronenergy.com that showcase several energy efficiency and renewable energy projects that CES has successfully implemented in the public sector. Included in these are videos about a biogas project we completed for the City of Millbrae, CA, and a 1 MW hydrogen fuel cell co-generation project that we installed at Alameda County’s Santa Rita Jail.

SecuritySolutionsWatch.com: Thanks again for joining us today, Ram. Are there any other subjects you’d like to discuss?

Ram Ambatipudi: CES looks forward to meeting with key stakeholders in the solar power industry at Solar Power 2007 in Long Beach, CA. We invite readers to come by our booth to learn more about our capabilities in the energy efficiency and renewable energy arenas.