What Credit Crunch?

The severe credit crisis rippling through the markets didn't stop GridPoint--an Arlington, VA, startup that makes software for smart management of the power grid--from securing $120 million in equity financing, announced yesterday. "Really high quality deals will continue to get funded, despite the current turmoil," Peter Corsell, the company's president and CEO (and a member of this year's TR35), told me at a smart-grid conference in Washington, D.C. He said the money will be used to acquire other startups, starting with V2Green, a company that makes smart-grid software for recharging plug-in hybrids and other electric vehicles. GridPoint is a key player in an effort to upgrade the power grid in Boulder, CO, working with utilities including Duke Energy and Xcel Energy. GridPoint's software provides utilities and consumers a Web-based portal to manage and control electrical demand; it can do things like shut off electric water heaters and pool pumps temporarily in times of high demand. To date, GridPoint has raised more than $220 million.

Huge Solar Power Farms

Last week's news in the New York Times about massive new solar installations in California is both good and bad news. The good: Solar power plants are at last beginning to rival conventional plants in terms of peak power production. Two new installations will combine to produce 800 megawatts of power when the sun is overhead, the amount a small to midsize nuclear power plant produces at its peak. About two years ago, Technology Review reported on plans for solar farms of unprecedented size, but those would produce only 100 megawatts or less. The new installations increase this output by almost an order of magnitude. Clearly, solar power is on its way to becoming a significant source of electricity.

The bad news: It's still not that much electricity. The very fact that 800 megawatts of solar power is big news indicates just how far we've still got to go. For one thing, 800 megawatts of solar is not equal to 800 megawatts of nuclear or coal. That's because solar works only during the day--and even then it doesn't generate peak levels in the morning and evening. Nuclear can keep cranking at near peak output day and night. The new solar installations will produce far less electricity than a comparably sized nuclear plant.

What's more, we're still talking about megawatts of electricity. To supply anticipated energy needs, we need to be thinking not just in thousands of megawatts--that is, gigawatts--but in thousands of gigawatts, or terawatts, of power. According to one report, all of the solar panels produced so far can only generate about 12 gigawatts.

This is all just to say we've got a problem of enormous scale on our hands. There are also concerns about cost--solar is still more expensive than electricity generated from fossil fuels.

But enough of the negative. The new installations are yet another sign of a rapidly expanding solar industry. This expansion will fuel itself by bringing down the cost of making solar panels. Meanwhile, technology continues to improve. That includes the development of cheaper ways to store solar power, so it can be used at night.

A123 Systems Is Going Public

An exciting battery company called A123 Systems, a startup based in Watertown, MA, that has commercialized materials developed at MIT, has filed documents announcing an initial stock offering. The company, which has received considerable favorable attention in the press, including in the pages of Technology Review, has developed a battery that it claims is safer, lasts longer, and delivers more power than other lithium-ion batteries. What's particularly remarkable about the company is that, although it's a small startup, it has garnered the attention of major companies, including General Motors, which is testing A123's batteries for potential use in an upcoming electric car. In cooperation with these companies, A123 is currently designing and developing batteries for 19 different vehicles.

The company's prospectus, filed with the Security and Exchange Commission (SEC) last Friday, contains some tantalizing glimpses at less public details of the company. The 19-models figure mentioned above, for example, comes from the prospectus. But what's perhaps more noteworthy, given the company's favorable attention, is the detailed list of the risks that it faces--things that company execs downplay during interviews. The list underscores just how difficult it is for newcomers to break into the lithium-ion industry--even with the sort of promising tech that A123 has developed. Established battery makers have more resources and already have close connections with and commitments from automakers. From the prospectus: "Our principal competitors have, and any future competitors may have, greater financial and marketing resources than we do, and they may therefore develop batteries or other technologies similar or superior to ours or otherwise compete more successfully than we do."

A123's success so far is due to its ability to develop ways to manufacture its nanostructured materials. The company's competitors might solve similar problems themselves and produce batteries that could outperform A123's. A123 has responded by investing heavily in research and development.

The prospectus also gives a glimpse into the challenges of working in China, where A123 manufactures most of its batteries. In addition to worrying about trade relations between China and the United States, the company has to deal with a patchwork legal system, poor protection of patents, and business practices that put more value on personal relationships with senior management than on contracts. If A123 Systems continues to be successful, its ability to navigate these and other challenges will make it a good case study in what it takes to move tech out of the lab and into a highly competitive, international industry.