A prototype ArcStore home battery developed by Christchurch firm ArcActive. It forms part of its EnergyBank system, which it says will sell for less than half the price of a Tesla Powerwall-based system.
A prototype ArcStore home battery developed by Christchurch firm ArcActive. It forms part of its EnergyBank system, which it says will sell for less than half the price of a Tesla Powerwall-based system.
Christchurch-based ArcActive plans to build a plant in Australia that can pump out 30,000 home solar battery systems per year. And its founder says they’ll sell for half the price of a Tesla Powerwall set-up, or other top brands.
The firm will embark on a A$65 million ($70m) equity raisenext month, founder and chief executive Stuart McKenzie confirms.
The funds - which come on top of some $45m already raised and spent on R&D - will be used to build a factory in either Queensland or Victoria.
Today, it costs an Australian home around A$17,500 to get a 13.5 kilowatt-hour (kWh) battery, inverter and home gateway installed. His firm aims to offer its own EnergyStore home solar battery system, including a 15kWh ArcStore battery, for around A$7000 fully installed or A$4900 uninstalled - and says it generated A$1500 per year in avoided electricity. This means with EnergyBank, consumers achieve a payback in four to six years with a 10-year battery, McKenzie says.
ArcStore, the battery used by the EnergyBank, will be a general battery system, but storing energy generated by home solar panels is seen as its primary market.
Once the funding round is closed, McKenzie says it will take around 18 months to get the first production line up and running, employing around 70.
McKenzie says the scale of solar installs in Australia - where some three million homes have panels - is such that “the wholesale electricity price goes negative as soon as the sun comes up”, with power companies relying on the evening peak to make their profits.
EnergyBank will let people use power stored during the day during the evening - to run their home, power their EV or both.
McKenzie says lead also has the advantage of there being zero fire risk, and a sustainability advantage in that “what sets lead batteries apart, and has made [them] the standout performer in the circular economy, is that people make money from recycling lead batteries”.
A prototype ArcStore battery. The firm has used a carbon fibre engineering breakthrough to re-tool cheaper lead acid-based batteries for an age that's been dominated by lithium-ion batteries.
“Tesla is a premium brand; we’ll be an everyday brand,” McKenzie says.
How will it manage to be so much cheaper?
Less expensive lead-acid batteries have been eclipsed by lithium-ion batteries in the era of electric cars and solar rooftops.
McKenzie says they’ve developed technology to re-engineer lead-acid batteries, “restructuring the electrodes to make lead performance compatible with 21st-century needs”.
Another view of ArcActive's ArcStore battery, which the firm says is more recyclable than the lithium-ion competition.
ArcActive had its genesis in a 2007 meeting between McKenzie and Canterbury University professor John Abrahamson, who was researching a process (now patented by ArcActive) for arc-treating carbon fibre - now harnessed to improve the efficiency and longevity of lead batteries.
$45m on R&D
The first employee was hired in 2011. More than a decade of R&D since has been funded by $45m from high-net-worth individuals (including software entrepreneurs Mike Chisholm and Brendan McNeil, plus Sir Stephen Tindall) and Gallagher Group - whose 22 per cent stake makes it the largest single shareholder ahead of next month’s raise.
A prototype ArcStore home battery developed by Christchurch firm ArcActive.
ArcActive has also licenced battery technology from US firm Advance Battery Concepts, which has invested around $68m in its tech, billed as 100 per cent recyclable.
ArcActive has done some licencing of its own, including a deal with East Penn - the second-largest lead battery maker in the US - which will utilise the Christchurch firm’s carbon fibre electrode technology for automotive and uninterruptible power supply (UPS) batteries.
But the Australian ArcStore factory will be ArcActive’s first major play.
Why do its own manufacturing, with all the complexity and risk that involves, rather than license to an established company?
“I’m a hardcore rationalist, and if it made sense to license, I’d license,” McKenzie says. “We’re accessing markets that lead batteries don’t typically access, so we’d much rather grab this massive opportunity ourselves.”
He says while it was “massively challenging” over the past decade, his firm has cracked the engineering challenges the production line will involve - including electrodes with a thickness tolerance of just 50 microns, or less than half the width of a human hair, using compressible carbon fibre fabrics a process that took four years to develop.
McKenzie says as his firm weighs up whether to build its plant in Queensland or Victoria, “there could be a conversation about grants, but it’s not huge in this context”. The state governments have “both been super-helpful as facilitators. They roll out the red carpet to guide us through consultation with local communities” and other parts of the consenting processes.
Beyond Oz
What will be the next step, if Australia goes to plan?
“Grow hard,” McKenzie says.
“When you look around the world, what’s happened in Australia is likely to repeat in other countries. Solar at large scale suppresses electricity prices - that’s inevitable. This battery would be super-economic in California or most countries in Western Europe.”
He also sees a reliance role for ArcStore in South Africa, India or parts of Southeast Asia - or any territory where daily brownouts are an issue.
While ArcActive will keep its R&D in its long-time base of Christchurch, our largely hydro-based power means “we’re largely decarbonised anyway”, McKenzie says. “We don’t have a ‘duck curve’” - a reference to the industry jargon for the impact on wholesale pricing once solar accounts for a substantial portion of a region’s generation.
In markets where it does launch, ArcActive will be unashamedly focusing on price.
“Cost is a big part of the equation,” McKenzie says.
“If decarbonisation was cheaper, we wouldn’t have to have regulation. Cost is the primary issue that holds decarbonisation back.”
‘Pressure to deploy’
The A$65m raise will be managed by the Sydney-based Pottinger, whose chief executive John Sheehy declined to comment on the valuation that will be used for the round.
Sheehy did offer that the venture capital market is starting to waked up.
“We’ve seen a welcome bounce-back in activity in the first quarter of this year as interest rates have started to wander down,” he said.
Sheehy added: “Those who have raised climate-focused funds are under some pressure to deploy and prove up the thesis to investors. And those who have followed batteries know that energy storage is one of the most fundamental challenges to solve for how consumers, businesses and governments will access and manage power over the longer term, so those who have broken through both technical and commercial barriers, like ArcActive, will be in high demand.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
