Berkeley, Calif., startup LightSail Energy, which aims to produce “the world’s cleanest and most economical energy storage systems,” has secured $37.3 million in a Series D round that included three big-name investors: Bill Gates, Vinod Khosla, and Peter Thiel.

Gates and Khosla Ventures have been backing LightSail since 2009. Forbes, which earlier this year named cofounder Danielle Fong the “Energy Standout” in its list of 30 under 30 energy innovators to watch, reported that Canada’s Innovacorp also participated in the current round of financing.

Compressed air energy storage (CAES) is not a new technology, but current facilities are fairly large and rely on underground air storage: the 290-MW Huntorf plant in Germany that entered service in 1978 and the 110-MW Alabama Electric Corp. plant in McIntosh, Ala., commissioned in 1991.

LightSail, founded in 2009, says its innovation for CAES is that it captures the heat energy created by compressing air and regenerates useful energy from it, thereby achieving 90% roundtrip thermal efficiency—a key to bringing down costs for energy storage. (See the LightSail website for diagrams of the process.)

The company’s concept also promises to make CAES more flexible in terms of size. Although it can be adapted for large-scale underground storage, the technology enables air to be stored “in simple, low cost air storage tanks, packed in a convenient shipping container form factor using industry standard pipes and matching ASME and ISO safety standards,” the company says. This could make CAES more competitive with batteries for small-scale, local storage.

The first LightSail storage units are expected to be 1 MWh modules that are planned for shipment in the fourth quarter of 2013. These first units are targeted to “economically outcompete” diesel gensets. But the company plans to render additional technologies obsolete; it says its second product “will be the first energy storage system to outcompete gas peaker plants” and will “drive massive adoption of green energy worldwide.”

Cheaper, more efficient energy storage would be a key enabler of more widespread variable renewable generation—especially wind power—as it would help to make such renewables more dispatchable. A recent EPRI study explored the potential benefits of directly integrated energy storage and wind generation. It investigated several options, including battery systems, pumped hydro, and CAES. CAES technologies were found to be the preferred options.

Sustainable Business quoted Khosla as saying, “The power grid needs cheap, reliable energy storage, but every single solution to date has been only incremental. LightSail takes a completely different approach that’s based on fundamental thermodynamics. They have the potential to totally disrupt the electricity industry’s assumptions with reliable grid-scale storage at a fraction of the cost of today’s battery technology. When deployed, LightSail’s technology would reduce the need for transmission line investment, peak power plants, and make renewable energy practical and mainstream for the first time.”

Pike Research predicts that energy storage on the grid—including pumped storage, CAES, and battery storage—will reach almost 14,000 MW by 2022.

The 25-year-old Fong, is, like Microsoft founder Bill Gates, an Ivy League dropout (Gates from an undergraduate degree at Harvard, Fong from a PhD in plasma physics that she started at Princeton at age 17). Actually, Fong is a double dropout. She also left junior high school in Halifax, Nova Scotia, to enter that city’s Dalhousie University at age 12.

Sources: POWER, LightSail Energy, Wall Street Journal, GigaOM, Pike Research, Sustainable Business,
[This story was originally dated and posted Nov. 5.]

—Gail Reitenbach, PhD, Managing Editor (@POWERmagazine)