Iron flow battery company ESS Inc has recognised revenues for the first time since it publicly listed, while also closing in on its targeted annual production capacity of 750MWh.
Alongside its latest quarterly financial results release yesterday, the Oregon, US-headquartered technology provider also announced a major deal for up to 12GWh of its systems to be deployed in a new partnership.
ESS Inc listed on the New York Stock Exchange in late 2021 after a SPAC merger. Having said from the outset that it would likely be a couple of years before it would be able to reach profitability, it has also not been able to recognise revenues until this quarter.
It registered revenues of US$686,000 for Q2 2022, relating to the sale and installation of three of its Energy Warehouse systems, which are behind-the-meter commercial and industrial (C&I) devices of 400kWh capacity each.
ESS Inc is the only manufacturer and holder of patents on its flow batteries, which use an iron and saltwater electrolyte in rugged systems that can deliver long-duration energy storage (4-12 hours’ duration) over many years without the degradation that lithium-ion batteries experience with use, in particular from frequent and deep cycling.
The company also talks up the fact that its electrolyte is non-toxic and uses more abundant raw materials than other flow batteries in their manufacture, with other providers tending to opt for vanadium dissolved in sulfuric acid, or in some cases, zinc-bromine. Alongside Energy Warehouse it also offers a grid-scale unit, Energy Center, which is a 3MW system.
CEO Eric Dresselhuys said in a call with analysts to explain results that the iron flow battery units were deployed in collaboration with the customers and learnings from the installation process can be carried into future projects.
The CEO then talked up progress in a microgrid project for California investor-owned utility (IOU) San Diego Gas & Electric (SDG&E), which will enable key community facilities to operate independently from the grid, in a region where the utility has had to enact Public Safety Power Shutoffs (PSPS) to limit damage potential from wildfires.
A couple of other customer deals were referred to by Dresselhuys in a company press release, including a solar-plus-storage project with utility Tampa Electric Company which it contracted for in the second quarter, and an Energy Warehouse delivered to installer Terrasol Energies for deployment at Sycamore International, a recycling company in Pennsylvania, US.
Dresselhuys also addressed the US Senate’s passing last Friday of the Inflation Reduction Act, which he called a “groundbreaking piece of legislation”.
The Act includes tax credits for standalone energy storage, extends tax credits for solar installations including when paired with storage, and offers tax incentives for domestic manufacturing, all of which could be applicable to ESS Inc or its customers. US President Joe Biden is expected to sign the act into law imminently.
Production capacity at ESS Inc’s factory was doubled during the quarter to 500MWh, with the ramping of the company’s second semi-automated production line.
The path to profitability remains a climb, with ESS Inc incurring operating expenses of US$24,862,000 during the quarter, meaning loss from operations stood at US$24,176,000 for the three months ending 30 June. For the first half of the year, that loss from operations figure stood at US$46,365,000, up from US$18,438,000 for H1 2021.
Overall net loss for H1 2022 was however considerably lower than in the same period last year: US$21,297,000 versus US$245,360, albeit much of that H1 2021 loss was associated with the costs of the SPAC merger transaction and redemption of warrants.
Yet the company still held total assets worth US$216.124 million at the end of Q2, a modest depletion from just over US$250 million at the end of last year.
CFO Amir Moftakhar said the company’s non-GAAP operating expenses were in line with expectations and cost reduction efforts were also going well, with the cost of manufacturing Energy Warehouses expected to be reduced by 80% by the end of the year.
The addition of a fully-automated production line in Q4 of this year will bring production capacity on an annual basis up to the targeted 750MWh, Moftakhar said.
ESS Inc expects its non-GAAP operating expenses to come in at about US$100 million by the end of the year, and to have “ample liquidity to run the business,” and end 2022 with cash, cash equivalents and short-term investments in excess of US$120 million.
Distribution and manufacture deal with Australia-based ESI
As mentioned earlier, ESS Inc also officially announced its strategic relationship with Energy Storage Industries Asia-Pacific (ESI).
Energy-Storage.news reported in early July that Australia-headquartered ESI is building an iron flow battery factory in Queensland, Australia.
At that time, Sword and Stone Capital Management, the investment group behind ESI, said that it had evaluated different technologies from different providers for more than four years before selecting ESS Inc’s iron flow battery.
The flow battery company said today that the partnership covers distribution and manufacture of devices using ESS Inc technology in Australia, New Zealand and the Oceania region. ESS Inc will deliver 70 Energy Warehouse units of 750kW/500kWh each during the rest of this year and in 2023.
At the same time, ESI will progress its construction of its own factory in Maryborough, Queensland, which will conduct final assembly of flow batteries from 2024, with targeted annual production capacity of 400MW by 2026. ESI has previously said that up to 80% of components could be sourced from within Queensland.
ESS Inc claimed the deal could result in the deployment of up to 12GWh of its technology.
“ESS is an ideal technology partner to meet the extraordinary demand for long-duration energy storage in Australia and the region. Safe and non-toxic ESS iron flow batteries are perfect in Australia’s harsh environment and the ability to locally source electrolyte provides insurance against supply chain risks and price escalation,” ESI managing director Stuart Parry said.
“The transition to clean energy requires new long-duration storage solutions and we look forward to working with ESS to meet the needs of an increasingly renewable energy grid.”