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Posted on Wed, Aug 5, 2009 : 12:35 p.m.

University of Michigan, Ann Arbor firm among Michigan winners of $2.4 billion in federal energy grants

By Nathan Bomey

Editor's Note: This story was reported and written live from NextEnergy's headquarters in Detroit.

The University of Michigan and a startup with strong ties to Ann Arbor will receive millions in grant funding from the U.S. Department of Energy to develop batteries, officials announced today.

Watertown, Mass.-based A123Systems, which has a research operation in Ann Arbor, will open battery centers in Brownstown and Romulus. A123, which is receiving $249.1 million, is partnering with Chrysler to produce lithium-ion batteries for electric vehicles.

U-M will receive $2.5 million for "education and workforce training programs" to accelerate battery technologies, according to the Department of Energy.

"It’s a great opportunity for our state to be recognized as a leader for developing this new technology that hopefully will provide transportation well into the future," Ann Arbor SPARK CEO Michael Finney told in Detroit.

U.S. Vice President Joseph Biden is speaking in Detroit in an appearance tied to the $2.4 billion batteries announcement.

"We have to build an economy that doesn’t rest on a bubble. I can think of no firmer foundation than the automobile," Biden said.

Today's battery grant announcement does not include U-M spinoff Sakti3, whose $15 million grant application was endorsed by General Motors and Gov. Jennifer Granholm. Sakti3, led by U-M professor Ann Marie Sastry, is based on Victors Way in Ann Arbor. Sakti3 is still eligible for future battery grants.

A123Systems in 2006 acquired Ann Arbor-based tech startup T/J Technologies, which was founded by U-M scientist Levi Thompson and his wife, Maria, in the early 1990s. A123 maintained its Ann Arbor office, and Maria Thompson continues to lead the operation.

Keith Cooley, CEO of Detroit-based economic development group NextEnergy, said the battery grants would help "establish a new paradigm for the energy storage industry."

Michigan companies have landed more than $1 billion from the pool of grant money, which is funneled through the $787 billion federal economic stimulus package.

"We are about to create in Michigan an entire new sector within the automotive industry," Granholm said. "The automotive industry is going to lead this nation to that freedom from foreign oil."

The battery grants fuel the gradual emergence of a vehicle battery supply chain in Michigan. The list of today's battery grant winners includes:

-Johnson Controls-Saft Advanced Power Solutions ($299.2 million), which is partnering with Ford Motor Co. to open a battery plant in Holland.

-KD Advanced Battery Group ($161 million), a multi-company partnership that includes Midland-based Dow Chemical

-LG Chem ($151.4 million), a South Korean firm with a Troy-based subsidiary called Compact Power. The firms are working with General Motors to supply battery materials for the Chevrolet Volt, an extended-range electric vehicle. GM won about $240 million in battery grants spanning several projects and collaborations.

Biden cited statistics estimating that the U.S. market for advanced plug-in hybrid and electric vehicles would balloon to between $10 billion and $20 billion by 2020. He said the U.S. lithium-ion battery market could be worth $16 billion by 2020.

"This is going to make a difference in people's lives," Biden said.

Today's announcement comes three months after the Michigan Economic Development Corp. announced that it had landed four battery projects worth $1.7 billion and several thousand jobs - investments tied to $700 million in state incentives for batteries. That announcement included A123Systems' revelation that it would invest more than $600 million and hire 5,000 workers at a battery production plant in Livonia.

A pending transition from internal combustion engines to electrically powered vehicles necessitates significant investments in battery technologies. Researchers and engineers are working vigorously to improve the reliability, durability and cost of lithium-ion vehicle battery technology.

"The automobile industry of a generation from now , the technologies of a generation from now, will be very different than the technologies of today," White House economic adviser Larry Summers said in Detroit.

"They will make, as has always been true each generation, better vehicles. They will reduce our country’s dependence on imported oil. They will be even more constructive to the global environment. And those technologies must be based in America."

You can follow's Nathan Bomey on Twitter. He is also guest-hosting the Lucy Ann Lance Business Insider on Ann Arbor's 1290 WLBY-AM this week from 9-10 a.m. each day.


Susan Montgomery

Wed, Aug 5, 2009 : 4:10 p.m.

Exciting news. One clarification, as Levi Thompson has been referred to as a scientist in the article and as a researcher in a previous comment. Prof. Thompson is a Professor in the Chemical Engineering department at the University of Michigan. (We are very proud of him :)

Nathan Bomey

Wed, Aug 5, 2009 : 11:51 a.m.

Joe -- thanks for this! A123's investment commitments to the Ann Arbor area and southeast Michigan, in general, are significant. More here: