VentureBeat

With the market for hybrid electric vehicles (HEVs) finally starting to heat up in earnest, several companies are making big bets on advanced rechargeable battery technologies. One of these is PowerGenix, a San Diego, Calif.-based startup that makes nickel-zinc (NiZn) batteries.

Another is ZPower, a startup that hopes to oust lithium ion as the dominant technology by developing advanced silver-zinc (AgZn) batteries. While they offer greater power density, AgZn batteries haven’t been used much because they allow for far fewer recharges than lithium ion batteries. ZPower has now succeeded in increasing the number of times its batteries can be recharged to be competitive with the latter.

NiZn batteries are smaller, lighter and more powerful than competitor technologies, such as nickel-cadmium (NiCd) and nickel-metal hydride (NiMH). Because they contain no toxic materials, they are environmentally safe and easy to recycle. PowerGenix’s CEO, Dan Squiller, said his company’s batteries are 50 percent cheaper than lithium-ion and 20 percent cheaper than NiMH. Not only that, they also offer a major power boost over the latter: 30 percent more — which, for HEVs, could translate to a 30 percent mileage increase.

Squiller believes his firm’s consumer AA batteries could grab a large share of the roughly $400 million rechargeable battery market. Unlike its rivals, whose batteries’ output typically peaks at 1.2 V, PowerGenix’s rechargeable batteries boast a 1.65 V output — even higher than standard throwaway batteries’ 1.5 V output. The company plans on inking several distribution agreements within the next 2 - 4 weeks.

Though he was coy on the details, Squiller told me PowerGenix had already secured over $40 million in supply agreements with several major power tool companies in Asia and the U.S. When I asked him what his game plan was to take on the industry’s heavy-hitters — companies like Sanyo, Panasonic and Johnson Control — he readily admitted that he didn’t foresee PowerGenix competing on the same plane anytime in the near future.

PowerGenix’s business strategy is two-fold: It plans on licensing its D-cell battery pack technology to OEM partners for the HEV market and, for all other device applications, will manufacture the batteries itself. One benefit of this strategy is that it avoids the need for PowerGenix to invest a lot of money in its own costly manufacturing processes: Because NiZn batteries are designed to use exising NiCd and NiMH processes, the firm will rely on its partners to build the batteries and incorporate them into a range of devices.

Squiller gave a blunt assessment of the battery industry’s future landscape, predicting prices for lithium ion batteries would rise and deeming most emerging technologies, including nanowires and supercapacitors, still too early for commercial-scale production. Though he commended A123 Systems‘ decision to switch to a nanophosphate lithium ion technology for safety reasons, he said the move had come at a performance cost for its batteries.

He predicted his company would reach full-scale production by the second half of 2009. PowerGenix plans on raising a fourth round of funding this summer and is seeking another $15-20 million to help it scale up its production capacity. It will start the round in early June and expects to wrap it up by the end of September. Squiller said he was looking for one lead investor with experience in the cleantech sector. PowerGenix has raised $31 million so far and has received support from Angeleno Group, Advent International, Technology Partners, Granite Ventures, OnPoint Technologies and Braemar Energy Ventures in the past.

His ultimate ambition is to replace all NiMH batteries with NiZn batteries — a decision he says makes sense from both a performance and financial perspective. Not too shabby for a technology that last saw its heyday in Thomas Edison’s time.

Lithium ion technology batteries have been on the market for over 16 years now, and like a human of the same age, the technology’s growth appears to be slowing. Improvements in the battery technology are lessening each year, and the power demand from electronics, fueled by chip advances, makes it feel as if time is standing still for lithium ions — phones and laptops don’t stay charged much longer than they ever did.

We’ve reported on a few companies trying to leap ahead in lithium ions technology, including Boston Power, Lion Cells and Nanoexa (coverage here, here and here). But ZPower, a battery startup based on an entirely different technology, says its time to chuck the lithium ions entirely and move to a next-generation technology that’s longer lasting and more easily recyclable.

ZPower makes use of decades-old silver zinc technology, which offers greater power density (essentially, how much electricity a battery can hold) than lithium ion, but allows far fewer recharges before becoming useless. ZPower’s breakthrough is raising the number of times a silver zinc battery can be recharged to be comparable to lithium ion, research which took the company over a decade.

The immediate improvement will provide about 40 percent more power, according to ZPower CEO Ross Dueber. And you may not have to wait long to get a laptop that can last all day unplugged; the company has partnered with one of the top manufacturers of laptops to roll out an ultra-thin notebook around this August, with further product launches coming afterward. The company is in the process of raising about $30 million to scale up manufacturing.

Dueber estimates that it could take three or four years less for silver zinc to capture a large part of the market than it did for lithium ion, which took about eight years, based on ZPower’s plans for licensing out the technology. The limiting factor in its potential growth is the incompatibility of silver zinc batteries with existing devices — new cellphones, laptops and other electronics have to be designed for the type of battery they use, so you can’t simply pop in a new silver zinc battery to replace your old lithium ion.

Once you do have a silver zinc battery, however, there’s more than one benefit. The material inside can be recycled for re-use in another battery, so you’d get money toward the purchase of a new battery in exchange for returning your old one — which also helps keep the landfills cleaner. (Lithium ions can also be recycled, but are generally just broken down for the various metals inside, a less lucrative proposition.)

ZPower has no immediate plans to move outside of the electronics market, which means that lithium ion applications in cars, power tools and elsewhere will be safe from it. However, lithium ion is also under attack in those quarters. Take for instance dark-horse candidate EEStor, a company that claims its ultracapacitor technology can outperform a battery in rapid discharge applications (like when you jam down the acceleration pedal of your Tesla Roadster). The latest reports have pegged the release of an EEStor-powered car in 2009, manufactured by Zenn.

However, lithium ion may also have an ace in the hole. Although it’s too early to tell if the technology can be easily commercialized, researchers at MIT report that using specialized nanowires in a lithium ion battery can triple its energy density. And a separate group of researchers at Stanford, also using nanowires, have increased density ten times over. Of course, similar improvements might also be possible for silver zinc.

ZPower received its last venture round in 2006, $7 million from Intel Capital, OnPoint Technologies and a private equity group. The company is based in Camarillo, Calif.

Featured companies: Akermin, Fluxion Biosciences, iCardiacTechnologies, Wellocities

UPDATED: Expanded items on Fluxion, Akermin, and Wellocities.

Fluxion Bio draws in $6.9M for cell-analysis tools — Fluxion Biosciences, a San Francisco developer of cellular-analysis tools, raised $6.9 million in a second funding round, VentureWire reports (subscription required). Investors included Kodiak Venture Partners, Claremont Creek Ventures and Life Science Angels.

Fluxion takes the idea of running chemical reactions against living cells — a key step in screening and analyzing the activity of drug candidates — to its logical conclusion with a system designed to measure biochemical changes involving, and sometimes within, a single cell. The company’s first microfluidic system is intended to allow researchers to study cells that adhere to surfaces, such as platelets that stick to arterial walls in the formation of plaque, and biofilms, which are drug-resistant sheets excreted by bacteria for protection.

Fluxion is also working on tools for studying electrochemical signaling within cells, which the company hopes to launch next year. The current financing may also make it possible for Fluxion to launch a third instrument that will image individual cells while they float in solution. Existing cell-imaging systems only work when cells are anchored in place.

The company could be profitable as early as 2010, Fluxion executives told VentureWire. It has raised a total of $7.4 million since its founding in 2005.

Bioenzyme-catalyst co. Akermin raises $5M — Akermin, a St. Louis developer of new biocatalytic enzymes, raised $5 million in a second tranche of its first funding round. Investors included Prolog Ventures, OnPoint Technologies, Chrysalix Energy and the St. Louis Arch Angels.

Akermin works with catalytic enzymes — molecules that speed particular chemical reactions — made via biotechnology that could replace precious-metal catalysts now used in fuel cells. The company is developing prototype “biofuel cells” and thin-fuel cells the company refers to as “bio-batteries.” Enzymes should theoretically be cheaper and more environmentally friendly than metal catalysts.

Fuel cells, which could theoretically replace conventional batteries and engines in some applications, are one of those clean technologies that have been on the table for decades in one form or another. However, existing technologies generally aren’t considered cost- or energy-effective when compared to burning fossil fuels or using traditional batteries.

Akermin is part of a wave of startups working on overcoming the difficulties in making fuel cells. Another is Bloom Energy, a secretive Silicon Valley startup that has nevertheless received plenty of press.

Akermin’s technology is a polymer “stabilizer” for these enzymes that’s designed to immobilize them, stabilize them and enhance their operating lifetime. The company has raised a total of just under $8.5 million since its founding.

Online health service Wellocities draws $1M — Toronto’s Wellocities, a diabetes-focused health-information site, raised $1 million in seed funding to create a more general online health service for Canadians. XDL Capital Group provided the funding.

The company didn’t say much more about its online strategy or how it would differ from a host of new, mostly U.S.-based sites that offer everything from detailed health information to physician directories to patient communities. In diabetes, Wellocities provides an online community and ways for diabetics to track their progress in maintaining control of their weight and blood-sugar levels.

OTHER HEADLINES OF NOTE:

• iCardiac raises undisclosed round for electrocardiogram cardiac-risk systems (release)