A crew of battle-tested cleantech veterans raised serious cash to solve the thorniest problem in clean energy.

As wind and solar power supply more and more of the grid's electricity, seasonal swings in production become a bigger obstacle. A low- or no-carbon electricity system needs a way to dispatch clean energy on demand, even when wind and solar aren't producing at their peaks.

Four-hour lithium-ion batteries can help on a given day, but energy storage for weeks or months has yet to arrive at scale. 

Into the arena steps Form Energy, a new startup whose founders hope for commercialization not in a couple of years, but in the next decade.

More surprising, they’ve secured $9 million in Series A funding from investors who are happy to wait that long. The funders include both a major oil company and an international consortium dedicated to stopping climate change.

“Renewables have already gotten cheap,” said co-founder Ted Wiley, who worked at saltwater battery company Aquion prior to its bankruptcy. “They are cheaper than thermal generation. In order to foster a change, they need to be just as dependable and just as reliable as the alternative. Only long-duration storage can make that happen.”

It’s hard to overstate just how difficult it will be to deliver.

The members of Form will have to make up the playbook as they go along. The founders, though, have a clear-eyed view of the immense risks. They’ve systematically identified materials that they think can work, and they have a strategy for proving them out.

Wiley and Mateo Jaramillo, who built the energy storage business at Tesla, detailed their plans in an exclusive interview with Greentech Media, describing the pathway to weeks- and months-long energy storage and how it would reorient the entirety of the grid.

The team

Form Energy tackles its improbable mission with a team of founders who have already made their mark on the storage industry, and learned from its most notable failures.

There’s Jaramillo, the former theology student who built the world’s most recognizable stationary storage brand at Tesla before stepping away in late 2016. Soon after, he started work on the unsolved long-duration storage problem with a venture he called Verse Energy.

Separately, MIT professor Yet-Ming Chiang set his sights on the same problem with a new venture, Baseload Renewables. His battery patents made their mark on the industry and launched A123 and 24M. More recently, he’d been working with the Department of Energy’s Joint Center on Energy Storage Research on an aqueous sulfur formula for cost-effective long-duration flow batteries.

He brought on Wiley, who had helped found Aquion and served as vice president of product and corporate strategy before he stepped away in 2015. Measured in real deployments, Aquion led the pack of long-duration storage companies until it suddenly went bankrupt in March 2017.

Chiang and Wiley focused on storing electricity for days to weeks; Jaramillo was looking at weeks to months. MIT's "tough tech" incubator The Engine put in $2 million in seed funding, while Jaramillo had secured a term sheet of his own. In an unusual move, they elected to join forces rather than compete.

Rounding out the team are Marco Ferrara, the lead storage modeler at IHI who holds two Ph.D.s; and Billy Woodford, an MIT-trained battery scientist and former student of Chiang’s.

The product

Form doesn’t think of itself as a battery company.

It wants to build what Jaramillo calls a “bidirectional power plant,” one which produces renewable energy and delivers it precisely when it is needed. This would create a new class of energy resource: “deterministic renewables.”

By making renewable energy dispatchable throughout the year, this resource could replace the mid-range and baseload power plants that currently burn fossil fuels to supply the grid.

Without such a tool, transitioning to high levels of renewables creates problems. Countries could overbuild their renewable generation to ensure that the lowest production days still meet demand, but that imposes huge costs and redundancies. One famous 100 percent renewables scenario notoriously relied on a 15x increase in U.S. hydropower capacity to balance the grid in the winter.

The founders are remaining coy about the details of the technology itself.

Jaramillo and Wiley confirmed that both products in development use electrochemical energy storage. The one Chiang started developing uses aqueous sulfur, chosen for its abundance and cheap price relative to its storage ability. Jaramillo has not specified what he chose for seasonal storage.

What I did confirm is that they have been studying all the known materials that can store electricity, and crossing off the ones that definitely won’t work for long duration based on factors like abundance and fundamental cost per embodied energy.

“Because we've done the work looking at all the options in the electrochemical set, you can positively prove that almost all of them will not work,” Jaramillo said. “We haven't been able to prove that these won't work.”

The company has small-scale prototypes in the lab, but needs to prove that they can scale up to a power plant that’s not wildly expensive. It’s one thing to store energy for months, it’s another to do so at a cost that’s radically lower than currently available products.

“We can't sit here and tell you exactly what the business model is, but we know that we're engaged with the right folks to figure out what it is, assuming the technical work is successful,” Jaramillo said.

Given the diversity of power markets around the world, there likely won’t be one single business model. The bidirectional power plant may bid in just like gas plants do today, but the dynamics of charging up on renewable energy could alter the way it engages with traditional power markets. Then again, power markets themselves could look very different by that time.

If the team can characterize a business case for the technology, the next step will be developing a full-scale pilot. If that works, full deployment comes next.

But don’t bank on that happening in a jiffy.

“It's a decade-long project,” Jaramillo said. “The first half of that is spent on developing things and the second half is hopefully spent deploying things.”

The backers

The Form founders had to find financial backers who were comfortable chasing a market that doesn’t exist with a product that won’t arrive for up to a decade. That would have made for a dubious proposition for cleantech VCs a couple of years ago, but the funding landscape has shifted.

The Engine, an offshoot of MIT, started in 2016 to commercialize “tough tech” with long-term capital. “We’re here for the long shots, the unimaginable, and the unbelievable,” its website proclaims. That group funded Baseload Renewables with $2 million before it merged into Form.

Breakthrough Energy Ventures, the entity Bill Gates launched to provide “patient, risk-tolerant capital” for clean energy game-changers, joined for the Series A. 

San Francisco venture capital firm Prelude Ventures joined as well. It previously bet on next-gen battery companies like the secretive QuantumScape and Natron Energy.

The round also included infrastructure firm Macquarie Capital, which has shown an interest in owning clean energy assets for the long haul.

Saudi Aramco, one of the largest oil and gas supermajors in the world, is another backer. 

Saudi Arabia happens to produce more sulfur than most other countries, as a byproduct of its petrochemical industry. While the kingdom relies on oil revenues currently, the leadership has committed to investing billions of dollars in clean energy as a way to scope out a more sustainable energy economy.

“It's very much consistent with all of the oil supermajors taking a hard look at what the future is," Jaramillo said. “That entire sector is starting to look beyond petrochemicals.”

Indeed, oil majors have emerged as a leading source of cleantech investment in recent months.

BP re-entered the solar industry with a $200 million investment in developer Lightsource. Total made the largest battery acquisition in history when it bought Saft in 2016; it also has a controlling stake in SunPower. Shell has ramped up investments in distributed energy, including the underappreciated thermal energy storage subsegment.

The $9 million won’t put much steel in the ground, but it’s enough to fund the preliminary work refining the technology.

“We would like to come out of this round with a clear understanding of the market need and a clear understanding of exactly how our technology meets the market need,” Wiley said. 

The many paths to failure

Throughout the conversation, Jaramillo and Wiley avoided the splashy rhetoric one often hears from new startups intent on saving the world.

Instead, they acknowledge that the project could fail for a multitude of reasons. Here are just a few possibilities:

  • The technologies don’t achieve radically lower cost.
  • They can’t last for the 20- to 25-year lifetime expected of infrastructural assets.
  • Power markets don’t allow this type of asset to be compensated.
  • Financiers don’t consider the product bankable.
  • Societies build a lot more transmission lines.
  • Carbon capture technology removes the greenhouse gases from conventional generation.
  • Small modular nuclear plants get permitting, providing zero-carbon energy on demand.
  • The elusive hydrogen economy materializes.

Those last few scenarios face problems of their own. Transmission lines cost billions of dollars and provoke fierce local opposition. Carbon capture technology hasn’t worked economically yet, although many are trying. Small modular reactors face years of scrutiny before they can even get permission to operate in the U.S.

The costliness of hydrogen has thwarted wide-scale adoption.

One thing the Form Energy founders are not worried about is that lithium-ion makes an end run around their technology on price. That tripped up the initial wave of flow batteries, Wiley noted.

“By the time they were technically mature enough to be deployed, lithium-ion had declined in price to be at or below the price that they could deploy at,” he said.

Those early flow batteries, though, weren’t delivering much longer duration than commercially available lithium-ion. When the storage has to last for weeks or months, the cost of lithium-ion components alone makes it prohibitive.

“Our view is, just from a chemical standpoint, [lithium-ion] is not capable of declining another order of magnitude, but there does seem to be a need for storage that is an order of magnitude cheaper and an order of magnitude longer in duration than is currently being deployed,” Wiley explained.

They also plan to avoid a scenario that helped bring down many a storage startup, Aquion and A123 included: investing lots of capital in a factory before the market had arrived.

Form Energy isn’t building small commoditized products; it’s constructing a power plant.

“When we say we're building infrastructure, we mean that this is intended to be infrastructure,” Wiley said.

So far, at least, there isn't much competition to speak of in the super-long duration battery market.

That could start to change. Now that brand-name investors have gotten involved, others are sure to take notice. The Department of Energy launched its own long-duration storage funding opportunity in May, targeting the 10- to 100-hour range.

It may be years before Form's investigations produce results, if they ever do. But the company has already succeeded in expanding the realm of what's plausible and fundable in the energy storage industry.