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6 January 2022

Another $50m for Energy Vault, but strategy lacks appeal

The tortuous investment in Energy Vault has proceeded this week with another $50 million being found, through the PIPE set up by Novus Capital II, paid by Korea Zinc that says it wants Energy Vault to help decarbonize its refining and smelting operations at Australian subsidiary Sun Metals.

Energy Vault has gone public in the US by way of a merger with a SPAC (Special Acquisition Company) called Novus Capital Corporation II which said that a PIPE (Private investment in a Public Equity) for $388 million in gross cash proceeds would be pushed into the company – while actually only $100 million has been injected so far into Novus II plus a funding round of another $100 million that was raised by Energy Vault, this is now $50 million more on top, but it looks more like a purchase of a system, which will begin deployment in mid-2022.

While Rethink Energy has been critical of the progress that Energy Vault has made in announcing deals, if it could get a reference account showing how effective it is in keeping smelting going continuously, it would open the company up for a wide variety of industrial investments.

Sun Metals is an Australian based zinc refinery wholly owned by Korea Zinc and aims to deploy Energy Vault’s storage and energy management software technology to support its refining infrastructure. The scope of the partnership also includes the potential sustainable and beneficial re-use of tailings and other refining waste materials within Energy Vault’s composite blocks.

Sun Metals wants to be one of the early zinc refineries to produce “Green” Zinc and hopes to push on into 100% renewable power by 2040 after hitting 80% by 2030.

Korea Zinc’s Ark Energy said it will acquire a leading Australian wind and solar developer Epuron which has 9 GW of wind and solar projects and it plans to enter hydrogen production on the back of its renewables – perhaps also supported by Energy Vault installations. Sun Metals is currently the second largest consumer of electricity in Queensland using 1 TWh of electricity a year.

But at present we are still looking for a clear financial funding breakthrough for Energy Vault, which has the look of a company that is feeding hand to mouth through the energy transition and has to be careful marshalling its resources. Its last announced deal was in September when it cut a deal with DG Fuels, which seems to have a contract to deliver Sustainable Aviation Fuel (SAF) to GE for testing its aircraft engines. That deal was first mentioned in 2016 and is supposed to generate $520 million for Energy Vault over a ten year period, with another mid-2022 installation.

SAF is not exactly a green fuel, but an interim fuel for aircraft until electric planes and those which fly on hydrogen hit the mainstream, circa 2035. SAF in our view is a catch-all term for any kind of fuel that can be made to approximate kerosene, but which either uses waste which is destined to release CO2 anyway or which uses a process which reduces CO2 within the fuel, but does not eliminate it.

DG Fuels is led by a bunch of ex-military leaders with energy connections and they hope to get their hands on $2.15 billion of loan guarantees from the Department of Energy. Without that, this deal looks like a non-starter, and it looked to us like Energy Vault just needed something to announce to stay in the public eye, even if it led to nothing happening.

The press release at the time said DG Fuels would deploy Energy Vault’s gravity storage system to store green electricity from solar to make green hydrogen, which appears to have nothing to do with SAF.

Under the terms of that deal Energy Vault said it would build a 500 MWh system in Louisiana and later add more systems in British Columbia and Ohio up to 1.6 GWh.

Energy Vault’s gravity energy storage systems are based on the mechanical engineering fundamentals of pumped hydro storage, but replaces water with custom-made composite blocks, or “mobile masses”, which do not lose storage capacity over time.

Back in July Enel Green Power partnered the Swiss originated Energy Vault to use recycled wind turbine blades as the weights used in the gravitational energy storage system.