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Aquion Energy on power trip

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By Thomas Olson
Saturday, Sept. 24, 2011

Advanced battery maker Aquion Energy Inc. in Lawrenceville has gotten all charged up in just the last two weeks.

Aquion landed $30 million in private equity from three venture capital firms on Sept. 7, then snagged Pittsburgh Technology Council's "Start-up of the Year" award on Tuesday.

Now, the early-stage company is scouting for a large plant to produce its innovative batteries on a commercial scale -- a six-state search that includes the former Sony Corp. site near New Stanton, Westmoreland County. The company says it expects to select a site by the end of the year.

"It's a competition between states, and, frankly, we'd like that facility in Westmoreland to win," said CEO Scott Pearson. The choice partly hinges on what incentives governments can offer, he said.

Aquion, which has about 50 workers, could employ 500 people by 2014 when it reaches commercial-scale production, said Ted Wiley, vice president of business and market development. He said he envisions perhaps 1,000 workers by about 2017.

"That's about how long it will take to ramp up," said Wiley, who co-founded the company with chief technology officer Jay Whitacre, who is on leave as an assistant professor at Carnegie Mellon University. Together, they spun out the company from CMU in 2008.

Aquion is looking for about 250,000 square feet initially, with the option to lease a total of 500,000 square feet or more later on, Pearson said.

The former Sony plant has 2.8 million square feet of space on 330 acres and is managed and marketed by the Regional Industrial Development Corp. of Southwestern Pennsylvania.

The RIDC is "actively talking" to Aquion about leasing the plant, said Bill Burroughs, vice president of project development. But government incentives will prove a challenge for the region and the state, he said.

"Westmoreland County can't offer a whole lot. It's kind of in the same position as the commonwealth: They are not flush with money," said Burroughs. But he said he remains hopeful Aquion will choose the Sony site "within the next few months."

Aquion produces what's called an aqueous electrolyte sodium ion battery. Each is slightly larger than a bread box and weighs about 50 pounds.

The company is manufacturing about 60 or more batteries a day from its Lawrenceville plant where capacity is "hundreds of batteries a day," Pearson said. The battery prototypes are tested internally or sent to independent testing labs.

"In 2012, we'll make pilot products (in Lawrenceville), and they will be sent to real utility customers who will put the battery in an environment where they can test it and evaluate it." Pearson said.

Sales to end users is likely to remain small-scale at first, such as residential solar applications.

Whatever new manufacturing site the company selects will enable Aquion to produce "tens of thousands" of batteries a day," Pearson said.

The company is mainly targeting utilities, which could store electricity for use during peak-demand periods. That would better balance output with demand and make power plants and the electric grid more efficient.

"Nobody wants to put a new gas turbine in the Hamptons," Wiley said.

Aquion also expects to sell its batteries to hospitals and other institutions where reliable power is mission-critical, as well as to military bases and other customers "off the grid" who need to optimize their solar, wind or other power production.

"It's not just about battery technology," said Alan Brown, executive director of the Pennsylvania NanoMaterials Commercialization Center, South Oakland. "It's about coming up with the right application to match up with the best technology, which is probably where Aquion is."

Aquion's electrolyte, based on salt water rather than on a flammable organic solvent, makes its batteries environmentally friendly and keeps costs down, Whitacre said.

The up-front cost of a lithium ion battery used in consumer electrical devices, for instance, is between $300 and $1,000 per kilowatt hour. Aquion's battery will cost between $150 and $500 per kilowatt hour, or about the same as a conventional lead-acid battery in most cars.

No matter what the technology, "batteries are expensive," especially if deployed by the thousands at a power plant, said Anissa Dehamna, a research analyst who has studied nearly a dozen battery types for Pike Research LLC, Boulder, Colo.

Utility executives tend to be leery of unproven technologies because "they want to be sure they will be able to use a technology in 10 years," Dehamna said. So, she expects Aquion will push demonstration projects in the field for a year or two.

Aquion is trying to line up demonstration projects at 10 utilities and off-grid power producers, which Pearson declined to name.

If all goes as planned, Aquion executives hope to take the company public in the next three to five years, said the CEO.

"I think that's every entrepreneur's dream," he said.

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