The U.S. made a breakthrough battery discovery -- then gave the technology to China

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When a group of engineers and researchers gathered in a warehouse in
Mukilteo, Wash., 10 years ago, they knew they were onto something big.
They scrounged up tables and chairs, cleared out space in the parking
lot for experiments and got to work.

They were building a battery — a vanadium redox flow battery — based on
a design created by two dozen U.S. scientists at a government lab. The
batteries were about the size of a refrigerator, held enough energy to
power a house, and could be used for decades. The engineers pictured
people plunking them down next to their air conditioners, attaching
solar panels to them, and everyone living happily ever after off the
grid.

"It was beyond promise," said Chris Howard, one of the engineers who
worked there for a U.S. company called UniEnergy. "We were seeing it
functioning as designed, as expected."

But that's not what happened. Instead of the batteries becoming the
next great American success story, the warehouse is now shuttered and
empty. All the employees who worked there were laid off. And more than
5,200 miles away, a Chinese company is hard at work making the
batteries in Dalian, China.

The Chinese company didn't steal this technology. It was given to them
— by the U.S. Department of Energy. First in 2017, as part of a
sublicense, and later, in 2021, as part of a license transfer. An
investigation by NPR and the Northwest News Network found the federal
agency allowed the technology and jobs to move overseas, violating its
own licensing rules while failing to intervene on behalf of U.S.
workers in multiple instances.

Now, China has forged ahead, investing millions into the cutting-edge
green technology that was supposed to help keep the U.S. and its
economy out front.

Department of Energy officials declined NPR's request for an interview
to explain how the technology that cost U.S. taxpayers millions of
dollars ended up in China. After NPR sent department officials written
questions outlining the timeline of events, the federal agency
terminated the license with the Chinese company, Dalian Rongke Power
Co. Ltd.

"DOE takes America's manufacturing obligations within its contracts
extremely seriously," the department said in a written statement. "If
DOE determines that a contractor who owns a DOE-funded patent or
downstream licensee is in violation of its U.S. manufacturing
obligations, DOE will explore all legal remedies."

Several U.S. companies have tried to get a license to make the
batteries
The department is now conducting an internal review of the licensing of
vanadium battery technology and whether this license — and others —
have violated U.S. manufacturing requirements, the statement said.

Forever Energy, a Bellevue, Wash., based company, is one of several
U.S. companies that have been trying to get a license from the
Department of Energy to make the batteries. Joanne Skievaski, Forever
Energy's chief financial officer, has been trying to get hold of a
license for more than a year and called the department's decision to
allow foreign manufacturing "mind boggling."

"This is technology made from taxpayer dollars," Skievaski said. "It
was invented in a national lab. (Now) it's deployed in China, and it's
held in China. To say it's frustrating is an understatement."

The idea for this vanadium redox battery began in the basement of a
government lab, three hours southeast of Seattle, called Pacific
Northwest National Laboratory. It was 2006, and more than two dozen
scientists began to suspect that a special mix of acid and electrolyte
could hold unusual amounts of energy without degrading. They turned out
to be right.

It took six years and more than 15 million taxpayer dollars for the
scientists to uncover what they believed was the perfect vanadium
battery recipe. Others had made similar batteries with vanadium, but
this mix was twice as powerful and did not appear to degrade the way
cellphone batteries or even car batteries do. The researchers found the
batteries capable of charging and recharging for as long as 30 years.

Gary Yang, the lead scientist on the project, said he was excited to
see if he could make the batteries outside the lab. The lab encourages
scientists to do just that, in an effort to bring critical new
technology into the marketplace. The lab and the U.S. government still
hold the patents, because U.S. taxpayers paid for the research.

In 2012, Yang applied to the Department of Energy for a license to
manufacture and sell the batteries.

The agency issued the license, and Yang launched UniEnergy
Technologies. He hired engineers and researchers. But he soon ran into
trouble. He said he couldn't persuade any U.S. investors to come
aboard.

"I talked to almost all major investment banks; none of them (wanted
to) invest in batteries," Yang said in an interview, adding that the
banks wanted a return on their investments faster than the batteries
would turn a profit.

He said a fellow scientist connected him with a Chinese businessman
named Yanhui Liu and a company called Dalian Rongke Power Co. Ltd.,
along with its parent company, and he jumped at the chance to have them
invest and even help manufacture the batteries.

At first, UniEnergy Technologies did the bulk of the battery assembly
in the warehouse. But over the course of the next few years, more and
more of the manufacturing and assembling began to shift to Rongke
Power, Chris Howard said. In 2017, Yang formalized the relationship and
granted Dalian Rongke Power Co. Ltd. an official sublicense, allowing
the company to make the batteries in China.

Any company can choose to manufacture in China. But in this case, the
rules are pretty clear. Yang's original license requires him to sell a
certain number of batteries in the U.S., and it says those batteries
must be "substantially manufactured" here.

In an interview, Yang acknowledged that he did not do that. UniEnergy
Technologies sold a few batteries in the U.S., but not enough to meet
its requirements. The ones it did sell, including in one instance to
the U.S. Navy, were made in China. But Yang said in all those years,
neither the lab nor the department questioned him or raised any issues.

Then in 2019, Howard said, UniEnergy Technologies officials gathered
all the engineers in a meeting room. He said supervisors told them they
would have to work in China at Rongke Power Co. for four months at a
time.

"It was unclear, certainly to myself and other engineers, what the plan
was," said Howard, who now works for Forever Energy.

Yang acknowledges that he wanted his U.S. engineers to work in China.
But he says it was because he thought Rongke Power could help teach
them critical skills.

Yang was born in China but is a U.S. citizen and got his Ph.D. at the
University of Connecticut. He said he wanted to manufacture the entire
battery in the U.S., but that the U.S. does not have the supply chain
he required. He said China is more advanced when it comes to
manufacturing and engineering utility-scale batteries.

"In this field — manufacturing, engineering — China is ahead of the
U.S.," Yang said. "Many wouldn't believe [it]."

He said he didn't send the battery and his engineers abroad to help
China. He said the engineers in that country were helping his UniEnergy
Technologies employees and helping him get his batteries built.

But news reports at the time show the moves were helping China. The
Chinese government launched several large demonstration projects and
announced millions of dollars in funding for large-scale vanadium
batteries.

As battery work took off in China, Yang was facing more financial
trouble in the U.S. So he made a decision that would again keep the
technology from staying in the U.S.

The EU has strict rules about where companies manufacture products
In 2021, Yang transferred the battery license to a European company
based in the Netherlands. The company, Vanadis Power, told NPR it
initially planned to continue making the batteries in China and then
would set up a factory in Germany, eventually hoping to manufacture in
the U.S., said Roelof Platenkamp, the company's founding partner.

Vanadis Power needed to manufacture batteries in Europe because the
European Union has strict rules about where companies manufacture
products, Platenkamp said.

"I have to be a European company, certainly a non-Chinese company, in
Europe," Platenkamp said in an interview with NPR.

But the U.S. has these types of rules, too. Any transfer of a U.S.
government license requires U.S. government approval so that
manufacturing doesn't move overseas. The U.S. has lost significant jobs
in recent years in areas where it first forged ahead, such as solar
panels, drones and telecom equipment. Still, when UniEnergy requested
approval, it apparently had no trouble getting it.

On July 7, 2021, a top official at UniEnergy Technologies emailed a
government manager at the lab where the battery was created. The
UniEnergy official said they were making a deal with Vanadis, according
to emails reviewed by NPR, and were going to transfer the license to
Vanadis.

"We're working to finalize a deal with Vanadis Power and believe they
have the right blend of technical expertise," the email from UniEnergy
Technologies said. "Our transaction with Vanadis is ready to go pending
your approval ..."

The government manager responded that he needed confirmation before
transferring the license and emailed a second employee at UniEnergy.
The second employee responded an hour and a half later, and the license
was transferred to Vanadis Power.

Whether the manager or anyone else at the lab or Department of Energy
thought to check during that hour and a half or thereafter whether
Vanadis Power was an American company, or whether it intended to
manufacture in the U.S., is unclear. Vanadis' own website said it
planned to make the batteries in China.

In response, department officials said they review each transfer for
compliance and said that new rules put in place last summer by the
Biden administration will close loopholes and keep more manufacturing
here.

But agency officials acknowledged that its reviews often rely on "good
faith disclosures" by the companies, which means if companies such as
UniEnergy Technologies don't say anything, the U.S. government may
never know.

That's a problem that has plagued the department for years, according
to government investigators.

In 2018, the Government Accountability Office found that the Department
of Energy lacked resources to properly monitor its licenses, relied on
antiquated computer systems, and didn't have consistent policies across
its labs.

In this case, it was an American company, Forever Energy, that raised
concerns about the license with UniEnergy more than a year ago. Joanne
Skievaski said she and others from the company repeatedly warned
department officials that the UniEnergy license was not in compliance.
In emails NPR has reviewed, department officials told them it was.

"How is it that the national lab did not require U.S. manufacturing?"
Skievaski asked. "Not only is it a violation of the license, it's a
violation to our country."

Now that the Department of Energy has revoked the license, Skievaski
said she hopes Forever Energy will be able to acquire it or obtain a
similar license. The company plans to open a factory in Louisiana next
year and begin manufacturing. She bristles at the idea that U.S.
engineers aren't up to the challenge.

"That's hogwash," she said. "We are ready to go with this technology."

Still, she says it will be difficult for any American company at this
point to catch up. Industry trade reports currently list Dalian Rongke
Power Co. Ltd. as the top manufacturer of vanadium redox flow batteries
worldwide. Skievaski also worries about whether China will stop making
the batteries once an American company is granted the right to start
making them.

That may be unlikely. Chinese news reports say the country is about to
bring online one of the largest battery farms the world has ever seen.
The reports say the entire farm is made up of vanadium redox flow
batteries.

--
Let's go Brandon!