The wind industry had close to $4.8 billion in transaction value in 2010, which included private fund-raising deals, initial public offerings, and mergers and acquisitions. Solar generated a transaction value of $3.2 billion, and energy efficiency, which includes smart grid and LED lighting companies, followed with $2.5 billion.

The transaction values run parallel to the cleantech investing numbers for 2010, which found that solar startups continued to draw the most money in venture capital investment last year, while energy-efficiency startups garnered the largest number of deals, according to the Cleantech Group. However, given utility-scale wind is a more matured market, there are fewer investments in next wind technology startups.

A bulk of the transaction value that went to wind was for building energy generation projects, the report noted. An analysis by the Solar Energy Industries Association (SEIA) showed that wind energy companies had grabbed the most money from a Treasury Department program that was set up in 2009 to subsidize renewable energy generation construction. As of November of last year, money that went to wind companies accounted for 85 percent of what the government had given out (solar took 8 percent).

In terms of the number of deals, the energy efficiency sector took the top spot, garnering 104 deals (fundraising rounds and M&A) last year, the Peachtree report said. Solar ranked second with 99 deals, followed by wind with 35 deals.

The report surmised that the strong interest in energy efficiency companies and projects will continue partly because they require less money and give quicker returns than more capital-intensive businesses such as solar and biofuel. Apparently, psychology also played a role, the report said, noting that many so-called energy-efficiency technologies are formerly called information technology and many investors came from the IT world.

Overall, $14.7 billion flowed into 371 fund-raising deals and mergers and acquisitions across all greentech sectors in 2010, and that reflected a 55-percent jump from 2009. Fund-raising deals, including equity investments in companies or projects, totaled $10.1 billion, a 65-percent hike from 2009. Mergers and acquisitions accounted for $4.6 billion in 2010, a 37 percent increase from the previous year.

So who are the losers? Bioenergy firms such as makers of biofuels to power cars. About $1.4 billion flowed into that sector, a 27-percent decline from 2009. Investors showed a strong interest in biofuel a few years back, when gasoline prices jumped dramatically and lawmakers began to approve policies and funds to jumpstart this new industry.

It has become painfully clear since then that figuring out how to make fuels from plants is trickier and takes more time and money than many had anticipated. Many companies have pushed back the time they will start mass-producing biofuels, prompting the government to dramatically scale back its expectation of gradually replacing fossil fuel with more renewable sources.

The energy storage sector, meanwhile, saw a 40-percent drop in deal values. But the report said the number is skewed by A123 Systems’ $378 million IPO in 2009, therefore, the storage business actually had a good year in 2010. Other fields that received less money included ocean and tidal power, carbon capture and sequestration, hydrogen and fuel cell technologies.

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Photo courtesy of Christopher Chappelear

Argonne is granting a worldwide licensing of its composite cathode material, a combination of  lithium and manganese oxides, for making lithium-ion cells. The license isn’t exclusive and covers only GM vehicles, though Argonne officials declined to name other licensees. GM plans use the intellectual property to develop battery packs that will last longer, as well as be safer and possibly cheaper, said Jon Lauckner, president of GM Ventures, on a conference call with reporters.

“We believe this will give us access to cutting-edge technology not for current vehicles, but rather future electrified vehicles,” Lauckner said.

LG Chem, a battery cell supplier to GM, also licensed the cathode material to make lithium-ion cells for the Chevy Volt, the plug-in hybrid electric car GM launched late last year. The agreement with LG Chem only covers the U.S. market, and LG Chem can use it to develop cells for customers other than GM.

The Korea-based battery cell maker does plan to use the cathode material in the cells it will produce at its new factory in Michigan starting in 2012, said Mohamed Alamgir, research director of LG Chem Power, during the conference call. Cells from that factory will end up in the Volt.

A battery is made up of anode on one side and cathode on the other, with electrolyte in between. Lithium ions travel from the anode to the cathode through the electrolyte, creating a chemical reaction that allows electrons to be harvested along the way. Argonne is licensing a set of patents to the two companies, and some patents dated back to a decade earlier.

Argonne’s cathode material promises to prolong the battery’s operating time and its overall life span. It also will allow higher-voltage charging in the cells, which means denser energy storage, as well as improve the battery’s safety. But officials from GM, Argonne and LG Chem couldn’t provide specific comparisons showing how the new technology can produce better cells. Eric Issacs, director of the Argonne, did say the cells should be able to store twice the energy, as measured by weight. But the new cathode material won’t enable battery cells to achieve the same energy density as gasoline.

The reluctance to provide concrete examples didn’t seem to only come from a desire not to divulge technical details. For GM, Argonne’s intellectual property forms the basis for research and development efforts to commercialize it, and that will take years, Lauckner said. He also noted that GM will be improving the anode and electrolyte materials as well, so it’s difficult to say for now how much better or cheaper new batteries will be with technology from Argonne.

The licensing deals give the U.S. Department of Energy a chance to brag about the research it has funded. The federal government has awarded billions of dollars in the past two years to spur the development and commercialization of electric cars. Companies that have benefited from the largess include GM, LG Chem, Ford, and a host of other businesses, universities and national labs.

LG Chem is building a $303 million factory in Michigan with a $151.4 million grant from the DOE.

The licensing agreements show “the benefit of investing in science and innovation, “said Cathy Zoi, acting under-secretary of energy at DOE, during the conference call. Late last year, Zoi’s boss, Secretary of Energy Steve Chu, warned that the United States is losing its innovation edge quickly because it lags other countries in investing in science and technology.

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What has almost quadrupled the company’s stock over the past weeks and months? Most recently news from China. China provides 95 percent of the world’s rare earth metals, but announced this week that it will significantly cut its exports of these metals, which are used for a variety of growing markets including hybrid vehicle batteries, wind turbines, compact fluorescent light bulbs and magnets for electric vehicle motors.

Molycorp previously mined these types of metals from a 50-year-old rare earth mine in Mountain Pass, Calif., but stopped removing ore in 2002 after it had problems with radioactive waste spilling into a nearby lake. Molycorp plans to use the proceeds of its IPO to start mining again in 2011 after modernizing and expanding the project. Basically Molycorp is one way that the U.S. can avoid being so reliant on China for the growth of these greentech markets.

The other bits of news came from Molycorp itself. Last week Molycorp announced a joint venture with Japanese mining giant Hitachi Metals, which followed on a $130 million financing deal with another Japanese conglomerate Sumitomo Corp. Japan also wants a way to be less dependent on China for rare earth metals.

The $50 price point is quite a difference from Molycorp’s almost rocky debut. The company reined in its IPO ambitions on its first day of training and priced its shares at $14 apiece, down from the $15-$17 per share price range estimated. The stock then debuted on the New York Stock Exchange at $13.25, and hovered mostly between $12.10 and $13.00 during the first day.

With a higher stock price, does Molycorp have a better chance of securing a Department of Energy loan guarantee? Its first loan guarantee application was  “summarily rejected” by the DOE, and Molycorp filed a second request in June for a $280 million guarantee, with the hopes that its IPO would help strengthen that application by “substantially [alleviating] equity funding and liquidity concerns that the DOE might have.”

Well, it will need either a loan guarantee, more contracts, more partners or just more funding to ramp up to full scale mining. Molycorp plans to reach full-scale production (40 million pounds of finished rare earth products per year) in 2012, and says it expects to spend as much as $511 million to get there.

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For a three-year-old company, which is working to commercialize low-cost, high-power, lithium-ion cell materials, that’s a rock star list of well-known supporters stretching from the world’s largest search engine to two name brand venture capital firms to the biggest U.S. auto makers, to the U.S. government. To date, ActaCell has raised close to $7 million in funding.

ActaCell was actually awarded the $3 million NIST grant two weeks ago, and the funding was one of nine grants given out under a federal program to support innovative manufacturing technologies. As Josie put it recently, innovation in manufacturing can be just as important as novel designs or materials, particularly when it comes to energy storage and clean power.

ActaCell’s technology is based on research out of the Material Science and Engineering labs of professor Arumugam Manthiram at the University of Texas at Austin. The startup develops materials for battery anodes (which draws in lithium ions when a battery recharges) and cathodes (which draws out current), and is also conducting research on battery cell and pack designs, and has built a module for demonstration in hybrid and plug-in hybrid vehicle applications.

ActaCell aims to use the NIST funds to scale up production of its nanocomposite material for lithium battery anodes by a factor of 1,000. Eventually, according to ActaCell’s project description, this could enable “safe, powerful and economical batteries for electric vehicles and other demanding applications.” While ActaCell claims its anode material is “in principle, significantly less expensive to produce” than state-of-the-art alternatives, the company is still working with small lab-scale batches. “To be commercially viable,” the company says it needs to bring production up to 5-kilogram batches, from five grams today.

To scale up, ActaCell plans to develop a low-cost manufacturing process involving something called “reactive high energy milling” — a technique that has yet to be applied at commercial scale in the lithium battery industry. According to the NIST project description, “The scale-up of this synthesis process will be a key innovation not only in the lithium-ion battery industry, but also as a low-cost manufacturing technique for other related materials.”

In terms of the contract with big autos USABC, ActaCell says it will do a 16-month-long assessment of how its cells perform in hybrid electric vehicles. According to this latest release, ActaCell will first focus on medium-to-heavy duty hybrid trucks for its battery tech.

Image courtesy of ActaCell

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While ActaCell has already raised $5.8 million from investors including Google.org, DFJ Mercury and Applied Ventures (Applied Materials venture arm), this $3 million award (over three years) could offer the Austin, Tex.-based startup a significant boost.

Founded in 2007, ActaCell is working to commercialize low-cost, high-power lithium-ion cell materials based on technology developed in the Material Science and Engineering labs of professor Arumugam Manthiram at the University of Texas at Austin. In addition to ActaCell’s work on materials for the anode (which draws in lithium ions when a battery recharges) and cathode of a battery, the company says it’s also working on battery cell and pack designs, and it has developed a module for demonstration in hybrid and plug-in hybrid vehicle applications.

ActaCell’s latest funding comes through the National Institute of Standards and Technology’s Technology Innovation Program, or TIP. The program, which announced a total of $22 million in awards on Wednesday, is designed to support high-risk, high-reward research projects focused on areas of critical national importance.

Throughout 2010, companies including A123 Systems and Amprius — another startup working on anode technology — have scored funds under the program. The latest round, which drew 110 proposals, was specifically for developing more efficient, lower cost, less wasteful and faster manufacturing processes for industries including renewable fuels, energy storage and advanced pharmaceuticals.

With the NIST funds and additional investment to meet cost-sharing requirements (total project costs are estimated at $6.2 million), ActaCell aims to scale up production of its novel nanocomposite material for lithium battery anodes by a factor of 1,000. Eventually, according to ActaCell’s project description, this could enable “safe, powerful and economical batteries for electric vehicles and other demanding applications.”

While ActaCell claims its anode material is “in principle, significantly less expensive to produce” than state-of-the-art alternatives, the company is still working with small lab-scale batches. “To be commercially viable,” the company says it needs to bring production up to 5-kilogram batches, from five grams today.

What’s the plan? ActaCell’s proposal for a low-cost manufacturing innovation involves what’s called “reactive high energy milling” — a technique that has yet to be applied at commercial scale in the lithium battery industry. According to the NIST project description, “The scale-up of this synthesis process will be a key innovation not only in the lithium-ion battery industry, but also as a low-cost manufacturing technique for other related materials.”

“Inventing disruptive manufacturing innovations is every bit as hard as inventing new materials,” Frank van Mierlo, President and co-founder of solar startup 1366 Technologies, told me in an interview last year. Clean technologies ranging from energy storage for plug-in vehicles to photovoltaics need both kinds of inventions in order to compete with the old standbys (internal combustion engine cars and fossil fuels). As shuttered startups like Imara and Firefly Energy have illustrated in the last couple years, it’s one thing to develop a breakthrough material in the lab with potential to deliver better batteries — but it’s another to be able to produce that material at commercial scale at reasonable cost. With this new funding, ActaCell has until early 2014 to try to figure out that second half.

Image courtesy of ActaCell

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So far, Pumped Storage Hydropower (PSH) is the only real show in town in terms of large-scale electricity storage. The problem, of course, is that a PSH facility can take a decade to build, and requires an enormous amount of zoning acrobatics (unless it is located in China), water resources, and the right topography. On top of that it can cost billions of dollars to construct and then operate.

So although PSH facilities now provide over 120,000 megawatts of capacity across the globe, growing this sector significantly is not logistically viable. It is also not patently environmentally sound, with environmental groups opposing PSH projects as a matter of course.

Then there are batteries, which can be used to store energy harnessed from wind and solar installations. But no matter how you look at it, batteries fail the environmental acid test — they don’t degrade well, some tend to explode, and they do not arbitrage well due to both capital cost and life-cycle cost. This problem is made even worse because most types of battery cells wear out quickly and must be replaced fairly frequently, while utility equipment is generally expected to last decades.

Worse yet, batteries are also very expensive for large scale energy storage, given their limited capacity and the above limitations. The comparison below is battery energy storage that can be sited fairly flexibly and provide four hours of storage (from EPRI):

10MW Systems:

(Total Capital ($/kW) = $/kW installed + (Number of hours times $/kWh)

1.  Lead Acid (Commercial) – Total Capital ($/kW) = $1,740 — $2,580 /kW

2.  Sodium Sulfur (Projected) – Total Capital ($/kW) = $1,850 — $2,150 /kW

3.  Flow Battery (Projected) – Total Capital ($/kW) = $1,545 — $3,100 /kW

4.  Lithium-Ion (small cell) – Total Capital ($/kW) = $2,300 — $3,650 /kW

5.  Lithium-Ion (large cell, projected) – Total Capital ($/kW) = $1,950 — $2,900 /kW

All of these numbers start to make PSH look a little better, with total capital ($/kW) ranging from $1,500 — $3,000/kW, comparable to the battery costs listed – but for ten (not four) hours of storage . . . or even more.

The truth is that no current utility scale storage works well for flexible seasonal storage, i.e.:  storing wind energy in the winter for use in the summer. Not even PSH is good for this, and at its heavy monetary and logistical costs, this fact has begun to vex the industry.

So, where can those of us seeking a viable utility-scale storage solution look to? How can we not only catch the power of the sun and the wind, but save it for many, many hours after the sun sets and the wind dies down?  And how can one solution capture all the benefits of PSH, yet eliminate its inherent barriers including finding a suitable location, obtaining permits, construction time and enormous capital expenditures?

Dig deep, is how. Answer coming soon.

David Anthony is the Managing Partner of 21Ventures, LLC, a VC management firm that has provided seed, growth, and bridge capital to over 40 technology ventures across the globe, mainly in the cleantech arena. David Anthony is also Adjunct Professor at the New York Academy of Sciences (NYAS) and the NYU Stern School of Business where he began teaching technology entrepreneurship in 2009.

David received his MBA from The Tuck School of Business at Dartmouth College in 1989 and a BA in economics from George Washington University in 1982. He is an entrepreneurship mentor at the Land Center for Entrepreneurship at Columbia University Graduate School of Business. In 2002, David was awarded the Distinguished Mentor of the Year Award from Columbia University.

David blogs at David Anthony VC

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Working on the battery and microturbine technologies in unison, said Arnold Roth, ETV’s chief operating officer, was like “trying to ride two horses at one time.” Make that two very expensive horses, in a time when capital has been hard to come by. Roth said ETV’s second round of financing “came on earlier than planned,” and the company, which counts David Gelbaum’s Quercus Trust among its main backers, had “thought capital would be available to continue development at the same rate. We were wrong.”

The Battery Bet

ETV plans to change its name to ETV Energy Limited, pending government approval, and it’s in the process of raising $15 million through an investment bank. According to Roth, the company still sees “several concrete market opportunities” for its microturbine technology, in both mobile and stationary applications. Yet the battery market is, “vastly larger than anything related to turbine activity,” he said. Plus, “the results coming out of our labs are important enough to warrant, we believe, placing a large bet on that half of our operation.”

ETV claims its lithium-based cells can deliver 50 percent more energy than state of the art cells and reduce the number of cells needed per pack, thereby cutting costs and weight. The technology involves high voltage spinel oxides for the cathode — a chemistry that ETV notes has been studied for years without seeing widespread commercial use because of damage caused by the high voltage. Working with researchers from Bar Ilan University, ETV says it has developed techniques, such as coating the raw materials and cathode, to overcome previous problems.

An important milestone for ETV’s battery business has recently come within reach: its first revenue. Business development chief Robert Meshel told me back in April that ETV expected to see its first revenue before the end of 2010, through a deal that finally came to fruition during the last week. The company has secured an agreement (worth approximately $2 million between now and 2012) with a global aerospace company to develop and deliver its batteries for use in aviation applications. Within a year to 18 months, Meshel said in an interview this week, ETV hopes to complete development of battery cells for automotive applications.

Building a Business

A crucial question for ETV, and for many other early stage cell developers as they chart a course to commercialization, is whether it makes more sense to produce cells under its own name or license manufacturing out to industry heavyweights. “Getting this right will determine how well we do in an explosive market,” said Roth. At this point, ETV plans to manufacture cells under its own brand and sell them to car companies and battery pack makers.

“Cells are where a very large part of the battery value is found,” he explained. “Staying focused on cell technology and standing back while others assemble and package them in accordance with their specific needs makes the most sense to us, at least for now.”

The company plans to set up a facility in Israel for pilot scale cell production, and hopes to “leverage overcapacity” in the industry once it’s ready to outsource manufacturing for higher volume production, around 2014 or 2015.

Matchmaker, Matchmaker

John Gartner, an analyst with Pike Research, expressed skepticism that a conglomerate would opt to enable a new competitor “just to make some short term cash.” But he said startup companies like ETV “may be able to join with existing companies if the new technology is more compelling than theirs.”

ETV is already sniffing around for strategic partners, and according to Roth the company is finding the most interest in Europe. But government incentives designed to cultivate the lithium-ion battery industry in the U.S. have their allure. “At any given point we could become an American company,” said Roth. Contrasting funds available for battery startups in the U.S. vs. Israel, he said, “Getting government funding in this country is heart breaking.”

Looming Glut

According to the most recent projections from Lux Research, sales of lithium-ion batteries for transportation and grid applications will reach around 11 gigawatt-hours in 2015. But manufacturing capacity could be as much as 18.2 gigawatt-hours in that year. So as Lux analyst Jacob Grose explained in an email, “even with on-the-fly capacity adjustments from battery manufacturers, a large-format li-ion battery glut is a distinct possibility by the middle of this decade.”

Gartner acknowledged that “in theory” excess production capacity may arise around 2012 or 2013 if demand for electric cars, and the batteries that power them, is lower than expected. “But I expect many cell manufacturers to try and continue producing and instead selling into the grid storage market,” he said, noting that companies in the U.S. that have received government funding to produce batteries “will be under pressure to continue manufacturing and not rent out their facilities.”

Tough Climb for the Little Guys

“Some cell manufacturing companies may not survive,” Gartner noted, “and startups may be able to purchase shuttered facilities at bargain prices if they can get the financing.” That won’t necessarily create a friendly environment for upstart battery cell companies. “Although the capacity will be there,” said Grose, “the oversupply will destroy margins by bringing prices down, and that will make it nearly impossible for smaller manufacturers to compete with the Panasonics, LG Chems, and BYDs of the world.”

ETV does not have an overly rosy view of what lies ahead. “Tough times await everyone, and in the nature of things the smallest players can expect the toughest time,” said Roth. But ETV isn’t discouraged by the likelihood of a product glut or price pressure right as it’s trying to pick up steam. “We are convinced this is a great moment for battery technologies that demonstrate superior cost-effectiveness relative to performance,” Roth said. “And that means us.”

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About 3 million 3-D TV sets are expected to sell in this holiday season, and that should double next year, says Ernie Petrus, Contour’s vice president of consumer marketing. As we note in our GigaOM Pro report on 3-D TV (subscription required), glasses will be an integral part of the 3-D TV viewing experience for some time to come, and some 80 percent of the active kind that need power to work use simple, disposable batteries.

Contour’s 3D glasses batteries will be sold at Fry’s Electronics and Amazon, among other venues over the holidays. It’s an opportunistic move for Contour because it lies outside Contour’s specialized carbon and fluorine-based chemistry — the 3-D glasses batteries are lithium-based — and because they’re not being made at Contour’s Azusa, Calif. factory, but rather by an unnamed Chinese manufacturer.

Still, it may represent the kind of niche application targeting that battery startups may have to tackle to differentiate themselves from the Energizers and Duracells of the world.

Petrus knows that competition well, having worked for 28 years with Energizer. To capture as many customers as possible with as few products as they can make, big battery manufacturers build general-purpose batteries, he said — pretty good for most applications, but stellar in none.

Contour, on the other hand, has built a battery specifically for 3-D TV glasses, which tend to suck up lots of power for hours at a time. Internal testing shows they’ll outlast standard coin cell competitors, such as Energizer, by about 60 percent, Petrus said. That’s about two full movies more life per battery, he said. Contour will provide the batteries in blister-wrap six-packs both in stores and online. “We don’t want to be in the battery section — we want to be an accessory to 3-D TV,” he said.

Petrus wouldn’t say if this would be the last of Contour’s moves into batteries outside its namesake technology, which is a patented mix of carbon and fluorine in a secret ration (CFx) for super-efficient cathodes. At the same time, the company is producing CFx batteries for long-lasting niches like tire pressure monitoring systems, LED lighting products, smart meters, RFID cards and medical implants. Eventually, Contour plans to scale up to consumer electronics and even automotive scale, while also making the shift to rechargeable batteries.

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Image Courtesy of Lawrence Berkeley National Laboratory.

One of China’s largest automakers has tapped Massachusetts-based A123 Systems to supply lithium-ion batteries for an electric car slated to roll out in 2012. A123, a poster child of government efforts to jump-start a U.S. advanced battery industry, announced the deal on Tuesday, amidst reporting disappointing earnings for the three months ending September 30.

A123 reported a loss of $43.7 million in the third quarter of this year, substantially more than the $22.8 million loss posted in the same period a year earlier. In addition, the company’s operating expenses climbed to $41.1 million for the quarter, nearly double the $20.8 million reported for the year-earlier period.

A123 posted $26.2 million in revenue for the most recent quarter, compared to $23.5 million in the third quarter of 2009. For 2010 annual revenue, the company lowered its guidance by $20 million to $100 million — mostly because transportation customers have bumped their production ramp-ups to the second quarter of 2011, instead of the end of 2010, executives said in a call with shareholders yesterday. The company noted that the customers are not shifting their timelines due to changes in demand forecasts, but rather because it’s taking longer than expected to get their vehicles ready for production.

A123′s customers include BAE, Eaton, Navistar, and plug-in hybrid vehicle startup Fisker Automotive, a company backed by venture capitalists, the Department of Energy, and A123 itself that plans to launch its first car next year.

On Tuesday, A123 said that its joint venture with Shanghai Automotive Industry Corp., or SAIC, will supply battery packs for an electric passenger car that SAIC plans to launch in the 2012 model year. Under the agreement described on Tuesday, A123 says it will “use its cells to develop a customized battery pack,” which the joint venture will produce.

The deal fits into a roadmap unveiled nearly a year ago, when A123 and SAIC announced a new joint venture in China — the first such partnership between a non-Chinese battery maker and a major Chinese automaker, according to A123. Dubbed Shanghai Advanced Traction Battery Systems Co., or ATBS, the joint venture was established as the preferred supplier of energy storage systems for all hybrid and electric vehicles manufactured by SAIC. At the time, SAIC already had plans to roll out an all-electric model in 2012.

While A123 is just beginning to set up manufacturing stateside with support from the state and federal governments, the company historically has done most of its manufacturing in South Korea and Changzhou, China.

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Panasonic made the investment through a private placement of common stock priced at $21.15 per share, according to a release from Tesla, and it now holds about 2 percent of the company.

Over the last 18 months, Tesla has secured investment from two other partners: Toyota and Daimler. Toyota invested $50 million in Tesla following its IPO, and the pair is working on an electric version of the Toyota RAV4 with a Tesla powertrain for 2012. Daimler, meanwhile, invested $50 million (before selling off 40 percent of its stake) in Tesla and is using the Palo Alto company’s battery packs in a demo of Smart Fortwo electric cars.

It was back in January of this year that the Tesla and Panasonic first announced plans to work together developing nickel-based lithium-ion battery cells for electric vehicles, and for Panasonic’s cells to be used for Tesla’s “current and next-generation EV battery pack.” For months prior to that, Panasonic was rumored to be a battery cell supplier for Tesla’s planned Model S sedan.

This comes amid a much larger campaign by Panasonic to bolster its energy storage business and become a heavyweight player in the world of electric cars, shifting its focus away from the consumer electronics market. By early 2010, Panasonic had reached about halfway point in what it expects to be a $1 billion investment over three years in facilities for lithium-ion cell research, development and production.

Image courtesy of Tesla Motors

The Olympics will doubtless require a lot of backup power. As will Russia’s electricity market, the fourth largest, and the Russian government wants to spend $15 billion in power grid upgrades over the next two years. As part of their $40 million deal, Ener1 and FGC plan to research ways to use batteries to strengthen the grid in remote regions and integrate intermittent wind power.

Pike Research predicts grid energy storage will be a $35 billion global business by 2020 — but most of that will be in the tried and true pumped hydro energy storage. Compared to that technology which pumps water uphill with cheap power and runs it down a hill when power is needed, batteries are still too expensive for most grid storage applications. But the massive investment into lithium-ion batteries for plug-in cars should improve performance and lower costs in the coming years, and Pike predicts that lithium-ion batteries will make up $1 billion of the world’s grid storage market by 2018.

Russia’s neighbor China provides the clearest example of just how large the opportunity for developing battery expertise is for the power grid, both as an exporter and as a market. While the country plans to double its capacity for pumped hydro energy storage, it’s also planning several big battery-based grid storage projects, including a partnership with battery and electric vehicle maker Coda and China’s southern power grid. At the same time, China’s growing might in battery manufacturing includes some technologies, such as flow batteries, aimed specifically at the grid storage market.

India, meanwhile, has a pressing need for smaller-scale distributed energy storage, so much that entrepreneurs are busy deploying jury-built systems of their own, the Times of India reported last year. Portable backup power systems like those from Fenix International could serve consumer markets from India to Africa, showing just how small-scale the technology can get.

On the subject of small-scale, Ener1’s $40 million Russian deal is with FGC’s wholly-owned subsidiary Mobile GTES, described as a provider of “mobile gas turbine power stations” to back up the Moscow region’s power grid. I’m not sure how loud and smoky those mobile generators are, but I’m guessing that wherever they’re parked, the neighbors would prefer a clean, silent battery-powered system — and I’d venture that the foreigners attending the 2014 Winter Olympics might complain even more loudly than the diesel generators.

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Image courtesy of Ron Danko.

Ice Energy’s so-called “Ice Bear” air conditioner units create ice during off-peak hours (like during the middle of the night), then during peak hours (like the middle of the day) the systems cool buildings by circulating chilled refrigerant to the coil of a standard air conditioning system. The devices are cost-effective and energy-efficient because they move the cost of cooling to off-peak hours when it’s less expensive. Ice Energy CEO Frank Ramirez once told me if was the only really efficient means of storing energy out there.

Investors in this round include Ice Energy’s existing backers Energy Capital Partners, Good Energies, Sail Ventures and Second Avenue Partners, as well as new investor, financial planning firm TIAA-CREF, which has a new green building investment partnership with Good Energies. Ice Energy raised a Series B round of $33 million in mid-2008.

Ice Energy says it will use the funds, quite simply, to deploy Ice Bears to its current customer list, including its largest, a 53-MW project for Southern California Public Power Authority, as well as a solar and ice combo project with SunPower for PG&E. Ice Energy commonly installs the systems on big box retailers like Staples, or an auto dealership, then works with the local utility for the demand response system and incentives for the building owner.

At a time when batteries for energy storage remain too expensive for wide-scale deployment, when compressed air energy storage has too many siting and regulatory problems, and when pumped hydro can only be built in certain regions, ice-based energy storage looks very promising. Because of its relatively low cost and quick deployment, it’s like the low hanging fruit of building-based energy storage. (See my energy storage FAQ).

Even beyond the startup world, the so-called ice battery might be finally getting its day in the sun. Earlier this year, Veolia Energy North America, a subsidiary of massive French energy and water company Veoli Environnement, announced it had bought a district cooling system that uses ice to lower the cost of cooling buildings from Comfort Link.

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Image courtesy of Stevendepolo.

But that’s hardly the end of Apple’s legal problems. The company was slapped with $625 million in legal penalties this week for infringing on three patents, at a rate of $208 million per infraction. Obviously, Apple’s already challenged the verdict, as would any corporation, but the ruling is blood in the water for Cupertino’s foes.

The case was brought by Mirror Worlds, and presents a legitimate case, not just the usual patent trolling fare. Mirror Worlds, a company founded by Yale computer science professor David Gelernter, claimed it held patents infringed upon by Apple through its Time Machine and Cover Flow features, among others. Mirror Worlds held patents regarding automated backups and flipping through digital album covers that are remarkably similar to the tech used in today’s Macs and iOS devices.

The verdict was rendered by jury in a Texas district court, and would represent one of the largest ever awards in patent suit history in the U.S., if upheld. Even a $625 million pay out won’t really dent Apple’s $40 billion on hand, but that’s not where the real hurt lies.

Apple is currently embroiled in a large number of legal disputes over patents. Here’s a list of some of the more high-profile cases:

• Microsoft co-founder Paul Allen’s company Interval Licensing filed suit against Apple, along with Google, Facebook, Yahoo and others in August for infringing on a number of patents relating to fundamental web technology developed in the early 90s.
• Kodak accused Apple in January of this year of using on of its digital imaging patents regarding previews in the iPhone, along with smartphone rival RIM. Apple is also singled out for two more infringement suits from the camera pioneer, including one regarding the ability to process images of differing resolutions.
• Apple, along with Google and others, is named in a suit brought by NTP, a patent holding firm, in June 2010. The suit concerns patents held by NTP about wireless email delivery, and an earlier suit against RIM resulted in a $612 million settlement.
• Perhaps the most highly publicized, Nokia is suing Apple over 10 patents it owns regarding wireless handset technology. The suit came after negotiations regarding licensing fees with Apple broke down. Apple is countersuing over 13 of its own patents.
• Tune Hunter named Apple along with a whole slew of others in its 2009 suit regarding music recognition tech. Tune Hunter holds a patent for a music identification and purchasing system that is says resembles far too closely the tech in use by Shazam.

This isn’t an exhaustive list, but it’s representative of the kind of heat Apple’s been facing since becoming a top dog in the tech realm. Now that one of these efforts has hit paydirt, it’s unlikely the tide will be stemmed anytime soon. The smell of money is a heady intoxicant.

As unseemly as it might be, Apple has the right idea with its countersuit of Nokia. The only way to deal with this kind of issue is to defend your patents vigorously, or face losing the farm. While things definitely won’t get better in the near future for Apple as its star continues to rise, whether or not this latest verdict is upheld will determine if things get much worse, and possibly begin to have an impact on the company’s ability to do business.

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Beach, who has decades of experience in the battery biz, put it simply: If you want to find a Moore’s Law-type improvement for batteries, “you’ve got to go to an asteroid and come back with some new materials.” Battery improvements these days are about optimization and incremental improvements, and we need to stop drinking the Kool-Aid and be realistic about pricing, said Beach.

That said, Beach did note three areas of battery technology that he thought would make the best places for innovation: creating “ultrasafe” batteries, developing battery management systems for high voltage and high density batteries, and creating batteries with a wide operating temperature range.

Quallion, which was founded in 1998, and produces lithium-ion batteries, battery materials and cells, entered the battery industry by focusing on niche markets like medical devices, aerospace, and defense. More recently, Quallion has focused on “green technology,” a broad market that includes batteries for energy storage for the smart grid, and vehicle-to-grid applications.

An interesting application, that Quallion showed off at The Battery Show, is an onboard battery system for a class A truck (a semi that often has a sleeping cab). Truckers are legally required to stop idling their trucks (punishable by fines if they don’t), but still want to power their sleeping cabs, and Quallion’s technology charges up while the truck is on the road, and uses the power while the truck is turned off.

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Image courtesy of Lenny Montana.

Fenix, which is coming out of stealth on Monday, makes a device called the ReadySet, which is a plug-n-play, portable, lead-acid battery that is wrapped in a protective casing, has all the basic connectors for charging devices, and uses smart circuitry to enable the battery to last up to three years (2 years longer than many of the car batteries that are being used in the ecosystem). The ReadySet system also comes with power generation options, like a bike generator (up to 100 watt hours) and a solar panel (15 watt hours), which can recharge the battery with clean power.

The ReadySet’s smart circuits are a big part of Fenix’s secret sauce — the software and electronics make sure that the batteries are not 100 percent discharged, which can kill a battery, and significantly cut down on its lifespan. While laptops and cell phones are already designed with software to avoid a full discharge (when your phone says you’ve got no charge left, there’s actually still a good deal of charge), car batteries are a lot less sophisticated. The result is that when car batteries are used for energy storage and off-grid power, they tend to only last about a year.

Fenix is targeting an introductory price of about $150 for its ReadySet device combined with one of its power generation gadgets (either the bike generator or the solar panel) and the company sees an opportunity to drop that price as volumes increase and the company benefits from economies of scale. Around $150 is still pretty high for a product for the developing world, but Fenix is selling the ReadySet to entrepreneurs that tend to have a little more access to capital than an average consumer is these regions. About 2.5 percent of the populations of these villages is some kind of entrepreneur, Fenix CEO Mike Lin tells me.

Lin estimates that there are about 150 million car batteries being used as distributed grid power, despite the fact that there are very few studies on the use of car batteries for power usage. Fenix’s Brian Warshawsky notes that there are so few studies of car battery usage because governments in developing countries commonly want their electrification rates to appear as high as possible. “It’s kind of a shameful subject to have such a small population connected to the grid,” says Lin.

Lin and Warshawsky are not relying on the government and nonprofits to distribute their device. They specifically opted to have Fenix, which they founded in July 2009, run as a for-profit. While non-profits have done a lot of solid work in certain developing countries, for-profits have often been able to deliver more successful products to happier customers. Fenix looks to how successful cell phones companies — and companies like Coca Cola — have been, and draws inspiration from them, says Lin. Travel anywhere in Africa, and you can find a bottle of Coke and cell phone coverage in even the remotest of villages.

That’s one reason why Fenix has decided to partner with the major telcos in the developing world for distribution, along with other partners like NGOs and service providers: to effectively and economically sell and market its devices. The telcos could benefit from the proliferation of the energy storage devices and distributed cell phone charging, and could white-label the ReadySets with their brands. Fenix says it’s already working with some major cell phone service providers.

Fenix also has an important ideology beyond working with local partners: “We try to be as open source as possible,” Lin tells me. In other words, no proprietary connectors are allowed on the device, only USB and cigarette lighter connectors. In addition, Lin hopes that one day they can create an online community that can share ideas about how to develop home-brew energy solutions.

Of course, Fenix isn’t the only company developing micro distributed power for the developing world. Solar lantern makers D.light, Duron, and Egg-Energy, have all developed different ways to face the problem of off-grid power.  In fact, D.light’s founders were classmates of Lin’s, and Fenix says it sees potential partnerships with startups like Egg-Energy.

The next step going forward, after its pilot project in Africa last November, is to launch its first commercial implementation in the fall, and then raise the next round of VC financing. Most of the small team actually worked together before on a startup called Potenco, a pull-cord charger developer, which was planned to work with the One Laptop Per Child project. That project didn’t work out, and Potenco was unable to raise more money after a certain point, so most of the team moved over to work on Fenix. No doubt, it’s a very cool idea, but we’ll see how its customers respond to it in a few months. As Lin explained to me, there’ve been several products that have been developed for distributed power; the proof is in what the consumers there think is worth spending money on.

Here’s a video on their team and plan:

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Tuesday’s memorandum of understanding was short on details, and the two companies cited its “non-exclusive” nature. That means GM and LG Chem, the maker of the battery cells for the Volt’s 16 kilowatt-hour batteries, may be announcing more partners in the future.

Just about every battery company and electric and hybrid vehicle maker seems to be looking for an afterlife for batteries that are too depleted to drive vehicles, yet still have up to 80 percent of their original capacity available for less stressful duties. In fact, that’s seen as critical for making EVs and plug-in hybrid vehicles more affordable, since much of the additional cost comes from the expensive batteries.

Nissan announced in October that it would form a joint venture with Sumitomo to recycle lithium-ion electric car batteries, like those in its upcoming Leaf all-electric sedan. In April, the Renault-Nissan Alliance announced similar projects in Europe with utilities Enel in Italy and Endesa in Spain.

The action isn’t limited to major automakers. EnerDel, the Ener1  subsidiary supplying lithium-ion batteries for Think City EVs, is working with Japanese conglomerate Itochu on a grid storage pilot project. Last week, BYD, the China-based, Warren Buffett-backed EV startup, announced a MOU with the Los Angeles Department of Water and Power to build batteries to back up wind power. Of course, all of these projects are still in the R&D phase.

Then there’s A123, which already has a significant presence in grid storage and could find ways to bring its vehicle batteries to that market. Pike Research estimates that the grid-connected lithium-ion battery market will grow to $1 billion by 2018, mainly driven by the economies of scale that will come to the industry as it ramps up for the automotive sector. Samsung, for example, plans to start producing lithium-ion batteries for electric vehicles next year through a joint venture with Germany-based Robert Bosch, and has said it is also targeting grid storage applications.

ABB — a sometimes slow-moving behemoth in the power grid field that generated annual revenue of $31.8 billion in 2009 — has been getting more involved in other smart grid and energy management projects lately. Last week, its venture arm invested $1.5 million in startup Power Assure, which makes software to match data center power consumption to server utilization.

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