Will green play in Peoria? (cont.)

"There's a lot of energy here on a lot of fronts," McConoughey acknowledges. Among its other undertakings, the Heart-land Partnership has invested $400,000, largely donated by Peoria's business community, to transform a vacant 1.2-million-square-foot foundry into an industrial center whose anchor tenant will manufacture bricks from fly ash (a waste product of coal combustion).

The partnership plans to invest about $200,000 from a community development fund to jump-start a revitalization of the city's less-than-scenic southern gateway on the Illinois River - now lined with scrapyards and derelict warehouses - into a hub for ethanol and biodiesel refineries.

The Heartland Partnership also administers Peoria NEXT, a hybrid research collaborative organization, tech incubator, and capital network that links scientists, investors and entrepreneurs.

Formed in 2001, the organization has turned out 26 small businesses to date - 11 of them green startups such as Firefly - and fielded another 300 or so proposals not yet ready for market. Over the next five years McConoughey hopes the incubator can generate as many as 1,500 new jobs, many of them related to environmental technologies.

Tom Churchwell, a venture capitalist who has invested in Peoria startups, says that the city's relatively tight-knit community and a paucity of political infighting have helped it move forward.

"Starting small companies depends a lot on the climate of the place," says Churchwell, managing partner of Arch Development Partners in Chicago (archdevelopment-partners.com). "Peoria has figured out that infrastructure is the critical factor. Little businesses can find inexpensive spaces to rent, find employees they need to get started, and very importantly find the early-stage funding."

The poster child for Peoria's vision of becoming a thriving center for green-tech businesses is Firefly Energy, the battery startup. With $17 million in funding, 25 employees (up from three at the outset), and 40,000 square feet of office space under renovation, Firefly dreams of transforming the global battery market.

Kurt Kelley, a founder and now Firefly's chief technology officer, designed the battery's basic technology while working for Caterpillar, which then spun off Firefly as an independent company - with the help of Peoria NEXT. The incubator had enlisted former Apple executive Ed Williams as a consultant. When Williams, 55, now Firefly's CEO, heard about the battery invention, he jumped onboard, working with Peoria NEXT to line up private equity and venture capital money, as well as to secure office space and recruit intellectual talent. "We're creating a nucleus of the energy-storage world, capable of research and development expertise," says Williams.

Firefly's system replaces the heavy, corrosive lead panels found in traditional car batteries with much lighter panels made of a noncorrosive graphite foam. The result, the company says, is a battery that is longer lasting and able to discharge and recharge more efficiently.

One potential future use is in plug-in hybrid cars, which currently require either expensive lithium-ion batteries or heavy lead-acid batteries that don't recharge efficiently (and require a lot of energy just to haul around). Williams takes a broad view of his battery's potential. "Long term, we think our product will capture a worldwide market."

"The technology looks really interesting," says Marshall Miller, senior development engineer at the Institute of Transportation Studies at the University of California at Davis (its.ucdavis.edu) and an expert in battery technology. "The one caveat is that it's not uncommon to have claims about battery technologies just never pan out."

Miller cautions that Firefly's innovation might not perform as well once it's commercialized as it did in the lab. "Power in the outside world is different from what you got when you were doing your lab test. We've seen a lot of problems arise over the years." Still, he's intrigued by Firefly's potential: "Lead-acid hasn't been very interesting, and if someone really does have something that's a significant breakthrough, I think it'll be very exciting."

Some entrepreneurs are heading to Peoria's U.S. Department of Agriculture lab (ncaur.usda.gov), which conducts research on everything from soy-based foods to bio-fuels made from cornhusks and prairie grass. One hoping to profit from the lab is Sudhir Seth, president of BioFuels Manufacturing Illinois (biofuelsillinois.com), who is seeking $35 million in financing for a 45-million-gallon-a-year biodiesel factory he is hoping to build in Peoria. Seth, 58, is a relative newcomer to town, but he has already found the ag lab to be a "vast resource of expertise and know-how."

Seth is closely watching a project in the lab of Steven Vaughn, a plant physiologist: the production of biodiesel from a weed in the mustard family called field pennycress, which requires no fertilizer and which local farmers can rotate with their soybean crops. Field pennycress is a winter annual native to Eurasia and is not susceptible to the same pests as soybeans or corn. "It's a nice oil for biodiesel," says Vaughn, "and its residual seed meal can be used as a natural, biodegradable pesticide." A local farmer is growing ten acres of pennycress in a test run for Seth.

Seth has received help from the Heartland Partnership with everything from financing (including obtaining state grants) to site selection to staffing. "This is a hard-core brick-and-mortar industry," Seth says of biodiesel. "This isn't just a technological brainwave with two guys sitting in a garage and a dog watching them."

Seth, who moved to Peoria from up-state New York to be closer to family, was interested in alternative energy and became convinced that Peoria was an ideal site for a bio diesel operation because of market demand and state incentives. At first his plant will process soy, but it will eventually be able to convert a wide variety of materials to biodiesel - from pennycress to animal waste depending on which processes become commercially viable.

Peoria NEXT is putting a finger to the wind as well: It awarded a $25,000 seed grant to Smartenergy (smartenergyltd.us), a wind-power startup. Founded by Tony Grichnik, an artificial-intelligence researcher at Caterpillar, and his wife, Heather, an electrical engineer, along with a third partner with a background in manufacturing, Smartenergy plans to use wind energy for residential heating, turning wind into electricity that can then be used to heat homes.

Smartenergy, which won't yet disclose the details of its technology, is making prototype components for a wind-powered device that Grichnik claims "is like nothing anybody's ever seen." Individual homeowners would install the device on their property, like a wind turbine. "You hear a lot about big wind projects, but we think there's a different solution where everyone can make a little bit of their own energy," says Grichnik, who also teaches computer science at Bradley, the local private university, and holds several patents in artificial intelligence.

Grichnik, 37, who is large and boyish-looking and recently completed the University of Chicago's New Entrepreneurs program, believes Peoria is an ideal place to start a business, particularly one that relies on engineering. "We have an eclectic community here of scientists and manufacturing experts," he says. There's also a low cost of living: The average home in Peoria costs less than $130,000.

Challenges exist too, mainly the relative scarcity of capital compared with the availability in larger cities. "But things that do get funded here always seem to pan out," says Grichnik. "Pessimists would call it 'risk averse,' but optimists would call it being prudent."

Prudent enough, that is, to play in Peoria.

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