In January 2022, Reliance New Energy Solar Limited - a subsidiary of India’s biggest
private enterprise - purchased a company called Faradion Limited for about 100 million British
pounds.
Faradion is a technology pioneer in the sodium ion battery space.
These batteries have had a higher profile recently due to sustainability concerns around
lithium ion batteries.
I've previously done a video about sodium ion batteries.
In this follow-up video, let's take a look at this purchase and what it says about this
tantalizing technology.
Faradion was founded in 2010 by Dr. Jerry Barker, Dr Chris Wright and Ashwin Kumaraswamy.
They founded the company with the goal of bending the cost curve on large lithium ion
batteries for energy storage and EV cars.
He observed, not incorrectly, that rare materials like lithium were adding significant costs
to new energy adoption.
In 2012, an unnamed energy multinational invested a seed stake.
Then in 2014, Danish catalyst company Haldor Topsoe bought 18% of Faradion in a series
A. Haldor also received the right to manufacture and sell cathode materials for sodium ion
batteries.
It had seemed like Faradion thought that Haldor could have provided essential manufacturing
scale, expertise and heft.
Then-CEO Chris Wright said:
> The relationship with Haldor Topsøe provides us with a fast-track route to bring our proprietary
materials to market in commercial quantities.
[It] will enable the future users of our technology to secure high quality materials in commercial
volumes at competitive prices.
Haldor kept their stake until Reliance bought Faradion 8 years later.
But I was not able to dig up any additional information about the company being able to
achieve its commercialization goals in partnership with Haldor.
Three years later, Mercia Asset Management - a fund that provides small rounds to UK
companies - led another capital infusion with a Series B round.
With this, Faradion raised in total about 3.2 million pounds ($4.3 million USD).
Co-founder Ashwin Kumaraswamy works as a venture capitalist at Mercia, so I reckon that he
provided that connection.
The stake Mercia sold to Reliance was worth 19.4 million pounds ($26.2 million USD).
So I reckon that a 5-6x return is not too bad.
As mentioned, I did a whole technical deep dive video about sodium ion batteries in the
summer of 2021.
I recommend that you watch it because I have little else to add.
Sodium ion batteries are very similar to lithium-ion batteries.
They have a cathode, an anode, a porous separator between the two, and an electrolyte.
The primary difference are the compounds in these components.
Batteries compete in the market on the basis of three criteria - safety (obviously), cost
defined usually in dollars per kilowatt hour, and performance - like cycle life, energy
density, power density and so on.
To summarize, sodium ion battery ingredients are conceptually cheaper than that for lithium
ion batteries.
This is because sodium is the sixth most common element on earth - 1000x times more abundant
than lithium.
We have a practically infinite supply of it.
Generally, material costs are quoted to be 30% cheaper at the cell level.
A sodium ion battery appears to also be safer and less toxic.
Most importantly, the ability to store sodium ion batteries under a condition known as zero
volt storage.
Lithium ion batteries on the other hand have to be transported at a finite charge state
- usually 30%.
However, this comes at a cost that is fundamentally unavoidable.
Sodium ion batteries are less energy dense than lithium ion batteries - a function of
the element being heavier than lithium.
Faradion's latest offerings are at 160 watt hours per kilogram, with a pathway towards
200 or more.
To compare, good lithium ion batteries that are available for sale on the shelf today
can offer 250 watt hours per kilogram.
Specialist batteries can do even higher, with 300.
And advanced chemistries can go yet further up to 400.
This does seem to be an issue with regards to commercializing the product - we will talk
more about it later - but there is a lot of potential here.
Dr. Barker noted that when Faradion was founded in 2010, the company had basically no competition
in the sodium ion battery space.
But interest has grown and a variety of companies have since then emerged.
They include:
HiNa Battery Technology, a corporate spinoff from the Chinese Academy of Sciences;
Tiamat, a French corporate spinoff from a government-funded research center.
They were one of the first companies to develop a sodium ion battery in a traditional form
factor;
Aquion Energy, which is now bankrupt.
This had been an American startup based in Pennsylvania;
Natron Energy, a spinoff from Stanford University in the United States;
Altris AB, a spinoff from Sweden-based Uppsala University;
And of course, there is CATL, the 800 pound gorilla in the industry.
They demonstrated their sodium ion battery technology in mid-2021 with plans for mass
manufacture in 2023.
The space has seen an immense amount of patenting activity, indicating widespread industrial
interest in this "post-lithium" technology.
This leads to a very big question about commercialization.
Sony pioneered the lithium ion battery in 1991 and sales immediately took off at double
digit growth rates.
It took just six years for lithium to win the market from traditional chemistries like
nickel-cadmium and nickel metal hydride.
In 2015, Faradion said in a Guardian article that they were able to:
> "produce material which outperformed lithium-ion phosphate, which has until recently been the
workhorse in automotive batteries"
So the materials to make sodium ion batteries are apparently 30% cheaper than lithium ion.
And the battery's material and safety benefits were apparent from the very start.
So why hasn't sodium ion taken off yet?
Early on, Faradion seems have examined the possibility of getting their technology into
cars.
By 2015, they had scaled up some manufacturing and demonstrated a 400 watt-hour battery for
an e-bike application.
But the energy density shortfall was one of two really big issues - there’s another
one which we will talk about later.
As I said before, off-the-shelf lithium ion offers 250 Watt-Hours per Kilogram and even
that is deemed insufficient for EVs.
It was never said aloud, but sodium was simply uncompetitive.
There are other mobility applications - forklifts, telecoms, scooters, and so on.
But cars were out.
Furthermore the same 2015 article has Faradion saying that the product development process
can take eight years from when the deal is done to the vehicles going on sale.
Too long a cycle for a small VC-funded entity.
This caused them to turn their focus to energy storage units either for the home or the larger
grid.
In April 2020, Faradion signed a joint venture deal with a privately owned agribusiness ICM
Australia to offer energy storage systems for households in Australia.
The products seem to be geared towards providing energy for home solar installations.
CEO James Quinn mentioned shortly thereafter in the news that the company was targeting
the Indian and Australian markets.
At the same time of their ICM Australia joint venture, Faradion partnered with a company
called IPLTech.
They also mentioned they would examine doing their manufacturing in India.
Where Faradion's product focus for the Australian market was energy storage, for India it seems
like they were targeting EV mobility technologies.
It’s a bit strange considering the history but it is in line with the Indian government's
target of 30% EV adoption by 2030.
IPLTech seems to be developing heavy electric vehicles for the Indian market.
Founded in 2018, they launched the Rhino 5536 a year later - which they called to be India's
first electric truck.
The Indian truck market is indeed very large, but it appears that the deal did not quite
work as expected.
They did try to use sodium ion for their trucks, but had "mixed success" per a later story.
IPLTech eventually decided to use traditional lithium-ion batteries for their Rhino trucks.
Disappointing, but it's alright.
The publicity from the two deals seemed to have attracted a lot of attention - with Dr.
Barker saying on his personal blog that Faradion received 120 requests for partnership.
Perhaps one of those companies was Reliance.
Like I said, Faradion’s real sweet spot was probably in stationary energy storage
rather than EV.
But going after this market presented real risks for a small British company to undertake.
Dr. Barker said that the biggest issue to scaling up had to do with taking it from the
prototype to full manufacturing.
In a 2021 Parliament Meeting, he said:
> Right now, one of the challenges that we have is that we as a UK company prefer to
do this in the UK, but all our larger-format cells are put into demonstration units in
China.
> Our biggest problem is that we would prefer to do it in the UK somewhere, but there is
not the infrastructure, so we are forced to do it quite a long way away, which does not
make it easy to co-ordinate the work.
Manufacturing capital and execution is a big problem, especially in the super-dynamic advanced
battery market.
The story of the aforementioned Aquion Energy serves as a stark warning.
Founded in 2008 by a Carnegie Mellon professor, Aquion had their own sodium ion battery technology,
which they marketed as being made from cheap, non-toxic and abundant materials.
This battery would be safe to make and transport while lasting many charge/discharge cycles.
The technology was mentioned as one of Popular Science magazine's "Best of What's New" in
2014.
MIT Technology Review ranked it number 5 on their top 50 smartest companies.
Same as Faradion, Aquion targeted the large-scale energy grid applications, which requires a
lot of capital.
In total, the company seems to have raised nearly $200 million of capital from investors
Kleiner Perkins, Bill Gates, the corporate venture arm of Royal Dutch Shell and others.
They raised $91.8 million in 2014 alone, over two rounds.
With that money they set up a 350,000 square foot manufacturing facility in Pennsylvania.
They tried to scale up and find customers for their energy grid solutions.
Despite some success, they ended up filing for bankruptcy.
The company was eventually acquired by a Chinese company.
It re-emerged, but all production was moved to China.
This is super disappointing considering the company got a $5 million grant from the Department
of Energy in 2010 and $16.6 million in grants from the Pennsylvania Dept of Community and
Economic Development.
So now comes the second big issue with sodium ion commercialization: Lithium ion batteries
- for all their sustainability issues - are cheap and getting cheaper.
It is very difficult to compete against the big lithium ion manufacturers.
Raw materials are just a fraction of their overall cost.
And sodium ion’s sustainability advantage is not factored into the final price.
Scale, government incentives and manufacturing savvy annihilated the market.
In 2012, Aquion targeted manufacturing costs of $300 per kilowatt-hour of capacity - but
lithium ion reached that number in 2016.
And kept going.
As of now, lithium ion battery prices threaten to breach $100 per kilowatt-hour of capacity.
Hundreds of millions still could not have kept Aquion competitive.
The market is just too fierce and Faradion would be joking if they think they can scale
up to match CATL, LG Energy Solution, and others without a rich friend of their own.
So I guess they went out and found one.
Reliance New Energy Solar is in the midst of a technology shopping spree.
Reliance Industries - traditionally an oil and petrochemical giant - recently founded
the subsidiary in 2021.
They have moved fast.
Since its founding, Reliance New Energy has made six transactions with the goal of acquiring
an integrated, end-to-end value chain.
I don't even think they have a logo yet.
Reliance has set a target of several giga-factories within India by 2024 - an integrated solar
photovoltaic module factory for the production of solar panels, an advanced energy storage
battery factory, an electrolyser factory for the production of green hydrogen and a fuel
cell factory.
And by 2030, the company hopes to have 100 gigawatts of renewable energy capacity - in
line with the Indian government's goal for 450 gigawatts of renewable capacity.
These include Singapore-based REC Solar Holdings and Germany-based NexWafe for the IP and manufacturing
know-how surrounding solar cells, modules, and panels.
And investments in Sterling and Wilson and Denmark-based Stiesdal for supply chain management
and maintenance as well as technology expertise.
The Faradion acquisition gives Reliance New Energy access to a distinct battery storage
technology for its planned solar farms.
One that sidesteps the heavily patented lithium-ion space.
And the acquisition helps cash out all the workers who stuck with Faradion for 10 long
years.
Well, at least the founders.
With a chunk of that 100 million pounds, they might even be able to buy a house in London
now.
Reliance will begin to invest now on commercialization and manufacturing of sodium ion batteries
for the planned energy storage solution.
They have allocated some 25 million pounds as growth capital to start.
Before moving on with the conclusion, I want to thank an Asianometry viewer for recommending
this topic.
I love taking topic suggestions, so feel free to email me.
Faradion’s issues exhibit a persistent problem with the United Kingdom technology industry.
They are good at the pure sciences and fundamental research, but have problems commercializing
and capitalizing on those discoveries.
For several years, the company went from door to door trying to find someone to put money
behind their technology.
But as Steve Jobs famously once said, they were a feature not a product.
They needed to be put into the larger system to really work out the kinks and get competitive.
Joining the end to end ecosystem within Reliance New Energy will help them maximize the uses
of this unique technology.
Hopefully Reliance is able to pull it off.