Energy storage called ‘holy grail’
San Francisco Business Times - by Lindsay Riddell
Friday, July 31, 2009
Imara’s Jeff Depew says the battery company is looking to enter the market for power tools. Spencer Brown
More than $2 billion in federal stimulus cash is charging up the battery industry, with Bay Area companies poised to compete for the funds.
But one fundamental question remains: Is America too late to compete with already established Asian battery companies?
The Bay Area is home to a cluster of energy storage and battery companies, most of which are doing research and development near their venture capital backers and planning to scale up their companies in more manufacturing-friendly areas.
Bay Area battery and energy storage companies include Envia Systems in Hayward, Mobius Power in Fremont, Molecular Nanosystems of Palo Alto and Imara in Menlo Park. In addition, Germany’s Bosch does its battery research and development in Palo Alto at the Bosch Research and Technology Center.
Envia, Mobius and Imara are developing new technologies for lithium ion batteries that can last longer, store more power and cost less and could be used in emerging industries like electric vehicles and electric transmission storage.
For these companies to scale up will depend on getting money out of the federal government, which by pumping money into the industry is attempting to create a battery manufacturing market stateside that can rival those already established in Asia.
“Energy storage is the holy grail,” said Michael Horwitz, a cleantech analyst with Robert W. Baird & Co. He said the vast market potential for electric car batteries and grid storage have made batteries one of the few sectors venture capitalists continue to pour money into.
Venture capitalists put $125 million into advanced batteries in the second quarter of 2009, up from $66.5 million in the first quarter and slightly down from $131 million in the same quarter in 2008, according to data from the Cleantech Group.
Jim Greenberger, a Chicago attorney and founder of the National Alliance for Advanced Transportation Battery Cell Manufacture, said the U.S. battery industry is “completely and utterly” dependent on federal government funding.
“Can anyone make batteries of any kind in the U.S. without government assistance? The answer is, of course, yes,” Greenberger said. “Is there any way the U.S. collectively can get into and grow a lithium ion battery industry in mass scale, particularly one that could support transportation infrastructure as it moves to the electric drive train? Without government support, the answer is no.”
At its 52,000-square-foot Menlo Park headquarters, Imara can produce millions of its lithium ion batteries that the company says have 60 percent better energy density than competitors. That means an electric car using an Imara battery could travel 60 percent farther between charges.
China, Japan and South Korea have established battery manufacturing industries that have supported the consumer electronics industry. But those batteries are different than the ones that will be required to power an electric vehicle, or store energy for the electric grid, said Jeff Depew, CEO of the 36-employee Imara.
“So that arena is pretty open at this point, and the scale of what’s to come says you’re going to end up with batteries being made around the world in proximity to their customer,” he said. “There’s no reason that Sanyo or Sony or LG Chem should own those markets more than somebody from here should.”
The U.S. government appears to think so, too. It’s prepared to dole out $1.5 billion in grants to U.S. battery and components manufacturers as part of the federal stimulus package and has made $615 million available for transmission grid storage and monitoring technology. The federal government has provided San Carlos-based Tesla Motors with a $465 million loan, some of which will support the manufacture of Tesla’s electric vehicle battery packs.
The U.S. Department of Energy has indicated that it will make decisions about battery funding within the next few weeks.
Battery companies say the DOE’s decisions will determine if the market lives or dies.
“If they just invest in the ones that are big names and already incumbent, they’ll be investing in first generation technology that may or may not be able to withstand the competition that will be coming from Asia,” Depew said. “If they invest in more forward companies that have demonstrably better technology and better performance, but maybe are not as connected or at the same level of development, I think that’s what we need to look for.”
lriddell@bizjournals.com / (415) 288-4968
