The Energy Storage Report 2024

Now available to download, covering deployments, technology, policy and finance in the energy storage market

IRA tailwinds will take time to translate into revenue growth, flow battery player ESS Inc says

LinkedIn
Twitter
Reddit
Facebook
Email

The US Inflation Reduction Act has created a great buzz but not yet business deals for flow battery maker ESS Inc, according to CEO Eric Dresselhuys.

ESS Inc, aka ESS Tech Inc, is the holder of IP and manufacturer of a flow battery energy storage system technology, based on an iron and saltwater electrolyte chemistry, headquartered in Oregon.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

The company announced its latest financial results for the first quarter of this year, in which it revealed negative EBITDA of US$21.4 million for the three months ending 31 March, but also ended the period with US$119 million cash and short-term investments. Company management said in a call with analysts to explain earnings that it has sufficient capital to see through its planned activities in 2023 and 2024.

While it only recognised US$400,000 in revenues in Q1 2023 from the delivery of two units – lower than expected based on factors including delays getting product onto project sites – chief financial officer (CFO) Tony Rabb said that ESS Inc believes it has “a path to non-GAAP gross margin profitability in the next 12 to 18 months”.

From there to achieving company cashflow breakeven will be dependent on ESS being able to scale up its manufacturing into mass market volumes, and the company’s COO and SVP of engineering were on the call to explain how it intends to streamline, automate and standardise production to lower costs and improve efficiencies.

The company currently has 800MWh annual production capacity at its factory in Wilsonville, Oregon, which it finished installing before the end of 2022, a year in which it earned just US$894,000 in revenues. ESS Inc is in a relatively early stage of commercialisation. Last year was also the first year in which it was able to realise revenues since going public in 2021.

A little less conversation…

On the demand side, what ESS Tech and its fellow players in the non-lithium energy storage space focused on novel long-duration energy storage (LDES) applications are looking to, is the growth of renewable energy on the world’s grids translating to market structures that value LDES technologies.

Dresselhuys spoke in the call about the “tailwinds that are accelerating demand for our solutions”, most notably in the US and the investment tax credit (ITC) for standalone energy storage deployment and production tax credits (PTC) for domestically-produced clean energy equipment brought in by the Inflation Reduction Act (IRA).

Alongside that federal policy driver are energy storage targets and incentive policies introduced in 11 US states, with Maryland the latest to join a club that includes New York, Virginia and California. Elsewhere “major regulatory announcements” in Europe and Australia have also “continued to drive interest” in ESS Inc’s solutions, the CEO claimed.

However, it would take time to realise the benefits of those industry tailwinds, Dresselhuys said, and in responding to an analyst’s questions said the IRA has “generated a lot of conversation, but not a lot of close at this point”. Part of that is that customers are still trying to get their heads around IRS rules and interpretation of the legislation.

Overall, Dresselhuys said the macro drivers for energy storage are too big to ignore now, and utilities and state regulators in the US for example are incorporating greater need for storage into their long-term planning.

18 March 2025
Austin, Texas
The Energy Storage Summit USA is the only place where you are guaranteed to meet all the most important investors, developers, IPPs, RTOs and ISOs, policymakers, utilities, energy buyers, service providers, consultancies and technology providers in one room, to ensure that your deals get done as efficiently as possible. Book your ticket today to join us in 2025!

Read Next

May 24, 2024
The new tariffs on batteries from China will increase costs for US BESS integrators by 11-16%, consultancy Clean Energy Associates said, adding that new guidance around the domestic content ITC adder will make it easier to access.
Premium
May 22, 2024
We hear from developers, IPPs and upstream battery sources about the US’ decision to massively hike tariffs on batteries and battery components from China.
May 22, 2024
The former prime minister of Australia, Malcolm Turnbull, delivered a keynote speech to open the second day of the Energy Storage Summit Australia 2024.
Premium
May 17, 2024
We hear from renewables independent power producer (IPP) and energy trading firm Monsson about a recent BESS project in Romania which reportedly used nearly 100% European technologies.
Premium
May 16, 2024
UK electricity market operator National Grid ESO is reassessing how much energy storage gets paid in the Capacity Market, battery storage operators told Energy-Storage.news, with one calling the current system ‘outdated’.

Most Popular

Email Newsletter