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Alevo: The Apple of energy storage?

Thu, 10/30/2014 - 00:56 -- Anonymous
Alevo business development VP Chris Christiansen

Picture the scene. Six hundred invited guests are attending the launch of an unknown Swiss firm boldly claiming to be ‘redefining energy’ in a virtually empty and rather shabby former cigarette factory in North Carolina.

The Governor of North Carolina is present, so is the local Congressman. So too are the state Commerce Secretary and a host of other luminaries. Spirits are high, music is pumping.

After a few pleasantries, the curtain goes up and a steel shipping container painted white, emblazoned with the corporate logo and the words ‘GridBank’ is revealed. What is in the box? Lithium-ion battery modules, which will be made there in Concord.

The luminaries are dazzled. This is going to create thousands of jobs. This is going to save the planet. “This is the best place in the world,” says Governor Pat McCrory, getting a little too high on his own bonhomie.

In short, this is energy storage hype writ large. It is as if the late Steve Jobs is launching Apple’s latest, ‘game-changing’ technology in Cupertino.

Except, in this case, the tech is not all that exciting or, indeed, game-changing. But anyway, much of the audience doesn’t really understand the tech or even really care about the tech, as long as it brings much-needed jobs.

Who is Alevo’s Steve Jobs? One Jostein Eikeland, a reasonably succcessful Norwegian Internet entrepreneur and Alevo’s CEO, who decided it would be a good idea to take a novel inorganic electrolyte made in Switzerland and make lithium iron phosphate cells with it.

Inorganic electrolyte is desirable because it is inherently safer than organic electrolytes - think thermal runaway - and reduces performance degradation.

Alevo's cells are claimed to have achieved an impressive 43,500 cycles in the lab at 100% discharge. Orginally made by Fortu Powercell, a German battery research company Alevo fully acquired last year, the cells have a stable power rate but suffer from a 50% drop capacity fade after 10,000 cycles. Less impressive is the energy density, which is a measly 41.28Wh/kg, less than one-fifth, for example, of the 18650 cells in a Tesla S. 

From July 2015, Alevo, which paid $67.5m for the 2,000 acres former Philip Morris site, will make their own cells & modules and put them into 2MW/1MWh GridBank energy storage systems in standard-issue 40-feet containers. The initial capacity of the plant will be 12,000 cells/two GridBanks per day, but its business plan is to churn out 200,000 cells/two GridBanks per hour within three years.

But this is not just another battery factory and Alevo doesn’t want to be just another battery manufacturer. The idea is to be a vertically-integrated energy storage service provider.

That means doing what AES, S&C Electric and others do, but with their own batteries, rather than buying them in from Samsung SDI, LG Chem, Kokam, BYD et al.

Alevo’s business development VP Chris Christiansen, another Norwegian and a dead ringer for Brian O’Driscoll*, explained one of its potential business models is similar to mobile phone contracts where handsets are given away or at a low upfront cost, and the customer is tied into a two-year plan.

For Alevo, read 20 years of monthly or annual fees based on energy usage.

But it doesn’t stop there. Alevo has created Alevo Analytics, an IT division which allows it to identify potentially valuable sites for ‘GridBanks’ within a grid network. To do this, and also be able to calculate the knock-on effects of having an energy storage system on other assets on a grid, requires crunching enormous volumes of data.

Soon it will take delivery of a supercomputer with the ability to perform 3 petaflops - or 3,000 trillion calculations - per second. The supercomputer will also be able to perform predictive analysis of weather, grid demand etc. in order to optimize discharge/charging of the batteries - all of which will form part of Alevo’s energy storage service provision.

It all sounded very impressive, but this author couldn’t help wondering if Alevo really knows what it’s doing. Starting a huge battery manufacturing capability and complex IT operation from scratch is a challenge for anyone, no matter how optimistic.

Despite the Silicon Valley-style glitz and glamour, this is not an iPhone, or any other consumer product. This is an unknown firm attempting to sell an untried battery and untested service provision to a conservative, risk-averse and slow-moving sector. Has Alevo put the cart before the horse?

But Alevo is nothing if not ambitious. Within five years it wants to install 16GW of GridBanks worldwide – a colossal amount when you consider California’s world-leading energy storage mandate is 1.325 GW by 2020.

Having raised $350m in private equity funding from anonymous Swiss investors, Alevo is seeking $1bn to make good on its ambition. Aim for the stars or stay in the gutter? Let’s see what happens.


*Brian O’Driscoll is a recently retired rugby union great, who made a world record 141 international appearances for Ireland and the British & Irish Lions. Chris Christiansen sportingly bought the press troupe at the drinks party a round of Guinness.