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ESS Inc claims US$8bn pipeline of opportunities for its iron flow battery storage

ESS Inc shares listed on the New York Stock Exchange in October. Image: ESS Inc via Twitter.

ESS Inc’s recent special purpose acquisition company (SPAC) merger, which listed the iron flow battery manufacturer’s shares and warrants on the New York Stock Exchange, has raised US$246 million cash. 

The company got its NYSE listing in October as it finalised the business combination with ACON S2 Acquisition Corp. ESS’ shares are now listed under the ticker GWH and warrants as GWH.W. After listing at US$10.42 on 11 October, the price rose immediately to a high of US$23.80 the following day.

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The price then came down and has fluctuated slightly in the month or so since between about US$15 and US$20. As of yesterday the GWH shares were trading at US$14.98. Certain targets in the merger agreement were also met and legacy holders of stakes in the company, including Softbank Group, Breakthrough Energy Ventures and ESS company executives were able to receive additional shares.

ESS issued its quarterly financial results for the third quarter of 2021 earlier this week in which it revealed the sum raised by the merger, bringing its total liabilities to US$285,412,000. It held total assets worth US$17.8 million as of the end of September, up from just over US$9 million at the end of 2020. 

As with some other energy storage companies taking the SPAC route to going public over the past 12 months, such as Eos Energy Enterprises, Stem Inc and Li-Cycle, ESS Inc acknowledged before listing that the route to profitability is long-term and commercialisation will cost money. 

It saw a net loss of US$51.3 million for Q3 2021, and just under US$300 million for the nine months ended 30 September. 

As the company only listed during the quarter, ESS said it would not be holding an earnings call to explain results, but would be hosting one for Q4 2021. 

CEO Eric Dresselhuys did provide a brief statement on results, stating that: “ESS made immense progress in the third quarter,” including becoming the US’ first publicly-trade long-duration energy storage company.

“We continue to produce and ship towards our goal and continue to ramp operations in support of our journey to be the leading provider of long-duration energy storage,” he said.

Key to profit lies in opportunities ahead and ability to scale

ESS Inc is one of more than 20 founder members of the newly-launched Long Duration Energy Storage Council (LDES Council), a CEO-led group of companies and organisations which seeks to accelerate the uptake of long-duration energy storage technologies and their role in the global energy transition. 

The group is preparing to launch a report later this month (23 November), which promises to show how the deployment of between 85TWh and 140TWh of long-duration storage worldwide by 2040 — requiring US$1.5 trillion to US$3 trillion investment — can allow renewable energy to meaningfully replace fossil fuels at the heart of the energy system. 

Other members include the likes of BP, ESS Inc investor Breakthrough Energy Ventures, numerous other long-duration storage technology providers, and more. 

The long-duration market needs a significant scale-up in demand for the likes of ESS Inc to succeed. Many consider that it will do, but regulatory and market design barriers do not yet value technologies that can store energy for several hours or even days.

During the quarter just gone, ESS Inc announced a few deals and agreements that the company no doubt hopes are indicators of big things to come.

The company has been contracted to supply 8.5MWh of its non-toxic, degradation-free ‘all-iron electrolyte’ flow battery systems to Enel Green Power España to support a solar farm in Spain, with more contracts with Enel touted as likely throughout the EU. ESS Inc also signed a framework agreement with Softbank’s renewable energy subsidiary SB Energy to deploy 2GWh of flow batteries between now and 2026, with the first system already delivered to an SB Energy project in California. 

The flow battery provider also got expanded insurance coverage for its 10-year warranty through Munich Re, which may go some way to improving the bankability of its products. 

ESS Inc said in its financial results statement that it has identified a global pipeline of opportunities in excess of US$8 billion from now to 2027. This is based on named projects with customers ESS has already been in talks with and signed non-disclosure agreements to discuss. That includes projects and deals booked, awarded and in negotiation. 

“Looking ahead, our pipeline and backlog remain robust, and we are rapidly expanding capacity to satisfy the accelerating worldwide demand for long-duration energy storage,” ESS Inc CEO Eric Dresselhuys said. 

Dresselhuys said that the company feels confident that supply chain constraints, which are “a concern for most manufacturers” will not impact on its ability to deliver on opportunities ahead. The situation will be monitored in the coming months, he said. 

ESS Inc has recently secured additional space for its manufacturing facilities in Oregon, US, and Dresselhuys said he was “confident in our ability to increase manufacturing capacity and expand our sales and support footprint to bring long-duration iron flow battery technology to the world”.

Dresselhuys was among commentators featured in an article on the passing of the US Infrastructure Investment and Jobs Act (IIJA) legislation, which was signed by President Biden on Monday.

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