Executives at US flow battery manufacturer ESS Inc. have said the company will be able to continue into 2025 and reach a gigawatt-hour of annual production capacity next year.
The company, established in 2011 and working to commercialise a proprietary iron and saltwater electrolyte flow battery, reported its most recent financial results last week (14 August).
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It recorded an EBITDA loss of US$18.8 million and revenues of just US$348,000 for the second quarter of 2024, ending the quarter as of 30 June with US$74.4 million in cash and equivalents.
ESS Inc. CEO Eric Dresselhuys said that delays by a key partner had resulted in lower-than-expected revenues, which are expected to “resolve in the coming weeks,” while the company’s plan to move into “volume manufacturing and shipments remains solidly on track”.
Share prices were at US$0.56 per share yesterday after ESS Inc. listed them on the New York Stock Exchange (NYSE) at US$10.00 in December 2020.
They hit a brief high of US$18.75 in November before falling. ESS Inc. received a listing notice from the Securities and Exchange Commission (SEC) in March, and on 8 August, the company filed a definitive proxy statement with the SEC to execute a reverse split, which, once effected following a special shareholder meeting next week would put the flow battery company back into compliance.
ESS Inc. CFO: EXIM loan ‘should support cash needs well into 2025’
Despite these challenges, in presentations and an earnings call with leadership, the company emphasised the demand it expects to see both in the US and internationally for long-duration energy storage (LDES) technologies of the type it produces.
It also highlighted various project and technology development milestones, including a 25% increase in energy density resulting from improved electrolyte chemistry, cutting the commissioning time for its Energy Warehouse product in half and a near-60% reduction in costs for the Energy Warehouse’s production.
ESS Inc. also put emphasis on the fact that its batteries and storage systems can be produced domestically in the US, which is why it has been able to enter negotiations with the Export-Import Bank of the United States (EXIM) for up to US$50 million in funding.
The EXIM deal, disbursed under the state institution’s Make in America Initiative, is a “transformative agreement,” CFO Tony Rabb said.
While it is still in negotiation with EXIM, ESS Inc. expects to draw down US$10 million from that low-interest loan this year, helping the company to “fully fund” current and future capacity expansion.
“We’re extremely well positioned to continue to expand our production capacity through this EXIM financing facility, effectively funding all of our production capacity CapEx needs through 2025 and into 2026,” Rabb said.
“This transformative agreement bolsters our liquidity levels, and we expect should support our business cash needs well into 2025.”
Dresselhuys noted that the plan going into 2024 had been to “moderate” product builds and shipments during the first half of the year, before scaling in the second half once cost reduction had been implemented.
Rabb added that another 40% reduction in the cost of Energy Warehouse production—ESS Inc.’s commercial and industrial (C&I) product—is expected to be achieved during 2024.
Recently published research from the US Department of Energy’s Office of Electricity found that flow batteries are among the LDES technologies, defined as providing 10-hours or more storage duration, with the greatest cost reduction potential through 2030.
Meanwhile, the has completed production and testing of its first utility-scale Energy Center flow battery system and “has been cycling it to hone the operations while subjecting it to varied operating demands to characterise and validate its operational performance,” Dresselhuys said. The first Energy Center will be delivered to Oregon utility Portland General Electric (PGE) for the product’s inaugural project later this year.
ESS Inc. hopes to make ‘live announcements’ from Honeywell partnership in coming months
Other recent highlights included the start of commercial operation of ESS Inc.’s first overseas project, at Schiphol Airport in the Netherlands, thought to be the first flow battery deployed at an airport.
There was also the award of a US$10 million California Energy Commission (CEC) grant for an ongoing collaboration with California utility Sacramento Municipal Utility District (SMUD) and the selection of ESS Inc. flow battery tech for another CEC-supported project for a microgrid with Native American-owned developer and system integrator Indian Energy. Another California project for community energy supplier Burbank Water & Power was inaugurated in June, with 75kW output and 500kWh capacity.
Meanwhile, the initial engineering contract has been completed for another overseas project for the German utility LEAG. That project, at which the lignite-burning European utility is procuring a 50MW/500MWh (10-hour) flow battery system as part of an energy transition strategy to deploy 2-3GWh of LDES, has a targeted COD in 2026 and is now moving into the detailed engineering phase.
In response to a question from analyst Davis Sunderland, equity research associate at Baird around progress on a partnership with US automation technology provider Honeywell, CEO Dresselhuys said that Honeywell CEO Vimal Kapur had recently visited ESS Inc.’s premises in Wilsonville, Oregon.
“Honeywell certainly has a great appreciation, as we do, for the market environment and the mandate to get down the cost curve as fast as possible. So we’re at the stage now where the go-to-market teams have been organised,” Dresselhuys said.
“We’re putting proposals out to people and our hope would be that we’ll be able to translate that into live announcements with people here over the coming months.”
Dresselhuys spoke with Energy-Storage.news Premium at last year’s RE+ trade event in the US, discussing the potential for LDES technologies, the iron flow battery’s perceived advantages over lithium-ion and other flow battery technologies, as well as offering insights into specific projects and deals.
Conference call transcript by Seeking Alpha.
This article has been amended to reflect that the company’s first Energy Center unit will be delivered to utility PGE later this year and is not already cycling at the customer’s site, as was originally reported.
