DOE earmarks $2B to charge up 35 battery makers

This week, the Department of Energy announced it would divide $2 billion in federal grants between 35 battery companies, including battery makers, component providers and electric vehicle firms. Applications for these economic stimulus grants, ranging in size from $100 to $150 million, come due Tuesday of next week.

Candidates for the money are required to prove they already have the funds to cover half of their project costs. Winners will be announced in July and receive their allotments in September. There are other guidelines, too. For example, $275 million will go to component and material makers, and $350 million will go to companies that make electric drive equipment. But the majority of the money — $1.2 billion at least — is already set aside for companies looking to build battery manufacturing facilities, with emphasis on lithium-ion and other advanced batteries for cars. Anticipating heavy competition in that area, the DOE says this money will only be given to companies with solid commitments from one or more automakers.

That doesn’t thin the herd as much as you’d think. Established players like A123 Systems (working with Chrysler), Johnson Controls-Saft Advanced Power Solutions (supplying Ford), LG Chem’s subsidiary Compact Power (partnered with General Motors), are all relying on this funding to push them to commercial-scale capacity — something that would be impossible to achieve with venture backing in such a capital-intensive sector.

And these companies aren’t the only ones holding their breath. Local communities, cities and states also have a major stake in the DOE’s decision making. Michigan and its governor Jennifer Granholm, in particular, have gone to extremes to attract qualified battery companies, hoping that the much-needed funds and jobs will follow. Notably, the state approved $300 million in tax credits for four battery companies that have since set up shop near an ailing Detroit, including A123, Johnson Controls-Saft, Compact Power and KD Advanced Battery Group. New York is also doing what it can, pumping state grants into battery efforts at Columbia University, Cornell, SUNY Stony Brook and Brookhaven National Laboratory to create 400 jobs and encourage a slice of the stimulus pie. Oregon, meanwhile, is attempting to turn itself into a mecca for EV and hybrid manufacturers in hopes that battery makers will put down roots there. It has two welcoming tax-credit bills pending approval in the legislature.

The grants will also come with plenty of strings, with the DOE expecting recipients to turn out between 20,000 and 100,000 batteries for plug-in hybrid and low-emission vehicles every year.