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Advanced energy next focus for economic development

February 16, 2009

The Central Indiana Corporate Partnership—the parent of the BioCrossroads, TechPoint and Conexus industry cluster initiatives—let it be known last month that there would be a fourth leg to its economic development stool: clean technology.

The new initiative is known to insiders as the Indiana Energy Systems Network and has been under the reins of Paul Mitchell, formerly Gov. Mitch Daniels' policy director of economic development, work force and energy.

Mitchell declined to comment on CICP's plans for the clean-technology sector before a formal rollout that could come next month.

The initiative, which is likely to have a catchy name when introduced, aims to grow the state's advanced energy industry. That includes battery-storage technology for hybrid and plug-in electric vehicles and power units for buildings.

It will coordinate the brainpower and technology of existing manufacturers—such as Allison Transmission, Cummins and Delphi—and emerging players the likes of lithium ion battery maker EnerDel.

Also involved are partners outside of manufacturing, including Duke Energy, which would stand to gain from a mass rollout of plug-in electric vehicles. Duke put up $50,000 in initial funding, according to records.

The initiative also would help bring to bear university research and scout for government funding. The initiative comes years after states like California, Massachusetts and Texas launched coordinated energy system initiatives.

The Indiana Energy Systems Network is an attempt "to establish Indiana as the Silicon Valley of electric and hybrid vehicles and [to] go after federal money," Bill Wylam said. He was chief engineer of batteries and technology development at General Motors Corp.'s former Delco Remy division and is a major player in the new energy initiative.

Now, "everybody in the country is scrambling to get their billions from [President] Obama" for advanced transportation and hybrid development, added Wylam, president of International Energy LLC, an Indianapolis firm focused on energy conversion and storage technologies.

Wylam said the initiative also is looking at specific projects, such as a possible hybrid-powered refuse truck that could be produced in the state with a collaboration of manufacturers.

He said the origins of the effort lie with former Remy International CEO Thomas J. Snyder, who, after leaving the company, set up shop at Flagship Enterprise Center in Anderson. Eventually, CICP got involved and tapped the expertise of the Rocky Mountain Institute, a think tank based in Snowmass, Colo.

Among the institute's former researchers was John E. Waters, the inventor of the battery pack system for the ill-fated EV1 electric car General Motors introduced in 1996. Today, Waters is CEO of Anderson-based Bright Automotive, which is developing a hybrid electric truck.

The Indiana Energy Systems Network quietly got rolling last year and, last summer, brought together representatives from more than 50 companies and organizations to establish connections and to look at opportunities for collaboration.

At the same time, CICP's Conexus advanced manufacturing and logistics arm sought proposals from firms to analyze the state's energy cluster occupations. The goal is "to look at what's needed to support the emergence of a world-class energy cluster and identify skill requirements associated with these occupations," states the request for proposals.

Rocky Mountain Institute analyst Stephanie Johns in a report about the network wrote that Indiana has "extensive untapped assets" in the automotive, power electronics, and energy storage and conversion sectors.

Much of that is the remnant of former General Motors businesses, such as Delphi, Delco Remy and Allison Transmission. They developed battery and electronic controls for various projects including the EV1, which was canceled in 2003. And technology that Allison Transmission developed for a hybrid bus is a key part of GM's Tahoe and Escalade hybrid sport utility vehicles.

Wylam said that, despite talk of impressive initiatives in states like California and Michigan, central Indiana already has the expertise in place that made the early advancements in electric and hybrid vehicles.

Added RMI's Johns: "The keys to success are speed and collaboration. This is a huge opportunity for the region, and the timing is right for Indiana to move forward and establish itself as a leader in the advanced energy systems space."

The kind of collaboration the energy network could foster is already at work at companies such as Anderson-based I Power Energy Systems. The company that sprang from GM's former Delco Remy division doesn't make major components for its power generators, which provide electricity and heat for buildings. Rather, it integrates engines and electrical generators made by other firms.

The company also works with, among others, racing teams in Indianapolis to optimize the engines in I Power's power units. And the company taps the expertise of IUPUI energy researchers, said Mike Hudson, chairman of I Power.

That collaboration has helped I Power develop competitive products for worldwide export, whether for high-rise buildings in South Korea or, recently, for the Westin Hotel Turnberry, a luxury Scottish hotel that will serve the 2009 British Open in July.

Companies like I Power could thrive if anticipated carbon regulations make electricity more expensive to obtain from utility companies. As it is now, the units are often used during peak hours when electricity from the grid is at its most expensive.

It's not just GM castoffs that have potential to grow the state's presence in the energy system segment.

One company that makes lightweight panels for advanced automotive purposes and wind turbines has made three visits to Indiana scouting for a possible site, said Scott Prince, managing director of EnerTech Capital Partners Midwest, one of the relatively few venture capital firms eyeing the Midwest for clean tech investment.

For all the promise, one area where Indiana is at a relative disadvantage is in venture capital funding for clean technology. Between 1999 and 2005, venture firms committed $47 million here on nine deals versus $2.7 billion in California on 278 deals and just over $1 billion in Massachusetts on 105 deals, according to Cleantech Group, a San Francisco-based research firm.

Investments in clean tech worldwide have been estimated at $150 billion in 2007. But now, many emerging clean tech firms are clamoring to get some of the tens of billions of dollars that may be allocated to the sector as part of the federal stimulus package.

Other federal funding programs also could help. EnerDel's parent, New York based Ener1, has applied for $480 million in U.S. Department of Energy low-interest loans, for example. EnerDel, which has its plant off of Hague Road just north of East 86th Street, said the funds would enable it to double manufacturing capacity to produce 600,000 hybrid electric battery packs per year at its existing plant, and to build a second, larger plant.

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