LANSING – The Strategic Fund Board approved $16 million in Centers of Energy Excellence grants Tuesday, allocating the remainder of the funding allowed for the fiscal year and leaving one project hoping additional funds are added to the program.

The board Tuesday also approved the last of the tool and die renaissance zones allowed under current law.

The energy grants, part of the 21st Century Jobs Fund, are designed to get alternative energy companies and state universities collaborating on projects.

The largest of the latest grants, $10 million, went to A123 Systems for a lithium ion battery manufacturing plant in the state.

The Boston, Massachusetts-based company is working with both Michigan State University, which is researching battery materials and electrode designs, and the University of Michigan, which is contributing manufacturing system design, in building batteries for military and automotive uses.

“This is our first attempt to build batteries in North America,” said CEO David Vieau. “We as a country have missed out on the lithium ion battery build-up.”

Michigan Economic Development Corporation CEO James Epolito said the plant could be key to assisting the Detroit 3 auto manufacturers in developing electric powertrains for their vehicles. “The first auto company that will be able to do that will leapfrog over the other auto companies,” he said. “We have an opportunity to locate this manufacturing here in Michigan. Certainly our Big 3, Detroit 3, need these batteries.”

A123 was also the only of the applicants to receive its full request.

American Process Incorporated, based in Atlanta, Georgia, received $4 million of the $8.6 million it had requested for a biorefinery tied to Decorative Panels International in Alpena. The plant will use the waste from the plant, solid and liquid, to make a variety of chemicals, including ethanol, and return clean water to the plant. Valero Energy Corporation is also participating in the project.

Michigan Technological University is participating in plans to create sodium acetate, a non-corrosive deicing material, from some of the effluent.

“We found that a lot of the tree ends up as waste,” said Theodora Retsina, president of the company. “We found a way to turn that waste into product.”

In addition to its own products, the plant is also expected to provide other companies an opportunity to test some of their own product ideas, Ms. Retsina said.

Working Bugs, which is developing a biorefinery in Webberville, received $2 million of the $4 million it had requested. The company is developing processes to create a number of chemicals, including fuels, now refined from petroleum products instead from various plant materials.

“This really heightens our role in Michigan’s bio economy,” said managing partner Diane Holman. “We need to diversify the manufacturing that is involved with ethanol plants so they can become more stable.”

The review team had also approved $3 million for Adaptive Materials Incorporated of Ann Arbor, which builds solid oxide fuel cells, but there was not enough money in the program for that grant. The current set-aside provides only $2 million more, and that is not available until FY 2009-10.

But the board approved a resolution that, should additional funds be made available to the program this year or should one of the prior grant recipients have to return funds, Adaptive Materials would receive those funds.

Chief Business Officer Michelle Crumm said the company hopes to use the money to develop a supply chain for its new 50,000-square-foot manufacturing facility, purchased with assistance from other MEDC programs.

“We’re a little bummed that there’s no funding left,” Ms. Crumm said.

PFIZER ASSETS: The board also approved another $2 million of the $90 million set aside for life sciences projects toward its efforts to keep former Pfizer employees in the state and to reuse the company’s buildings and equipment.

The grant, to MPI Research Incorporated and the Southwest Michigan First Corporation, will assist in renovating a former Pfizer facility in Kalamazoo. MPI has committed $30 million of its own funds to renovate the facility into a contract laboratory. Over time, the company is projecting to add some 3,000 jobs in the state, officials, said.

The award brings the total allocated for Pfizer asset retention to $15.5 million.

TOOL AND DIE: The 25th Tool and Die Recovery Zone was approved Tuesday, with the American Tooling and Manufacturing Coalition receiving the last of the tax-free designations. The coalition includes 15 companies seeking zone designations up to 15 years. The companies in the coalition are located around the state.

The zones provide tool and die companies tax-free status for all but the last three years of the requested designation. In the last three years, the tax credit drops by 25 percent each year.

MARKETING: The board approved a $3.1 million extension of the current business marketing program through Duffey, Petroskey and Company. The funds pay for the “Upper Hand” advertising campaign designed to attract new business investment to the state.

The original request had been for $3.25 million, but had to be reduced because the portion of the 21st Century funds used for the advertising was reduced by line-item veto.

Lisa Dancsok with the MEDC said the money will not only keep the television and radio advertising on the air, but will also be used, in conjunction with some other funds, to expand Internet advertising for the state.

Dancsok said the advertising has been working, with at least two projects coming to the state as a direct result of company officials seeing one of the spots.

And she said the spots for the coming year would concentrate on alternative energy “so people are looking at us as a place to alternative energy.”

The extension is the last year for the contract, and officials said both the business attraction and tourism advertising campaigns will be going out for bid in the coming months.

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