The Energy Blog: Startup Plans on Establishing Grids to Sell Electricity for Recharging Electric Cars

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October 29, 2007

Startup Plans on Establishing Grids to Sell Electricity for Recharging Electric Cars

Shai Agassi, former SAP executive, announced today the formation of Project Better Place, a company based on one of the 21st century’s biggest challenges – developing a sustainable, environmental solution for converting country-wide transportation systems toward electricity and away from fossil fuel. Electric vehicles would be enabled through an electric recharge grid infrastructure and using charge spots and battery exchange stations. In one of the largest-ever initial fundings for a startup, the company has raised $200 million from a group of investors lead by Israel Corp. The energy cost of all-electric cars would be about 7 cents a mile which is less than a third of the cost of driving a gasoline-powered car today.

Project Better Place will focus in phase one on establishing a repeatable infrastructure to support electric vehicles, implementing electric recharge grids through local operating companies in multiple countries. They will establish a widespread grid of electric charging spots at current parking locations as well as battery exchange stations, analogous to gas stations, all of which are integrated with software systems. These capabilities will provide consumers with the energy to keep their cars charged and driving without the need to wait for electricity at any point. The new grid presents a practical solution to address barriers to electric vehicle adoption.

In addition, the company will secure partnerships with a supply chain of car makers, technology providers, and global and local financing institutions. The company is currently in discussions with various governments to establish pilot sites, with plans to begin rollout of the new infrastructure in early 2008.

Two events have made this concept possible 1) increasing costs of fuel for cars and 2) the emergence of a new generation of batteries - Lithium Iron Phosphate (LiFePO4) - able to sustain more charge cycles and based on safe chemistry that can be put into a car. Having convenient automated battery exchange stations where the leased batteries can be swapped out, in a few minutes, for a fully recharged battery eliminates concerns over the life of the batteries as well as enabling trips longer than can be achieved with a single charge. Within a decade, the cost of energy for a single year of fuel supply for a combustion car should cost more than the cost of energy for an electric car’s entire life, even when taking the cost of battery into consideration.

“Our global economy urgently needs an environmentally clean and sustainable approach to energy and transportation. We need to rethink how to bring together consumers, existing technology, and the entire car eco-system to establish the next generation infrastructure that provides energy for commuters and is not dependent on liquid fuels,” said Mr. Agassi. “We have crossed a historic threshold where electricity and batteries provide a cheaper alternative for consumers. Existing technology, coupled with the right business model and a scalable infrastructure can provide an immediate solution and significantly decrease carbon emissions.”

The company has entered into a term sheet for its first round of funding in the amount of $200 million with investments from Israel Corp., Morgan Stanley, VantagePoint Venture Partners, and a group of individual private investors managed by Michael Granoff, which includes James Wolfensohn, Edgar Bronfman, Sr. and Musea Ventures.

Shai Agassi, 39 will serve as CEO of the new entity, while Idan Ofer, Chairman of Israel Corp., will serve as Chairman of the Board.

Project Better Place will establish a network of charging spots and battery exchange stations to provide ubiquitous access to electricity to power electric vehicles. They will deploy and test this framework over the next 24 months in a variety of launch markets, after which it plans to deploy hundreds of thousands of vehicles annually, across multiple markets. The company anticipates achieving tipping-point saturation in early markets within 10 years of rollout.The company will partner with car makers and source batteries so that consumers who subscribe to the network can get subsidized vehicles which are cheaper to buy and operate than today’s fuel-based cars. Consumers will still own their cars and will have multiple car models to choose from.

Project Better Place plans to begin the test phase of the new infrastructure using high-consumption professional consumers, such as taxis or delivery vehicles, rolling out the deployment country by country, metropolitan by metropolitan. They expect the first wave within the pilot countries to begin in early 2008, broadening to a few 1000 cars by 2009 with the expectation that they will be able to put approximately 10,000 cars on the system per month in 2010 for a total of approximately 100,000 cars on the system in each pilot site by the end of 2010.

Through subscription models, vehicle owners will be linked into a nationwide network of charge spots and exchange stations. When a consumer parks his or her car, the network synchronizes the car with the smart electric grid to recharge the battery. When a driver travels long-distance, he or she can swap batteries at an exchange station to get a fully charged battery, similar to how we now stop to fill our gas tanks today.

This may be viewed by some as quite a departure from the oil based infrastructure we have for conventional cars, hybrids and even plug-in hybrids, but it is quite analogous if you consider the battery exchange stations as equivalent to gas stations. With the exchange stations located at existing gas stations the cost of building the infrastructure will be reduced. The batteries at the exchange stations can be tested before recharging to determine their condition. Charging of the batteries could be done using off-peak power, thus making no expansion of the electric grid required for a couple of decades.

The concept is very valid for metropolitan areas and relatively small countries. When enough vehicles are in use the cost effectiveness of long distance travel becomes much better.

I get the impression that it would not be possible to charge the batteries overnight, at home, as it would deprive the company from income. If this is the case it causes a major inconvenience which could kill the project, as well as reduce the use of off-peak power.

This is quite an undertaking for a startup company, which may receive opposition from the big car companies and may initially be limited by the number of cars that can be offered by electric vehicle producers. The most innovative idea for a company that I have seen in some time. Best of luck to Project Better Place.

EDF is installing 250 charging stations in the UK, previous post, with about 200 of them expected to be deployed in London with a further 50 planned for other cities including Brighton and Sheffield by April 2008.

October 29, 2007 at 03:58 PM in Batteries, Electric Vehicles, General Interest | Permalink