Christchurch start-up ArcActive has developed new battery technology that it says means better performance, for longer, for green cars.

The technology was developed by University of Canterbury professor John Abrahamson.

He and former venture capitalist Stuart McKenzie met in 2007 and the two worked together in a "low-key" sort of way for several years, looking for business opportunities for the process Abrahamson had developed.

They discovered that an opportunity lay in developing new battery technology to meet a growing need by car manufacturers for more fuel-efficient, lower emission cars, to comply with tough government regulations in Europe, North America and China.

The pair hit the "go" button on the company in 2010, hired their first staff member in May last year, and now have a team of 12.

What ArcActive has developed is a new kind of negative electrode for lead acid batteries for start/stop or microhybrid vehicles.

Industry estimates are forecasting stop/start systems will be built into 20 million cars a year by 2015.

It is a US$12 billion market niche.

"Which is a very nice market niche," McKenzie says, with a smile.

With a start/stop system the engine automatically shuts off when the car is stopped to prevent idling, for example when at a red traffic light, and that reduces fuel consumption and emissions.

But traditional lead-acid batteries can't cope with the demands of micro-hybrid vehicles and have a short lifespan.

So what the automotive giants are desperate to get their hands on, is a rechargeable battery that will last, and is not too expensive.

That is good news for ArcActive – its batteries have a high dynamic charge acceptance, which means better fuel economy and battery recharge rate, and an improved performance in micro-hybrid vehicles with regenerative braking. Regenerative braking means kinetic energy generated when braking is not lost through heat energy, but fed into a generator that stores the energy in a battery.

But McKenzie is clear-eyed about the challenges that lie ahead.

"Doing it in a cost effective manner is a huge challenge. These guys fight for every cent, so you've got to be cheaper."

And to satisfy the billion-dollar automotive industry, the batteries have to be capable of mass manufacture.

At the moment, it takes the company a week to make one electrode.

And because the automotive industry is so sophisticated, "they do not want to do business with start-ups".

The Canterbury Development Corporation, PowerHouse, Scott Technology and the Ministry of Science and Innovation had all been incredibly supportive, he said, and there was a desire to see ArcActive manufacturing in Christchurch.

But the company needs a lot more funding.

It was possible to get seed funding in New Zealand, but you quickly moved beyond that stage, McKenzie said.

To date it has received $3.5 million in equity funding and $1.5 million in government funding.

And while it would be a good news story to manufacture the batteries in Christchurch, that is looking difficult.

"With the best will in the world, I don't see how we're going to do that in New Zealand."

At the CleanEquity conference in Monaco, ArcActive won the international award for Excellence in the Field of Environmental Technology Research and investors were lining up to meet him, McKenzie said.

"They all wanted to have a piece. But every one of them needs us to be based in Europe.

"It's no discredit to New Zealand but it's a very small economy."

The company has a huge amount of work to do to actually get the technology certified.

It needs to establish a manufacturing process and secure its intellectual property, and while there is clearly massive potential for this business, it is a very small company at the wrong side of the world.

It has to sell its technology through a battery maker – and the battery makers are all based in overseas markets.

The battery makers sell to the car makers, and the consumer chooses the kind of car they want.

"We have got to satisfy a lot of people and shareholders."

- © Fairfax NZ News