Planar Energy Devices said Monday it has raised $1.3 million of a $4-million round of venture-capital funding.

Battelle Ventures and Innovation Valley Partners invested in the Series-A round and also committed another $2.7 million, dependent upon Planar hitting future milestones. The company also said it received a $50,000 grant from the Florida High Tech Corridor Council for a research project with the University of Central Florida.

The startup, a spin-off of the U.S. Department of Energy's National Renewable Energy Laboratory, is developing thin-film batteries based on lithium.

Entrepreneurs say batteries in the form of thin films could potentially deliver as much energy as lithium-ion batteries in thin, moldable shapes -- a big advantage when cell-phone manufacturers are squeezing more and more features into thinner packages.

But they are costly and -- after some 20 years of development -- have yet to disrupt the market for higher-power applications. After all, the general rule is the smaller the cell, the less energy it can store.

Glenn Kline, a partner at Innovation Valley Partners, said Planar expects its technology will result in a battery that will have higher energy density, hold its charge longer and be more easily manufactured than competing batteries.

"It's an innovative approach that we believe yields some substantial advantages," he said.

While Planar -- like other thin-film battery companies, including Infinite Power Solutions -- is licensing thin-film technology from Oak Ridge National Laboratory, the company is meshing that technology together with technology developed at NREL, Kline said.

Planar has the exclusive license to use the NREL technology for thin-film batteries, he said, and Roland Pitts, a senior researcher who worked on the technology at NREL, has joined the startup.

Manufacturing Challenges

Kline said Innovation Valley Partners was particularly attracted by Planar's claim of manufacturability.

"The industry has been somewhat plagued by the manufacturability issues," he said. "Companies out there have had a very difficult time."

Kline said the company plans to use a standard manufacturing process, which will help Planar reach high volumes and drive down cost.

"We saw a very clear path to having extremely competitive pricing for high performance," he said.

But Bernd Neudecker, chief technology officer for Infinite Power Solutions, which raised $35 million in venture capital for its thin-film battery technology last year, said Planar might find that the challenges are more difficult to overcome than it expects.

"Many people have tried a lot of things and, when they get into it, they are always surprised how difficult it is to make a flat battery," he said. "It reads so easy in all the patents, but keep in mind that most of the good stuff isn't written in patents; they are trade secrets."

In December, Infinite said it was building the world's first thin-film battery manufacturing plant in Littleton, Colo.

"There is a reason so many have licensed from Oak Ridge and ours is the only one, basically, going into mass production," Neudecker said. "If it was so easy, others would have done it too. Planar will also go through their learning curve and I'm happy to see them."

Can Batteries Boost Renewables?

Planar is targeting electronics and automotive applications and also expects a key market will be energy storage for renewable power, like wind and solar, Kline said.

Because those sources of electricity are intermittent -- that is, electricity is sometimes needed when the wind isn't blowing or the sun isn't shining -- the growth of those energy technologies could be a compelling opportunity for thin-film batteries, Kline said.

While thin-film batteries today are just as costly as lithium-ion batteries, about 15 to 20 cents per watt hour, WinterGreen Research has forecasted that next-generation technology would boost the batteries to 40 times the efficiency of lead-acid batteries for the same price (see Recharging Green Energy ).

"I project those to be very large markets within a couple of years," said Susan Eustis, president of WinterGreen Research. "In a very few years, you will be able to run 20 percent of the power in the home from a thin-film battery."

Eustis said she expects the market for thin-film batteries to grow from $10 million in 2007 to $9.9 billion in 2012. WinterGreen projects the batteries will enable wind and solar power to grow to a whopping 55.3 percent of the world's electricity in 2018, with wind making up 40.7 percent.

But others, including Vinod Khosla, founder of Khosla Ventures, said the costs need to come down much further -- to $10 to $30 per megawatt-hour -- to boost wind and solar power into such a large role.

Brian Barnett, a managing director at product development and consulting firm TIAX, said one challenge is that thin films so far have proven better at providing short pulses of energy than longer stretches.

"Generally speaking, you can get whopping power from these things, which are great for short pulses of energy, but if you want to supply longer-term energy, it's really hard with [thin films]," said Brian Barnett, a managing director at product development and consulting firm TIAX. "Most companies are developing thin-film applications with relatively short duration."