​Off-peak space heating was a big challenge for electric cooperatives back in the 1970s and 1980s, and Steffes Corp. in out-of-the-way Dickinson, North Dakota, met it by adapting European electric thermal storage (ETS) technology for the American market. By 2003, the family-owned company was supplying ETS heaters to 200 electric co-ops. 

One day that summer, CEO Paul Steffes rang a bell on the manufacturing floor announcing an order for 15 Comfort Plus whole-house units and 25 room-sized units from Indiana’s Hoosier Energy. 

Minnesota’s Great River Energy, another G&T, had ordered 15 of the whole-house systems the day before.

“That was a bell-ringer too,” said Steffes.

A big man with a big, friendly face, he rang the bell hundreds of times before stepping down from day-to day operations in 2020.

ETS emerged in the late 1940s as a way to flatten demand curves as European countries struggled to get back on their economic feet after the devastation of World War II. It involves heating ceramic bricks at night with off-peak power and circulating the heat during the day with a fan.  

The room unit Steffes Corp. marketed to co-ops in 2003 was about the size of a small bookcase; the whole-house unit the size of a conventional furnace. Resistance coils inside the bricks raised their temperature to 1,000 degrees Fahrenheit. The fan, which was controlled by a thermostat, kept the unit’s surface temperature at about 100 degrees.   

Steffes got interested in the technology after he returned to Dickinson with an engineering degree from North Dakota State University in 1973 and joined his father’s agricultural machine shop. When a college friend told him North Dakota-based Basin Electric Power Cooperative (G&T) was shopping around for ETS heaters, he bought a European product and took it apart. 

“We thought we’d put 10 or 20 thousand dollars into this, and we’d have a product. Well, a quarter of a million dollars later, we finally had something.”

Finding the right mix of design and materials took years of work and prototype after prototype. Along the way, Steffes Corp. had to design its own high-density ceramic bricks and go hunting for insulating material that could withstand the high temperatures inside a room unit without giving off a bad smell. The company found what it was looking for in the space shuttle program.

Basin Electric stuck with Steffes Corp. during the unprofitable development years. The G&T also introduced the company to engineers at United Power Association (now defunct), Great River Energy and East Kentucky Power Cooperative, and they, in turn, helped Steffes Corp. apply for financial support from NRECA’s Cooperative Research Network (CRN, predecessor to NRECA Research).

“The support helped the company improve its products when it lacked the funds to do so,” Steffes said at the time. “We were just trying to minimize our losses so the bank would carry us for another year or two.”

Equally valuable was the feedback from co-op marketing people. It “allowed us to design a product that was… top of the line” and that didn’t have any features “the customer didn’t like,” he explained.

When Steffes Corp. needed to nearly double the size of its plant to meet increasing demand for its ETS units, West Plains Electric Cooperative in Dickinson arranged for a $400,000 interest-free economic development loan from the Rural Utilities Service.

At about the same time, CRN agreed to cover a quarter of any co-op’s wholesale purchases of Steffes units, making it easier for them to take a chance on the new heating technology. 

The co-ops “helped bring ETS technology to market,” Joe Rothschiller, Steffes Corp.’s president and CEO said. “NRECA was willing to put its money where its mouth was.” 

It was perfect marriage of “readiness for market and value to co-ops,” added Karen Sawyer, then CRN’s senior program manager for membership. 

Between 1989 and 2003, CRN invested $500,000 in Steffes Corp., and was receiving quarterly royalty checks from the ETS manufacturer.

“These are research dollars that, if the project had failed, they wouldn’t get back, said Steffes. “We can’t go to the bank and get funding like that.”

In addition to the 200 co-ops, Steffes Corp.’s stable of customers included a half dozen investor-owned utilities in the U.S. and Nova Scotia Power. 

According a CRN analysis, ETS produced heating cost savings of between 10 percent and 22 percent in five of the six states studied and outperformed both propane and fuel oil by even wider margins. It was a proven solution for residential space heating for utilities offering off-peak rates.

Steffes Corp. employed 100, and the company estimated that 90 percent of those men and women were native North Dakotans, many of them former Dickinson residents who came home for a good job with a promising company. 

That was almost as important to NRECA as the technology.

“We are always happy to invest in a technology that is good for co-op operations or members,” said Sawyer. “We’re even happier to invest in operations where the jobs and revenues produced by the technology remain in a rural area.”