Lead Carbon Batteries: A Game Changer for Alt Energy Storage - Part II 32 comments
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One of my readers sent an e-mail message that asked some pointed questions about lead-carbon battery technologies and the relative strengths and weaknesses of the principal lead-carbon battery developers. So instead of dashing off a quick reply, I thought it might be interesting to share both the message and a detailed response.
Mr. Petersen,
You've convinced me the storage future for key applications is lead-carbon (see for example AEP's project for distributed storage on its network, a topology I expect will be common, perfect for Axion). I've greatly enjoyed your common sense, economics trumps whiz-bang technology, perspective. I've spent the last half of my career in IT and have seen it time after time. [Hyperlink added by Author]
Would you now please comment on whether Axion still has a competitive future given the Furakawa-East Penn license and production of the CSIRO lead-carbon battery. As best I can tell at a marketing or performance level the CSIRO battery is an Axion look alike. Also, looks like they will get first mover advantage, maybe for years since I can't see how Axion can move quickly or scale production, given it's limited resources. I'm concerned Axion's time may have passed. I’ve also seen lots of small companies with better mousetraps fail for lack of resources and marketing.
Also, are there patent conflicts between what Axion has and the CSIRO patents (spent the first half of my career as a lawyer)? What's current status of the Mega C litigation? Any chance some of Axion's former Canadian penny stock past can come back and bite it, or is Mega successor's upside limited to its 7m shares? What exactly do Axion's patents protect? If not from East Penn's perform/look alike product, are they worthless? My brief search only disclosed a TM registration.
The final issue of concern for me is that both companies are in Pennsylvania, which gives Rendel and other pols a problem in helping Axion with a request for Obama money. Prior to East Penn's news it looked to me Axion was pretty well wired with local politicians. Given all that, to me their future looks bleak. I'm guessing it's either Obama, massive dilution, or giving away it's future to a larger "partner".
In short can you stop replaying the technology story - I got it - and take the kind of informed business look at Axion's prospects you are in position to publish. It would be deeply appreciated. I am unable to perform any reasonable due diligence on my own with this small company. I appreciate your legal and former relationships with Axion make this an area where you need to be careful, but anything you could put in print to your fans would be most appreciated. I'd really like to bet on them - but I'm only so crazy.
Mr. Smith
Ultrabattery Status
Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO) has developed a lead-carbon energy storage device that it refers to as the “Ultrabattery” and licensed the technology to Japan’s Furukawa Battery Co. (Frankfurt - FBB.F). Furukawa, in turn, has sublicensed the NAFTA rights to East Penn Manufacturing.
CSIRO and Furukawa road tested prototypes of the Ultrabattery in a modified Honda Insight HEV in late 2007. They subsequently sent Ultrabattery prototypes to Sandia National Laboratories for inclusion in a series of partial state of charge cycle-life performance tests that Sandia conducted in 2008. While the tests were hugely successful, Furukawa currently classifies the Ultrabattery as an R&D stage technology and the Green Car Congress reports that the product is not scheduled for commercial introduction until late 2010. Since the Ultrabattery is more complex than a normal lead-acid battery, it seems reasonable to assume that it will probably take another year or so to get an Ultrabattery production line up and running in the U.S., which implies a domestic release date of late 2011.
PbC Status
When Axion Power International (AXPW.OB) began making and testing prototype PbC devices in late 2003, a top priority goal was to develop a lead-carbon battery technology that could be easily implemented in existing lead-acid battery plants with minimal changes to manufacturing equipment and processes. The New Castle asset purchase in early 2006 was a critical step in Axion’s development plan because it gave the research staff the power to change a design parameter in the laboratory and then immediately integrate that design change into a manufactured prototype using existing manufacturing facilities.
During its first two years in New Castle, Axion’s development effort focused on optimizing electrode performance using labor-intensive manual fabrication techniques. When it finally developed an electrode design that met the performance goals and worked well in the existing manufacturing plant, Axion began negotiating utility scale tests and manufacturing hundreds of pre-commercial PbC prototypes for use in those tests. Pictures of Axion’s Power Cube, which was built for a NYSERDA-funded utility substation upgrade deferral demonstration project, are available on Axion’s website.
Over the last year, Axion’s focus has shifted to developing automated fabrication methods for electrode assemblies. Custom equipment for the carbon sheeting and electrode fabrication processes has been on order since last year. When that equipment is installed, Axion expects to be able to fabricate electrode assemblies for about 1,000 PbC devices per day, or 250,000 units per year. Since I’m no longer privy to inside information, I don’t know what the current status of the equipment orders is, but I hope we’ll hear something in the next earnings call.
First Mover Advantage
While I can’t assess the status of Furukawa’s ongoing development work, I have to give the first mover advantage to Axion. Its automated electrode fabrication equipment should be operational this year, which will give Axion a one to two year head start over the Ultrabattery. If the PbC devices are well received, the electrode line can be rapidly expanded to fully utilize Axion’s existing battery manufacturing capacity and permit the sale of electrode assemblies to other manufacturers. The current round of equipment orders is already financed. Additions will not be necessary unless the PbC devices are successful. If Axion is selling 250,000 PbC devices per year at a reasonable price and profit margin, expansion financing and dilution should not be significant problems.
Over the long-term, Axion plans to implement a platform technology business model like Intel’s (INTC) where it will focus on making electrode assemblies for sale to battery manufacturers that want to offer PbC devices. The advantages of a successful platform technology business model are clear. Specialized facilities for the fabrication of electrode assemblies will be far cheaper to build than new battery manufacturing plants. It’s also easier to increase production if you can leverage a broad pre-existing base of manufacturing, marketing, distribution and customer support infrastructure.
Patent Status
The Ultrabattery and Axion's PbC device are similar, but there are important technical differences. The Ultrabattery page on Furukawa’s website includes three schematic drawings; a conventional lead-acid battery is shown on the upper-left, an asymmetric capacitor like Axion’s PbC is shown on the upper-right and the Ultrabattery is centered beneath the two.
I used the U.S. Patent Office’s online search utility and could not find a CSIRO patent for the Ultrabattery. I then did a broader Google search and found a recent entry on The Patent Search Blog that said a European patent application for the Ultrabattery was published in September 2008 (priority date March 20, 2007). So it appears that CSIRO does not have any issued patents for the Ultrabattery. In comparison, Axion owns six issued U.S. patents for the PbC device (Nos. 6,466,429, 6,628,504, 6,706,079, 7,006,346, 7,110,242 and 7,119,047) and has seven additional patent applications pending. While I am not a patent lawyer, Axion’s patent position seems to be the stronger of the two.
Prior Litigation
To begin with, I want to be perfectly clear that Axion does not have a “Canadian penny stock past.” It has fought to the death with a group of Canadian stock promoters who tried to claim an ownership interest in its PbC technology, but Axion has never been implicated in a questionable penny stock promotion.
I hate Mega-C questions because it was a long and emotionally draining battle. Comparing the Mega-C bankruptcy case and the associated adversary proceedings to a can of worms would be a grave insult to worms everywhere. The final outcome of four years of litigation was that 5.7 million Axion shares are held in court-supervised trusts that will sell enough shares to pay the costs of Mega-C’s bankruptcy and the claims of its creditors, and then distribute the remaining shares to holders of allowed equity claims. As a result of several adversary proceedings that were brought and resolved in connection with Mega-C’s bankruptcy, the individuals that I would have considered a threat to Axion have been effectively neutralized. While I’m reluctant to use the word never, I think the risk of future substantive claims is very remote.
Potential Stimulus
Axion, East Penn, C&D Technologies (CHP) and Enersys (ENS) are all based in Pennsylvania. Frankly, I wouldn’t be surprised to see all four companies apply for a portion of the $2 billion in advanced battery manufacturing grants and the $4.5 billion in smart grid deployment grants included in the Obama stimulus plan. It’s important to remember, however, that manufacturing lead-acid batteries is far less expensive than making other types of batteries and while Li-ion producers may request billion dollar grants, requests from lead-acid manufacturers are likely to be far more modest despite the cost advantages of lead-acid products.
Given the importance of battery manufacturing to Pennsylvania’s economy, I would expect the political powers to offer whole-hearted support to all eligible in-State manufacturers. Moreover, as the political battle lines are drawn in D.C., I think Senator Specter’s decision to cross the aisle and vote in favor of the stimulus bill may prove helpful.
Due Diligence Resources
When I want to perform a due diligence investigation on a public company, the first place I visit is the SEC’s EDGAR Company Search page. All you need to do is type a company name in the text box and the site will bring up a complete list of the company’s SEC reports that you can select and review on-line. If you want to know about Axion, a good starting point will be the prospectus for a resale registration statement that Axion filed last August and the prospectus supplement that it filed in November.
Disclosure: Author holds a large long position in Axion Power International (AXPW.OB) and small long positions in Active Power (ACPW), Exide (XIDE), Enersys (ENS) and ZBB Energy (ZBB).
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This article has 32 comments:
Thanks in advance.
Excellent post. Thank you for going into detail on some to the questions that have concerned me as well as Mr. Smith.
I am looking forward to the next earnings report and conference call. Maybe the company has some insight into the selling pressure on the stock. Could that be related to the Mega-C stockholders?
www.economist.com/scie...
Gives lead-acid a very good write up, backs up what you've been saying. If it's good enough for the economist, it's good enough for me!
Rick, I learned a long time ago that who the sellers are is nowhere near as important as who the buyers are. The trading patterns seem to indicate that the seller(s) are in a position where they have no choice, which only makes sense when you consider that today's market is way below the average price Axion received for its stock over five years of private placements. Through the end of last year, the trusts had only sold a little over 100,000 shares. The next round of reports won't be due till mid-April, but I have a hard time imagining the trustees are in any hurry to sell during a period of market turmoil.
engstudent, you'll probably like this one from "Mechanical Engineering" magazine even better:
memagazine.asme.org/ar...
www.pocket-lint.com/ne...
I researched the recent MIT report in some detail. While it is excellent news for lithium technology and for us all by extension, it is still lithium (expensive) and so the same arguments versus lead apply. On the margin it might make lithium more reasonable a choice, but in cases where the cost benefits support a low cost battery the LAB will still prevail. Now, if you read something about cutting costs by a factor of a hundred, then we have a story.
Rick
and which company has an edge patent-wise. Recently
Nigel Calder has written in Sail magazine about lead foil technology,it is promising. Flooded batteries give off alot of hydrogen,
not as much with AGM or Gel.
Joe, the PbC devices are an AGM design. See axionpower.com
the amount of discusion in the marine community might be a real indication of who will be leader of the pack.Nobody
has been critiquing batteries as long as boat users,we rely on them, something the general population is just about to do.
Thank you for the great service you are doing for investors with your well researched articles. My question: how does the recent discovery at MIT by Kang and Ceder for faster lithium iron phosphate recharge change the game for EVs?
The problems with scientific discoveries like the stuff from MIT is the initial reports don't provide much in the way of performance detail and they almost never consider what the cost of a product might be. From what I've read, the new materials don't do much for energy density (which governs the distance a vehicle can travel) but do wonderful things for power (which governs things like acceleration and recharge rates). Li-phosphate and Li-titanate were already showing some very fast charge rates, so I'm not certain it's a disruptive change rather than an evolutionary change. As I mentioned in an earlier reply, it sounds like MIT is working with a nano-structured material instead of a nano-milled material. If that's the case, we could be looking at time-line and cost issues similar to carbon nano-tubes.
The big problem with batteries is it generally takes five to seven years to get something from a laboratory bench to a factory floor. People try to cut down the development time, but it's real hard to do.
I'm rough on a lot of these technologies from a cost-benefit standpoint, but that doesn't mean I don't think they'll improve with time. Heck, one of my biggest hopes is that somebody will invent something that makes the entire current batch of battery technologies obsolete. But until somebody actually finds the holy grail, I think we need to go to work with the tools we have and solve our problems to the best of our ability. Waiting for progress is a sure way to ensure it never gets here.
Even if the cost of that cool Li technology were cut by 90%, half the world's lithium reserves are located in Bolivia. Bolivia's President Morales would probably sell to anybody BUT the USA.
For the CSIRO UltraBattery, try the following patent numbers when searching:
WO2008113133-A1
WO2008070914-A1
Probably you already have it (as a matter of fact it seems a recopilation of your data en SA)...but just in case
www.economist.com/scie...
There is something interesting about catodes in this week edition,
Regards
Plenty of Lithium available outside of Bolivia. Way more than enough to supply all the vehicle battery needs.
www.worldlithium.com/A...
And U.S. Geological Survey, World Lithium mining and reserves report (click on 2009)
minerals.usgs.gov/mine.../
Yes, this lithium scarcity has me wondering. Is there a possibility of it being recycled? If not, doesn't that put us in a negative position as a non-renewable resource, and, as you say above, with limited supply?
On the EV trike I am building using gel cells, I figure I will have at least a four to five year service life on the batteries. The advantage of gel cells over AGM is that they can take a deeper discharge. The gel cells I have say they have a new grid technology, apparently pressing the lead mixture into grids with a fine molecular structure to them. Whether this is just hype, my batteries do have a small size for being 70 ah. With my four year, lets say, time frame, I will be interested in any new technology for future use. Next step may be an EV car, but need to gear up for that.
My investments are in my small business, nothing else, but I may be a buyer of the technology if not the underlying stocks.
Again, many thanks - I'll be tuning in!
That is the feeling in UK, the markets champion , in my opinio, smart grid and EV masive use based in plug in apps will take longer than expected...will se.
Regards
What this tells me is that extracting Lithium from pegmatites is a known technology that was perfectly viable in the past and could easily be done again. I don't think that Lithium prices were particularly outrageous in the 1950's and 1960's.
1.4KG of Lithium Carbonate per 1 KW Hour battery.
1.4KG x $8 per kilogram of Lithium Carbonate = $11.20
So $11.20 worth of Lithium in a 1KW Hour Lithium car battery which is selling for $650 to $750!!
$11.20 / $700 = 1.6% of the cost of a battery.
So if Lithium stays cheap, car batteries will be supplied by foreign brine sources. If the price starts to rise significantly, you'll see pegmatite mines all over the place. (Lithium is actually more abundant than Lead! )
The world seemed to survive oil going from $35 a barrel to $150 a barrel in a short period of time. Doubtful Lithium Carbonate even at $50 per KW Hour of battery would kill off the electric car.
gas2.org/2008/10/13/li.../
The article also included a shorter section on a new basic research level technology called spintronics.
"Researchers at the University of Miami and at the Universities of Tokyo and Tohoku, Japan, have been able to prove the existence of a “spin battery,” a battery that is “charged” by applying a large magnetic field to nano-magnets in a device called a magnetic tunnel junction (MTJ).
Futuristic but interesting
climateprogress.org/20.../
The 3 stage plug in smart chargers that are available today have been a godsend for managing the batteries at the dock, while not cooking your batteries.
On Mar 19 10:48 AM John Petersen wrote:
> kirby, I've written a bit about the firefly technology in the past.
> In their case the composite foam significantly reduces inactive weight
> and increases energy density. It's my understanding that it also
> promotes a more effective use of active materials. I think the technology
> has great potential for a large number of markets, but I don't see
> it as a direct competitor for the PbC because they're different devices
> that accomplish different goals. The last discussion I heard on the
> firefly device was in C&D's last conference call where C&D
> allowed that the product had some unique manufacturing issues that
> needed to be resolved, so C&D was unwilling to predict future
> manufacturing volumes or the potential impact on C&D's bottom
> line.
kirby, right now the Axion PbC and the Firefly foam are promising development stage technologies that have not completed the transition to mainstream technology. My sense is that both need to mature a bit before looking for a potential mate.
Off the top of my head I can think of 4 minerals that don't have underground mines (Fe (OK Sweden does have 1 underground Fe mine), Al and Mg. This is not because they are rare but because its not economic to tunnel for such an abundant mineral.
I would add Li to this list, the cost effectiveness of salt brines is so cheap that there is no need to bother for opencut or underground mines. There can be a significant constaints on processing of lithium ores, but very little rent on the ownership of lithium deposits.
It is even one of the metals that have had extraction from seawater demonstrated, not just theory
Talk of future cost reductions are pipe dreams because raw material costs are directly proportional to battery capacity you can't reduce the material inputs without reducing the energy. Moreover, if the lithium markets tighten as many believe they will, you won't be able to make the batteries at all.
Would you see the lead carbon battery as the product to supercede NiMH batteries in Hybrids like the non-plug in Prius or Honda Insight?
www.furukawadenchi.co....
page 6 effectively claims that the battery is as good as NiMH and is only 20% of the price. (ie 80% cheaper)
Hybrids without plugs usually have a lead-acid battery for starting and a 1.5 to 2.5 kWh battery pack for the hybrid drive. If the Axion and Furukawa batteries come in at the anticipated price points and perform anywhere near as well as the prototypes, they should be strong competitors in the HEV markets. That being said, they'll lose a lot of allure when you add a plug due to volumetric energy density issues.