Batteries help recharge the economy

The race for better batteries has spurred venture capitalists.

If you’ve ever felt the frustration of trying to send an e-mail, make a call, or snap a photo only to realize that your laptop, cellphone, or camera has gone dead, you understand the need for better batteries. But while there’s no question that batteries are important, they’re rarely described as “exciting.”

Lowly, hardworking batteries have routinely received little or no attention, while the devices they power grab the spotlight.

“When somebody sees a Bentley, they don’t say, ‘Oh my God, that’s got a good battery inside,’ ” says Brian Fan, senior director of research at the Cleantech Group headquartered in San Francisco, which tracks venture-capital investments in North America, Europe, Israel, China, and India.

In the economic downturn, that could be changing.

The Cleantech Group’s numbers show an uptick in venture-capital funding for batteries in the first quarter, even as overall US venture investments fell to the lowest level since 1997, according to the National Venture Capital Association.

Spurred by federal cash, electric cars, and demand for ever more powerful gadgets, investment in advanced batteries has bucked the recessionary slump and, energy analysts say, could help the economy recover.

Cleantech tracked $94 million in advanced-battery investments in the previous quarter, up substantially from a recession-affected $29 million in the last quarter of 2008 and up slightly from $90 million in the first quarter of that year.

Sara Bradford, a principal consultant for global research firm Frost & Sullivan, predicts that North America could be facing a renaissance in battery manufacturing.

In March, she wrote that the US battery industry “is humming with revived confidence” as a result of the federal stimulus package, which opens up $2 billion in loans for advanced batteries, among other incentives.
A move toward greener cars helped fuel this growth. Hybrids, plug-ins, and electric vehicles are “the big goal” of next-generation batterymakers says Kent Furst, an analyst for research firm Freedonia Group in Cleveland.

Another factor is renewable energy. Wind and solar power are “intermittent” sources – they only collect energy during blustery or sunny times of the day, not necessarily when people need it most. To continue serving communities even during weak moments, some in the energy industry have called for grid batteries that could store the green energy and dispatch it on demand.

A variety of innovative battery technologies have received funding so far this year, but the bulk of the cash has flowed to lithium-ion batteries. This common type powers most portable electronics, particularly laptops and cellphones. Lithium-ion is not a surprising favorite because, of all the mainstream battery chemistries, these pack the most energy for their size and weight.

While most hybrids use nickel-metal hydride batteries today, which can store up to 36 watt-hours per pound, they can’t deliver the all-electric range that many automakers want for electric vehicles and some plug-in hybrids, such as GM’s much-anticipated Chevy Volt. Lithium-ions offer more than double the energy density of nickel-metal hydrides, storing up to 81 watt-hours per pound, Ms. Bradford says.

But the batteries are too costly for most vehicles and for grid storage today, she says. Lithium-ion also faces some technical challenges.

For one thing, consumer electronics generally call for longer running times (more energy) while vehicles tend to require higher voltage (more power), says Mr. Furst. Vehicle batteries also need to be able to perform in widely varying temperatures, and need longer life spans than are typically required for consumer electronics.

Then there’s the safety issue: After Dell recalled thousands of laptop batteries in 2006 because of a fire hazard, everyone wants to be sure their batteries won’t burst into flames. “When it comes to motor vehicles, safety is the No. 1 concern,” Furst says. “You can’t have a battery pack blowing up in your car.”

Most of the lithium-ion technologies working to address these issues are focused on new materials, particularly at the cathode of the battery – or the negatively charged part where electrons enter the device – Bradford says.

A123Systems in Watertown, Mass., is one such company. The company, which raised $69 million in April and signed a deal to supply electric-vehicle batteries to Chrysler, is developing batteries with tiny phosphate particles at the cathode, which it claims makes them safer. (Phosphate is used in fire extinguishers.) The company also claims its batteries offer higher energy density; a longer lifespan; and the ability to recharge 90 percent in five minutes, a potentially useful trait for longer trips.

Startups such as Valence Technology of Austin, Texas; International Battery of Allentown, Pa.; and E-One Moli Energy of Taiwan also are researching batteries that use phosphate – as is Johnson Controls-Saft, a joint venture between Milwaukee automotive-component supplier Johnson Controls and French
batterymaker Saft.

“It seems like the lithium-ion-phosphate [chemistry] is winning the race,” Furst says, pointing to plans by A123Systems, Johnson Controls–Saft, and another lithium-ion startup, Boston-Power, to build large battery factories in Michigan. “But it’s hard to say right now, because everything is in such a development phase.”
The race is certainly far from over.

Manganese-based cathode materials – such as those EnerDel in Indianapolis and E-One Moli, which is working on a phosphate-based battery, are developing – also show promise, Bradford says.

So do the new anode (the positive counterpart to a cathode) materials. British startup Nexeon Ltd., which raised about $13 million in venture-capital funding in February, is developing a silicon-based anode.

Meanwhile, Boston-Power in Westborough, Mass., is taking a different approach. Instead of using a brand-new material, the company – which raised $55 million in January and provides batteries for Hewlett-Packard laptops – says it has improved the lithium-ion battery with “unique chemistry formulations” as well as a mechanical and electrical design that increases energy density and reliability. The company claims its batteries don’t degrade for three years (most laptop batteries begin to fade after just three months) and can recharge 80 percent in 30 minutes.

Battery innovation isn’t confined to ithium-ions, of course. Swiss-based zinc-air battery startup ReVolt Technology raised about $13 million in January. Carbon-fluoride battery startup CFX Battery in Azusa, Calif., closed $11 million the same month. Nickel-zinc batterymaker PowerGenix in San Diego and lead-acid company Firefly Energy in Peoria, Ill., are developing very different chemistries that they believe will target the vehicle market.

Even with all the advancements so far, however, it’s clear that batteries still have a long way to go. Bradford says lithium-ions cost around $1,000 per kilowatt-hour today, which is far from being viable for vehicles. “It has to be much less than that,” she says.

Frost & Sullivan projects that the batteries will reach $200 per kilowatt-hour, in automotive and other large applications, by 2020. Expect to see more startups, new technologies, and investments crop up as the industry strives toward that goal.