“The problem that I see is that too many solar developers moved into this dramatic storage development in Italy because it looks easier, right? Because it’s way less land compared to solar,” claimed Rodolfo Bigolin, CEO and co-founder of Innovo Group. The firm is partnering with Spanish utility Iberdrola to deploy solar and storage projects in Italy through a JV, iCube Renewables.

“And the problem with that is that people are throwing around grid connection requests and they’ve secured land without the strategy, without any studies over the specific project. We believe that battery storage cannot be developed like solar. It needs much more work and analysis on every specific project,” he added.

“We’ve had half-a-gigawatt pipelines come across our desk with a point of connection of 10 or 12km, from the same people who were a year ago advising others that you can’t go beyond 2 km. But they found a piece of land and are now throwing grid connections around.”

Another issue in the Italian market is that BESS costs spiked shortly after battery storage won an unprecedented and unexpected amount of contracts in February 2022’s capacity market auctions, said Emanuele Taibi, recently appointed Italy country manager for UK’s Field which is also targeting Italy.

Taibi said the battery storage wins “…happened because the forecasts which the industry provided in terms of capex reduction were looking very aggressive, and the numbers and the caps in the capacity market auction were compatible with that. So people went into the capacity market with an expectation that they’d be able to procure storage later at a much lower price than what we’re seeing in reality today.”

“So there is a bit of an issue there, because the vision was one of a continuous smooth reduction in the capex of storage, which didn’t happen and it actually increased.”

Wärtsilä, one of the largest BESS integrators globally, for example, told Energy-Storage.news in June 2022 that the BESS cost base had increased 25% year-on-year, mainly due to battery cells.

Enel was the big winner of the February 2022 capacity market auction, with 93% of the roughly 1.1GW of BESS projects awarded contracts for 2024 onwards. The Italy-headquartered utility is now starting construction on 1.6GW of BESS projects in Italy, largely to service those contract wins, it announced recently.

“Other players are still hoping to see a bit more of a decline in capex before investing,” Taibi added.

The feature on the Italian grid-scale energy storage market in the 35th PV Tech Power will explore why it is now picking up pace, the all-important reform of the electricity market by TSO Terna, and what opportunities there are. ESN Premium subscription also gives access to the PV Tech Power catalogue.

PV Tech Power 35 will be released later this month, meanwhile, you can already read PV Tech Power 34 here.

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There are strong comparisons between the onshore wind turbine and battery energy storage markets in terms of their path to maturity and emerging issues.

Given the different way the markets began this may seem surprising but similar challenges were seen for wind turbines as the market grew and matured, such as choice or stability of manufacturers, choice of site, operational issues or revenue streams. Many have been resolved or mitigated with the help of insurance.

An evolving technology

The S Curve of technology adoption.

The UK turbine market was driven by government subsidies and manufacturers quickly entered the market. Some 50 – 60 different manufacturers in the UK and Europe were approved by insurers by the late 1990’s.

The first onshore wind farm, erected before the advent of subsidies in 1991 at Delabole, Cornwall consisted of ten 400 kW turbines. The largest onshore wind turbine nowadays has an output of up to 7.5 MW from a 126 metre diameter rotor to give some sense of change in scale over this time, an 18 fold increase.

The dream chased by those that followed Delabole was to have 100 turbines in a field and ensure a great revenue from this clean energy source. This is where the similarities between the battery market and the wind turbine market begin.

The planning process and permissions needed for installation was an issue for turbines, as it is now for battery assets.

At ideal turbine sites, wind at different heights was expertly modelled but even moving a site 100 metres, often required by planning, made a huge difference to the performance and revenue streams, because wind patterns can vary significantly in just a short distance. Similarly, battery asset owners are now facing long and complicated processes to find and secure permissions on sites and may have to overcome the challenges of less than optimal locations, such as on flood zones.

For turbines, from an insurance point of view less than ideal sites increased the risk and there were other factors that affected the revenue turbine businesses could achieve, including pitting on blades, concern about moss growing on them, natural catastrophes causing turbines to fall over or fire caused by the blades rotating the wrong way. Blade technology and design has had to increase dramatically, including how to point higher as in a sailing boat.

As the subsidies dropped from 5kW to 50kW and then ceased, the turbine market changed again and so did the insurance requirements. The second life market evolved quickly through gear box remanufacturing, which require bespoke warranties. The standard life of a gearbox is around ten years, but some first life gearboxes suffered from the wrong carbon content in the gearing causing them to shatter and explode. Those intact at their ‘end of life’ are suitable for remanufacturing to a much higher specification, reflecting learning and technological advances over this time.

Insured warranties ensured turbine site owners could invest in them with confidence however, which helped the market to evolve and mature, and these products are still in play today.

Insurance’s role as technology moves up the S curve

At each stage in the development of the turbine and battery market, insurance has played a crucial part in supporting investment and growth. For turbines, insurance has to be based on a thorough understanding of mechanical and electrical engineering processes, whereas in the battery market insurance requires a combination of chemical and electrical engineering, plus an ability to read and interpret battery data and telematics.

In terms of manufacturing, the turbine market has gone through an extraordinary period of evolution and consolidation so that manufacturing is now limited to a few large suppliers for utility scale sites. The battery market is similarly limited to a few major manufacturers, but it has not gone through a period of evolution to reach this stage.

With no distortion of the market for batteries from subsidies, at least in terms of payment for output, those entering the battery market must have good financial backing and a good product. The sums of money required to invest are on a completely different magnitude so relatively few manufacturers have emerged.

The precision and sophistication required to manufacture cells is far more complex than turbines, a fact that has been poorly communicated, even at government levels. The struggles to develop Britishvolt are testimony to this.

Insurance impacts on nearly every aspect of creating a successful market for energy storage. Image: Altelium.

But despite cells being manufactured or integrated by largely blue chip or government backed businesses, insurance still plays a vital part in the growth of the battery market. The existence of insurance can make finance deals less costly, because due diligence on the product or site has been carried out by the insurer with specific expertise in that market, and is a hallmark of quality and confidence. With such large sums involved even a fractional difference to interest rates or terms can be significant.

Banks were slow to come into the turbine market, and the quality of the warranties was very important for some lenders to enter it. Even though the sums are much larger, with banks lending perhaps £50-£60 million (US$62-75 million) on a battery site, the response has been different with batteries, largely because output (revenue) can be controlled.

Turbine assets and battery assets can appear alike in the sense that they supply a revenue stream from renewable energy, and require sophisticated planning and proximity to an electricity substation. Both also require some type of management.

As a moving item a turbine needs constant management or maintenance, but nothing can be done to change the way the wind blows and the revenue or output that can be achieved as a consequence.Similarly, a turbine can be allowed to rotate or not, but its usage profile can’t be altered to balance the degradation rate against revenue generation. The health and longevity of a battery can be altered. The battery is entirely dependent on a human made compound, the chemicals in the batteries, and how they are cycled can have a dramatic impact on their lifespan and output.

Battery technology has matured more quickly, but warranties are still arguably more important

Degradation and usage are key parameters to the successful finance and operation of a battery asset. This is perhaps the most crucial interface between asset owner and insurer, where investors can use the specialist knowledge of the insurance company to help protect their assets and establish suitable operational and financial terms.

As an immediately more mature market, not having been skewed by smaller players chasing subsidies, those involved with batteries have the skill sets to embrace the use of the financial markets, including the use of insured warranties to underpin and protect balance sheets.

Warranties are also of importance to batteries for a further reason which wasn’t at play in the turbine market, because, while there were many manufacturers in China there were also more manufacturers in Europe or North America. The best gearbox was made in Finland, Vestas from Denmark was a global presence and there were other manufacturers in Germany, Spain and Canada.

The large distances between cell manufacturer or integrators, and the battery energy asset owner, can make it more challenging to collect a claim under a warranty. In this situation an additional insured warranty gives vital peace of mind to investors.

Other factors too have played a part in accelerating the maturity of the battery asset market, including the energy crisis in Europe, and global recognition and response to climate change.

Greater research and planning is needed to enter the battery market compared to the turbine market but those entering the battery asset market are stronger as a consequence. The speed at which the market has matured, and the existence of specialist battery insurers is a very positive sign indeed.And perhaps most importantly, a mature battery market will help turbines deliver on their true promise of a clean, independent energy supply, when and where it is needed.

About the author

Charley Grimston is executive chairman and co-founder of Altelium, an insurtech business offering insurance for batteries driven by real-time AI-powered data analytics.

He has deep experience of the insurance industry, remembers the excitement of first seeing a US wind turbine in 1976 being underwritten in the Lloyd’s market and has been involved in the green energy industry ever since. Charley is a member of the British Standards Institution (BSI) committee which developed the UK standards for safe and environmentally conscious handling of battery packs and modules.

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In short, non-wires alternatives are solutions that mitigate the need for buildout of transmission and distribution (T&D) networks, by using cheaper alternatives that include battery storage. When electricity grids reach or are projected to reach their full carrying capacity and become congested, batteries can help shift the load they carry to different times of day, when they are less strained.

The solution in Orange County is distributed across three separate 4MW battery energy storage system (BESS) installations: two on property owned by the local Warwick Valley Central School District, the third in the Orange County Village of Warwick. The batteries will improve grid conditions for a number of towns, villages and hamlets in the largely rural area, serving around 7,500 of O&R’s customers.

“This project represents a positive, innovative achievement in O&R’s continuous efforts to provide more sustainable, local power while minimising its costs to our customers,” utility president and CEO Robert Sanchez said.

It will do this via connection to O&R’s Wisner substation in the Warwick area, helping to back up the substation’s operation as well as supplementing local electricity supply on days of high demand, which could include summer or winter peaks when heating or cooling loads increase, for example.

It’s mitigating those peaks that proves both expensive and technically difficult for utilities around the world and the Convergent Energy and Power BESS installations, connected to O&R’s existing overhead wires and cables will help O&R with that. Building out new T&D lines and infrastructure is also a lengthy, difficult and often highly regulated process that frequently meets with local opposition.

The BESS project also makes a modest contribution to New York’s energy storage deployment targets: 3,000MW by 2025 and 6,000MW by 2030. Orange & Rockland, Con Edison (of which O&R is a subsidiary) and New York’s other investor-owned utilities (IOUs) are each tasked with procuring or deploying a tranche of that storage output each.

It’s the first NWA project for O&R in its Orange County service area, but not the utility’s first of its kind. Back in 2021, developer Key Capture Energy and the utility switched on a non-wires alternative BESS project in Rockland County, a 3MW system provided by system integrator-manufacturer Powin Energy.

Key Capture Energy won that project’s contract through an Orange & Rockland request for proposals (RFP). In April 2021, Energy-Storage.news covered the project, at O&R’s Ladentown substation in Pomona, Rockland, as one of three relatively small-scale projects which nonetheless proved the versatility and forward-looking applications of battery storage technology.

Valuable NWA use cases taking time to take hold

Despite the seemingly obvious value of the NWA use case, getting projects off the ground has not been straightforward. While it’s difficult to generalise why that may be, it generally comes back to the highly regulated – if not outright politicised – nature of T&D planning and investment.

As with much to do with advanced energy storage, the technology development progresses much faster than the regulations of the markets it participates in. In New York, a recent report highlighted the importance of transmission network planning waking up to the benefits of energy storage as a non-wires alternative. A similar report was published pertaining to the neighbouring New England ISO jurisdiction around the same time.

Yesterday (16 May), Energy-Storage.news reported on a distributed energy storage buildout planned by German transmission system operator (TSO) Amprion with energy company E.On as a mitigator of grid congestion. Other recent examples include a transmission-level 30MW/60MWh NWA BESS project completed in Brazil last year on the networks of transmission system operator (TSO) ISO CTEEP.  

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The Karlsruhe regional administration issued the approval notice on 1 March, and construction will start this year with completion expected by the end of 2027.

Karlsruhe administration president Sylvia M. Felder said: “I am pleased that the Forbach hydropower site is being retained and transformed into to a dedicated pumped storage power plant. This is a significant contribution to the success of the energy transition. Pumped storage power plants represent a vital means of energy storage and are indispensable for renewable energies.”

The main aspect of the new project is the construction of a new powerhouse integrated into the hillside to accommodate the new plant technology. This will include a new turbine for the Schwarzenbach power plant, with 54MW discharge power capability and 57MW of pumping power, as well as three Francis turbines for the Murg plant totalling 23MW.

The existing Forbach equalisation basin will be expanded with a new cavern water reservoir in the adjacent hillside to serve as the lower reservoir for the future pumped storage power plant. This will collect water channeled from the upper reservoir (the Schwarzenbach dam) to drive the turbines and generate electricity.

PHES plants account for the vast majority of installed energy storage capacity by MWh today, but new projects are relatively few and far between because of the nature of the technology.

Last month conglomerate GE announced it would provide six 37MW turbines for a plant in Gran Canaria, while in March £100 million (US$124.4 million) was put into a new project in Scotland and a final application for an 8GWh project in Nevada was submitted.

See a German-language diagram of how the new PHES plant in Germany will work below.

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On Sunday (14 May) NT chief minister Natasha Fyles and minister for renewables and energy Selena Uibo released a statement about the latest “milestone” reached at the Darwin-Katherine Battery, which as the name suggests, will support the region’s Darwin-Katherine Interconnected System.

Following the successful installation of all the batteries, the project has now reached the pre-commissioning phase, where test charge and discharge cycles will be performed. The battery is being islanded from the grid in testing, using a temporary power supply and AC/DC power converter.

It will be connected up to the network later this year, and is expected to go into full operation during the 2023-2024 financial year, the ministers said. It’s the first update on the project since November last year, when civil and building works were completed, as reported by Energy-Storage.news at the time.

“Commissioning is a complex and intensive process,” said Gerhard Laubscher, CEO of Territory Generation, the state-owned energy company overseeing the project. Laubscher said Territory Generation is “working closely with all stakeholders to support the fastest possible progression of these activities”.

Those stakeholders include Hitachi Energy, which provided and is integrating the BESS at a site adjacent to Channel Island, a gas power plant and currently the Northern Territory’s main source of centralised power generation.

The batteries will allow the Darwin-Katherine network to reduce its reliance on Channel Island’s fossil fuel-powered turbines, and instead leverage growing shares of distributed solar PV: like pretty much all of Australia, rooftop solar uptake is very high in the NT, with local government studies finding an increase of about 45% in rooftop installations annually since around 2010.

It will be used to test and try out a variety of applications for the BESS, including providing the spinning reserves that help integrate variable renewable energy to the grid, while its advanced inverters will enable it to deliver inertia to the network.

That’s a growing use case for batteries in Australia, with many of the country’s largest BESS assets either being kitted out with advanced inverters from Day One or being retrofitted with them. The federal government, through the Australian Renewable Energy Agency (ARENA), for example, is funding a number of such retrofit and new installations around the country.

Project partner Hitachi Energy can claim a pioneering position in this regard – the company delivered the first large-scale BESS to deliver ‘virtual’ synchronous inertia to an Australian network with a 2018 project in Dalrymple, South Australia. The company won the Darwin-Katherine project contracts through a competitive procurement process launched by the NT government in 2020 and awarded a year later.

While the Darwin-Katherine BESS (DK BESS) in the sparsely populated Northern Territory is clearly of an order of magnitude smaller than many of the large-scale BESS projects recently completed or underway across the rest of the country, it is significant for the NT.

The Darwin-Katherine electricity network supplies around 150,000 of NT customers with power, in a territory where the total population numbers just under a quarter of a million. Therefore, decarbonising it will be key to the territory reaching its goal of 50% renewable energy by 2030.

As well as installing the BESS next to Channel Island’s power plant, the NT government also recently ordered a new 22MW aeroderivative gas turbine to help further firm up the influx of renewable energy. The turbine is trailer-mounted, ‘hydrogen-ready’ and compatible with the 35MW BESS, according to manufacturer General Electric (GE), which is installing it in the expectation that if all goes well, much like the BESS, Territory Generation will order more units.  

The government laid out the BESS’ role, and that of other initiatives like solar PV installations for schools and home solar and battery incentive schemes, in a 10-year plan published in 2021, which you can read here.

Energy-Storage.news’ publisher Solar Media will host the 1st Energy Storage Summit Asia, 11-12 July 2023 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

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President Joe Biden

Despite passing both the House and Senate in recent weeks, President Joe Biden has vetoed H.J. Res. 39, a measure that would have lifted the president’s two-year moratorium on solar tariffs.

“For too long, because of unfair trade practices and underinvestment in domestic manufacturing, the United States has been reliant on China for solar energy products,” Biden writes in a statement to the House. “We have worked to create good-paying jobs and build manufacturing facilities in the United States for solar energy … But that production will not come online overnight.”

Biden says more than 50 new or expanded solar equipment manufacturing plants have been announced since he took office, and the U.S. is “on track to increase domestic solar panel manufacturing capacity eight-fold” by the end of his first term.

In the meantime, however, tariffs on solar products being imported would jeopardize the momentum the U.S. solar industry is building, Biden contends.

“Passage of this resolution bets against American innovation. It would undermine these efforts and create deep uncertainty for American businesses and workers in the solar industry,” the president states.

Industry stakeholders and trade groups have applauded the president’s veto.

“The Commerce Department’s solar tariff case effectively shut down the solar industry last spring, and the short-term tariff pause was strategically implemented to both allow project development to continue and create a bridge to a domestic manufacturing future,” says Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA).

“This strategy could not have come at a better time as the U.S. is experiencing an avalanche of solar manufacturing investment across the country,” she adds. “President Biden’s veto has helped preserve our nation’s clean energy progress and prevented a bill from becoming law that would have eliminated 30,000 American jobs, including 4,000 solar manufacturing jobs.”

American Clean Power Association CEO Jason Grumet echoes the sentiments about the “misguided, job-killing legislation.”

“Our nation’s solar industry has already announced billions of dollars in investments focused on building a strong and resilient domestic solar supply chain. The imposition of punitive retroactive tariffs – which would have been borne by U.S. companies and workers – would have jeopardized those investments,” he says.

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Eric Potts

Imerys, a supplier of mineral-based specialty solutions, is collaborating with TotalEnergies to install a large-scale solar power system paired with battery energy storage at its Lompoc facility in Santa Barbara County, Calif., as part of a long-term energy services contract.

TotalEnergies will install, maintain and operate an approximately 15 MW DC ground-mounted solar array and 7.5 MWh energy storage system under a 25-year power purchase and storage services agreement.

The Lompoc industrial site began its diatomite mining and processing operations in the 1890s. The new renewable power installation will cover 50% of the current electrical energy demand of the site.

“This project is a pivotal step to combat climate change and to manage the energy we buy in the region as we continue to invest and develop low-carbon products for our customers as well as extract and transform minerals responsibly and sustainably,” says Imerys’ Jim Murberger.

The TotalEnergies Distributed Generation USA team first engaged with Imerys to evaluate which of the company’s U.S. facilities offered the greatest viability for solar.

“We remain committed to helping Imerys achieve its sustainability goals with projects around the world, now with a focus on their U.S. operations,” says Eric Potts, managing director of TotalEnergies Distributed Generation USA.  

TotalEnergies currently has more than 1 GW of signed solar capacity, with more than 500 business and public agency customers worldwide. The deployment of this capacity is expected to be completed by the end of 2023.

The solar-plus-storage system at Imerys’ Lompoc site, which is expected to be fully operational in three years, features a ground-mounted single axis tracker solar PV system with bi-facial modules to maximize energy generation.

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Cindy Tindell

Matrix Renewables, the TPG Rise-backed global renewable energy platform, has completed the construction and financing of the Gaskell West 2 and 3 projects, located in Kern County, Calif.

The projects include 143 MW DC of solar energy plus an 80 MWh energy-storage system and are fully contracted, holding five long-term power purchase agreements with utilities and cities in the state.

Construction on the Gaskell West projects began last year and reached commercial operation this month. Subsequently, Matrix Renewables closed on tax equity provided by Bank of America for a total of $106 million and permanent financing of $99 million with an additional $25 million letter of credit facility provided by MUFG, HSBC, National Bank of Canada and Commonwealth Bank of Australia.

Cindy Tindell, managing director and head of U.S. for Matrix Renewables, says, “We are thrilled to complete the construction of our first project in the U.S. and to partner with such strong financial institutions.”

With an expanding team and portfolio comprising over 7 GW of pipeline, Matrix Renewables continues to grow across the U.S., furthering its goal of becoming a leading renewable energy platform across North America, Europe and Latin America.

Matrix was advised by CohnReznick Capital, which served as exclusive financial advisor, and Norton Rose Fulbright providing legal support.

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Basically, rather than go the long way round to list via an IPO, many companies elected to partner with SPACs, essentially shell holding companies that already had stock market listings and cash. In many cases, the hundreds of SPACs out there were unaffiliated with their targets, but went out to market to seek rising companies with perceived high growth potential.

The energy storage industry was no different, and in early 2021, in a Guest Blog written for this site, Charles Lesser, a partner with energy transition financing and consultancy group Apricum said SPACs were “awash with capital and eyeing the energy transition”.

What’s quite funny to note is that in the early years of Energy-Storage.news, at the start of every quarter, our colleagues over at PV Tech would be scrambling to write up analysis and news based on the financial results, presentations and earnings calls of companies in the solar PV sector.

Conversely, at Energy-Storage.news, quarterly earnings seasons would be relatively quiet affairs, with only a small handful of results to write up – Tesla being a prominent example, since Tesla’s electric vehicle (EV) business had already pushed it to the stock market. Some of the other pure play listed energy storage companies, in the mid-2010s, simply weren’t doing enough business to warrant too much coverage.

All that changed during the pandemic, as blank cheque SPACs swooped, much as Lesser had predicted, and took on mergers or reverse takeovers with energy storage companies, and companies in adjacent sectors like battery recycling. We’re still not quite as busy as the PV Tech team come results time each quarter, but we have become much busier than before.

Among that wave of public listings were three energy storage companies with novel technologies, each targeting areas of the market in which lithium-ion (Li-ion) might be reasonably expected to struggle to compete in.

ESS Tech Inc (ESS Inc) is the world’s only provider of an iron electrolyte chemistry flow battery. Eos Energy Enterprises is a manufacturer of a proprietary zinc-based battery storage technology, and Energy Vault, well, Energy Vault had a sort of revolving crane on a huge concrete tower raising and lowering 35-tonne bricks to store and release energy using gravity.

All three believed – and presumably still do – that they could deliver cost-effective energy storage, particularly long-duration energy storage (LDES) at a mass market level. All three however had to traverse the Valley of Death that nearly always prevents a great idea or great technology from becoming a fixture in its chosen industry sector.

One thing each of those companies was careful in pointing out was that despite the quickfire nature of their listings, profitability would take time to achieve. So, based on their respective Q1 2023 financial results, and with the understanding that it hasn’t been that long since their shares became publicly traded, how have the trio fared?

As they were shortly after listing

Eos Energy Enterprises

Eos went first, listing on NASDAQ in November 2020. On the publication of its second results release after that, in March 2021, Energy-Storage.news reported that the company was incurring significant costs to scale up manufacturing and deployments, although order book, sales backlog and pipeline of opportunities had all grown.

The company’s CFO at the time, Sagar Kurada, said Eos could expect to see positive gross margin on a quarter-to-quarter basis by the fourth quarter of 2022, as Eos targeted 2021 revenues of US$50 million. Perhaps more important for Eos and the other companies rivalled here is the belief in the fundamentals of its technology and the movement of the market to create demand for it.

Eos completed UL9540A fire testing in that quarter, with a short circuit test finding the battery temperature to rise to only about 80°C, versus lithium-ion batteries which can experience about 10x that temperature increase.

ESS Tech Inc

ESS Inc was listed just under a year after Eos, in October 2021. One interesting bit of trivia is that the flow battery company claimed that made it the first long-duration energy storage (LDES) battery system company to go public.

One reader wrote to Energy-Storage.news, enquiring why ESS Inc was making that claim, when Eos had already listed. The answer, according to a source that the site spoke to later, was that Eos’ zinc aqueous hybrid cathode battery actually goes to a 3-hour duration as standard.

However, Eos batteries can be stacked to create longer durations of up to about 12 hours, whereas ESS Inc’s flow batteries – and other flow batteries using different electrolyte like vanadium – can simply add energy to power by using bigger electrolyte tanks.

ESS Inc company management was clear on the challenge it faced commercially well ahead of its listing, which is on the New York Stock Exchange (NYSE).

As with Eos too, merging with a SPAC gave it capital to work with, but also came at a steep cost. Revaluation of warrants, derivative and earnout liabilities associated with the listing were expensive, and the manufacturer was yet to recognise revenues on products shipped, due to a wait on customer acceptance – again, one of the growing pains associated with selling a new and novel technology.

Reporting operational losses of about US$60 million in its first full-year results in February 2022 – spanning a period before and after listing – ESS Inc nonetheless ended 2021 with a quarter of a million dollars in assets, mostly cash.

That had only been slightly depleted by the end of Q1 2022, and it held US$213 million by then. For both Eos and ESS, R&D expenses made up a significant chunk of their expenses and both companies were targeting ramping up their production facilities to about 800MWh annual capacity.

ESS Inc CEO Eric Dresselhuys and his team were bullish on the prospects for long-duration energy storage (LDES), convinced that the growth of renewable energy would be a major driver for increasing durations of storage on the grid.

Energy Vault

Energy Vault also listed on the NYSE, in early 2022. Its SPAC merger raised US$235 million, most of which came in the form of investment from Korea Zinc and a company called Atlas Renewable, a US company set up to facilitate energy storage business activities for US companies in China.

It sought to differentiate itself from the competition, and its technology certainly looked different. However, as Energy-Storage.news noted, even before its listing, Energy Vault admitted that its grid-scale energy storage system technology was not ready for market, borne out by the company’s launch a few months later of a completely different-looking set of computer-generated renderings of its systems.

From a set of cranes perched almost precariously on top of a single tower, swinging weights like some high-tech fairground ride for giants, the Energy Vault gravity storage tech now looked like a solid, squarish building shape, with weights lifted up and down more like elevators in a fancy office block.

It’s fair to say that reception to the company’s idea of massive gravity storage installations was mixed, with many industry folk sceptical on what it could really do. Still, the company ploughed on ahead, with construction said to have begun in 2022 on a 100MWh project in China, which would be just the second gravity storage system it had built, including a megawatt-scale commercial demonstration project in Switzerland, the former using its old design of cranes with big blocks dangling from them.

Energy Vault claimed it would be earning some US$680 million or so of revenues from 2022 and 2023 combined: about US$75 million to US$100 million in 2022 and the balance this year.

Energy Vault’s 5MW demonstration project in Switzerland using its ‘old’ design. Image: Energy Vault.

Rendering of new design for EVx, Energy Vault’s gravity storage system. Image: Energy Vault.

Energy-Storage.news says:

All three companies had claimed big deals being in the works with a range of utilities and independent power producers (IPPs) and developers, mostly around the world, but largely in the US. Many of these announcements were covered by Energy-Storage.news, but projects actually underway – with the exception of Energy Vault’s China project – tend to be much smaller, often for industrial microgrids and the like.

So, whether or not some or all of these will be followed through on remains to be seen, but it’s safe to say if they did go ahead, each company would be deploying roughly about 3GWh to 5GWh of systems in the next five years or so.

After Q1 2023

What Energy Vault did next is pretty interesting. The company launched a battery energy storage system (BESS) division, headed up by John Jung, former CEO of Greensmith Energy, the software-focused BESS system integrator acquired by Wartsila.

By Q3 2022, Energy Vault already had around 1GWh of lithium-ion BESS projects in development and in its near-term pipeline.

In Q1 2023’s results release, Li-ion projects comprised the majority of Energy Vault’s US$11.4 million in revenues reported, although the company claimed it had been awarded 2.8GWh of projects for a value of about US$1 billion in Q1 alone and said about 75% of those awards were for EVx, its gravity storage solution.

Its revenue expectations have come down to earth a little though – full-year guidance, which it recently reiterated, is for US$325 million to US$425 million for 2023, with a 10% to 15% gross margin and adjusted EBITDA loss of between US$0 to US$75 million.

Eos Energy Enterprises, after a tough Q4 2022 in which sales figures dipped to about half of the previous quarter, saw revenues rebound in the period ending 31 March this year. The company reported US$8.8 million in sales in Q1 2023, versus US$2.7 million in Q4 2022.

It is now targeting getting its annual production capacity up to 1.25GWh with a fully automated line by Q1 2024, and has moved on to the fourth generation of its products. While it posted a net loss of US$71.6 million in Q1 2023, the company claimed its opportunity pipeline stands at a value of US$8.5 billion, and its order backlog at a value of US$535 million, equivalent to 2.2GWh of systems.

ESS Inc revealed negative EBITDA of US$21.4 million from Q1 2023 meanwhile, and earned about US$400,000 revenues from just two units delivered and commissioned in the quarter. Still, that revenue figure is nearly half of the total US$894,000 revenues for 2022, and the company would argue that the trajectory it is on is positive, especially given that it has now reached its 800MWh annual production capacity target.

US Secretary of Energy Jennifer Granholm has visited and toured both Eos’ and ESS Inc’s premises. Image: Eos via Twitter.

Granholm at ESS Inc’s Wilsonville, Oregon factory. Image: Business Wire.

Energy-Storage.news says:

You can of course look up how the stocks of each company are performing, and you’ll find the obvious takeaway that they’re not making huge profits – yet. Still, energy storage and (pun incoming) LDES is a long game, at least until market demand heats up.

ESS Inc CEO Dresselhuys recently referred to “tailwinds” behind the LDES and wider energy storage industry that will lift up the fortunes of those well-placed to capitalise – a major one of those being the Inflation Reduction Act (IRA), which will mean tax credit incentives both for production and deployment of clean energy technologies, including bonus adders for domestic content produced within the US.

And perhaps the biggest tailwind of all is the energy transition itself. There is no doubt longer durations of storage are being deployed in energy storage markets that are maturing. However, as we’ve heard from some industry sources and even seen in real-life procurements, the non-lithium technology companies not only have to compete with each other, but with a growing expectation that lithium itself will be chosen for projects of even 8-hour duration, at least in today’s market.

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Notice 2023-38, posted last week (12 May), spells out the degree to which a battery energy storage system (BESS) being deployed needs to be manufactured in the US to qualify for the 10% uplift to the new standalone ITC.

The guidance has been eagerly-anticipated by the industry and the delay may be partially to blame for fewer new projects being announced since the start of the year.

It separates the portions of a clean energy project into Steel/Iron parts and ‘Manufactured Product’ parts with different requirements for each.

The Steel/Iron portion for energy storage only covers rebars used in the concrete foundation of a system, according to the notice, and these need to be 100% US-made. Manufactured Product covers the battery pack, the battery container/housing and the inverter.

For the Manufactured Product, i.e. the BESS and inverter, it needs to be 40% US-made if construction starts before 2025 and 55% from 2027 onwards to qualify for the 10% adder. The years pertain to the date on which construction starts.

Various law firms have said that the percentage – termed the Adjusted Percentage – will be increased in phases, to 45% in 2025 and then 50% in 2026, although this is not in the IRS notice.

The calculation of these figures is based on the project costs, and uses categories of Product and Component. The Manufactured Products are defined as BESS and inverters, and the BESS product Components include the cells, packaging, thermal management and battery management systems (BMS).

Products and Components totalling 40% (until 2025) of the Total Manufactured Products Cost need to be manufactured in the US (and 55% 2027 onwards).

To be considered ‘manufactured in the US’, all of the manufacturing processes of a Manufactured Product (BESS, Inverters) need to have taken place in the US and all of its Components (cells, packaging, BMS etc) need to be of US origin.

But crucially, a Component is considered of US origin if it is manufactured in the US “….regardless of the origin of its subcomponents”. This implies that battery cells would need to be manufactured in the US, but not necessarily the underlying raw materials and subcomponents that go into them.

The 40-55% figure also means that BESS projects could qualify whilst still using battery cells from abroad since these typically equate to 40-50% of a project’s cost (although may have gone higher last year). However, the BESS and all other parts of the project would need to be assembled/manufactured in the US to make up the difference.

The note clarified that the 100% requirement for the Steel/Iron portion of a BESS Project does not apply to the steel or iron used in a Manufactured Product, i.e. the BESS itself or inverters, something that was raised as a possibility by an executive from Wärtsilä when discussing the topic at Energy Storage Summit USA in March.

It spelt out what examples of these might be: “items such as nuts, bolts, screws, washers, cabinets, covers, shelves, clamps, fittings, sleeves, adapters, tie wire, spacers, door hinges, and similar items that are made primarily of steel or iron but are not structural in function are not subject to the Steel orIron Requirement”.

Read the full notice from the IRS here, which also has details on timeline and how to certify on a tax return that a project qualifies for the bonus domestic content credit. See our sister site PV Tech‘s coverage of how the domestic content requirements relate to solar PV here.

The US has been ramping up its investments into both upstream and downstream clean energy projects, including storage, in response to the ITC and other incentives and funding programmes as part of the Inflation Reduction Act.

Since the Act passed in August last year, some US$150 billion has been announced in investments in the US’ clean energy sector.

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