One-time Media Darling Sun Catalytix Acquired by Lockheed Martin

The trajectory of energy startup Sun Catalytix is enough to give anybody motion sickness. After five years of ups and downs, though, Lockheed Martin this week said it acquired Sun Catalytix’s assets and will explore using the company’s flow battery in energy projects.

As part of a larger conglomerate, Cambridge, MA-based Sun Catalytix’s technology stands a chance of being used commercially. But the purchase, whose price was undisclosed, falls short of the ambitions of the company and, most likely, its investors.

Daniel Nocera, an MIT professor at the time, co-founded Sun Catalytix in 2009 to make what he called an “artificial leaf”—a device that could cheaply produce hydrogen fuel from water. He envisioned rooftop solar panels powering a machine that produced hydrogen from water. Then hydrogen fuel cells would generate electricity, turning homes into self-sufficient power stations. (The Catalytix portion of the name comes from the Nocera-discovered catalyst that produces hydrogen from water.)

But after much fanfare, including glossy spreads in National Geographic and claims of scientific breakthroughs, Sun Catalytix ran into trouble, even with a $9.5 million Series B funding round from venture capitalists and Indian conglomerate Tata in 2010. It also received a $4 million grant from the Department of Energy’s ARPA-E agency and a $3 million seed round. The company went quiet and brought in a new CEO, Mike Decelle, in 2011 to engineer an alternative to the original business plan.

Last year, Decelle told me what the new Sun Catalytix would be: instead of making a water-splitting electrolyzer to produce hydrogen, it designed a flow battery to store energy on the electric grid. A flow battery produces and stores energy by circulating two liquid electrolytes into a cell where an electrochemical reaction occurs. Last fall, I met Decelle and CTO Tom Jarvi to see a small-scale prototype of its flow battery, designed with low-cost materials and a novel chemistry.sun.catalytixx299

During my visit, Decelle portrayed the pivot to batteries away from hydrogen as a matter of survival. Powering homes on cleanly produced hydrogen is a compelling vision, but requires infrastructure, which just isn’t available yet for the mass market. “As a venture-funded company, we can’t think in generational terms,” he said.

On paper, Sun Catalytix version 2.0 made sense. In its previous incarnation, the company had hired chemical engineers from MIT and elsewhere, so it had the talent to make a new type of flow battery. And the demand for grid energy storage technology is growing, particularly low-cost and reliable batteries. A number of companies are building new types of flow batteries, which are well suited for grid energy storage, including Hayward, CA-based Primus Power, Fremont, CA-based Imergy Power Systems, and Sunnyvale, CA-based Enervault. Other grid energy storage startups include Cambridge-based Ambri, New York-based Eos Energy Systems, and Pittsburgh, PA-based Aquion Energy.

But Sun Catalytix didn’t have the means to bring commercial systems to market. With many investors staying clear of energy and cleantech, its options for add-on funding were fairly limited. In November last year, Decelle left and was replaced by Bruce Rogoff, whose last job was chief restructuring officer of a telecommunications company.

Lockheed Martin said it acquired some of Sun Catalytix’s intellectual property, its lab facilities, and the 25 or so employees who will be part of new subsidiary called Lockheed Martin Advanced Energy Storage. It will remain in Cambridge and become part of the business division that works in the area of microgrids, says Lockheed Martin spokesperson Joe Stout. The company has a number of customers in the U.S. military, which is leading a number of microgrid projects that require energy storage to operate independently from the grid.

In a way, Sun Catalytix embodied the first generation of cleantech investing. Venture capitalists invested millions of dollars into a company formed to commercialize science from a lab, an endeavor that typically takes several years to complete even without unexpected technical problems. In that sense, Sun Catalytix could have sought more patient sources of capital.

But ultimately, Sun Catalytix wasn’t able to remain independent after such a dramatic change in direction from hydrogen to grid batteries. Instead of the topsy-turvy route it took, it probably would have benefited from choosing a more near-term market and a methodical approach to meeting technical milestones.

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