Long-duration energy storage company ESS missed revenue targets for 2023 due to customer delays but said it remains positive about future growth prospects and its position in energy storage.
It is refining its iron flow battery design to improve manufacturability and cost efficiency. It said in its 2023 earnings report it lifted its first Energy Center (EC), a utility-scale, front-of-the-meter long-duration energy storage product providing up to eight hours’ energy storage. It expects this new system will be commissioned and delivered to Portland General Electric later this year.
The company expects profitability in 2024 after a $77.6 million loss in 2023. Eric Dresselhuys, CEO of ESS, said: “In fact, our strategic decision to make fewer Energy Warehouses (EWs) and ship them to customers with the greatest long-term opportunity allowed us to conserve cash and exit the year with a cash and short-term investments balance over $100 million.”
He said ESS cut the costs of building an EW flow battery unit by almost 60% during 2023 and this helped halve the Q4 adjusted EBITDA loss year-on-year. It plans to further reduce EW unit costs by up to 40% in 2024.
It cut labour time needed to build the EW system by 45% and decreased cycle times for power modules by 52%, and for proton pumps by almost 70%. In all, it lowered EW build cycle time by 73%, it said. It improved the electrolyte so that energy density increased by 25%, Dresselhuys said.
The company cleared customer delays in Australia and delivered in Q1.
Large multi-year deals with key customers and improvements in operational execution are expected to support the company’s aim of tripling or quadrupling its 2023 revenue levels. Last year it delivered to clients including SMUD, Army Corps of Engineers, Burbank Water and Power.
Dresselhuys said in an earnings call: “Indeed, we are poised to ramp our shipments and revenue late in 2024 and into 2025 while maintaining a sizable financial cushion, which should bolster our market position. The road to building a company in a new space is bumpy, particularly during the early stages when companies are more reliant on the timing of revenue and shipments, and often things don’t happen as quickly as one would like. And certainly, we’ve experienced that as we’ve been ramping up here at ESS.
“However, the behind-the-scenes work to execute on our strategy has progressed to plan. Our near-term challenges to maintain moderate and consistent scale shipping and installing energy warehouses have led to inconsistent financial results.”
He said the long-duration energy storage market has tremendous tailwinds, and lithium-ion is rife with flaws.
ESS filed 82 patents last year, and had 52 patents granted. That brings the total to 367 patents filed and 77 patents granted, he added.
The company has received notification from the New York Stock Exchange that it is not meeting share pricing listing requirements, but has six months to remedy this.
