Green Tech

So far in 2009, battery companies have received over $600 million in venture capital funding, compared with $478 million garnered for 2008, according to research analyst Lux Research.

The investment isn't without reason. In a report released Tuesday, Lux predicted that the energy storage market will grow to become a $60 billion industry by 2013.

But for now, it's hard for even the experts to predict who will emerge as the victorious innovators. Instead of a few key players, there's a plethora of both established and start-up companies developing a wide range of approaches to power storage for things like cars, utilities, and gadgets, according to Lux.

A123 Systems' battery platform is being used for tools, transportation, and power grid energy storage.

(Credit: Martin LaMonica/CNET)

A123Systems, of which GE is an investor, and NGK Insulators are seen as leaders in power grid energy storage.

And Lux sees Johnson Controls-Saft and Compact Power as leaders in developing lithium ion batteries for electric hybrid cars.

But when it comes to batteries for products like power tools, electric bikes, and portables, the space is wide open. That space is open not only to emerging companies, but also as to which type of battery technology will succeed, according to Lux.

"Nickel-metal hydride (NiMH), nickel-zinc (NiZn) and even lithium-sulfur (Li-S) and lithium-air (Li-air) batteries are all pitching themselves as lower-cost alternatives," according to the report.

At least one company is already poised to make money off the uncertainty. Lux is offering a service to manufacturers and investors interested in the market. It's dubbed the Lux Innovation Grid, a chart that plots the variables for evaluating companies' battery tech and business models.

The Department of Energy on Wednesday announced which U.S. companies have been awarded grants to build manufacturing plants for electric vehicle batteries.

The $2.4 billion program, established as part of the stimulus plan, sets aside funds for auto battery manufacturing and related components, such as electric motors. (Click here for a PDF to see the full list and for a map of the awards).

President Obama, appearing in Elkhart, Ind., and Vice President Joe Biden, in Detroit, were scheduled to announce the recipients and specific amounts. Energy Secretary Steven Chu is scheduled to speak Wednesday in Charlotte, N.C., and visit a battery supplier.

A123 Systems' battery platform is being used for power tools, transportation, and power grid energy storage.

(Credit: Martin LaMonica/CNET)

The grants, which will be matched by $2.4 billion in private investment, will go to battery and component suppliers as well as the big U.S. automakers--General Motors, Ford, and Chrysler--which will receive over $400 million for manufacturing and to test the performance of electric vehicles, such as the Chevy Volt.

The grants are meant to jump-start the U.S. industry for auto batteries, which is now dominated by Asian suppliers. The Obama administration has set a goal of putting 1 million plug-in electric vehicles on the road by 2015.

Of the total, $1.5 billion is available for U.S. battery manufacturing and $500 million for related technology, such as electric motors. Another $400 million is dedicated for federal agencies to purchase fleet plug-in electric vehicles and to develop the infrastructure needed for plug-in electric vehicles, such as charging stations and training for technicians in electric vehicles.

The White House said that the companies were chosen in a "highly competitive process" where applications were evaluated by the DOE.

Battery makers
For the individual companies involved, the grants can be a lifeline to bigger things, such as volume production. The credit crisis on Wall Street has made it difficult to secure the significant amount of money needed for constructing new manufacturing facilities, particularly for new battery technology.

The top recipient is Johnson Controls, which will receive $299 million to produce nickel cobalt metal battery cells and packs. A123 Systems will get $249.1 million to go ahead with plans to build a factory in Michigan for its lithium ion battery packs and related components.

Dow Koman is set to receive $161 million for its batteries, and Compact Power, on behalf of Korean company LG Chem, will produce the lithium ion battery cells that will be used with General Motors' Chevy Volt electric car.

EnerDel's battery pack for the Think City electric car.

(Credit: Martin LaMonica/CNET)

Another recipient is EnerDel, which received $118.5 million that it intends to match with the same amount to expand lithium ion battery manufacturing in its home state of Indiana. EnerDel has supply agreements with Fisker Automotive and Think. Saft America will receive $95.5 million to produce lithium ion cells and batteries for industrial, agricultural, and defense vehicles.

EnerDel CEO Charles Gassenheimer said that the grant will allow the company to double the volume at its existing auto battery plant in Indiana. "What this money does is accelerate our business plan tremendously," he said.

The company has also applied for a $480 million loan under the Advanced Technology Vehicles Manufacturing Loan Program, which is expected to be announced in the coming weeks. Without the grant or loan, the company projected revenue of $700 million by 2015, but if it receives both it expects it can get to $2.25 billion.

Having a domestic auto battery supply chain will allow auto battery makers to lower the cost by as much as 40 percent in that time frame, EnerDel projects.

"The U.S. taxpayer can expect the United States, which is playing second seat to Asia and Europe in electric drive trains, (to produce) cheaper, more fuel-efficient cars faster," Gassenheimer said. "We strongly believe that on a total cost of ownership basis, electric cars can be significantly cheaper today than gasoline cars."

Charging stations
Hybrid vehicles now use nickel metal hydride batteries but many new models of electric cars set to come to market over the next two years will use lithium ion batteries, which are already widely used in consumer electronics. Although there are different types, lithium batteries are preferred because they are lighter and allow for higher energy density.

But there were two battery companies--East Penn Manufacturing and Exide Technologies with Axion Power--in the program that received funds to advance lead acid batteries for "micro and mild hybrid applications."

The largest grant for developing a charging infrastructure went to eTec, a subsidiary of Ecotality, and Nissan which will test a network of fast-charging stations in cities in Arizona, California, Oregon, Washington, and Tennessee.

The DOE will invest $99.9 million, which will be matched by participating companies, to test the performance of 5,000 of Nissan's all-electric Leaf sedan with eTec's charging stations, in different climates and use patterns.

The DOE's goal is to have 70 percent of funds spent by the end of September next year and have nearly all the money spent by the following year, Energy Department senior adviser Matt Rogers told reporters on Tuesday, according to Environment & Energy Daily.

A "public-private partnership" is required to speed the transition to new auto technology, said Brian Wynne the president of the Electric Drive Transportation Association industry group. Pumping money into the sector will help auto makers meet demand for electric cars over the next two years and lessen the premium consumers need to pay for the new technology, he said.

"There's the immediate impact of jobs--it's all about green jobs--and we want to invest in a sector that will pull us into a new era. That's what essentially investing in here," said Wynne.

This article was updated at 9 a.m. PDT with more details, and the corrected amount of EnerDel's grant and the number of awards in Michigan and Indiana.

Click on the image to see a photo gallery of battery-related projects from GE's New York research labs.

(Credit: Martin LaMonica/CNET Networks)

General Electric on Tuesday committed $100 million to open a factory in upstate New York to manufacture batteries for hybrid locomotives and other industries such as power grid storage.

CEO Jeffrey Immelt dedicated the facility at a press conference at GE's Niskayuna, New York research and development facility along with New York governor David Paterson and other politicians.

GE has been testing sodium-metal chloride batteries for heavy-duty industrial applications, such as hybrid locomotives and trucking equipment in mining. The technology can also be used for back-up power in data centers, plug-in electric vehicles, and to smooth electricity flow across the grid, GE executives said during the press conference.

GE has already invested $150 million in developing sodium battery technology, which it says can store a large amount of energy in a relatively small space. Because it uses relatively common materials--sodium and nickel--the cost is competitive with other battery technologies, said Mark Little, director of GE Global Research.

"It's very sophisticated, very high-end manufacturing technology with very simple materials, giving you low cost," Little said.

In the next month, GE expects to pick a site for the factory, which will employ about 350 manufacturing jobs in the upstate area. The plan is to break ground this year and be producing in 2011. The factory will be able to produce 10 million cells, the equivalent of 900 megawatt-hours worth of storage, Immelt said.

GE is an investor in lithium-ion battery company A123 Systems, which is also targeting automotive and grid energy storage customers. Immelt said GE's sodium technology should complement what A123 offers.

Immelt forecast that GE's battery business could grow to $500 million in sales by 2015 and eventually be a $1 billion business.

GE CEO Jeffrey Immelt holding a sodium battery at an announcement of a manufacturing facility in upstate New York.

(Credit: Screen capture by Martin LaMonica/CNET)

"We see lots of applications that are ready for this technology. We see those spaces exploding," he said, adding that GE intends to sell its products to customers outside the U.S.

The company will apply in the next month for federal stimulus money set aside to promote domestic battery manufacturing, but the company will build the facility regardless, Immelt said.

"The way to think about the stimulus money is it's an accelerator. It helps make technologies more competitive and move them more quickly," he said. "This has to be the vision of what the future of the country has to look like from a manufacturing standpoint."

Chrysler's family of all-electric and extended range electric vehicles

(Credit: Chrysler)

Chrysler announced that it selected lithium ion battery manufacturer A123Systems to produce the energy storage systems for Chrysler's first-generation ENVI extended-range electric vehicles and all-electric vehicles.

Chrysler's plans to produce Dodge Circuit EV, Jeep Wrangler EV, Jeep Patriot EV, Chrysler Town & Country EV, and the Chrysler 200C EV concept showcased at the 2009 North American International Auto Show in Detroit. The company's first production electric vehicle is expected to hit the market in 2010, but the company won't say which one.

"Government and society are calling for the introduction of a variety of advanced propulsion vehicles," John Bozzella, senior vice president of external affairs and public policy for Chrysler, said in a press release. "This partnership with A123Systems signifies Chrysler's commitment to contribute to our nation's goal of reducing dependence on foreign sources of energy, and reducing greenhouse gas emissions. Chrysler's partnership with A123Systems represents a win-win-win for the American consumer, American manufacturing, and the environment."

NISKAYUNA, N.Y.--With a 1914 electric car displayed outside, General Electric last week hosted a symposium on batteries for transportation and the electricity grid.

GE has been working on battery-powered vehicles for decades. Although those projects didn't yield mass-produced electric vehicles, GE executives said that the conditions for increased use of batteries on the grid and in vehicles have never been better.

Click on the image to see a photo gallery of battery-related projects from GE's New York research labs.

(Credit: Martin LaMonica/CNET Networks)

The same conditions that are driving GE's initiative--a limit on natural resources like fossil fuels and fresh water as well as regulations to cut carbon emissions--make batteries a good area for research, said Mark Little, senior vice president and director of GE Global Research.

GE last week said that revenue under its Ecomagination program is expected to go up 21 percent this year to reach $17 billion. GE's annual clean technology research and development will go to $1.4 billion.

Even with the recent drop in oil prices, the trend toward battery-powered vehicles is strong because of high energy prices and the lower carbon footprint batteries have compared with gasoline engines, Little said.

"My own view is that even if 5 to 10 percent of vehicles become electrified, that's a huge opportunity," Little said.

GE is looking to work with Chrysler on a Department of Energy-sponsored research project for a battery-powered passenger car, Little said. The project, which has not yet been finalized, will involve using different types of batteries in a vehicle. GE is investing in further development of its sodium-metal chloride batteries, now used in train locomotives.

Last week, GE upped its investment in lithium-ion maker A123 Systems, injecting another $30 million in the company. GE is working with A123 Systems in integrating its batteries into the all-electric Think town car and a hybrid bus platform.

Both GE and A123 Systems are developing storage for power grid operators. Integrating several hours of storage on the grid would allow utilities to use the distribution network more efficiently and integrate intermittent wind and solar energy more.

Boston-area battery upstart A123 Systems on Friday said that it plans to go public and raise $175 million.

The company, which is not profitable, on Friday filed papers in which it said it intends to raise as much as $175 million, based on the registration filing fee. The money will be used to expand it manufacturing and research facilities as well as pay back about $2.5 million in debt.

A123 Systems was spun out of the Massachusetts Institute of Technology seven years ago to commercialize lithium-ion batteries for a range of applications.

The batteries, which the company says last longer and are more powerful than existing lithium-ion batteries, are already being used in power tools. In its S-1 filing, A123 Systems said it anticipates the portable power market to grow from $411 million to $1.1 billion in 2012.

The company sees more potential in the nascent markets of electric transportation and energy storage, according to the filing.

The company has developed batteries for plug-in hybrid cars and acquired Hymotion, which retrofits hybrids with bigger batteries. General Motors is testing A123 Systems batteries for use in its planned plug-in hybrid, the Chevy Volt.

A123 Systems' battery platform is being used for power tools, transportation, and power grid energy storage.

(Credit: Martin LaMonica/CNET News)

Batteries for transportation now represents a $700 million business and can grow to $5 billion by 2012, the company said.

Last month, a company executive indicated for the first time publicly that A123 Systems is also pursuing energy storage on the power grid with a dedicated group.

Energy storage, where devices are used to smooth out short-term fluctuations in the power grid and store wind or solar power, is anticipated to grow from $2.4 billion last year to $3.1 billion in 2015, according to A123 Systems. It also indicated that it is working with utility AES on grid-storage projects.

The company, which will be listed under the "AONE" ticker, made $35 million last year, but it's losses mounted to $31 million last year. In the first three months of this year, it lost almost $14 million.

Bankers for the planned initial public offering will be Morgan Stanley, Goldman Sachs, Merrill Lynch, Pierce, Fenner & Smith, as well as Broadpoint Capital and Lazard Capital Markets.

A123 Systems' IPO has been expected and rumored for months.

It will be closely watched by the the clean-tech industry which has seen a huge influx of venture capital into start-ups and a number of public offerings despite a generally poor environment for stock market entrances.

The company was originally funded by a number of corporations including General Electric and the Duracell division of Procter & Gamble, as well as venture capital firms Alliance Capital, Sequoia Capital, North Bridge Venture Partners, CMEA Ventures, and FA Technology Ventures.

Updated at 8:40 a.m. PDT with more financial details from S-1 filing.

A123 Systems has signed on electricity utilities to use its lithium-ion batteries for short-term energy storage, according to a company executive.

The company, spun out of the Massachusetts Institute of Technology, is a closely watched venture that is best known for activity in the auto and power tools markets.

It is working with General Motors for plug-in hybrids and Think for all-electric town cars. A123 Systems also owns Hymotion, a company that converts hybrid cars to plug-in hybrids.

But lithium-ion batteries, already used in millions of consumer electronics devices, can be plugged into the electricity grid as well, according to the company.

A123 Systems is working with investor General Electric to use A123 batteries for "grid stabilization," said Ric Fulop, founder and vice president of business development, on Tuesday. He spoke on a panel of energy storage experts organized by the New England Clean Energy Council.

Utilities need power for short periods of time--it could be as short as several seconds--to ensure that the power supply matches the demand. It's a multimillion dollar market, Fulop said.

"(Our batteries) take our batteries and make the grid a hybrid similar to what we do in a car," Fulop said.

He declined to provide more details on how their batteries are being deployed or how many except to say they are already in use. A company spokesperson was not available to further comment on A123 Systems' work with utilities.

Right now, there are not many storage devices used on the U.S. power grid. But interest in energy storage is growing as utilities look for alternatives to building new power plants to meet peak demand. They are also seeking ways to incorporate solar and wind power onto the grid, though they are intermittent sources of energy.

Fulop said that batteries can meet utility needs for grid stabilization, where a large amount of electricity is needed for a short amount of time.

"The technology can do it. Now it's a question of building the systems," he said. "Megawatt-level systems are all about systems integration."

In addition to batteries, utility-ready energy storage systems require electronics and thermal management systems, he said.

Fulop noted there are a number of challenges to getting new storage technology used by utilities.

Financing large projects is difficult, and utilities are hesitant to work with a technology that does not have a 15-year track record. As a result, he said that venture-backed start-ups are more or less closed out of the market, which is why A123 Systems is partnering with GE.

Still, he predicted that some early adopters of battery storage will yield positive results over the next three to five years. Other alternative to batteries for short-term storage and stabilizing the grid's frequency are flywheels or different types of batteries.

"I think we will see a lot of deployments in the next few years that will change how the grid works," he predicted. "Then we'll see utilities jump on the bandwagon."

A123 Systems has created a Web site where Toyota Prius owners can preorder a battery to convert their cars to plug-in hybrids capable of getting well over 100 miles per gallon.

The switch from hybrid to plug-in hybrid doesn't come cheap, though. The battery and installation costs $9,995, plus an extra $400 "destination fee" and taxes.

The battery, called Hymotion 5, is designed to fit into the spare tire slot underneath the trunk of Prius model years 2004 to 2008. The company didn't say when the batteries would be available.

The Hymotion L5 battery from A123 Systems converts a Toyota Prius to a plug-in hybrid.

(Credit: Martin LaMonica/CNET News.com)

A123 Systems said the extended-life battery has been tested over 200,000 miles of "real life" conditions and that it should not void Toyota's warranty unless it's directly responsible for a failure.

There are a number of converted plug-in hybrids, but they are not yet manufactured from automakers. Last year, A123 Systems bought Hymotion, which has a network of installers who are expert in plug-in hybrids.

With a plug-in hybrid, a person can boost gas efficiency from about 40 miles per gallon in a Prius to more than 100 miles per gallon depending on what kind of driving you do. If there is a lot of stop and go driving for trips under about 30 miles, the braking system can recharge the battery and substantially cut down on gas use.

The Web site underscores the large interest in plug-in hybrid cars for purely environmental reasons, rather than saving money on fuel.

Rather than calculate the return on investment, the site allows consumers to calculate what sort of gas mileage they can expect and how it will affect their carbon footprint.

Although there are not any production plug-in hybrids, Toyota and General Motors are expected to release their own versions.

GM, in fact, has signed up for a partnership with A123 Systems to use its lithium ion battery with the Chevy Volt, a plug-in hybrid that can run on different liquid fuels.

City driving offers better mileage than highway in a plug-in hybrid.

(Credit: A123 Systems)