Ecotality, a company involved in hydrogen and fuel-cell technologies, announced Thursday it is buying Innergy Power Corp. for $3 million in stock and cash.

San Diego, Calif.,-based Innergy makes solar panels, solar-powered chargers and thin, rechargeable lead-based batteries.

The deal is expected to close in October. Ecotality CEO Jonathan Read said he expects no management changes at Innergy as a result of the purchase.

The acquisition will help the Scottsdale, Ariz.,-based company become a diversified renewable-energy company, he said. Aside from bringing Ecotality into the solar and battery markets, Innergy is profitable and comes with a low-cost manufacturing plant in Tijuana, Mexico, he said.

Read said Innergy's battery and charger systems also could be a good match for Hydrality, Ecotality's cornerstone company focused on a technology to produce hydrogen using magnesium and water.

"We're really excited about buying the company, which is what I call a VC orphan," he said, explaining that orphans are companies that get venture-capital funding but don't grow big enough to give VCs an exit, even if they are profitable, and are left to languish.

"It's perfectly good technology and it's just sitting there, and it fits perfectly. VCs put a lot of money in Innergy early on, then didn't see a lot of value in it, but we see a huge value."

Ira Ehrenpreis, a general partner with Technology Partners, said taking advantage of prior investments is common practice in energy-technology investing, such as when VCs invest in companies that already have received big government or university backing.

Buying Spree

The Innergy purchase isn't Ecotality's first. In June, the company - which also has a fuel-cell bus company, Ecobus, and a green blog, Ecotality Life - bought Fuel Cell Store, an online fuel-cell retailer.

And Read said the company expects to buy up to three more companies by the end of this year.

He wouldn't say which companies, but hinted they would be involved in chargers andstorage solar and hydrogen. Ecotality is negotiating to buy parts of two utilities and also will be announcing a partnership with a utility, Read said.

Ecotality also is planning investments in wind next year, although those have yet to be determined, he said.

The strategy is to buy profitable companies with technologies that would help advance Ecotality's current subsidiaries, Read said. "The other companies have a vote about whether the company is going to be an asset for them, and if it can drive value to them, it's a target for acquisition," he said.

New subsidiaries will remain separate companies and won't be rebranded, he said.

Buying Low

Matt Horton, a principal at @Ventures, said Ecotality's strategy might make sense because interest in different clean-energy sectors fluctuates wildly.

"What is a hot sector today could be really cold in a year and a half," he said. "Fuel cells are an example of that. Five years ago, they were very hot. Now some still have decent prospects, but they aren't getting much attention. There is an opportunity to make investments in companies that are not in hot sectors anymore."

The industry could well see more acquisitions across the board, Horton said, pointing to solar manufacturer SunPower's purchase of solar integrator Powerlight in November.

"If someone does have a very exciting technology in one part of the chain, and another part of the value chain isn't valued very highly, it may make sense to pick up that company," he said.

Acquisitions also could prove important because companies will need to put together complete systems - including several technologies - wrapped into single products in order to succeed, he said.

And of course, he added, there are plenty of VC orphans out there for the taking.

But buying sprees have their shortfalls, too, Horton said. Buying many different technologies can expose a company to a lot of technology risks, he said.

And with all mergers and acquisitions, it's important to be careful to choose companies that fit well together, he said.

"The big key is making smart acquisitions that add value to your existing business, and not just buying up dysfunctional small companies because they're cheap."