This startup wants the $80-billion U.S. railroad industry to switch from diesel to batteries

In this articleDORL-IL your favorite stocksCREATE FREE ACCOUNTVoltify plans to build a series of energy microgrids to power its locomotive batteries, as shown in this computer-generated image.VoltifyDaphna Langer has a bold ambition: To decarbonize the rail industry in less than a decade.How? By convincing U.S. freight railroad companies to switch from diesel power to rechargeable batteries — part of a model Langer estimates could make her company, Voltify, as much as $10 billion a year.The rail industry needs to reduce its emissions by 5% a year by 2030 to reach net-zero goals, according to a 2023 report by the International Energy Agency

In addition, switching to battery electricity would U.S. rail freight companies $94 billion over 20 years, according to a 2021 study published in the journal Nature Energy.Voltify's VoltCars — essentially sodium-ion batteries on wheels — are designed to connect to existing freight locomotives.Convincing the $80-billion U.S. rail industry to switch from a traditional and long-relied on fossil fuel to renewable energy might seem a tough task, but there are several reasons Langer said she is confident in Voltify's goal.After a stint advising multiple early-stage companies in the climate industry, Langer noticed two things that limited their growth. "Most of them rely on subsidies of governments, and [the] second [factor] is that they rely on manufacturing and scaling that just doesn't exist today," she said.In a bid to overcome those hurdles, Langer held meetings with hundreds of people in the energy and materials industries, seeking opportunities

When she first met her co-founder Alon Kessel, it was a "ding ding" moment, she said.A computer-generated image illustrating Voltify's VoltCar batteries attached to a locomotive.VoltifyKessel knew the renewable energy market well, having co-founded Doral, a firm that owns and operates dozens of solar energy farms in the U.S. and Europe

What if they could convince the large companies — known as Class 1 railroads — to convert their locomotives from diesel to battery power?"Converting six companies is not that hard

And having that ability to create such an impact with just six companies, it's huge," Langer said

But they found initial resistance. "There's a lot of skepticism, because this is such a traditional industry, and uptime and and reliability are key," Langer said. "We've been figuring out what would be able to ... fit into their schedule, to fit into their operations without harming their efficiency."The companies' biggest concern was the amount of time it might take to charge the batteries, and that there would always be the power supply to do so. "The rail companies, who have been very blunt it, [said] 'Listen, we don't really care the energy source

We just need to make sure that it's always up

There's always energy,'" Langer said.So Voltify spent a year working on an algorithm that could forecast the energy demands of trains "in every route," Langer said, and the company is also building its first solar-powered energy microgrid that Langer said is on track to be by the end of the year. "Our calculations show that a network of these microgrids could eventually power all trains in North America," Langer told CNBC in an

Voltify estimates that to do so would require 1,400 microgrids.Wabtec's FLXdrive battery locomotive was developed in 2019.WabtecVoltify is in "very active" talks with three of North America's largest railroad companies, Langer said, adding that it is set to run a demonstration ject with a smaller railroad company later this year

Voltify is also starting a pilot with a Class 1 railroad company in early 2026, and Langer said it is "expected" that this will become a commercial deployment after several months.Voltify isn't the first company to come up with the idea of powering freight trains with batteries

The company also tested its battery-electric locomotive with GE, and said in an to CNBC that it plans to test and operate FLXdrive trains in North and South American .The nology can reduce diesel consumption and emissions by 30%, according to Tim Bader, Wabtec's director of external and engineering communications, in an to CNBC. "This benefit is critical since fuel is one of the major operating costs for a railroad," he said.But as the nology is emerging, there are challenges such as charging time and battery capacity, plus a "challenging" case given the infrastructure investments required. " any emerging nology, these challenges will diminish as the industry continues to re and imve battery-power solutions," Bader said.A computer-generated image of a passenger train on New York City's MTA Metro North network, which is set to be powered by Siemens Mobility Charger B+AC battery.Siemens MobilityThere's also "substantial" market potential for battery-powered passenger trains, according to Tobias Bauer, the acting CEO for Siemens Mobility North America, in an to CNBC. "Battery-powered trains represent a new and exciting platform for the rail market, particularly as operators seek alternatives for non-electrified routes," Bauer said.Siemens Mobility has sold more than 400 diesel-electric Charger locomotives in North America, and in June launched its battery-electric train, the Charger B+AC, selling 13 to the New York's Metropolitan Transportation Authority and Metro-North Railroad.The new locomotive draws electricity from overhead catenary wires and transfers to battery power when needed, according to an online release

While the locomotives' range is currently up to 100 miles, Bauer said that is expected to grow as the battery nology advances.In February, Siemens Mobility received an order from Swiss freight operator WRS Widmer Rail Services for two of its Vectron lithium-ion battery locomotives, which can be used for shunting without the need for overhead power lines

Asked the potential for battery-powered freight trains, Bauer said: "A full transition to battery-powered freight would depend on route specifics and charging infrastructure, but the potential is there."— CNBC's Michael Wayland contributed to this report.