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8 March 2023

Energy Vault back to its roots in gravity with EMEA licensing deals

Another quarter’s results and Energy Vault is once again looking a little more like an innovator and less like a battery module installer, with news this time of some developments around its gravity energy storage technology. In prior financial quarters you would not know that gravity system still existed.

Its initial design, where 3 cranes lifted 5 ton concrete blocks into place, and then dropped them again to harvest energy, has been replaced by the tidier looking block building on the right, which slides similar blocks inside an enclosed space, to fall on pulleys to generate energy. And the weights are no longer made of concrete. It is such a dramatic change that it took quite a while to perfect the transition, we’re sure.

Its Q4 numbers show revenue of $100 million, most of which comes from a California 275MWh battery storage project which is ahead of plan, and ready to deliver energy by July.

Revenue for the year was only $145.9 million, much from deals cut in only in Q3. Q4 losses from operations were just $26 million, and it still has $286 million in cash and no debt on the balance sheet. The company has new signed orders in the quarter of 1,635 MWh, which it says represent $540 million in future revenue. That brings its total order book to 5.2 GWh, or around $2 billion in revenue over the next few years.

It says that construction of its first gravity system, the EVx continues to advance in Rudong, China with expected mechanical completion and commissioning start of all electronic and power generation components on track for Q2 2023. And it has signed two new gravity EVx deals, but this time they are not contracts to build them, but licensing and royalty agreements – one in Europe and one in the Middle East – both signed in Q4. Neither contract partner was revealed but later in the presentation the company said that the deals are for 10 year deals, and they are exclusive to the region.

This is something that Rethink Energy has pushed and pushed – smaller start ups cannot build their way into the green history book one deal at a time – only by licensing really good ideas to large existing companies with geographic reach, can they move the dial on a global basis. There are still some doubts that using gravity and large blocks of cheap heavy materials, through pulleys which are also turbines, will be efficient enough to compete with lithium ion battery storage, but the only way to find out is to get the technology into decent shape, and then license it and then go through the learning curve on it. The only reason for ANY start up to do their own EPC and built projects, is to prove the economic worth of a new technology. Once that’s done, licensing is the route to go.

A year ago Indian utility NTPC also said that it wants to deploy Energy Vault’s EVx gravity-based energy storage technology and software, but this seems to have disappeared as a deal, or at least was not mentioned in the results.

The biggest name that it has on its books is Enel Green Power – it has a gravity installation at Snyder, Texas for a first EVx system in the US and if this is either profitable or at the very least promising, this could make or break the idea of gravity systems. Enel alone could install enough of these to make the company founders rich – if it likes it.

It’s probably only then that we will see if Energy Vault really has a fresh iconic idea for energy storage, or if it is just another battery BESS installer which has written some neat software for managing installations.

It has started EPC activities on lithium ion installations in Texas and California totaling 835 MWh which it says are all on schedule to be online in the 2H of 2023. The company now has 170 employees, up from 72 employees a year ago. And is planning operations in China, the UK and Australia.

Naturally the Inflation Reduction Act was invoked as a good reason to be in energy storage right now, but this would apply to the company in either activity, gravity based storage or battery and the company said it can monetize with ITC or Advanced Manufacturing Credits. The company gave 2023 guidance of between $325 million and $425 million in revenue, with losses of $50 million to $70 million.