Aquion

Aquion is a company founded in 2008 by Ted Wiley and Jay Whitacre. Whitacre is a professor at Carnegie Mellon University. The company currently has research and development offices in Lawrenceville in Pittsburgh, Pa. and is setting up manufacturing facilities at the old Sony plant in nearby East Huntingdon. The company was the corporate winner in the energy category at the 2011 World Technology Awards and has raised over 20 million dollars; investors include Bill Gates. They have a close relationship with Siemens.
In 2013, CEO Scott Pearson got national press coverage when he ate one of their batteries during a meeting.

Aquion is working on a battery with a sodium magnesium oxide chemistry. The chemistry is not new. Research into the sodium-ion battery started in the early 1970s but quickly diverted into lithium-ion when it  seemed more rewarding.
Compared to lithium, the sodium ions are larger and heavier by a factor of two--heavier and therefor slower--so a replacement for the commonly available graphite used as an electrode material in Li-Ion batteries must be found. Without a replacement, cycle life is very low, on the order of maybe 50 cycles. Some experiments report a maximum cycle life of less than ten cycles. Vanadium has been tested in the lab as an electrode material, which reportedly can boost the cycle life to over 500 cycles, but at a reduction in battery capacity to about 85 percent. Severe volume expansion of the electrodes--of over 5 times--during charge/discharge is another problem.

The lower energy density and operating voltage of the element sodium makes it unsuitable for consumer electronics and electric vehicles. It is seen as most suitable for larger scale grid storage. But battery life expectancy would have to allow cycling for at least ten years in the field.
Some research indicates that the sodium ions are best able to travel from electrode to electrode at temperatures greater than 266 degrees Fahrenheit but that would create considerable temperature engineering challenges.

In January, Aquion raised $55 million in new capital. Aquion has raised more than $100 million and may seek additional capital later this year or early next year.

Vanadium--or Valyrian?--Steel

Vanadium, an element with 5 electrons in its outer shell, was discovered first in 300BC by artisans in the Middle East who made steel with it called "Damascus Steel," a hard alloy that helped Middle East kingdoms and Muslim troops, then rediscovered by the Swedish chemist Nils Sefstrom, who named it after the Norse goddess of beauty, Vanadis.



Adding as little as 0.15% vanadium creates an exceptionally strong steel alloy and allows the strength of steel to be increased with less steel. Henry Ford used it in 1908 to make the body of his Model T stronger and lighter. Vanadium steel retains its hardness at high temperatures, it is used in drill bits, circular saws, engine turbines and other moving parts that generate a lot of heat. So steel accounts for perhaps 90% of demand for the metal.



But there is more: Sulfuric acid strips the 5 outer electrons away (oxidation) then zinc-mercury adds electrons back one at a time as the solution goes yellow to blue to green to violet. That loss and acceptance of electrons is the essence of a battery.
Electrons being add, one by one:

Electricity and Sushi

Storage is what takes place between availability and demand. And creativity is what is necessary before availability, usually--but not always--stimulated by demand.

10 years before the iPod, the portable media player business--portable music storage--totaled 715 million dollars a year. After the iPod it was $34 billion.

The global electricity market is a $2 trillion business, over 100 times the size of the music industry, yet Apple sells 25X more music storage than every battery manufacturer combined sells grid storage. The electrical market is the largest supply chain in the world and has very little storage capacity. According to Eos, a storage company, "Even sushi, which like electricity basically needs to be consumed as soon as it is produced, has storage in its supply chain."

The energy storage market in 2010 was 1.1 billion dollars. Piper Jaffray estimates the market at 600 billion. Why the difference? The same as the portable media storage business: A great need unfilled by the right product at the right price.

Axion's Annual Meeting

Axion is a small--and getting smaller--battery company that has replaced the negative lead electrode in the lead-acid battery with a carbon electrode (called a "PbC" battery). During charge and discharge, the positive electrode undergoes the same chemical reaction that occurs in a conventional lead acid battery, i.e. lead dioxide reacts with acid and sulphate ions to form lead sulphate and water. The main difference in the PbC battery is that the replacement  activated carbon electrode does not undergo a chemical reaction at all. Instead, the very high surface area activated carbon electrode stores the protons (H⁺) from the acid in a layer on the surface of the electrode and the protons move to the positive electrode during discharge where they are neutralized to form water. The result is reduced acid concentration swings from the charged to discharged state. This results in considerable less sulfate corrosion and a longer battery life.
Faraday is spinning.

The battery has other characteristics: significantly faster recharge rates and greater charge acceptance, significantly longer cycle lives in deep discharge applications, and minimal required maintenance.

The company has been suffering. They have gone to great lengths to keep up their financing as they continue their march from research and development to commercialization.

This is my take on the annual Axion meeting, a take riddled with my bad science, financial bias and fatigue:

The meeting seemed smaller than last year, less hands-on guys. Mr. Peterson was there and, true to his guru status, wore sandals.

77% of shares voted on the motions.

Mr. Granville, a man with a sleepy, Walter Matthau look, stuck to his guns and reiterated the company would have significant orders by the next earnings call. He said some of the urgency in signing the PIPE financing was anxiety of the financial condition of the company by some potential customers. The discussion with potential manufacturing partners (two) was clarified a bit--at least to me--when he said one manufacturer was itself interested in the technology, another manufacturer had a customer who was. The first patent to expire is in 2022; the plate patent expires in 2027. He feels the technology is difficult to reverse engineer. In Class 8 trucks, much of the advantage of battery replacement comes from allowing the downsizing of the engine (which Ecosystem does not allow.)
Uniform string behavior where the PbC batteries self regulate in a series was a prominent, and to me new, theme.

Subjectively, I felt the technology, which has been worked on so long, had more to yield and this uncertainty might hurt the company with potential customers. Nonetheless, much of the advantages and disadvantages of the technology have been learned and further elaboration is probably the province of small back room labs. The next step here is whether the management can take this company from R and D to commercial.

As complicated as their technology is, their current business problem is no more, or less, complicated than that.

From an investment view, the PIPE financing has pit a few investors against the  price of the stock and created a disjunction between the company value and the stock price behavior. However temporary--and it could be permanent--this disjunction seems to beg for exploitation.

Cut Him if He Stands

What does the anti-carbon activists' war mean?

Multinational oil companies produce just 10% of the world's oil and gas reserves. State-owned companies now control more than 75% of all crude oil production. Yet private producers, not state owners, are the anti-carbon activist's target. Nor do they target customers. Coal producers, petroleum producers and natural gas producers draw all their fire while the eager consumer, the other half of the supply and demand equation, gets a pass. It is reminiscent of the pusher and his customer; the customer is a victim of the pusher's greed and irresponsibility. The hapless user, perhaps otherwise a swell guy, is accidentally locked in a self-destructive relationship with a rapacious and greedy supplier. Somehow, like the abused wife, he cannot escape his situation. He is an innocent. The availability of the carbon pushes the equation his way. He needs it but knows it's not good for him.

What the anti-carbon activist sees as an endpoint of this war against the supplier is never fully explained. Obama says as a result of his war against coal, "electricity prices will necessarily skyrocket," as if there is a more expensive substitute waiting in the wings. But coal produces 40% of our electricity. What would that substitute be? The battery has not improved much in one hundred years and cannot pick up the slack of the inefficiencies of solar and wind. Nor will nuclear be tolerated. So what, then? Will the customer, the poor sap hooked on carbon, just suffer withdrawal? Will he just have to be brave? Cold showers and walking to work? How much of the advances allowed by carbon will we have to let slide? And what about those emerging countries who have seen our success that carbon has driven? Will they just shrug, look away and passively close their carbon plants?

This, indeed, seems to be a program long on hope but not far-sighted.

It is said by some that Thomas Newcomen in 1712 produced the most important single technological advance of the industrial age. He developed a crude, inefficient steam engine to pump away seeping ground water and allow men to work there. For what? To dig coal.

After all, as England was going to the steam age, they needed something to boil the water.

Politician vs. the Dreaded Numbers Villian

The Guardian website has an upbeat quote from Norman Baker, Liberal Democrat Under-Secretary of State for Transport, about the future of the government's Electric Vehicle subsidy plan. ‘I know electric vehicles have a bright future in this country’ he says, citing new models due this year, including the relatively inexpensive Renault Zoe and the Sunderland-built Nissan Leaf.

However the Guardian website's figures for the numbers of new cars registered under the British Government’s ‘Plug-in’ Car Grant plan are not as optimistic. This program gives buyers 25 percent off (up to a maximum of £5000) the price of a rechargeable electric vehicle such as a Chevy Volt, Toyota Prius plug-in or Renault Fluence. The program is now two years old. According to the Department for Transport figures, 1419 cars were registered under the plan in the first nine months of the 2012 up from 786 in 2011. So it looks as if all of 2012 will see around 1900 rechargeable cars bought, out of the two million news cars that left UK showrooms.

EV and Anti-EVolution

Vic Heylen, director of the Flanders Centre for Automotive Research based near Antwerp, Belgium, was quoted recently in the Detroit News. He says the electric engine and car effort has become too big to fail. "Latest sales figures are indeed disastrous. The EV market is dead. There is just no one with the political guts to sign the death certificate," Heylen said.

Western European sales of electric vehicles certainly were horrible, just under 11,000 in the first half of 2012, or 0.15% of all sales.  (Obama's State of the Union Address in 2011 predicted 1 million EV's produced in the U.S. in 2015 but only 11,000 EV's were sold of 13 million cars in the U.S. in 2011.) True, they are twice as expensive as conventional cars, their batteries are huge and take up both space and insurance costs as they are prone to explode (Chevrolet Volt's 16 kWh battery costs around $8,000 today), they have little luggage space, their driving range is very limited and, of course, for these reasons they are nerve-wracking to drive.

Yet they stagger on, despite their poor sales and dangers. But Heylen notes a growing parallel market of advisers and support groups, a nice little growth industry. "During the first three months of 2012 I counted 89 Electric Car Forums and Conferences with very high attendance fees. Prices for reports for forecast, studies etc increased from around 700 euros ($870) to around 3,000 euros ($3,700) today," Heylen said.

Probably run by nonprofits.

Seeking Alpha and the New Storage Companies

Mr. John Peterson, the always entertaining and sometimes combative contributor to Seeking Alpha on energy topics, has an interesting post this weekend. He notes that the companies he has picked in the energy storage space have generally had a very poor year. "December 31, 2010, .......18 of the pure-play energy storage device manufacturers had a combined market value of $5.9 billion. At last Friday's close, the 12 survivors had a combined value of $2.4 billion."

The specifics are not particularly interesting (unless you have a horse in the race)---he might have lousy judgment, the specific companies might be swamped by the general market---but there is a jarring generality: Isn't this the area in which we all expect great strides to be made? Isn't this the area that will transform energy usage in the next decades? None of the new ideas--electric transport, wind and solar energy capture, geothermal energy-- make any sense without the ability to store energy with more efficiency than we can manage today. If these new storage companies are not thriving, what does that tell us? Are we not seeing the potential they offer? Or are we seeing the truth? Do these companies actually have little to offer the future?

Batteries and Cost

Cost and their implications are hard to analyze. A battery might cost 100 dollars to produce but what does it cost to charge? And test? And repair? And dispose of?

For example, Nickel Metal Hydride, NiMH, batteries are the preferred battery for mild and full hybrids but the "M" is lanthanum, produced globally at 5 gms per capita, so the industry has swung towards lithium batteries. Lithium is a more plentiful component of the newer batteries but it has a history of explosion and fire in small portable units. Has it been tested in cars? In actual car situations? Like wrecks?

Here is a clip of a battery recycling plant: http://www.youtube.com/watch?v=dfQwYKqmfk4

Not to worry because almost all of the Department of Energy's 170 million dollars in grants went to lithium battery makers this year.

Electric Vehicles and Investing in the Future

One of the interesting stories is the recent announcement of Department of Energy grants to battery manufacturers and developmental labs aimed at improving battery efficiency. At the core is the hope that new improvements in power storage will open new options in the development of alternative and cleaner energy sources. 170 million dollars were awarded to various companies over the last week, all--ALL--were lithium battery producers or researchers. What this implies is that the government and the DOE have thrown their considerable financial support behind the refinement of the Electric Vehicle.

Now this is interesting. The toughest environmental standards in the world start going into effect in Europe in two years so one would think the plans in Europe would be more forward looking. That said, J.D. Powers recently published their estimates of the makeup of the European fleet in 2020. According to them, electric vehicles will make up 7.4% of the European fleet in 2020. 7.4%.

So why the American emphasis on lithium ion batteries?