A123: The Company They Keep

Had a chance to attend a conference put on by GE last week that centered around their Ecomagination campaign/business initiative. The centerpiece of the event was a press event hosted by GE CEO Jeff Immelt. Jeff was joined on stage by leaders from other companies that are in the process of "greening" their businesses to various degrees. The panel of 10 included Lewis Gillies of BP, Charles Zimmerman of WalMart, and Jim Young of Union Pacific.

Oh, and David Vieau of battery maker A123 Systems.

While Vieau didn't make any dramatic announcements during the event, his presence was notable in that he was positioned as the de-facto leader in the advance vehicle technology sector. Additionally, his ability to network with other business leaders at events like this will only solidify A123 positioning in the market. Other battery makers (Altairnano, Lithium Tech Corp, etc.) will be struggling to keep pace with A123 business capabilities, even is they have superior technology.

Lithium Technology Corp: Some pics.

I wrote about Lithium Technology Corp not too long ago. The father of the PHEV, Dr Andrew Frank of UC Davis, had some nice things to say about their battery technology.

included here. Interesting to note that the battery pack, which LTC claims (througLTC recently posted pictures of their battery packs, which I'veh assumption based on smaller pack performance) could support fuel economy of up to 125 miles per gallon, is meant to replace the OEM battery. Most other conversions systems I've read about / seen supplement the existing on-board battery.

Next steps including further testing of the pack performance in the converted vehicle. Here's a link to the release.

Ethanol: Ripples of Corn

The Center for Agricultural and Rural Development @ Iowa State University is forecasting a long term increase in corn prices. Here's their full report.

Well, no surprise there. The explosion in ethanol plant building and record corn prices have been reported on widely. A couple of interesting points, though:

1. Sacrificing Soybeans: To keep up with increased ethanol demand, US farmers are expected to grow their acreage to 94 million acres. Farmers will most likely replace their soybeans crops with corn to do so. The irony, of course, is that the soybean is a more efficient feed stock source of biofuel at a rate of about 3:1. But don't get me started on this, as I've already commented on it here and here.
2. Ripple Effect: No surprise with all that corn headed to fuel, other parts of the economy will be significantly impacted. Inevitable higher feed costs for livestock would increase US food prices by an estimated 1.1% over baseline. Specifically, meat and poultry would jump by 4% and eggs by 8%.
   
3. Cellulostic Fantasy: The much ballyhooed cellulostic ethanol is essential dismissed out of hand for the simple reason that the authors do not envision economic feasibility in the long term for farmers. Too expensive to haul corn stover over long distances to a commercial production facilities, apparently.
   

Admittedly, much of the report reads like a statement of the obvious, but it's worth a read.

Lithium Technology Corp: Battery Tech Darkhorse?

Trying to keep up with developments in battery technology these is a little like being the circus act where the guy spins dishes at the end of long poles: every time you pay attention to one area, a new development takes place somewhere else.

An announcement today from Lithium Technology, however, made me take notice not so much because of what it said, but for who said it.

Lithium (OTC symbol: LTHU.PK) released information about a new line of large format battery cells using lithium iron phosphate technology. Interesting, yes, but the company release features a quote/testimonial from Dr. Andy Frank of the University of California, Davis. (Dr Frank is widely recognized as the creator of the Plug In Hybrid concept, and has approximately 20 - 25 years of research in the field.) So, understandably, when he makes a quote like the following, it's worth taking notice:

"Batteries made of LTC's cells can provide 3000 charging cycles, which would be able to do 150,000 miles to 80% capacity for a 100 km or 60 mile all electric range plug in hybrid, which no other technology can claim. The new cells... provide improved safety with the iron phosphate chemistry while delivering the impeccable performance they are known for, which is what the auto makers have been in search of; this is a Company that is seriously committed to making hybrid, plug-in hybrid and electric vehicles an affordable reality for the consumer."

It's worth noting that LTC has supported Dr. Frank's research in the past by supplying battery packs used in build competitions such as Challenge X, so there's obviously a history there.

However, even with that minor caveat, I'd still recommend keeping an eye on developments related to LTC.

Friday Round Up: Some old friends...

Worth noting a couple of news items featuring some folks we've blogged on in the past.

GreenStar Products (view previous entry) recently completed "Phase 1" of a demonstration facility for their algae to biofuel technology process. The objective of Phase 1, apparently, was to determine if they were able to sufficiently control H2O quality (temperature, salinity, ph, etc.) to create an optimal growth environment for algae stocks. Here's a link to the (long) GreenStar press release that includes a couple of pictures of the test facility.

I've got some issues with GreenStar (which you can review in that previous post), but algae conversion to biofuel is an interesting opportunity to bears watching. Hope the company gets it's stuff together.

Tesla Motors scored another $45 million in series D financing. The capital will be used for further development of the White Star EV passenger sedan, developing sales and service infrastructure, and mass production of the Dark Star Roadster.

Seems like that's a lot to ask of $45 million. Keep a look out for Series E...

Impressive Imperium?

Here's what I like about Imperium Renewables, the Seattle based manufacturer of biodiesel products:

• They're well funded: To the tune of $214 million last February. According to Clean Edge, the equity round is one of the largest private equity investments in a US-based biodiesel company, and one of the top five single investments in a renewable energy company ever. The money is earmarked for plant development aimed at boosting capacity.
  
• Blended skills: Management has a blend of start up and energy experience. CEO Martin Tobias comes from Microsoft, digital media start ups, and (most recently) venture capital firm Ignition Partners. President John Plaza has the background in biofuels that is complemented by an advisory board comprised of chemical and petroleum experts.
  
• A better (though maybe not best) fuel source: Imperium forged a relationship with Washington state-based grower Natural Selection Farms to supply enough canola to produce 1 million gallons of biodiesel. With a yield potential of about 140 gallons per acre , canola far outstrips traditional sources such as soy (~48 gallons per acre). Only palm oil and algae have more potential (see earlier post). The fact that the oil comes from a local producer only increases the efficiency of the product.
  
• Friends in the right places: Speaker of the House Nancy Pelosi recently stopped by for a visit. Can't hurt, right?

Plans for expansion are progressing, as plans for plants in Argentina and Hawaii have been submitted and are awaiting approval.

Rosy Projections for Advanced Battery Makers

The axiom about supplying picks and shovels to miners as the pathway to financial success seems to be playing out for advanced battery makers as well...

According to The 2007 Advanced Automotive Battery Industry Report, global sales of hybrid vehicles, estimated at 384,000 vehicles in 2006, will reach 1.1 million units in 2010 and 2 million units by 2015. Sales are obviously contingent on a number of factors (continued high oil prices, HEV model availability, etc) but the need for capable batteries looks significant.

Currently, that means nickel metal hydride batteries, but that looks to change. The author of the report, battery expert Dr. Menahem Anderman, suspects that NiMH batteries will continue to capture a dominant part of the market for the immediate future, but that adoption of lithium ion batteries will row rapidly, moving from a projected 5% of market share in 2010 to 36% in 2015.

Dominant NiMH suppliers Panasonic and Sanyo are rapidly developing their lithium ion capability, but are being chased by advanced battery technology being supplied by new companies using nano-technology techniques like Altairnano, A123, and others.

As these new companies to capture the business of automakers (e.g. A123 with GM, and Altairnano with start up Phoenix Motorcars), we could be looking at a new chain of dominant suppliers.

Startech Environmental: Waste Gasification

I've had been poking around the edges of waste gasification technologies for a bit for a couple of reasons:

1. I'm trying to understand how it works.
2. Fuel from garbage? Cool.

Startech (STHK.ob) is a good example of this kind of technology (so is SkyGas). Essentially, they are using a plasma arc at temperatures of over 30K degrees Fahrenheit to 'molecularly disassociate' (aka completely incinerate) any kind of solid waste to produce 2 byproducts: gas that can be used as a fuel and a super hard stone. At these temperatures, you can pour just anything with carbon in it into a reaction chamber to produce the gas; sludge, garbage, even highly toxic materials get completely molecularly disassociated (yes, I just like to use the phrase... I'm looking forward to throwing it out at a cocktail party...) Furthermore, Startech has licensed technology that isolates hydrogen from the gas products, and plans to sell that in the coming hydrogen economy.

Nice, yes? Time to put StarTech on a watch list? Well...

First, read this excellently detailed post from David Miller of Seeking Alpha. He isolates the challenges faced by Startech as follows:

• Limited board experience: The board of directors has virtually no experience in the market place. Company founder Joe Longo has the most relevant business experience, and that's in waste management.
  
• Reliance on hydrogen in business model: It's going to be a looooooong while before there's a payoff with hydrogen fuel systems.
• Expense acceleration: No argument here about the benefits of disposing of toxic wastes. But storage, transportation, permitting, etc are time consuming and expensive.
  

Furthermore, there's questions regarding ultimately efficiency of this type of technology. Reed Benet at the UC Davis Institute of Transportation Studies, who is working on an exothermic variant:

"They essentially make artificial lightening to create high temperatures to gasify lots of things. It’s all great until you consider the huge amount of external electricity you need to use to create artificial lightening. I’ve seen 7% efficiencies for these type of things..."

Not to say that's necessarily the case with Startech. Something to consider, however.

Easy as A123? Maybe not so much.

David Vieau, the CEO of A123 Systems, recently testified before the US Senate Committee on Finance abut the future of advanced vehicles. A significant part of his testimony focused on a recent decision to partner with Hymotion to to develop and sell range extension conversion kits to owners of existing hybrid vehicles.

Now, the folks at A123 are smart folks (I've said as much previously). Far be it from me to critique a bunch of MIT professors and the like; engaging them in a battle of wits would be like sending me into a knife fight with a feather duster.

But with all the major car makers racing to be the first to produce PHEVs (with A123 supplying the battery technology to GM), my sense is that the crop of after market conversion suppliers will shortly be irrelevant.

Vieau points to the fact that there are will be 1 million HEVs on the road by the end of the year, and perhaps 5 million by 2010. OK, that's a lot of cars.

But at a cost of $10,000 (less a purported $3,500 tax credit), the average consumer is going to balk at the cost. Furthermore, manufacturers will almost certainly be close to launching their own PHEVs by 2010. It's reasonable to expect, I think, that a significant portion of hybrid owners will be more interested in upgrading to a new PHEV versus converting their old HEV.

Is there a market for after market conversion? The numbers on the surface seem compelling. But I'd be surprised if 1% of those projected 5 million actually pursued conversion.