Xtreme Power Raising Funds for Extreme Plans

Xtreme Power is nothing if not big in its ambitions. The company told us earlier this year that it’s been seeking financing for a $425 million plant that would roll out an eventual 2 gigawatts of batteries per year to be used to provide energy storage for the power grid. Looks like here’s the beginning of that fund raise: According to a filing posted today, the company has raised $18 million of a planned $29 million round.

The 6-year-old company’s ability to raise funding was recently helped out by a big contract win to build a 10-megawatt storage system meant to back up a 30-megawatt wind farm planned for the Hawaiian island of Oahu. The developer of the project, First Wind, recently received a $117 million Department of Energy loan guarantee for the project, and Xtreme Power says it will be managing not only its battery, but the entire wind farm’s output via its own smart grid network.

Xtreme describes its PowerCell battery chemistry as a “chemical capacitor” that can beat lithium ion batteries in terms of energy storage, efficiency, cycle life and cost. The technology was born out of a 1990?s joint venture between Ford Aerospace and defense contractor Tracor that was shelved after its target market — California’s zero-emissions vehicle fleet — collapsed in the wake of the state’s decision to back off its ZEV mandate.

Xtreme bought the technology in 2004 and put its first 500-kilowatt PowerCell in place at the South Pole Telescope, an extreme environment to be sure, in 2007. Since then, it has also tested a 1.5-megawatt PowerCell at another 30-megawatt wind project on the island of Maui. Xtreme is already backed by about $25 million from investors including Sail Venture Partners and the state-run Texas Emerging Technology Fund.

Lyle, Texas-based Xtreme has made some major claims around the price and performance of its technology. CEO Carlos Coe told us back in March that its PowerCell battery tech acts more like capacitors, charging and discharging at high speeds, while at the same time maintaining the qualities that make batteries better than capacitors for long-term energy storage. Combined with Xtreme’s own power electronics, Coe said PowerCells can yield a 90-percent or better “AC-to-AC” energy efficiency — that is, a measure of the input and output of grid-friendly alternating current from the system, rather than the direct current that batteries actually accept and provide. The PowerCells also have deep discharge capability combined with long cycle life, and Xtreme is also working on a line of portable batteries, Coe said.

However, Xtreme is quieter on how much its battery tech costs. Sam Jaffe, analyst at IDC Energy Insights, told us that Xtreme has been targeting around $500 per kilowatt-hour as a profitable price point for grid storage systems, though he expects the Hawaii project to exceed that, given its novelty.

At $500 per kilowatt-hour, the Xtreme tech would compare well to costs of about $800 per kilowatt-hour for sodium-sulfur batteries, the primary battery technology now widely deployed for grid backup, or between $622 per kilowatt-hour and $1,500 per kilowatt-hour for flow batteries, another technology competing for grid-scale markets. Pumped hydro and compressed air energy storage are cheaper for energy storage, but require hard-to-find canyons to dam and fill up with water, or underground caverns to fill with air, while batteries can be placed next to wind farms or at utility substations.

Energy storage will play a critical role in the country’s renewable energy growth as well as the success of the smart grid and nascent electric vehicle markets. The idea is that you when the sun shines and the wind blows, batteries can store that energy to be used later on when the sun goes down and the wind stops blowing.

Policy makers are just starting to recognize the need for energy storage. The DOE has targeted funding energy storage with $120 million of its $4 billion in smart grid stimulus grants, and a California energy storage bill would require utilities to store about 5 percent of their peak generation capacity by 2020.

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