Supplier Profile: Change Moves ISE Forward

April 6, 2010
An evolving industry keeps technology moving forward.

Most people may not like change, but change was the common thread through everything talked about at ISE Corp., a provider of clean energy, heavy-duty vehicle propulsion technology. From the industry, the technology, the company and the background of its president and CEO, Rick Sanders, everything is moving forward.

“I don’t think anyone likes change,” Sanders says with a laugh. “I think it’s obviously important to continue to be more efficient in our use of fuels and certainly with the whole concern about greenhouse gases and the effects on the environment.

“We need to make change, there’s no other way around it,” he stresses. “I think as people start understanding the reason for change, they’re more inclined to accept it, to embrace it.”

Maintaining the Right Attitude

ISE is located about 20 minutes outside San Diego in the mountains of Poway, Calif.

Juxtaposed with the stress of change is the tone of Sanders’ office and the rolling mountains outside. The first thing that jumps out at you in his office is the wall-sized mural of a tropical scene, a hammock among palm trees inviting you in to relax. Adjacent to that is a warm-toned tropical painting, next to the wall of windows looking out to the mountains in the horizon.

He says he likes the relaxed atmosphere that the images project. And with all that’s going on at ISE, some calmness is a good thing.

“What motivates me is change, so that’s why I came here,” Sanders says. He says he’s motivated by the challenge of taking the company from where it was and positioning it through a difficult growth, and also a cultural change, to a high-volume, credible manufacturing company that continues to grow and go public.

“That’s the challenge that I like, I don’t know why.” He adds with a laugh, “Also why I don’t have any hair left.”

Sanders was recruited by the board of directors to come in as COO and president. The company was thinking about going public in the United States at the time and the prior CEO, also the founder, needed some more management experience on the team.

With a hybrid technology background, Sanders  came on board for his expertise on taking companies through high-transition points or taking them public.

“When you’re taking a company through a major transition point, it’s a cultural shift, you have to put in your processes, new ways of thinking, a new way of doing business and sometimes employees embrace that, accept it and race ahead and pull you there, and other times there’s resistance or they just don’t have the skill set or background knowledge,” he says of transitions.

“You have to bring people that have done it and that’s the only way you get through it because you can’t do everything yourself.” He emphasizes, “You have to delegate; you have to bring in people that you know you have confidence in.”

Adapting Technology

Talking about ISE Sanders says, “I think we’re kind of at a tipping point right now where we’ve come a long way with basic technology.

“We’ve got some traction in gasoline hybrid systems and a few other areas, we’re still sub-scale in terms of being where we want to be in order to really scale that and the market is continuing to grow.” He adds, “I think ISE has been around longer than any other kind of hybrid, heavy-duty hybrid developer and as a result, has a lot of experience and trial-and-error so they’ve put out a lot of different types of demonstration vehicles early on with different fuel types and different size engines, configurations.

“Where others have kind of focused in on one core area, ISE has developed a very broad breadth of experience and how to apply it best in the application.”

What the folks at ISE are really excited to talk about right now is what is happening in the energy storage space.  Decreasing the engine size decreases your emissions, and as a result, you have to increase your energy storage capability.

“Today it’s a very expensive proposition because the cost of these energy storage systems is very high,” Sanders points out.  “We don’t make the cells, but we make the system and we put the cells in the system and then all the software, controls and vehicle interface.”

Today they’re using ultracapacitors for energy storage with the average sales price (ASP) at about $35 thousand. “As we move in to the battery-dominate or plug-in, ASPs will go up and the type of energy storage will go up,” explains Sanders. “As you get into an all-electric, the energy storage for an all-electric bus is like $400,000; so you’re not going to sell too many of them today.

“That’s why we think this small APU, like a 40 horsepower motor and a larger energy storage have a lot of merit.”

Using some examples, he further explains how the blended system works. Looking at ultracapacitor base technology today, there is very low storage capability but you get a million cycles of life and high power, 200 kW per half hour. You can put a 1,500 kW ultranano pack together for about the same price, a little bit more, but it only gets you 12,000 cycle life and it doesn’t give you the power rating.

When you go to a high-energy base system, you drop down in cycle life to maybe 6,000 and your C ratings are very low, so you can’t recapture much, you’re not as efficient. But, you have a lot more storage capability.

So then when you blend it, you see a very compelling case. Looking at one case with a 12-year life, efficiency of 95 percent, it’s about $40,000. With an ultranano pack, a 15 kW-hour system, it only has a three-year life and 80 percent efficient, at about $70,000.

“If I blend it together with Maxwell and ultranano, the life goes up to beyond 18 years,” says Sanders. “It’s 94 percent efficient, it’s incrementally not very much more, but your cost for energy storage goes down from $23,000 per year to $6,000. That’s huge.”

He adds, “We have some patents in this area and it’s quite complex with lots of DC to DC conversion going on. That’s where we see a very compelling case as we go down this path more and more until you get a blended system that brings your total costs of ownership way down.”

Expanding Industries

Transit is the first mover in the market with hybrid vehicles because the hybrid systems are still quite expensive because it’s so early in the market, and the transit space is heavily subsidized. It’s also a great application because of transit’s high stop and go’s.

“The trucking industry is 15 times the size of the North American transit market and we see traction currently in that space, but it’s a much smaller adoption rate because it’s not subsidized,” Sanders says. Though they have delivered refuse trucks to the Department of Sanitation in New York.

Carolyn Paynton, marketing & communications manager with ISE, says, “They’ve been really successful. We have the ultracapacitors in there for that stop and go, but those aren’t cheap, but some really first-class trash trucks.” She adds, “They really love them in New York.”

“This is essentially the core areas that we have invested in over a period of time that we will continue to invest in and those core technologies have been applied in the transit industry, because this transit industry in North America is the first adopter,” Sanders says. “It’s not necessarily where we, ISE, are in the transit business. We are now because 90 percent of our business is there.”

He adds that there are other applications, “selling energy storage systems or electronics as components to other applications: stationary mining, windmills, you name it, so that’s future potential for our growth.”

Adapting to Change

Talking again about people adapting to change, we talk about agencies working with hybrid technology. With hybrid systems being more complex than the standard diesel engine, agencies don’t necessarily want to change unless they have to so introducing new technology to new locations is a learning curve.

“They have to train their maintenance operators to a new level of technology and certainly that’s a challenge,” Sanders says. “I think right now it’s about 30 percent of all new transit vehicles are hybrid and expected in a few years to be 50 percent.” He stresses, “That’s not an experiment any longer.”

Paynton explains a training session held in California by the Southern California Regional Transit Training Consortium (SCRTTC). “That one was a great example of how they all came together and they got the funding. They conducted training courses for all of the transit agencies on one site. That was huge.” She adds, “The nice thing that did, it didn’t just train our current customers, it trained customers that were considering it; it got them prepped.”

Summarizing, Sanders states, “We are looking at a battery-dominant configuration using a CNG auxiliary power unit, which I think is going to be pretty exciting.” He continues, “It greatly reduces the fuel demand and applies to inter-city-type fabrication where you don’t have the need for the size of engine and transmission that everyone currently has sitting in their vehicles, so it’s a waste.

“If we can prove that out and get people to accept that, I think that will be a revolutionary kind of change in the transit industry.”