By Jeff St. John

Posted March 2nd, 2010 at 9:48 am in Energy Storage

We’ve been tracking plenty of stories that underscore China’s growing might in cleantech, and here’s another one. Prudent Energy, the subsidiary of China’s JD Holdings, said Tuesday that it has raised a $22 million Series C round to build out its Beijing manufacturing capacity for vanadium redox flow batteries and to “drive the company’s steady growth into the U.S.A. and elsewhere,” according to a release.

Until recently, those batteries were being developed in Vancouver, Canada by a company called VRB Power Systems — that is, until Prudent Energy bought out the struggling company’s assets in Jan. 2009. Apparently new investors Northern Light Venture Capital and Sequoia Capital China, and existing investors DFJ and DT Capital, think Canadian technology and Chinese manufacturing are a winning combination.

China is the biggest financial backer of cleantech in a world that’s seen governments take over that critical role from banks and venture capital firms over the past 18 months of economic distress. According to the Stern report released in April 2009, the Chinese government had set aside some $200 billion in cleantech stimulus funding over the coming years, compared to about $112 billion from the U.S. government.

This year should see government stimulus jump to a global $182 billion, up from $79 billion last year, according to an analysis by the Cleantech Group. The cleantech research firm also reports that Asian companies “absolutely dominated” IPO and M&A activity last year, including the world’s biggest cleantech IPO of 2009, the $2.2 billion fourth-quarter offering of wind power producer China Longyan Electric Power Group.

He who pays the piper, calls the tune — and in China’s case, that’s expected to mean a lot more focus on leveraging the country’s manufacturing might and cost advantages to mass-produce technologies developed both at home and abroad. A recent example is ECOtality, the Scottsdale, Ariz.-based electric vehicle charging system maker that just announced a $300 million credit line from Chinese partner Shenzhen Goch Investment. That money isn’t just going to build equipment for export. While ECOtality’s subsidiary eTec also won about $100 million in U.S. stimulus grants in August, China is expected to build about half of the world’s EV charging station in the next five years or so, according to Pike Research.

Depending on one’s point of view, China’s emergence is either a major threat to U.S. competitiveness, or an enormous market opportunity for U.S. cleantech companies and U.S.-Chinese research partnerships. China has already become the world’s biggest maker of solar panels and wind turbines.

While that growth has been built on export markets, China is also developing some of the largest wind and solar projects in the world within its borders, with the goal of getting one-fifth of its power from renewable sources by 2020. China has also set its sights on building a nationwide smart grid that could cost about $10 billion a year through 2020, Bloomberg reports, and this has drawn the interest of such major smart grid players as General Electric and IBM.

Prudent Energy’s batteries might find a role to play in these smart grid plans. Flow batteries share characteristics with fuel cells, in that they’re powered by liquid catalysts that can be refueled or recharged. While flow batteries have long cycle lives and lower costs than other battery technologies, they don’t tend to be as efficient at storing power, meaning that pound for pound they’re best suited to stationary applications — say, storing wind or solar power for the grid.

Other flow battery startups include EnerVault, which recently raised $3.5 million from Oceanshore Ventures and U.S. Invest, Deeya Energy, which raised $30 million in May from Technology Partners, BlueRun Ventures, Draper Fisher Jurvetson and New Enterprise Associates, as well as Premium Power and ZBB Energy Corp.