IRA is an Investment in Battery Innovation

IRA is an Investment in Battery Innovation

Among many things, the inflation reduction act (IRA) is a big investment into our domestic battery production.  To get the details, you can read about the IRA from Moss Adams here. 

Here is what has us the most excited:

  • The establishment of a $27 billion Greenhouse Gas Reduction Fund for the Environmental Protection Agency to allocate towards emissions reductions projects. 
  • $250 Billion in Energy Infrastructure Loan Guarantees
  • $40 Billion in Clean Energy Loan Guarantees
  • The multitude of guarantees and incentives to build domestic battery capacity

We will cover more later, but right now I want to highlight how the EV incentive may drive investment and innovation in domestic battery production. The requirements for batteries in EVs lead to increasing investment in innovation. There are two parts.

  1. Battery materials must be sourced in the United States or a country that has a free trader agreement with the United States.
  2. Batteries must be assembled in the United States, Canada, or Mexico. 

This will limit what Electric Vehicles qualify for the incentive, but it won’t eliminate them

Batteries qualify by having a certain percentage (escalating over time) meet the requirements. There is no clarity on the requirements currently. Everyone is waiting on the Department of Transportation and the Treasury to make the final rules. Whatever they end up being, there is likely not enough capacity for materials and assembly to meet the potential demand. With high demand and shortages of materials, there will be investment to expand supply and innovation to increase efficiency/ reduce cost. Innovation in battery design and manufacturing should boom. The IRA is providing over $100 Billion in loans to speed up the transition. 

We have talked about Battery Advancements in the past. Now, we hope to see these advancements make it to the practical world.

New battery design, and chemistry are where I am excited about innovation. So far in the US there have been over% 15 Billion committed to building domestic capacity.  PEM Motion has a good Battery Atlas for Europe here. Over the past year, there were major investments by vehicle OEMs Tesla, Toyota, GM, Ford, and VW to build domestic battery capacity. They are partnering with major battery companies like SK Industrials, and LG Chem, who are also building plants of their own. Most analysts think this is not enough and we may need up to $100 Billion in battery manufacturing. With that amount of investment, slight improvements in battery design and manufacturing go a long way. Even with two Giga factories, Tesla is looking at investing $10 Billion more to keep their advantage.  

While the energy transition increases demand for storage, the investment from the IRA should get us ahead, increasing competition and building needed capacity.

Thomas Hall

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, Moss Adams, River City Bank, GreenbergTraurig

BlueTech Valley, PowerSoft.biz, Revrnt, Synbyo, Califronia Mobility Center

LiCAP Technologies Developing a Game-Changing Electrode Material

LiCAP Technologies Developing a Game-Changing Electrode Material

A Rancho Cordova-based innovator is poised to make a big contribution to lowering lithium ion battery costs and improving their performance.  LiCAP Technologies is working on an “activated dry electrode” that is significantly better than the wet slurries now used.  Wet coating is energy-intensive, time consuming, and uses a highly toxic solvent, plus it creates a fair amount of waste.  LiCAP is addressing all those flaws and getting lots of attention from an industry looking for a better technology.

LiCAP’s CEO Linda Zhong left ultra-capacitor manufacturer Maxwell Technologies in 2011 to pursue her ideas for dry electrodes.  Her first venture was EnerTrode in Hayward, and in 2016 that morphed into LiCAP when she moved to Sacramento.   Her goal is to revolutionize the fabrication of batteries at dramatically lower costs.  Almost half of the energy needs for a Giga-scale battery manufacturing plant are associated with the industry-standard electrode manufacturing methods.  Zhong is convinced her innovation could do much better.

However, in order to get a revenue stream started as soon as possible, LiCAP started with the manufacture of ultra-capacitors.  Capacitors are simpler and easier to make than batteries.  A capacitor consists of an anode and cathode separated by a dielectric material which prevents the accumulated charge from jumping the gap between the electrodes.  The key to lower cost is to make the various layers as thin as possible so more material can be stuffed into a small space.  LiCAP’s innovation is using an activated carbon membrane that is 100 microns or less thick, yet quite strong.  The conventional wet process inherently makes much thicker electrodes.  

Zhong’s long-time business partner Martin Zea has been inventing their own production process and machines to make rolls of material at 100 meters per minute, faster than any competitor.  The rolls are sent to LiCAP’s ultra-capacitor assembly plant in Tianjin, China, for now.  In 2016, the China government lavished help on anyone wanting to set up enterprises such as this, and that gave LiCAP an important kickstart.  Now, the company is making millions of dollars of sales per year, with about 40 employees in its local plant.

Dry electrodes have been getting a lot of attention in the market, and LiCAP may have the lead in making them practical.  They are smaller, with higher energy and power densities than any other.  Super-caps and ultra-caps are used in a lot of products, notably in some EVs to provide near-instantaneous injections of power and energy with very fast recharge times.  They are also used in medical equipment, industrial machinery, and consumer electronics to protect against short losses of power or power spikes, or providing an important boost.  As their product’s capacity increases they are getting increasing attention for grid support.  One interesting LiCAP product is a drop-in replacement for the batteries used in wind turbines to adjust the pitch of the blades as they start to rotate.  This kind of high-power draw is murder on batteries, but perfect for ultra-caps that then can last 10-15 years compared to 2-3 years for batteries.  They may also become important to backstop ultrafast charging stations.  Advertisements for LiCAP now routinely pop up on technology sites and in publications.

But batteries are an even bigger market.  Zhong sees that market as her ultimate goal and the one most likely to take her company past the billion-dollar mark.  Katharina Gerber has been added to the team in the last year as the Director of Business Development to accelerate the sales and strategic partnerships.  LiCAP has been hosting a couple dozen of interested partners and customers this year as word of their new material has spread.  They have added a process development area at their facility, which is doing batches of material for batteries, working out the kinks.  They hope to have a continuous process in operation soon to start making batteries and getting them to market to increase their impact.

Since beginning the ultracap assembly plant in Tianjing, doing business in China has become more difficult.  Zhong now wants to keep the manufacture of the membranes and final assembly in the US, especially with the new IRA law limiting the most generous EV incentives for buyers to those vehicles with a significant fraction of all content coming from the US and North America.  

To get to a bigger scale and to build the battery-manufacturing process line, LiCAP will need to find an investment of $25+ million.  They hope this will be enough to convince more of the skeptics that they meet the requirements of big orders with a high-quality product that meets all the performance measures.  Then Zhong believes they will be able to make the leap to Giga-scale either through an alliance with an established battery manufacturer or on its own. 

The CEO has been very quiet about this company and few people even know about it.  Will it be the next clean tech unicorn in our region?  Linda Zhong is very determined to do just that.

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStart’s Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.

CleanStart Sponsors

Weintraub | TobinBlueTech Valley, Revrnt, 

Moss AdamsPowerSoft.biz, Greenberg Traurig, California Mobility Center

CleanStart Perspectives with Christoph Lienemann of PEM Motion

CleanStart Perspectives with Christoph Lienemann of PEM Motion

Join us as we chat with Christoph Lienemann of PEM Motion about future mobility battery projects.
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Christoph Lienemann is responsible for the North American operations of PEM Motion, a consulting and engineering company focused on future mobility solutions and their industrialization. He manages their teams in Canada, Mexico, and the USA. PEM Motion helped establish the California Mobility Center, a Sacramento-based public-private innovation hub and industry-sized tech shop enabling the future of mobility.

CleanStart Perspectives are short online conversations to connect the greater Sacramento clean tech entrepreneurship community and share insights, experiences, and outlooks. Join us as we welcome our featured guests to share their perspective on what entrepreneurs and innovators can do to thrive and grow.

Register and we’ll send you the Zoom login information prior to the meeting time.

CleanStart Perspectives are recorded through Zoom.

Fearless Predictions 2022

Fearless Predictions 2022

We have done pretty good on our predictions in the past, so this year we changed it up. We have predictions on global changes and local developments. Let us know what you think. 

  1. Oil prices will fall below $60 per barrel.  The current price is $78 per barrel.  After oil hit $145 per barrel in the 1990s, “everyone” was sure it would exceed $200 soon.  Then it fell below $25 per barrel.  Oil is one of several mineral resources which have been swinging up and down in price for decades.  With substitution of renewables for petroleum-based fuels, and with renewed production both domestically and outside the US, we predict that oil prices will be on a downward trend this year.  The current price is enough to stimulate investment in production but there will be a lag between the price signal and the supply response which typically leads to an overshoot.  That’s what has almost always caused the price to drop.  The same will likely be true of natural gas with diminishing demand, but we don’t think it will be as dramatic.  The latest data show the decrease in demand has resulted in oil and gas production in balance with demand, a reversal of the decades-long trend of oil imports.  The US still imports oil and gas but it also exports about an equal amount now.
  2. The installed price of rooftop solar will decline more steeply in 2022 than in 2021.  The CPUC is likely to do something to allow utilities to pay less for the output of such installations, and that will undercut demand.  A drop in prices will follow.
  3. A new microgrid will be developed in our region with at least 500 customers.  We keep expecting this to happen.  There is one on the North Coast for the Blue Lake Rancheria which Is similar to what we expect.  We know the interest is out there, but progress to build more has been slow.  We expect at least one project to advance in the year.
  4.  The Air Resources Board will publish new, lower Carbon Intensity figures for renewable fuels made from captured CO2 (to produce methane and clean diesel, for example) which will drive interest in using them for backup and long-duration storage.  The required target for Carbon Intensity in the total fuel mix declines each year according to ARB rules.  That drives increased demand for lower carbon intensity fuels to meet the target in 2022.  Progress in captured CO2-derived fuels will lead to new options coming onto the list of possible options.  Bio-gas from dairies already has a strongly negative score (about -400 grams of CO2 equivalent per megajoule).  The new calculations will include some pathways that make renewable fuels more negative.
  5.  California will receive a new application for an offshore wind farm.  Already two have been filed for sites within state waters along the Central Coast each with four floating wind turbine platforms with four 10-15 MW turbines each.  With the infrastructure bill and the push for more renewables, we expect at least one more application, possibly on the North Coast.
  6. Nationally, renewables (solar, wind, small hydro, geothermal) will generate more GWh than coal and nuclear.  In 2021 we saw the return of coal-fired power generation with the first increase in decades, but the slide will resume. Renewables will surpass coal and become the second largest source of energy behind natural gas.
  7. EV adoption will double in the US with twice as many delivered in 2022 than in 2021. The supply shortages slowed Volkswagen ID.4 and Ford’s Mustang sales in 2021. The Chevy Bolt EV and EUV faced recalls, but should return to strong sales in 2022. Most companies are releasing new EV models. New companies with significant preorders will start delivering.  We expect EVs to make up 10% of new purchases (more than double 2021).
  8. There will be another SPAC deal with a regional company, as the boom slows.  SPACs will not get regulated and there will still be a fair amount of speculation associated with them.  But, as the shine wears off and scrutiny increases, the pace may lag.  Nevertheless, we expect to see some enormous investments in companies that are looking to scale.  The biggest investments last year were around the energy transition, such as ZEV companies looking to scale received major investment.  But they weren’t all happy stories. Lordstown motors is running low on cash. Engie subsidiary EVBox just terminated their potential merger. SPACs have 18-24 months to pick an acquisition target or return the money. In 2022 there are nearly 300 SPACs representing nearly $100 billion in value that will cross the 18 month threshold. We expect to see another.
  9. CleanEdge’s Smart Grid Index QGRD will cross $120. It is now at $100. Last year muted Clean Energy Stocks. Following ETFs Like QCLN and ICLN has been typically what we do, and in those cases 2021 saw expectations brought in line with reality. They did not jump; as much as we thought. But some still grew YOY. This year, with all the focus on infrastructure growth, we think the indexes will rebound, and the grid and energy infrastructure stocks most of all.
  10. Elon Musk will step down from the Tesla CEO position.  Musk chases innovation and Tesla is becoming more “normal”. Unless people tell him to go earlier, he will install a replacement by the end of the year. He still will argue with people about Tesla on Twitter but his SEC liability for doing so will be reduced.

Check out our past predictions below.

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStart’s Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | TobinBlueTech Valley, Revrnt, 

Moss AdamsPowerSoft.biz, Greenberg Traurig, Momentum,

College of Engineering & Computer Science at Sacramento State

CleanStart Perspectives: Decarbonizing California’s Grid: The Next Chapter

CleanStart Perspectives: Decarbonizing California’s Grid: The Next Chapter

The clean energy transition is well underway, but still far from complete. What’s the journey ahead?

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Join us as we talk with Nick Pappas of NP Energy about decarbonizing California’s grid. Nick will discuss the journey ahead, including Community Choice Aggregators (CCA’s) and how they are evolving.

Nick is an energy industry leader with 10+ years of experience developing and shaping California energy policy while helping energy industry stakeholders navigate complex policy and market challenges.

CleanStart Perspectives are short online conversations to connect the greater Sacramento clean tech entrepreneurship community and share insights, experiences, and outlooks. Join us as we welcome our featured guests to share their perspective on what entrepreneurs and innovators can do to thrive and grow.

Register and we’ll send you the Zoom login information prior to the meeting time.

CleanStart Perspectives are recorded through Zoom.