6 clean en­ergy plays, from hy­dro­gen to lithium

A closer look at six star­tups and ven­tures on the lead­ing edge of al­ter­na­tive en­ergy

BC Business Magazine - - Front Page - by ANDREW FIND­LAY

New oil and gas pipe­lines are win­ning ap­proval in B.C. and across the coun­try, but the world is also shift­ing in new di­rec­tions. Global in­vest­ment in green en­ergy hit a record of al­most US$286 bil­lion last year, ac­cord­ing to the United Na­tions En­vi­ron­ment Pro­gramme, up five per cent from 2015. A re­cent sur­vey by the BC Clean­tech CEO Al­liance iden­ti­fied more than 275 clean­tech com­pa­nies in the prov­ince, many of them in en­ergy, in­clud­ing dar­lings like Nex­terra Sys­tems Corp. (with five waste-to-en­ergy projects in North Amer­ica and two in de­vel­op­ment in the U.K.) and hy­dro­gen fuel cell pioneer Bal­lard Power Sys­tems Inc., plus a host of lesser-known play­ers. As re­new­ables gain trac­tion, B.C. en­trepreneurs are stepping up to help re­shape the way we pro­duce, store and con­sume power.

X Marks the Spot Lithium X En­ergy, a well-backed min­ing ven­ture led by Brian Paes-braga, aims to cash in on the elec­tric ve­hi­cle trend

Last sum­mer, af­ter Elon Musk un­veiled the Model 3, Tesla Inc.'s most af­ford­able car to date, the rush of al­most 350,000 pre-or­ders got Brian Paes-braga's at­ten­tion. The kicker: an ex­pected surge in de­mand for lithium ion bat­ter­ies. Global sales of plug-in elec­tric au­to­mo­biles hit more than 770,000 units last year, ac­cord­ing to the Elec­tric Ve­hi­cle World Sales Database. Al­though such ve­hi­cles still only ac­count for about one per­cent of the mar­ket, that's a 42 per cent jump over 2015.

Paes-braga, the 29-year-old pres­i­dent and CEO of Lithium X En­ergy Corp., sits at a spot­less glass-top cof­fee ta­ble on the 31st floor of Van­cou­ver's Ben­tall III tower. A con­fus­ing ar­ray of ar­rows, charts and seven-fig­ure num­bers are scrib­bled in blue ink on a white­board be­hind his oak desk. In the cor­ner sits a full bot­tle of premium whiskey sur­rounded by three tum­blers await­ing a cel­e­bra­tory pour once his min­ing startup be­gins lithium pro­duc­tion next year.

North Van­cou­ver–raised Paes-braga has the panache of a sea­soned pro­moter. Af­ter drop­ping out of the Univer­sity of Calgary at age 20, he start­ing work­ing as a stock­bro­ker trad­ing shares in biotech, med­i­cal, real es­tate and ju­nior min­ing com­pa­nies. The lat­ter of­ten tainted the now-de­funct Van­cou­ver Stock Ex­change's rep­u­ta­tion, Paes-braga ad­mits. But “cap­i­tal is gath­er­ing around cred­i­ble ven­tures,” he says, claim­ing he has a win­ner with Lithium X, even if some an­a­lysts ask whether the lithium boom is largely hype.

Be­sides car bat­ter­ies, the light­weight metal is used in a wide range of prod­ucts, from glass to poly­mers to an­tide­pres­sants. De­mand for lithium could out­strip sup­ply by 25 per cent in 2020, Credit Suisse Group projects, largely thanks to the shift to hy­brid fos­sil fuel–elec­tric and fully elec­tric car en­gines.

Paes-braga moved quickly in 2016, launch­ing Lithium X with a pair of heavy­weights, Van­cou­ver min­ing and film in­dus­try ty­coon Frank Gius­tra and re­source fi­nancier Paul Maty­sek, who has sev­eral multi-hun­dred-mil­lion-dol­lar ex­its to his name. The team head­hunted New Jer­sey–based stock pro­moter Ti­mothy Mckenna, a vet­eran of the U.S. lithium min­ing sec­tor who pre­vi­ously worked with Rock­wood Hold­ings Inc., Amer­ica's only lithium pro­ducer.

With a crew of 11, Lithium X joins sev­eral other Cana­dian ju­niors hop­ing to get rich off the min­eral. “It's a race to pro­duc­tion right now,” Paes-braga says. “The price of lithium has gone from $5,000 per tonne in 2015 to north of $15,000 for bat­tery­grade lithium.”

By in­dus­try stan­dards, min­ing lithium has a rel­a­tively small en­vi­ron­men­tal foot­print, ac­cord­ing to Paes-braga. The min­eral, found in a brine, is air-dried in pools once it's pumped from the ground. But sep­a­rat­ing it from the re­main­ing ore re­quires en­er­gy­in­ten­sive elec­trol­y­sis, and mak­ing lithium ion bat­ter­ies yields eco­log­i­cally toxic byprod­ucts.

Still, in­vestors are in­trigued. Lithium X shares traded on the TSX Ven­ture Ex­change at a high of about $2.35 in late 2016 but had dipped to roughly $1.60 by March 31. The pre­vi­ous month the com­pany took a big step to­ward pro­duc­tion by win­ning reg­u­la­tory ap­proval to build its first pond­ing fa­cil­ity at its Sal de los Angeles prop­erty in Ar­gentina, in the so-called lithium tri­an­gle strad­dling that coun­try, south­ern Bo­livia and north­ern Chile. Lithium X has a 50 per cent stake in the land, with an op­tion to ac­quire up to 80 per cent. The pond is de­signed to pro­duce 2,500 tonnes a year of lithium car­bon­ate equiv­a­lent, the min­eral's stan­dard mea­sure­ment unit. That vol­ume could be worth more than $US25 mil­lion, Paes-braga reck­ons, but he warns that th­ese are early days. “That's just the first of sev­eral ponds we hope to build at Sal de los Angeles,” he says, adding that the com­pany is ex­plor­ing other prop­er­ties in Ar­gentina and Ne­vada.

Burn­ing Am­bi­tion Is hy­dro­gen the clean fuel of to­mor­row? Si­mon Pickup's Hy­dra En­ergy hopes to make that longsim­mer­ing dream a re­al­ity

For his Grade 4 science fair project, Si­mon Pickup wanted to “blow some­thing up.” His fa­ther, a self­taught engi­neer, urged him to build a hy­dro­gen elec­trolyzer in­stead. Born and raised in North Van­cou­ver, Pickup even­tu­ally dropped out of high school to dive into cre­at­ing hy­dro­gen en­ergy tech­nol­ogy. In his early 20s, he re­turned to academia, study­ing eco­nom­ics through Har­vard Ex­ten­sion School be­cause he saw the hy­dro­gen chal­lenge as more fi­nan­cial than tech­ni­cal. “His­tor­i­cally it's been kind of a chick­e­nand-egg prob­lem,” says the 28-year-old co-founder of Hy­dra En­ergy Corp. at the startup's head­quar­ters in a drab in­dus­trial sub­di­vi­sion on An­nacis Is­land near Van­cou­ver. “The tech­nol­ogy works, but the eco­nom­ics haven't.”

Hy­dro­gen, once touted as the

mir­a­cle emis­sion-free fuel of the fu­ture, has yet to meet its prom­ise, hob­bled by an en­ergy-heavy pro­duc­tion process and a lack of dis­tri­bu­tion in­fra­struc­ture —not enough fuel pumps—plus lin­ger­ing stigma around safety. (Think the Hin­den­burg dis­as­ter.) But it isn't go­ing away, and it may be en­joy­ing a resur­gence. In 2015, Toy­ota launched its Mi­rai hy­dro­gen fuel cell car in Cal­i­for­nia, and last year Bal­lard Power Sys­tems signed an agree­ment with China's Zhong­shan Broad-ocean Mo­tor Co. Ltd. to de­velop hy­dro­gen fuel sys­tems for buses and com­mer­cial ve­hi­cles. That deal could be worth US$168 mil­lion for the Burn­aby-based com­pany over the next half-decade.

While Bal­lard fuel cell tech­nol­ogy uses hy­dro­gen to gen­er­ate elec­tric­ity, Hy­dra fo­cuses on mak­ing it a di­rect com­bustible re­place­ment for gas- or diesel-burn­ing en­gines. As a re­minder of what could be, Pickup parks his own con­verted hy­dro­gen-burn­ing Chrysler 300 next to a pro­to­type hy­dro­gen fuel pump. Printed on the door of the of­fice wash­room is the phrase “Ideas can hap­pen in the most un­likely places,” one of many apho­risms scat­tered through­out Hy­dra HQ to in­spire its 11 em­ploy­ees and con­trac­tors.

For its first ma­jor com­mer­cial play, the com­pany's ver­ti­cal in­te­gra­tion model tar­gets short-haul heavy-duty trucks that re­turn to the yard each day, com­bin­ing the eco­nomic scale ben­e­fits of high en­ergy con­sump­tion with a cen­tral­ized fu­elling sta­tion that solves the dis­tri­bu­tion prob­lem. Hy­dra plans to cover the cap­i­tal costs of con­vert­ing truck en­gines to dual hy­dro­gen/diesel fuel units, re­cov­er­ing this out­lay by sign­ing cus­tomers to mul­ti­year fuel pur­chase agree­ments. In ex­change, clients will shrink their op­er­at­ing ex­penses by up to 20 per cent and greatly re­duce emis­sions, ex­plains Pickup.

As part of its scale-up, Hy­dra is de­ploy­ing a re­cent $ 300,000 BC In­no­va­tion Coun­cil award that will help put $1 mil­lion in its R&D cof­fers. It's also joined forces with UBC me­chan­i­cal engi­neer­ing pro­fes­sor Steven Ro­gak to test the en­gine per­for­mance and emis­sions of its flag­ship heavy-duty truck con­ver­sion, with a ve­hi­cle sup­plied by Ihaul Freight Ltd., also based on An­nacis Is­land.

But big­ger things lie ahead. As of March, Hy­dra was work­ing with undis­closed part­ners in north­ern B.C. to build a $10-mil­lion­plus fuel plant that will re­cover hy­dro­gen re­leased as in­dus­trial emis­sions. Us­ing waste hy­dro­gen is a pil­lar of the com­pany's busi­ness model: Hy­dra es­ti­mates that gen­er­at­ing enough hy­dro­gen to re­place more than 11 mil­lion litres of diesel an­nu­ally could re­duce green­house gas by 45,000 tonnes while only yield­ing a few hun­dred tonnes of car­bon diox­ide equiv­a­lent. “By 2018, we hope to

have a fleet of 90 trucks con­verted to hy­brid hy­dro­gen-diesel and the plant built,” Pickup says. “The hype around hy­dro­gen has been huge, but we don't want to be a hype play.”

Sea Change With its lithium bat­tery sys­tems, Corvus En­ergy has es­tab­lished it­self as a leader in en­ergy stor­age for the marine in­dus­try

In busi­ness, like life, tim­ing can be ev­ery­thing. Late last decade, Corvus En­ergy co-founder Brent Perry and his part­ners were de­sign­ing quiet-run­ning elec­tri­cal hy­brid sys­tems for the lux­ury yacht mar­ket. At the time, lithium bat­tery man­u­fac­tur­ers didn't make any­thing larger than what was needed to power a car, and the global ship­ping in­dus­try was just start­ing to delve into fully elec­tric and hy­brid propul­sion sys­tems.

This op­por­tu­nity prompted a game-chang­ing pivot for the startup. “Three fac­tors came into play,” says pres­i­dent and CEO Andrew Mor­den, who cap­tained Rich­mond-based Corvus's com­mer­cial­iza­tion and is stick­han­dling an on­go­ing law­suit against the com­pany's founders, who have since left to start a ri­val firm. “Our value propo­si­tion strength­ened, lithium tech­nol­ogy had ad­vanced, and there be­came avail­able in­cen­tives and sub­si­dies in re­gions like Scan­di­navia to adopt propul­sion tech­nol­ogy to lower emis­sions in the marine in­dus­try.”

First de­ployed on tug­boats to re­duce emis­sions while idling, Corvus's lithium-ion bat­tery packs are now found in 50 projects world­wide, in­clud­ing ships, off­shore drilling plat­forms and port op­er­a­tions. In 2011, the com­pany used a $580,000 Sus­tain­able De­vel­op­ment Tech­nol­ogy Canada grant to at­tract pri­vate in­vest­ment and do a demon­stra­tion project in the key Nor­we­gian mar­ket. Rev­enue grew from less than $150,000 that year to $6 mil­lion in 2015. Corvus, which has 50 staff and made this year's Global Clean­tech 100 list, re­cently com­pleted its sixth ferry propul­sion project for the north­ern Euro­pean trans­porta­tion firm Scan­d­lines. In Nor­way, pro­gres­sive poli­cies like the NOX tax—a levy on ni­trous ox­ide emis­sions that is re­turned to firms do­ing up­grades that will lead to re­duc­tions—have trans­lated into steady busi­ness, prompt­ing the com­pany to open an of­fice there in 2015. Corvus's tech­nol­ogy now helps pro­pel two fully elec­tric Nor­we­gian pas­sen­ger and ve­hi­cle fer­ries.

By com­par­i­son, Canada has been a slow adopter, but it's com­ing around. Corvus re­cently in­stalled bat­tery packs for two Sea­s­pan ULC cargo fer­ries sail­ing be­tween Van­cou­ver Is­land and the main­land, and the com­pany is in talks with Bri­tish Columbia Ferry Ser­vices Inc. “We're see­ing the first groundswell in North Amer­ica, but the world's ship­ping fleet is def­i­nitely head­ing to­ward hy­bridiza­tion,” Mor­den says.

Sunny Ways Sun­pump So­lar ap­plies NASA-in­spired ther­mal tech­nol­ogy to the North Amer­i­can hous­ing mar­ket

Bruce Gray took his first stab at the res­i­den­tial so­lar panel busi­ness back in 2010, but he quickly learned that such sys­tems suf­fer from a well-de­served rep­u­ta­tion for be­ing un­re­li­able en­ergy gen­er­a­tors. “Sales were slow, so we sur­veyed our cus­tomers,” says the founder and chief tech­nol­ogy of­fi­cer of Sun­pump So­lar Inc. from his Qualicum Beach of­fice.

Their wish—more re­li­a­bil­ity at a lower price—wasn't ex­actly mu­sic to a strug­gling en­tre­pre­neur's ears. So Gray turned to Google's open-source think tank plat­form, Solve for X, and an old project from the Na­tional Aero­nau­tics

por­trait by POOYA NABEI

SEC­OND CHANCES With Hy­dra En­ergy, Si­mon Pickup is bet­ting on a resur­gence of in­ter­est in hy­dro­gen

MAK­ING WAVES Corvus En­ergy develops lithium-ion bat­ter­ies for ships

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