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A Story about Energy Innovation Policy: Envia Systems

Since the ARPA-E Energy Innovation Summit, emerging next-generation electric vehicle battery company Envia has been gaining headlines because its technology holds the promise of much cheaper electric cars within a few years. Yet a recent story in Forbes adds to Envia’s intrigue.  It brings to light the strengths, weaknesses, and controversial debates that make up America’s climate and energy policy discourse.  In fact, it’s a compelling case study on how to make clean energy cheap and globally viable, while also highlighting in stark fashion areas of technology development in great need of policy support.

Electric vehicle batteries – or batteries in general – are comprised of three basic parts: the cathode, anode, and an electrolyte.  Traditional lithium-ion batteries, which are used in most electric vehicles, utilize lithium-cobalt oxide cathode and usually a graphite anode. While this arrangement provides a modest energy density, the battery packs still must be large and costly in order to power a vehicle.  So much so that current electric vehicle battery packs often represent almost half the sticker price of a car. And even at these large sizes, they don’t last very long – typically powering a vehicle no more than a third as long on a single charge as a typical gasoline powered car (300-350 miles).

It’s clear batteries are one of, if not the biggest, barrier to electric vehicles become a viable choice for consumers.

So how do we get better batteries?  As the Forbes Envia story shows, through sustained public support for energy innovation. But the story also shows how much more work needs to be done on our energy policies to ensure that more Envia’s emerge.

Here’s the short of it:

Envia CEO Atul Kapadia was pondering years ago on how to make better EV batteries. He started reading the academic literature and found an Argonne National Lab report on a new cathode architecture that held the hope for much higher energy densities. He went with his gut feeling and licensed Argonne’s technology to pursue further. Note, if Atul didn’t luckily read through hundreds of scientific papers, he would never have known Argonne had this technology sitting on the shelf.

Key energy policy weakness: need for technology transfer reform – check.

After testing the cathode technology and perfecting it (including the use of heavily supported nano-tech coating processes), he needed to develop anode technology.  In comes ARPA-E and its BEEST program or Batteries for Electrical Energy Storage in Transportation, which invested $4 million into Atul’s team to develop the anode that would work with his cathode. ARPA-E, which ITIF has reported on extensively, set goals for all of its investments to meet to gain.  For batteries, it was to produce a battery at 30 percent of today’s cost an 2-5x the energy storage capacity of existing technology.

Strong government role in breakthrough energy innovation (national lab and ARPA-E) – check.

Turns out, Atul was able to get both breakthrough ideas to work together. They tested a pilot project at the Naval Surface Warfare Center, finding that it met ARPA-E’s power density goals and metrics. It’s now going through a long series of tests to ensure that the battery can be certified for automotive use and is safe.  This will take 2-4 years (!).

Strong government role in supporting technology testbeds – check.

Key energy policy weakness: need streamlined and accelerated new technology certification and testing – check.

Once testing is complete, Envia will look to move to the next stage of development: scale-up and manufacturing. As the Forbes story highlights, it looks like America will lose out on the benefits of manufacturing these breakthrough batteries:

“Envia doesn’t plan to manufacture the batteries itself.  Instead, Kapadia and Kumar expect to produce battery materials in the United States, then license or partner with one or more battery manufacturers abroad to get the batteries to market. We will make the materials in the US because intellectual property is the key [consideration].  Cost is an important factor, but… we can source equipment from cheaper countries in Asia and build a [production] line which is credible,” said Kapadia.  “[Manufacturing] cells is [a] system integration issue…. Nobody can rip the material required.  We have decided to make [battery cells] in China for a fraction of the cost.”

In other words, the U.S. does the breakthrough early-stage innovation work and the advanced manufacturing is done elsewhere.

Key energy policy weakness: need aggressive, national advanced manufacturing strategy – check.

To tie all of this together, the Envia story highlights the kind of policies necessary to spur the breakthrough energy innovations we need to make clean energy cheap.  In comparison, many energy advocates point to the need for more technology pull or deployment subsidy approaches to get these type of innovations.  On the contrary, I think it’s clear that more tax credits for Chevy Volt’s wouldn’t have resulted in Envia.

To be surely, deployment incentives will play a role in helping drive some incremental innovations and help push almost-cost-competitive technologies down the extra mile to competitiveness, but electric vehicles won’t break into the market without these type of batteries, subsidy or not. Furthermore, these type of debates often hide the many other energy policy weaknesses plaguing America’s innovation ecosystem, like technology transfer barriers and a declining manufacturing competitiveness.

So Envia’s story brings us back to the central question of the energy and climate policy debate: how can we best optimize the full breadth of energy innovation policies to make sure these type of breakthrough innovation happen and happen much more quickly to make clean energy cheap without subsidy?

Note: For an even more compelling case study, check out Breakthrough Institute’s excellent reporting on the role of government in shale gas fracking.

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