High-tech battery manufacturer A123 Systems Inc. will go to auction tomorrow as part of bankruptcy proceedings, almost one week after Energy Secretary Steven Chu unveiled an initiative to develop high-performance energy storage to enhance U.S. cars and utilities.
A123, which produced lithium iron phosphate batteries and initially received $249 million from the Department of Energy, filed for bankruptcy in October. Speaking last week at a news conference announcing the Joint Center for Energy Storage Research (JCESR), Chu reiterated his contention that faltering startups are typical in an emerging industry and that new research will cement America's role in the global energy sector.
"In any new technology development, not every company succeeds," Chu said. "Never should the United States say that 'we had some that didn't succeed as well as others; we shouldn't be in the game.'"
Chu added that DOE's role in A123's future is to protect taxpayers and retain the technology advantage in the United States. "If we let Germany, Korea and Japan own this space, then we will fail," he said.
Several foreign firms have expressed interest in bidding for the battery company, including China's Wanxiang Group Corp., Germany's Siemens AG and Japan's NEC Corp.
However, the Committee on Foreign Investment in the United States (CFIUS) could block these bids. The Treasury Department agency notes on its website that its mandate is to "review transactions that could result in control of a U.S. business by a foreign person ('covered transactions'), in order to determine the effect of such transactions on the national security of the United States."
This may include A123's auction, because the company had taxpayer backing and used research from DOE national labs. Agency spokeswoman Kara Alaimo would not reveal whether CFIUS is reviewing the auction and said in an email that, by law, the agency cannot disclose this information to the public.
U.S. company hopes to prevail
Milwaukee-based Johnson Controls Inc. is also eyeing A123, particularly its automotive battery division, and will submit a bid tomorrow. "It is our hope we will prevail at auction," said MaryAnn Wright, vice president for technology and innovation at Johnson Controls. "We really see it as complementary to what Johnson Controls already does." The company received $300 million in DOE funding in 2009 under the American Recovery and Reinvestment Act in the same tranche that financed A123 (ClimateWire, Aug. 6, 2009).
Wright noted that Johnson Controls is also an industry partner for DOE's new battery hub. "We've been deeply involved since the call for proposals came out," she said, echoing Chu's point that innovation is critical to America's energy sector and economic future.
DOE will base JCESR at Argonne National Laboratory outside Chicago, and the center will receive $120 million from the department over five years. The state of Illinois will contribute $35 million. Partners include several universities, other national labs and private companies (E&ENews PM, Nov. 30).
Chu said the target is to produce batteries that are five times better and five times cheaper in five years. "If they do a good job, [the program] will be renewed," he said, likening the scope and urgency of JCESR to the Manhattan Project. "You've just got to do what Oppenheimer, Fermi and Seaborg did, OK? No pressure. Starting now."
Wright said Johnson Controls will help scale up applied battery research at JCESR and will bring prototypes and new designs to the market. In return, Johnson Controls will have some access to patents and innovations developed under the program. "We negotiated intellectual property rights and obligations as part of the partnering process," Wright said.
Chicago hopes for jobs
As for the program's future, Wright said she is cautious but optimistic. "We're kind of in the honeymoon phase," she said. "This is really going to help us in terms of the pipeline development and getting people into our institutions and help with jobs."
However, JCESR's main measure for success may not be technology produced, but whether DOE's hub model outperforms conventional research paradigms. Venkat Srinivasan, head of the energy storage and distributed resources department at Lawrence Berkeley National Laboratory, explained that basic research in labs and commercial research in factories were usually in separate silos.
With JCESR, industry partners and entrepreneurs will be involved at the earliest research stages and remain committed as a battery design comes to fruition, according to Chu. Scientists at Lawrence Berkeley, as partners in JCESR, will have to coordinate closely with their counterparts at Argonne, despite more than 1,800 miles between them.
"This is not the Bell Labs of old where you need the water cooler effect," Srinivasan said. He added that the researchers Skype with their collaborators almost daily and share results through online databases.
For some public officials, A123's demise has not dampened their enthusiasm for battery research and clean-tech investment. "In Chicago, we are going to be the center of this promising field," said Chicago Mayor Rahm Emanuel last week. "If you invest in the quality of your workforce and infrastructure, you will actually lead the country in job creation." Emanuel said he wants to create a Silicon Valley-style environment for battery development and commercialization around Chicago.
Gov. Pat Quinn (D-Ill.) said he wants to make sure the state has a piece of the $42 billion international battery industry. "Our state early on recognized how important this is to our future," Quinn said at the announcement news conference. "We want to really be intimately part of it, the center of it."