The Energy Startup Conundrum

An inventor of a storage technology tries to outlast a brutal stretch for new energy companies.

Danielle Fong has a clever way to widen the use of renewable power: take the electricity produced by, say, a wind farm and use it to compress air in carbon-fiber tanks. When the wind quiets down, use the compressed air to drive an electric generator, eliminating the intermittency that consigns wind farms to a small role on the grid. The concept isn’t new, but it has been limited because air heats up as it is compressed, making it difficult to store. Fong figured out that spraying water into the compressor to cool the air makes it possible to store so much energy that it could be cheaper than using batteries.

You’re planning to begin pilot tests in 2016. Why is it taking this long to scale up your technology from the lab?

We thought that we would be out in the market about twice as fast. We were going to cut some corners by converting an off-the-shelf natural-gas compressor. Ultimately, we decided that would be too much of a compromise. In early 2012 we decided to switch and just go directly to the product that we would ultimately want.

Why hasn’t the money you’ve raised been enough?

It’s not actually a lot of money compared with how much it takes to develop an engine, for example, or a compressor. Say you’re a power plant company, and you’re trying to make a better gas turbine. Even when you hit volume, you’re going to be spending more than $100 million, maybe a couple hundred million dollars. Who writes those checks? There just aren’t that many. There used to be. Those times are over. Now what you need to do is figure out how to get to a commercial scale so that you can bring the unit cost down without spending that kind of money.

And yet you still need to raise more money.?

Our plan has us going profitable on less than $30 million [of] additional capital. Technically, we wouldn’t need to raise money after that, if all goes according to plan.

Does it frustrate you that in other tech sectors, money is very easy to come by?

I will admit a fair amount of frustration. There are a dozen venture-funded apps to pick up your dry cleaning.

It must seem both promising and daunting that the opportunity is so huge.?

We need energy storage in the terawatts. We’re talking about getting to half a megawatt [with each of LightSail’s storage machines]. That’s a factor of a million. That’s where my head is at.