Aquion acquired by firm from China

$9.1 million bid wins bankruptcy auction

After a bankruptcy auction where four bidders vied for battery maker Aquion Energy Inc., an entity called Juline-Titans LLC had the winning $9.16 million bid.

The firm, which registered in Delaware on May 30, is an affiliate of the China Titans Energy Technology Group. According to Bloomberg, Titans is an investment holdings company that “engages in research, development, manufacture and sale of electric products and equipment” in China.

Aquion,t he Lawrencevillebased saltwater battery manufacturer, filed for bankruptcy in March after a decade of raking in Silicon Valley bone-fides and capital. It was scheduled to go before a bankruptcy judge Wednesday afternoon seeking to certify the sale.

Enpower Energy Corp. Ltd , a Chinese battery firm, underbid Titans by $50,000.

An Austrian firm called BlueSky Energy that once sold Aquion’s batteries had served as the so-called stalking horse bidder, setting a floor of about $3 million.

The sale makes it very likely that Aquion’s technology will be leaving Pennsylvania in the next few months.

According to conditions negotiated in the purchase contract, it appears Aquion will be evacuating its large manufacturing space at the former Sony Corp. plant in Mount Pleasant, as well as its other locations in Belle Vernon and Lawrenceville.

The contract does require Titans to offer jobs to at least 16 Aquion employees, up from two in a previous version of the purchase contract when BlueSky was the stalking horse bidder.

In March, Aquion said it laid off more than 100 workers, leaving 19 of its full-time employees and kept 12 on as consultants during the bankruptcy process.

Finding a market

Aquion got its start during a time when money for clean energy technology flowed freely, said Reed McManigle, senior manager at Carnegie Mellon University’s Center for Technology Transfer and Enterprise Creation.

Now, a startup like Aquion might have to trudge through small government research grants, but 10 years ago, enthusiasm for clean tech was driven, in part, by the expectations of a more aggressive

shift away from fossil fuels than has materialized.

It didn’t hurt that Aquion’s technology was developed at CMU by Jay Whitacre, whose ideas are now roaming the surface of Mars in the rover Curiosity.

“They started out of the gate with significant money,” Mr. McManigle said.

In total, Aquion raised $180 million in equity, documents show.

But by late last year, Aquion found it couldn’t raise any more money to stay afloat.

“Energy was big a decade ago,” Mr. McManigle said, “but more recently people recognize what a challenge it is to bring any technology to market and lots of investors don’t have that kind of patience.”

Perhaps a bigger issue was that in recent years the price of Aquion’s chief competitor, the lithiumion battery, fell dramatic al l y as production ramped up.

In 2012, when Aquion hired Eric Hittinger, an assistant professor of public policy at the Rochester Institute of Technology, to build a model of a microgrid so it could test its competitiveness against lithium-ion batteries, Mr. Hittinger said Aquion’s batteries came out as the cheaper alternative.

He suspects that if he ran the same experiment today, lithium-ion would come out ahead.

Mr. Hittinger knows Aquion well. Mr. Whitacre was Mr. Hittinger’s thesis adviser at CMU.

His take on the bankruptcy is this: “They were actually a bunch of really good people and made pretty smart decisions and the market just basic al l y got away from them.”

As lithium-ion batteries made advances in the market, cheap shale gas also made the search for effective energy storage less urgent, Mr. Hittinger said.

While Aquion’s technology found an enthusiastic if limited market in residential and small commercial applications — paired with solar panels, for example, as an off grid solution — the company kept pushing into the utility space.

Utilities are interested in energy storage in part to supply power at peak times without having to build more power plants that would sit dormant most of the year.

Aquion had several pilot projects with utilities, including one with Exelon Corp., whose venture capital arm Constellation Technology Venture was an investor in the battery firm.

Some experts have suggested that Aquion’s batteries aren’t well-suited for this function.

Lithium-ion batteries can pump out a lot of power all at once, supplying a jolt to the grid. Each time that happens, the battery loses a bit of its life.

A fan, but a realistic one

Aquion’s batteries discharge more gradually, but they last a lot longer, explained Nick Dizon, president of Nidon Clean Energy in Oahu.

Mr. Dizon has been selling Aquion’s batteries for three years. He still monitors some of the homes and commercial buildings he’s taken off the grid with Aquion’s products since 2014 and reports he’s never had a problem with the batteries and hasn’t seen any appreciable loss of life in them.

As a standalone solution for utilities, he said, the batteries aren’t the best fit.

Mr. Dizon is quick to shower Aquion with superlatives and he plans to keep installing its batteries until the inventory runs dry in hopes that the company will be reconstituted and start manufacturing once again.

He believes so much in Aquion’s technology that the company had potential investors and prospective buyers call him.

He’s spoken with French petrochemical giant Total, whose venture capital arm invested in the battery company in 2014. And, shortly after the bankruptcy filing, he talked to Germany chemical company BASF about Aquion’s batteries.

“But I was honest to the investors,” he said. “People don’t know how to sell them. They won’t understand why this thing is far more valuable than any other battery on the market.”

Expenses outpacing sales

In the end, Aquion said it couldn’t rack up enough orders to keep pace with its expenses.

In part, that’s because the company grew so quickly and started largescale manufacturing earlier than many startups are able to do.

“The only way to see how cheap you can make [something] is to build a gigantic factory,” Mr. Hitt in g e r said. “And of course the downside of this is you need to figure out how to sell that much product.”

Aquion’s clients and some industry observers cautioned that the company’s trajectory, while dramatic, isn’t an indictment of its technology, whose promise was using common, environmentally friendly materials.

Sometimes, Mr. McManigle said, “Even when startups fail, they can be viewed as successes from the perspective of the new people who came to Pittsburgh and then move to another local company.

“And the increased pool of people who have taken the entrepreneurial plunge and are wiser for their next effort,” he said.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.