According to an Energy Department investigation, a government lab failed to adequately oversee a cutting-edge battery storage project, ultimately paving the way for technology developed by federal scientists in the United States to be used in China.
The DOE investigation examined how vanadium redox flow battery technology developed at Pacific Northwest National Laboratory made its way to China. It followed an NPR investigation this summer and criticism from Senator Marco Rubio, a Florida Republican, who expressed concerns that Chinese companies were using taxpayer-funded technology.
DOE investigators concluded that frequent staff turnover and an inadequate system of record keeping prevented the laboratory from adequately tracking UniEnergy Technologies. a Washington state company that has licensed the laboratory’s battery technology. The lab was also too lenient towards the battery maker when it ran into financial difficulties, DOE investigators found, according to a summary of a DOE report made available to E&E News.
“It is also difficult to understand why PNNL has continued to grant UET formal and informal exemptions from its licensing obligations despite years of apparent non-compliance,” the investigators wrote. “UET’s struggle to meet its licensing obligations was not a one-off event, but appeared to be a consistent pattern throughout most of its tenure as PNNL licensee.”
PNNL’s focus on battery technology comes amid dramatic shifts in the world’s technological and political landscape. While the DOE once encouraged collaborations with Chinese researchers and companies on clean energy, the Biden administration views Beijing as an economic rival and has sought to limit technology transfers. The government recently restricted Chinese access to advanced semiconductor technology over fears that it would be used by the Chinese military to develop advanced weapons.
Vanadium flow batteries have been around for decades and have long been viewed as a potential way to store renewable electricity generation. Researchers are drawn to their longevity, with batteries lasting decades, and the ability to grow or shrink the battery to store more energy or deliver more power depending on a customer’s needs.
However, vanadium flow batteries largely lost out in the early energy storage race to lithium-ion batteries, which are cheaper and have become the technology of choice for energy companies looking for energy storage options.
Lithium-ion batteries have leapfrogged other battery technologies because they’re used in other applications, like electric vehicles and appliances, attracting billions of dollars in investment, said Eric Hittinger, a battery researcher at the Rochester Institute of Technology.
“We haven’t seen a real competitor in the battery space within stationary storage,” he said. “The challenge of the vanadium battery was how to grow this industry, how to go from the lab and prototype batteries to the first $10 billion in sales, which will help you perfect the technology, reduce costs and make it competitive. “
Nonetheless, vanadium could continue to play an important role in battery markets in the future as the world looks for alternatives to lithium-ion batteries.
Many Chinese companies have been taking a long-term view of battery technology, acquiring technologies that aren’t immediately useful today to dominate future battery markets, Hittinger said.
In the case of PNNL, researchers at the lab found a way to increase the storage capacity of a vanadium flow battery and reduce its cost by using hydrochloric acid as part of the electrolyte solution used in the battery, DOE researchers said.
One of these researchers, Gary Yang, left PNNL to found UniEnergy and licensed the technology he helped develop at PNNL.
A DOE official, who was granted anonymity to speak more openly about the situation, said federal researchers often trace the technology they are working on into the private sector as part of efforts to bring it to market.
But the company quickly ran into trouble.
Procuring the material for the battery was expensive. His pilot projects in the USA failed. And the company’s bills began piling up and not being paid.
An investigation by Crosscut, a Seattle-based nonprofit news site, found that the company owed $317,000 in rent and never repaid a customer who spent $468,000 on a battery UniEnergy never delivered.
As it struggled, UniEnergy began to turn its attention to China.
In 2016, the company entered into a sublicense agreement with Dalian Rongke Power Co. Ltd., a Chinese manufacturer of vanadium flow batteries. PNNL signed the deal in a decision consistent with US policy at the time, DOE investigators wrote.
But PNNL’s flawed record keeping and lax oversight prevented the lab from intervening before UniEnergy ran into financial difficulties, they said. The company defaulted on a loan in 2020. The lender sold UniEnergy’s assets, including PNNL’s assets, to Vanadis Power BV, a Dutch company.
PNNL signed the deal and concluded that UniEnergy complied with the license terms at the time. Canceling the license would have been complicated because it was used as collateral for the loan, investigators said. Still, they concluded that PNNL should have intervened. The lab canceled Vandis’ license agreement this summer.
“The lab had reasonable grounds not to agree to the transfer to Vanadis. Although it may have been legally challenged, the review team concluded that the lab likely had several potentially reasonable grounds for not consenting to the transfer,” the investigators wrote.
Meanwhile, Rongke Power made progress with vanadium flow batteries in China. Earlier this year, the company celebrated the installation of an 800-megawatt vanadium flow battery — the world’s largest battery of its kind Energy Storage News.
The Biden administration has tried to prevent such situations.
Last year, it issued a new rule updating a 1984 law governing the commercialization of federal technology. The update is essentially intended to ensure that taxpayer-funded technology is used in US manufacturing. Foreign companies using the technology overseas would need to obtain a waiver from the DOE.
The PNNL report “underscores DOE’s commitment to transparency in managing taxpayer investments that drive next-generation technologies and strengthen America’s competitive advantage,” DOE spokeswoman Charisma Troiano wrote in an email. PNNL referred a request for comment to the DOE.
Nevertheless, the rule changes would not have prevented a situation like UniEnergy. A DOE official said the update will apply to federal licenses going forward and cannot be issued retrospectively.
The UniEnergy case was criticized by some Republicans on Capitol Hill.
“Much too long, the [Chinese Communist Party] has captured important U.S. technology through illegal means and the negligence of government agencies and corporations,” Rubio wrote in a letter to Department of Energy Energy Secretary Jennifer Granholm (Green cableAugust 19th).
The DOE informs the relevant congressional committees of its findings.
In their report, DOE investigators wrote that PNNL had 30 days to rectify its recording deficiencies. The changes were to be overseen by the DOE office in the Pacific Northwest. The lab should also update its licensing procedures to ensure that taxpayer-funded technologies are “made in the US by American industry and labor to better secure domestic supply chains and enhance US competitiveness.”
A DOE official, who was granted anonymity to speak more openly about the situation, called the UniEnergy case unusual, but acknowledged the department didn’t know if other labs had similar difficulties tracing state-licensed technology. National laboratories have considerable discretion in granting and overseeing federally licensed technology. The DOE is currently reviewing approval procedures for national laboratories, the official said.
“I think every time you see a problem at a facility, there’s cause for concern,” the official said. “It’s just a good tour to take a look over the complex.”