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NEW YORK--Ener1, which manufactures lithium ion batteries for electric cars, is testing energy storage systems for the power grid, furadan the company's CEO said on Tuesday.

Ener1's roots are in the automotive industry and its Indianapolis-based EnerDel division already has agreements to supply battery packs to a handful of auto companies, including Think and another automaker in Europe.


Ener1 CEO Charles Gassenheimer

(Credit: Ener1)The company is also expanding into different markets, including the military and utility-grade storage, said Ener1 CEO Charles Gassenheimer at the Jefferies Global Clean Technology Conference here.

Ener1 is working with a few utilities that work in its Midwestern region on power grid storage units, Gassenheimer said. The company's flat, prismatic-shaped battery cells--different from the traditional cylinder shape--make its technology well suited to large megawatt-size storage as well as smaller units for homes, he said.

Earlier this month, utility AEP said it intends to start testing relatively small energy storage units--able to supply energy for four to six homes for a few hours--later this year.

Energy storage on the grid has become a hot area for technology development and investment in the green-technology area over the past year.

With storage, utilities can increase the amount of renewable power generation on the grid. Because wind and solar are intermittent, storage allows utilities to better control the supply of power on the grid to best match the demand. furadan Storage also gives utilities a form of back-up and a way to store electricity to meet demand during peak times, such as the middle of a hot day when air conditioning spikes up.

With military customers, Ener1 is working on $7 million in potential orders for hybrid tanks and for unmanned aerial vehicles, Gassenheimer said.

Expansion loans?
The company's core business, however, remains autos. Ener1 has applied for $480 million in loans to expand its Indiana manufacturing facility. It also plans to participate in a $2 billion grant program established in the stimulus plan for advanced battery manufacturing in the U.S.

With the $480 million loan, Ener1 could ramp up to 120,000 electric vehicle battery packs a year from a capacity of 30,000 a year now.

Gassenheimer said that investments in battery production are needed now to meet ambitious government and industry targets, such as the Obama administration's goal of 1 million plug-in electric cars by 2015. In the next two years, a number of all-electric or gas-electric sedans are scheduled to come out from many automakers.



EnerDel's batteries for the Think City electric car. Click on the image to see a photo gallery of electric vehicles.

(Credit: Martin LaMonica/CNET)

"Demand is not the issue. It's the ability to supply," he said. "You still need to make the investments in the platforms today. Otherwise, you miss the window of opportunity."

In his investor presentation, Gassenheimer said that Ener1's batteries offer benefits over the Nickel metal hydride batteries used in hybrids today.

The higher energy density of lithium ion batteries mean that costs will be cut in half compared to existing batteries. Ener1's prismatic-shaped batteries can be air-cooled, rather than cooled by circulating a liquid, furadan which adds costs, he said.

"The batteries that power your laptop and cell phone are insufficient for autos," he said. "The cylinder shape doesn't meet the needs for safety and energy density."

The question of lithium supply has become a topic in the media as more auto companies commit to using lithium ion batteries. Most lithium today is imported from South America. But Gassenheimer said that lithium could be extracted from alternative sources and that adequate supply will "not be an issue" until the late 2020s.

Updated at 5:20 p.m. PT with corrected figures for Ener1's potential battery manufacturing volume.