Perhaps the biggest challenge for green tech start-ups is the high cost of producing their product. New technology development requires a sizable capital investment. Then, once the technology is proven, the cost to produce each individual unit is often higher than the mass market will pay. The challenge lies in finding a niche market that can pay the premium price for that product. However, if the company is successful in the niche market, this opens the door to reducing production costs over time, which then allows the company to diversify its product line and enter the mass market at a lower price.
Finding their niche market was one of the challenges facing CyVolt, a local start-up that is finalizing technology to produce fuel cells using renewable energy. The fuel cell device the company is building will be able to recharge the lithium ion or NiMH batteries in portable, handheld electronic equipment. The fuel stored in the fuel cells comes from renewable fuels such as glycerin, a byproduct of biodiesel production. Because of the costs involved in developing the fuel cell technology and producing the fuel cells, the company had to find the right market for this type of energy.
CyVolt is developing a product to target gadget and gear enthusiasts with extended, off-grid power needs: the kind of target market who's willing to pay a premium for the specialized technology they require. CyVolt’s device, which is similar to portable solar power generation units currently on the market, will let its users go backpacking for extended periods and have power to recharge their tent light and GPS batteries the whole time, regardless of the amount of solar energy available. The device, which weighs about 50 grams, will be sold at outdoor retailers such as REI or Outdoor Research for around $70-80.
How it works
By catalytically converting glycerin or another renewable fuel, the device is able to capture and store electrons in its fuel cells. The user can swap in the recyclable fuel cartridges with refills to keep the device recharging equipment for extended periods. Using this patent-pending technology, CyVolt’s fuel cell device will have 10 times the energy density of lithium ion batteries and five times the energy density of methanol fuel cell technologies.
Funding the project
With the research wrapping up, the company is moving into the process development phase. CyVolt would like to begin selling their product in early 2010. However, like many start-ups, the company needs additional funding in order to move into this phase. With stimulus funds largely being directed to shovel-ready projects, CyVolt is applying for federal grants as well as co-development opportunities. Co-development may also be an option. The company is working on a partnership with a university lab in order to do co-development and commercialization. Also, as the market shakes out during this recessionary period, mergers and acquisitions among green tech companies are likely to occur frequently.
CyVolt’s founders Chris Ashfield and Dr. Steven Ragsdale were both at biotech and renewable energy startups. As chemists, originally working on the waste to energy potential from the byproducts of biodiesel production, the duo moved on to fuel cell technology. Ashfield sees many similarities between green tech and biotech. In biotech, he explains, you start with something as small as a gene. As you learn how this tiny unit operates, you start getting ideas for where things in the bigger picture can go. Similarly, the many small advances in green technologies enable us to learn, to change behavior, and to open the way to use less expensive technologies and more abundant resources down the road. They're hoping to establish their product with this device targeting backpackers. But on the long-term horizon, Ashfield and Ragsdale will be looking at other uses for their fuel cells, potentially building larger cells for offsite power generation.
Green tech in Washington
With its proximity to the University of Washington, the Washington Technology Center, as well as national laboratories, Ashfield feels that Seattle is a good place to locate a green tech company. There is valuable research coming from these organizations, and a high concentration of green tech professionals that congregate in this area. Ashfield also believes that Washington would be an even more popular hub for green tech if there were more funding opportunities that would increase the green tech deal flow to the levels seen in California.
Worldchanging Seattle's Serena Batten will be covering emerging local leaders in clean tech in her series, "Green Tech Watch." Serena has worked in Seattle's technology and finance industries for more than ten years, and is currently pursuing her MBA in technology management at the University of Washington.
Image: CyVolt's prototype under development. Image source: Cyvolt.com.