Solar Media analyst Charlotte Gisbourne assesses the financial health of technology providers with electrochemical battery alternatives to lithium-ion.
Lithium-ion has long been the dominant battery chemistry for energy storage systems, with a notable shift from NCM (nickel-cobalt-manganese) to LFP (lithium-iron-phosphate) in the 2020s. Despite the high energy density and long cycle life these batteries can offer, there are limitations to this technology, including safety concerns related to thermal runaway.
With the long-term supply-demand dynamics of raw materials uncertain and geopolitical tension potentially disrupting supply chains, companies are to some degree looking to alternative chemistries.
This is evident in both established battery companies expanding their product lines, such as Contemporary Amperex Technology Co., Ltd. (CATL), which achieved mass production of sodium-ion batteries this year, and Gotion High-Tech, which is developing solid-state batteries, as well as startups focusing on alternative chemistries.
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The financial health of the latter will be analysed in this article, specifically Invinity Energy Systems (vanadium flow), Eos Energy Enterprises Inc. (zinc), and ESS Tech Inc. (iron flow).
Revenue
In contrast to the majority of large battery manufacturers, these companies do not produce batteries for EVs, instead focusing primarily on energy storage systems, which consistently contribute over 80% of their revenue. This lack of revenue diversification poses a significant risk and leaves the companies more vulnerable to changes in market sentiment.
The non-traditional chemistry used means that currently the end market is considerably smaller than that for lithium-ion.
However, Invinity does have licensing and royalty agreements, such as with Guangxi United Energy Storage New Materials Technology Limited, that could provide another revenue stream and increase financial stability.
The three companies are still relatively early in their scale-up. Eos did not begin producing its Energy Block solutions until 2020, and ESS Tech only began commercial shipments in 2021. The two companies had a strong focus on R&D, and the recent commercialisation of products means they are still in the manufacturing ramp-up stage.
Despite the broader availability of both zinc and iron compared to lithium, and hence the expected lower cost, the battery technologies do not benefit from economies of scale like lithium-ion batteries. None of the three companies has seen operating profits yet; however, both Eos and ESS have seen an improvement in operating margins in H1 2025.
Both Eos Energy and ESS Tech are US-based companies and have been promoting their strong domestic supply chain and sourcing, something lithium-ion batteries could potentially struggle more with, given the dependency on importing LFP cells. This is a significant benefit, particularly in light of the OBBB and tariffs in the US, as well as the domestic content bonus in the 2022 IRA tax credit scheme.
Eos Energy experienced high revenue growth in H1 2025, jumping over 240% yoy. However, at the same time, the net loss increased from US$74.9 million in H1 2024 to US$207.8 million in the first half of this year, with the cost of goods sold exceeding its revenue by over three times. ESS Tech and Invinity saw a 4% and 84% year-on-year decline in revenue, respectively.
Cash Flow
Strong R&D is a key draw to these companies; the products being relatively nascent technologies, in addition to the companies themselves still being relatively new, means R&D spending is, as expected, relatively high. For ESS Tech, R&D spending has exceeded revenue since 2020, and the same is true for Eos, apart from the first half of 2025. As Invinity was formed from two preexisting manufacturers, Avalon Battery and RedT, its R&D spending has been lower than that of the other two companies and has been assisted by a £11 million (US$14.61 million) UK government grant in 2023.
While ramp-up is still underway, capital expenditure remains high, with the average capex/revenue for these three companies being 118% last year, compared to the 17% average of the top 10 energy storage suppliers featured in our quarterly Bankability Report. This higher investment spending could be a contributing factor to the negative free cash flow from the companies.
The lack of operating profits could pose a significant liquidity risk for these companies, with Eos Energy’s operating cash burn increasing from US$12.3 million/month in 2024 to US$15.83 million/month in the first half of this year.
Invinity and ESS Tech are being slightly more cautious, both decreasing their monthly burn rate from 2024 to H1 2025 by 7% and 15% respectively. Despite this, ESS Tech could potentially still see cash flow struggles; the company ended H1 2025 with unrestricted cash and cash equivalents of US$0.8 million. Despite funding which boosted this to US$7.2 million at the end of July, using H1 2025’s burn rate, the company still had a runway of 1.4 months.
Through financing rounds, Eos Energy has the highest cash balance of US$153.9 million at the end of the first half of 2025; however, the company appears to have the highest dependency on external financing among the three. The company secured a loan from the US Department of Energy in November 2024 for up to US$305.3 million total and received up to US$315.5 million of funding from Cerberus Capital Management LP the same year. From the company’s Q2 2025 report, Eos had a worrying -1.63 debt-to-equity ratio.
Both ESS Tech and Invinity are performing better in terms of debt, being primarily equity-financed. Invinity stated it had no external debt outstanding as of May 2025, and ESS Tech had a gross debt of only US$0.87 million according to its Q2 2025 report. The company is increasing financing efforts with a standby equity purchase of up to US$25 million and US$40 million transaction with an investment fund managed by Yorkville Advisors Global in October 2025, comprising US$30 million upfront.
Conclusion
If the energy storage market continues on its current growth trajectory, it is likely the alternative chemistry market will grow as well. This is aided by the increasing push towards long-duration energy storage (LDES), for which the battery chemistries provided by these companies are ideal. Both Invinity and Eos Energy have benefited from the UK LDES Cap and Floor scheme, with Invinity being selected for multiple projects and Eos securing a 5GWh agreement with Frontier Power. The growing demand for data centres across the US could also benefit ESS Tech.
However, the market remains limited, and the majority of developers appear to be looking to the more historically established lithium-ion batteries. Of the three companies, Invinity seems to be in the best financial health, with the company potentially reaching profitability in the coming years.
The companies analysed are smaller than the lithium-ion competitors, which tend to be part of large corporations. There is an argument that poorer financial health is due to this fact, in addition to the newer establishment of these companies.
However, HyperStrong and Hithium, founded in 2011 and 2019, respectively, which focus on lithium-ion, have already both managed to achieve profitability, although HyperStrong, as a pure-play energy storage system integrator, does not itself make cells, Hithium does. Overall, the high startup cost and the necessary R&D required for new chemistries, paired with the smaller market, are a significant toll for new companies aiming to bring new battery chemistries to the market.
Comprehensive bankability analysis of Invinity Energy Systems, Eos Energy Enterprises Inc., is included alongside top lithium-ion suppliers in our Battery StorageTech Bankability Ratings Report. For more information, please don’t hesitate to reach out to the team here.
About the Author
Charlie Gisbourne is a market analyst at Solar Media, focusing on energy storage systems (ESS). Her research encompasses ESS deployment across the UK and Ireland and the global upstream landscape for ESS manufacturing. She has a BSc in Physics from Durham University.