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Summary:

The days of startups building custom-made, capital-intensive machines to produce next-gen energy products is over. Today’s energy entrepreneurs are using standard machines from sectors like the chip industry, the lithium ion battery industry and printing.

Seeo

The entrepreneurs who are still willing to attempt large scale manufacturing of next-gen energy technologies — whether it’s solar materials, LEDs, futuristic batteries or advanced biofuels — are increasingly looking to using existing machines from other industries to make their products. Many of the executives, and investors at the ARPA-E Summit this week told me they are building this requirement into their original business models.

While the move might seem obvious, the trend is in contrast to high-profile companies from yesteryear like Solyndra, which built expensive custom machines to produce their solar panels and had to raise and spend hundreds of millions of dollars on manufacturing. The added expense and complexity of developing new machines and new products just added to Solyndra’s struggles and contributed to its bankruptcy.

The CEO of Alphabet Energy, Matthew Scullin, told me at the Summit this week that his goal from day one was to require all of Alphabet’s products to be made on existing toolsets. Alphabet Energy develops thermoelectric materials and devices, which convert heat into electricity, and the technology can be built on standard chip industry machines. “A startup needs to focus on developing one product in order to be successful, and developing a tool is like developing a second product in parallel. The risk is high,” said Scullin.

Scullin also pointed out that by using traditional semiconductor tools Alphabet can more easily find skilled operators and can also outsource manufacturing to chip foundries, if they choose to do so. For custom machines, “the lack of existing know-how, secondhand equipment, service people, and competition means the cost of doing business is high, adding to risk.”

Battery startup Seeo is using standard machines used to make traditional lithium ion batteries to make its batteries, including its secret sauce: its unique electrolyte. The company employs basic mixers, coaters, and assembly and testing machines at its pilot line factory in Hayward, Calif. and is also using battery cell, module and pack materials that are commonly used to make lithium ion batteries. Later this year the Seeo team hopes to build a larger fab with the same equipment somewhere in the U.S.

Startup Imprint Energy, which is making a zinc battery, uses off-the-shelf  printing equipment from prototyping to scaled production, says Imprint Energy CEO Devin MacKenzie. They haven’t done any customization of the equipment and MacKenzie tells me they do not anticipate requiring any large scale special equipment or significant modifications of commercially-available systems.

Many of the companies in its sustainability portfolio are embracing the practice of using standard plug and play manufacturing machines, Khosla Ventures’s partner Andrew Chung said at the Summit this week. Seeo has raised funds from Khosla Ventures.

Not all energy innovations, by their nature, can use existing machines. Tesla has invested significantly in its factory in Fremont, Calif. that is now churning out the Model S and using programmed robots to assemble the cars in an entirely new way. But Tesla has also long been smart about taking advantage of the cost savings and innovation of the traditional battery sector, as it uses basic Panasonic laptop batteries linked together to power its Model S.

  1. Reusing capital eqp from earlier cos is great cost reducer. But offers no barrier to competition. When specialty products can only be made with custom eqp, then those cos who invest will enjoy monopolies. Imagine how much crappier Apple’s products would be without their custom machining stations.

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    1. @sve you’re missing the point! early stage companies can’t afford that. sure, when you’re apple, anything goes. obviously barriers are not set by custom tooling… just look at solar.

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  2. devin-mackenzie Saturday, March 2, 2013

    At Imprint Energy, we are focusing on protecting materials and cell structure IP as that is where we see the most value generation. In terms of detecting infringement of patents, materials and structure are easier to detect in a finished product, but to really prove how someone manufactured something, you may have to know what happens inside the company, which can be difficult.

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  3. Absolutely correct.

    In fact if you take it a step further, get the parts from already existing supplies.

    Marty Lagod and his group at Solo Energy tried that in the 90s (yes there was clean tech before John Doerr invented it). They built a pretty good version of a microturbine from parts from the Grainger catalogue (this was at the heart of their business model). Unfortunately they ran out of runway before they could get the units into demonstration.

    Still, there’s a lot of room for creativity out there in clean tech, even for the asset heavy ideas.

    Rich Hilt

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