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manufacturing the carbon electrode used in all batteries regardless of whether the final battery ismanufactured by Axion or Exide. The current target markets for this new technology are in hybrid,plug-in electric and heavy-duty transport applications, but major new applications are envisioned inthe grid, where these batteries will be used to enhance power quality, load leveling and peak sharing.The combination of near-term capacity of lead-acid technologies and a roadmap to higherperformance products positions Excide well to be a major supplier of advanced lead-acid batteriesfor smart-grid applications.
Lead-Carbon and NaS
Two battery chemistries that most observers believe will ultimately have a large penetration of theSmart-Grid storage business are lead-carbon and NaS. Firefly Energy is one firm that we believebears watching in the lead-carbon space. This company's version of a lead-carbon battery uses atraditional positive electrode with a negative electrode based on composite graphite foam. Thetechnical advantage that Firefly brings to the market is that its carbon foam electrode can fit into atraditional battery manufacturing scheme. It is always an advantage when a firm brings a newtechnology to market that it does not also have to re-engineer an entire a manufacturing process. Also working to Firefly's advantage is its partnership with C&D Technology, an established batterycompany, which gives Firefly the access to markets that will be important to its long-term success.To date, there is only one large-scale supplier of NaS technology; NGK Insulators Ltd. Thiscompany has done the Smart-Grid storage market a service by firmly establishing NaS technologyas viable for grid storage applications; it has deployed the technology in 200 locations (160 inJapan) with over 300 MW/2000 MWh of capacity in the field. We believe it will continue to havesuccess in this field, since it has enough capitalization to enable further production expansions andmanufacturing improvements, which are needed to reduce costs. NGK's capacity has grown from48 MW/year in 2005, to 90 MW/year in 2008, with planned capacity of 150 MW/year for 2010.General Electric's entry into the NaS battery market is also key development to watch in the NaSarea and smart-grid storage in general. Obviously, GE has all the resources to make NaS happenoutside of Japan, if the market permits. It also has some history with this technology - it workedon it in the 1970s - and, most importantly, it has the "seriousness of purpose" that we mentioned