How Investment-worthy Are Long Duration Energy Storage (LDES) Companies?

Technology vs Market

In the recent past, dozens of companies have been founded to commercialize various long duration energy storage (LDES) technologies. These are storage technologies that can deliver 10+ hours of discharge at rated power more cost effectively than the dominant lithium-ion battery technology. The LDES space is a crowded field and each competitor is vying for a position at the podium. To a developer, investor, technology enthusiast or even an original equipment manufacturer, the billion-dollar question is: who will survive the valley of death? Consider this article an update towards getting to the billion-dollar answer.

It is well known that the technological struggle will be won in the market. Technological superiority stops to count for much if the product cannot compete in the market. As such, financial metrics are critical in assessing the competitiveness of a product/technology. In this review, the author has selected 5 LDES manufacturers based on:

1. Listing (public vs private): the author selected publicly listed companies since public companies are mandated by law to disclose their annual financial performance.

2. Structure (pure play vs vertically integrated): the author selected pure play energy storage companies since vertically integrated companies do not tend to specify the financial performances of their energy storage divisions.

Based on the criteria, leading LDES companies such Largo Inc., NGK Insulators, Ltd and VRB Energy are not reviewed herein.

Companies to Watch

The companies selected for this analysis, in ascending alphabetical order, are:

Energy Vault Holdings, Inc. (“Energy Vault“)

Energy Vault was founded in 2017 and is headquartered in Lugano, Switzerland. The company was listed on the New York Stock Exchange (NYSE) through a special purpose acquisition company (SPAC) in 2022. Energy Vault is traded under sticker symbol NRGV.

EOS Energy Enterprises, Inc. (“EOS“)

EOS is headquartered in Edison, New Jersey. The company was listed on NASDAQ in 2020 through a SPAC and is traded under sticker symbol EOSE.

ESS Tech, Inc. (“ESS”)

ESS was founded in 2011 and is headquartered in Wilsonville, Oregon. The company was listed on NYSE in 2021 under sticker symbol GWH.

Invinity Energy Systems plc (“Invinity“)

Invinity was created from the merger of redT Energy and Avalon Battery in 2022. The company is headquartered in Jersey, UK and is listed on AIM (sticker symbol: IES) and AQSE (sticker symbol: IES) stock markets in the UK. The company’s stocks are also traded over the counter via OTCQX (sticker symbol: IESVF) in the US.

Redflow Limited (“Redflow“)

Redflow was founded in 2005 and is headquartered in Brisbane, Australia. The company was listed on the Australian Stock Exchange (ASX) in 2010 under sticker symbol RFX.

FY2023 in Numbers

At this time of the year, the selected companies have released their annual reports with the exception of Invinity. The author has used half-year (HY) 2023 report to evaluate Invinity’s financial standing. How did these companies perform in financial year (FY) 2023? The companies annual reports are linked in the table below.

Net profit margin = (net income/revenue)*100; a measure of how much profit is generated as a percentage of the revenue.

**Energy Vault’s financial performance is largely driven by its lithium-ion BESS and hybrid ESS (hydrogen + BESS) offerings. Sales of G-Vault was not communicated.

*** This sales volume includes both purchase orders and commitments.

Author’s Take

All the 5 companies evaluated herein reported net losses for FY2023 but more importantly for a budding industry, they all recognized revenues and reported growing order intake. Other key takeaways include:

• Energy Vault leads the financial race due to its substantial offers in lithium-ion BESS and hybrid ESS. Energy Vault has secured a 400 MWh contract for its lithium-ion battery energy storage systems (B-Vault).

• EOS has announced a memorandum of understanding (MOU) with Pine Gate Renewables for EOS systems totaling 500 MWh. EOS has also announced a 4 GWh long term supply agreement with a leading energy storage company in the US. MOUs should be considered very early stage potential opportunities.

• ESS has a manufacturing capacity totaling 800 MWh with plans to expand the capacity to over 1,200 MWh (1.2 GWh). This indicates strength in meeting increasing demand.

• Invinity’s diversified customer portfolio (5 customers) enables it to reduce dependence on any particular customer thereby mitigating sole customer risk.

• Redflow’s pipeline totals 6 GWh with 70 MWh of the pipeline in late stage. Order intake has a positive correlation with profitability.

The LDES manufacturers that survive long enough will eventually turn profits.