Mygreenwheels

Since the beginning of last year (2006) I’ve been hearing rumours of an ultracapacitor ‘battery’ technology so advanced that it would render the internal combustion engine instantly obsolete. Apparently it won’t degrade, goes 500 miles on £5-worth of electricity running at normal speeds and it takes just minutes to charge.

In other words, it solves every problem with electric vehicle batteries at a stroke. It’s a dream come true if it works. Am I sceptical? You bet.

The company behind the revolutionary EV battery is EEStor of Austin, Texas. It’s tiny and secretive. I suppose that’s fair enough if you’ve got a technology that could change the world.

EEStor does have some pretty impressive credentials including a board with Morton Topfer, former vice-chairman of Dell Computer and Michael Long, CEO of real-estate giant Homestore. It also has backing from top Silicon Valley venture capital firm Kleiner Perkins. I am willing to admit that it’s not entirely smoke and mirrors.

The technology that EEStor is using is known as an “ultracapacitor” and I’m sure it has great possibilities. I’m sure because a lot of people are investigating ultracapacitors at the moment including the Chinese government and MIT.

Ultracapacitors do work, but they have inherent problems that will have to be overcome. As I understand it, to store the same amount of power as a standard lead-acid battery an ultracapacitor would have to weigh ten times as much. There are extreme voltage variations as it discharges. And there are problems with dielectric loss which, without going into too much detail, involves devices retaining their polarity.

EEStor has applied for patents. Some of the applications are apparently in Canada which may be normal practice for a US company. I don’t know. It does mean that the documents are available for public inspection, but they run to hundreds of pages revealing the  electrochemical devices are made of a mixture of ceramic powder coated with aluminium and glass.

So far, all I seemed to have revealed is my own ignorance. I’ll admit I don’t fully understand the science. I do, however, know something about the way venture capital (VC) works and it really is a form of gambling. Most VC investments fail, but the ones that win bring enormous returns which more than cover the losses.

VCs always want to get in early when companies are desperate for cash. It means the VC can get a bigger stake in the business in return for the money. If the business wasn’t risky, the company could go to a bank or other financial institution for a loan or whatever and retain a much larger share.

As well as buying into a company a VC wants an “exit strategy”, a way of getting its investment and profits back. Typically the VC would hope that the business it had bought into would be sold to another company or floated on the stock market.

Imagine a technology business (TB) being a bit like a mining company (MC). The TB has a promising invention, much the same as an MC has a claim on land which might yield gold. The TB needs money to develop the invention in the same way as the MC needs cash to drill holes. In either case, positive results will make the value of the investment rise and, of course, vice versa.

The optimum time to sell out is probably when either the MC has struck gold or the TB has proved an invention will work. The worst time to sell is when either the invention fails to work or the mine is proved to have no gold. What this means is that an investor will probably be looking hardest to sell their share just before there is definitive proof of failure or success.

With an invention the VC will probably be looking to sell the “intellectual property” – patents and so on – to a bidder that can afford to mass manufacture the product. That’s the point at which I become sceptical about EEStor’s ultracapacitor. There are a whole series of proving stages that an invention goes through before it is ready for market.

For instance, the much-vaunted hydrogen fuel cell has got to prototype stage and there are cars using the technology. Shame they cost about £3 million each. The ultracapacitor could be the same. 

To be fair, EEStor hasn’t been talking its product up. In fact it hasn’t been talking at all in public. It doesn’t need to. Enough of a seed has been planted for potential investors to be beating a path to its door.

Anything that mixes VCs and the promise of a perfect technology brings out the sceptic in me. Toronto-based electric car company Feel Good Cars says it will be putting EEStor’s ultracapacitor into its vehicles by 2008. We’ll see.