Building long-lasting batteries for satellites accounts for only about 4 percent of the Saft Group’s annual sales, which totaled some 560 million euros ($800 million) in 2009. But John Searle, a 20-year Saft veteran who took over as chief executive in 2002, said it’s a very important — and profitable — 4 percent. “It’s an extremely good way of test-bedding our technology,” he said.
Based in Paris, Saft designs and builds advanced technology batteries at 15 sites worldwide for industrial and defense applications. More than half of its revenue comes from its Industrial Battery Group, which makes rechargeable batteries for everything from hybrid vehicles and high-speed trains to back-up power systems for oil and gas plants and telecommunications networks. The rest of the revenue comes from the Specialty Battery Group, a roughly 240 million euro business that includes Saft’s military and space work.
Of the 3,800 Saft employees worldwide, Searle said about 150 work in the space battery business, which rang up 20 million to 25 million euros in sales last year thanks in large part to long-term agreements the company has with most of the world’s major satellite manufacturers.
Saft has put approximately 50 lithium ion batteries in orbit since making the switch in 2003 from nickel hydrogen, an older technology that by Saft’s estimate accounts for less than 20 percent of the current space market.
Searle spoke recently with Space News Deputy Editor Brian Berger.
Saft’s overall sales and profits were down last year. Was that true for your space battery business as well?
No, it wasn’t actually. Our space battery business grew a little last year — under 10 percent — and profitability was a little better as well. The reason our overall sales were down is only about 25 percent of our business is in military and aerospace. The rest is in the commercial sector, which was impacted by the recession and hence we saw our overall sales drop by just under 10 percent. But our military and space businesses both grew. I can’t say we had many other activities last year that grew.
Given that spacecraft batteries are such a small percentage of Saft’s business, why devote any time to it?
Because it’s a great way to test and prove the technology, and it’s great for our image as well. Right now we’re investing in a new facility in Jacksonville, Fla., to increase our lithium ion production volume for the renewable energy storage and telecom backup markets. But the first market we brought our lithium ion batteries into was the space market. So while it’s only 4 percent of sales, it’s a profitable 4 percent that gives us credibility and a way of testing our batteries at the extremes. That’s important when you’re going into other markets, whether it be hybrid-electric vehicles or storing solar energy.
What is the big advantage of lithium ion batteries?
Weight. When we were making nickel hydrogen batteries up until five or six years ago, the battery represented about a quarter of the weight of the satellite and about 1 to 2 percent of the cost. Lithium ion halves the weight of the battery for exactly the same performance and there’s no price premium now, either. There probably was a little in the early days, but now that it’s the dominant technology, people aren’t paying a premium.
There are also some performance advantages. For example, they don’t present a thermal management challenge when they’re being charged and discharged in orbit.
How long will satellite builders continue to use lithium ion batteries?
Right now, it’s not very clear what the next rechargeable lithium technology is going to be. We’re under contract with NASA now working on the next generation of lithium ion technology because they’re looking for even more energy density, which will have the benefit of course of making the batteries even lighter and smaller. So for the foreseeable future — to the end of this decade most definitely and probably longer — lithium ion is going to be the technology of choice for space and almost all of the other applications, such as electric vehicles, through 2020 or 2030. There are other technologies being looked at, but they are in early research stages.
Which of Saft’s market segments employs the most advanced batteries?
I’d say we’re doing the most to push the envelope in terms of maximizing energy in some of the advanced military work we’re doing in the United States. If you’re looking at things like portable lasers, here you’re talking about having to have very large batteries generating very many kilowatts of power for short duration pulses. I’m not American, so I’m not always privy to the performance of some of these programs, but these are some of the areas where we are being encouraged to push the envelope beyond what is used in the normal commercial markets. For example, a hybrid vehicle has a high-powered battery, but some of these advanced applications are many times the power that is needed in a hybrid vehicle.
Given the anticipated decline in U.S. defense spending, what’s your outlook for Saft’s military business?
I think we have to be realistic. We had an extremely good year, worldwide, on the military side. Last year, military accounted for about 20 percent of Saft sales, only a third of which were in the United States. Most of our military business is making batteries for applications where the batteries are consumable — batteries sold to militaries for their radios and things like portable military equipment. Those batteries inevitably are a consumable, and while volumes will increase and volumes will decrease, these are vital equipment that militaries need.
I also think we still have some good opportunities in emerging military applications. Maybe not as good as two or three years ago, because when you’re talking about developing batteries for new systems, you really need those systems to be deployed. There’s a healthy business in funded development and prototyping work, but we really need governments to invest in deployment before we see the real growth prospects coming through. So we have to be pragmatic and say that it’s probably not going to be the real growth driver for Saft in the next three to five years. But I don’t think the business is going to collapse, either, because the majority of what we’re building at the moment is consumed year by year.
What challenges do the International Traffic in Arms Regulations (ITAR) present to a company like Saft?
Technology we develop in the United States is subject to ITAR — particularly the military technology — and we’ve very, very carefully and very strictly adhered to those regulations. So we would not take U.S. developed technology and export it out of the U.S. without getting suitable clearances. We have plants in the United States that are run by Americans working on American technology for American applications, and the rules are very clear. And of course we do have technologies that we develop here in Europe and we have to apply the same European regulations when exporting these technologies around the world. Now having said that, European regulations are much lighter than ITAR.
Do you see any emerging opportunities for Saft space batteries?
Traditionally, we’ve been very strong in the geostationary market but probably not so well positioned in the small low Earth orbit systems. So in the last two to three years, we’ve put a lot of work in expanding our offering to that market segment and have been making reasonable progress.
When you talk about expanding into the small satellite market, how small are you willing to go?
Some of the very small ones are using commercial cells manufactured for laptop computers. They have a life of a couple of years, and it’s not at all interesting for a company like Saft that makes its own technology and offers all the traceability advantages, all the consistency of manufacturing that the industry wants. There comes a point when the satellites are so small and the batteries are so cheap that it’s no longer a very attractive commercial proposition. But there is the area of Earth observation and weather satellites where we have not been a major player. That’s an area where we are putting greater effort into.
Are there any changes afoot in the competitive landscape for space batteries?
We’re seeing more competition from Japan, which previously wasn’t an important player in the market for satellite batteries. But it’s not a great surprise, given that a lot of lithium ion technology was developed rather more in Japan than in America. What tends to happen is that as the technology changes, the competitive base changes. So the traditional competitors making nickel batteries are not always the ones that are invested to catch the trend into the next generation of technology and new competitors appear. So that’s an area that we have to watch. That said, I’m not so sure the market — at maybe $50 million to $80 million worldwide — is large enough to attract a great many more entrants. Even with all the people in the U.S. investing Department of Energy money, I’d be very surprised to see them getting excited about a burgeoning space business for their companies.
Have you seen or do you anticipate consolidation in the space battery business?
Looking back at the nickel hydrogen market, there was really only our principal competitor, EaglePicher, and ourselves. We were the principal battery suppliers, other than one or two satellite makers that had their own manufacturing capabilities. You don’t normally consolidate down from two. So I think we’ve got to be honest, there’s only a handful of players in the market at the most. Consolidation is probably possible, but not necessarily the obvious way to go.