Andrew Lockley – Exponential Investor (United Kingdom) –
AC: We’d welcome direct contact via our website, from anyone interested in investing.
“Any old ion! Any old ion!”
Amrit Chandran is today’s rag-and-bone man – but he’s after your lithium-ion batteries, not scrap iron.
You won’t hear him pushing a handcart round the street, calling for people to bring him clapped-out laptops. Nevertheless, his business uses a high-tech version of processes familiar to the rag-and-bone men of our grandparents’ era.
We’re all aware of the short life of modern batteries. This obsolescence means we’ve got a near endless stream of semi-kaput batteries. Instead of a waste-disposal problem, Amrit’s Aceleron has been turning these into viable stationary batteries. Its recovered batteries compete with newly manufactured energy-storage units – led by players like IKEA and Tesla. This means Aceleron is poised to win the battle on costs – because Amrit is refurbishing instead of buying. That’s a strategy also followed by Nissan xStorage – so he’s in good company.
I’m sure you’re keen to hear more, so I’ll hand you over right away.
AL: Hi Amrit. Let’s start off with a quick summary…
AC: OK, briefly, Aceleron is a clean tech startup which has developed the technology to quickly test, process and grade waste lithium-ion batteries from the automotive and waste electronics sector. Using these waste batteries, Aceleron provides safe, secure and affordable energy storage. Our units are suitable for many applications – including domestic energy storage.
AL: How did you get into this?
AC: I have always been motivated by a desire to make the world a better place in any way I can. I liked the idea of solving a growing waste and sustainability problem – whilst at the same time revolutionising access to affordable energy storage. Reliable power is a huge issue, for the estimated one billion people in developing regions without grid access. When we realised that batteries are sent for recycling well before they are really end-of-life (essentially destroying a valuable resource) we knew something had to be done.
AL: How big is the problem you’re solving?
AC: There is a need for low-cost energy storage in developing regions where decentralised energy systems are more appropriate – unlike in developed economies, where we use a centralised, grid-based system. Based on the ~40,000 Nissan Leaf electric vehicles sold in the UK, there is roughly 670MWh of recoverable energy storage available for reuse. This is enough to power around 670,000 Kenyan homes (average daily use of energy in Kenya is 1 kWh). This is just a fraction of the potential market we can service. The opportunity is very exciting because the uptake of renewable energy in these regions has seen massive growth in recent times. However, these customers lack access to low-cost energy storage. This means that they still suffer from rolling blackouts or a total lack of access to electricity when the renewables stop working. We have the opportunity to make such a large difference to so many people’s lives, as energy security is directly linked to the development level of society. By providing low-cost energy storage, we can help provide continuous access to refrigeration and other technologies – things we take for granted in the UK. This doesn’t even take into account the amount of emissions we can help save – as the people in these regions will no longer have to use polluting diesel generators and gas lighting.
AL: How big a problem is battery disposal, at present?
AC: There is a definite need for a solution to the growing lithium waste problem. Unfortunately, conventional recycling just isn’t good enough. 1,000t of lithium batteries are sent for recycling per year from the UK, but there are a lot more batteries in the UK which are stockpiled, waiting for a solution.
To make it even harder for the recyclers, battery manufacturers often use permanent assembly methods, such as welding. This makes recycling even more challenging.
AL: Tell me about how your solution solves the two problems together.
AC: Aceleron uses perceived end-of-life lithium batteries in repurposed packs. We are currently focused on developing a drop-in replacement for 12V lead acid batteries, using lithium-ion technology. We’ll provide a battery with all of the benefits of lithium, for the same price as a 12V lead-acid battery. This is suitable for most non-vehicle applications – eg, backup power, for data centres. This has huge implications for access to energy, for those at the bottom of the pyramid. They will have access to a better standard of energy storage, encouraging the uptake of renewable energy generation.
AL: How far along are you, in developing your solution?
AC: We’ve developed fast testing processes to identify used lithium batteries that are viable for reuse. To the best of our current knowledge, these can be carried out three times faster than competitors’ tests.
We also have unique, patent-pending hardware to repackage recovered batteries into serviceable packs for appropriate applications. This hardware is designed with the circular economy in mind –meaning we are able to disassemble and reassemble the hardware easily. This makes it ideal for repurposing old batteries. Safety of the batteries has also been designed into the hardware. We are therefore able to provide low-cost, safe and secure energy storage.
AL: How are you going to monetise?
AC: Aceleron generates revenue in two ways. Firstly, we have our “NuCycle” process – where we get paid by the waste companies to process batteries for reuse. Secondly, there’s our “Circa” products – where lithium-ion batteries are packaged into a variety of 12V products, to replace lead-acid batteries.
Aceleron’s NuCycle market value is made up by the recycling cost for the lithium-ion batteries, estimated to 12.5% of the sales value: £400m per year, globally.
Aceleron’s Circa market is made up mostly of current battery markets and markets where lead-acid batteries do not serve the market properly. Essentially all lead-acid batteries (excluding starter batteries for cars) can be replaced by lithium-ion, amounting to £16bn per year, globally.
The UK market is estimated to be 5% of the global market, which equals a current NuCycle market of £20m annually and Circa battery market of £800m annually.
AL: How do you differentiate your business from others? I know Nissan is operating in this space, for example.
AC: The major differentiators between Aceleron and its competitors are in our IP (intellectual property) strategy, and our approach to dealing with battery waste. Aceleron comprehensively tests all of the batteries it uses – which means we can guarantee how the battery will perform in a second-life scenario. Typically, companies involved with second-life trials use software to manage end-of-life batteries. However, this leads to problems guaranteeing the batteries’ state of health. Furthermore, by not testing the batteries, these competitors are not able to declassify the batteries as a waste. This makes transportation very difficult because the batteries are still classified as a hazardous material.
As a result of our battery packaging hardware innovation, we are able to easily assemble/disassemble our battery packs – enabling us to service them. This means the batteries have a lower capital cost than newly manufactured batteries, whilst still being able to offer the same performance as a lead-acid battery. This has not previously been possible, and allows us to explore the concept of energy-as-a-service. The real value in a battery is not in the technical components themselves, but rather in what you can do with the energy stored.
AL: What’s the motivation for people to engage with your offer?
AC: Interestingly, we find that people want to use renewable energy, but they are constrained by the lack of access to energy storage. People will use the easiest solution. By providing a low-cost battery, we can enable people to use renewable energy – as it just makes sense!
AL: What’s the actual evidence of engagement from your market?
AC: Aceleron has received phenomenal interest from companies looking for a solution to their battery waste problems, and also from firms looking to replace lead-acid batteries with a better alternative. We have several memoranda of understanding for delivery of prototypes, and for orders of lead-acid battery replacement units. We are due to deliver these in the coming months.
AL: How can people invest in your firm?
All the best to Amrit. Let’s hope he can show the world that UK greentech is a force to be reckoned with. Do let us know what you think: firstname.lastname@example.org.