Saltwater Battery Recipe

Astute investors are looking for opportunities in the electrification of transportation and renewable energy.  Investors have focused on the dominant lithium ion batteries.  For electric vehicle manufacturers and large grid operators, battery density and small form factor are the ultimate objectives.  With a view there might be a better technology that could challenge lithium ion batteries, this series is exploring the companies with new battery technologies.

As incongruous as it might sound, saltwater can provide a viable battery chemistry.  A concentrated saline solution is used as the electrolyte, the medium that transports the chemicals required for an electric reaction between the negative and positive electrodes of a battery.  Without a properly functioning electrolyte stored energy never gets converted to usable electrical energy. 

Developers point to a number of advantages in the saltwater battery compared to the conventional lithium ion battery.  The saltwater battery is expected to operate more safely, with no worries of thermal runaway and no need for some of the caustic materials in lithium ion or lead acid batteries.

It is really in terms of cost that the saltwater battery really shines.  The principal material is sodium, which is lower cost and more readily available than lithium.  Saltwater batteries are expected to last longer and require limited maintenance, further contributing to lower cost of ownership and operation.  Then when it is finally time to scrap the saltwater battery it is fully recyclable, with no heavy metals to contend.

Seems like a dream battery, doesn’t it?  Unfortunately, the saltwater battery has a significant shortcoming in terms of lower energy density than conventional batteries.  Developers have to give up some of the cost savings on materials to build a battery large enough to compete with lithium ion batteries.  The larger form factor then precludes some applications, such as electric vehicles.

Lower energy density may be one of the reasons there are very few developers with active programs underway.  An exception is Aquion Energy, a Pennsylvania-based developer and manufacturer of a proprietary design called the Aqueous Hybrid Ion (AHI) battery.  The company tried to sidestep the form factor issue by targeting electric grid operators with energy storage needs.

Aquion began low-volume manufacturing of its saltwater battery in 2011, but the move toward commercial operations was brought to a halt by financial difficulties.  It may have been a matter of poor cash management, spending too much, too quickly, on too many unnecessary things.  It might have been that it came to the market in 2012, when the lithium ion battery was ascending into higher volume production.  This brought the marginal cost of LiO batteries for grid applications down to a level where Aquion’s solution could not compete.   

In 2017, Aquion was brought back out of bankruptcy by a new owner, who had ponied up $9.2 million for its assets.  Not a very good return for its initial venture capital totaling around $200 million from illustrious investors, including Kleiner Perkins and a fund affiliated with Bill Gates.  Nonetheless, the company has made few headlines in recent years, but still have a saltwater electrolyte design that can be jiggered into a commercially viable battery.  

Investors probably cannot expect a private round with institutional investors, given its history with venture capital and the bankruptcy courts.  It is more likely that a larger entity might make a strategic deal with the technology at the center.  A strong deal with a grid operator could be the best situation for Aquion and then a private placement with high-net-worth individuals could make sense.  The company is worth watching by eager investors for a development along those lines.

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.