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ESS Inc posts US$477 million full-year loss; yet to recognise revenue

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An ESS Inc Energy Warehouse unit being lowered into position. Image: ESS Inc.

Iron flow battery provider ESS Inc has revealed a US$477 million net loss in 2021, in its first full-year results since becoming a publicly-traded company on the New York Stock Exchange (NYSE). 

The bulk (87%) of this was from losses on the revaluation of warrant, derivative and earnout liabilities, which relate to the listing through a SPAC merger in October. Operating losses were the remaining US$60.9 million and it ended the year with assets of US$250 million of which 95% is cash.

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ESS Inc designs, builds and deploys iron flow batteries for long-duration commercial and utility-scale storage requiring 4-12 hours of duration. It claims unlimited cycles with no capacity loss, versus Li-ion’s average of 6,000.

Its Energy Warehouse for commercial and industrial (C&I) customers is a behind-the-meter unit with a capacity of 400KWh. Its 3MW Energy Center for utility-scale applications, pictured above, packs 6MW/74MWh per acre footprint.

Path to near-term revenue

In a results webcast, CFO Amir Moftakhar said that that it shipped five of its utility-scale Energy Warehouse commercial units in the latter part of 2021. However, it had not recognised revenue on any of them for the quarter because customer acceptance had not yet occurred.

CEO Eric Dresselhuys said the company was making “…progress securing new contracts, delivering to customer projects, and ramping up our operations. We have now achieved full customer acceptance at one of the projects where we have installed our Energy Warehouses.” This indicates it will definitely have recognised revenue during the current quarter (Q1 2022).

He added that it expected to ship 40-50 Energy Warehouses in 2022, all of which were contracted. ESS is not guiding on Energy Center orders but said it expects to start shipping those this year.

It began trading on the NYSE after a merger with ACON S2 Acquisition Corp in October, as reported by Energy-storage.news. Its shares sit at US$4.50 with a market cap of US$650 million at the time of writing.

Long-term pipeline and growth goals

After it listed the company ambitiously claimed an US$8 billion pipeline of opportunities for its products. Two notable customers are investor-owned utilities San Diego Gas & Electric (SDG&E) and Portland General Electric (PGE). Both have ordered 3MWh of stored energy capacity which should come online in Q1 and mid-2022, respectively.

ESS also has an 8.5MWh order from Enel Green Power España and a framework agreement with SB Energy for up to 2GWh of flow batteries by 2026.  

The company has also announced ambitious growth forecasts. In a presentation in October, it projected US$37 million revenue in 2021, followed by five years of 150% average CAGR to reach US$3.5 billion in 2027. It expects the vast majority of revenue over the period to be from sales of Energy Centers.

The company is a major player in the long-duration energy storage space which was a hot topic of discussion at Solar Media’s Energy Storage Summit 2022 held in London this week.

The headline of this story has been amended from its original form to reflect more accurately the sum of the net loss derived from the costs of the company’s SPAC merger.

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