Your browser is not supported. Please update it.

23 November 2022

Energy Vault moves to lithium-ion as gravity projects take backseat

Energy Vault hosted its quarterly earnings call last week, flaunting new orders in its traditional battery storage business, its foray into green hydrogen energy storage systems, and really pushing the software side of things. But there was worryingly little focus surrounding the changing direction of the company’s product offerings.

Following the company’s redesign of its flagship gravity energy storage system away from stacking concrete slabs using a series of cranes and towards an enclosed system with sliding weights, interest seems to be waning relative to its other offerings. The company has secured some significant deals over the last quarter through its new traditional battery supply business – called Energy Vault Solutions – the most significant of which being a 410MW/820MWh project with an unnamed “large renewable energy developer” set to be completed in 2024.

The only issue is that its new deals for its gravity-based solution are tiny, 18MW/36MWh for a project in Texas for Enel Green Power, which we’ll accept as legitimate considering Enel’s pedigree. The company also secured a 2GWh mandate earlier in the year for its EVx system from the EIPC in China, with the first 25MW/100MWh being built in inner Mongolia by Atlas Renewables through a licensing agreement costing it $50 million and 5% in royalties.

So that’s 136MWh of gravity-based projects announced or being worked on this quarter, not great if you make the reasonable assumption that it’s the company’s main business focus, that’s less than the company’s entry into hydrogen energy storage which will come in at 300MWh.

But why Inner Mongolia? It’s one of the least densely populated regions in China at 20 people per square kilometer, where significant energy storage capacity is hardly needed due to sparse population and although these is significant industrialization. It is also the source of some of the cheapest coal produced electricity – so it may end up storing electricity from coal plants – although again it has plenty of solar also.

You tend to put a project in remote locations because land is cheap and permits are easily come by. So why is it that the company’s gravity projects seem to be allergic to being around or close to industrial hubs where it’d be most efficient from a transmission perspective? This has been a trend with Energy Vault’s gravity projects, with its first 5MW demo project nestled amongst Swiss mountains far away from anything it could disrupt.

We’ve been critical of some of Energy Vault’s dealings in the past, namely considering its dubious connection with a company called DG-Fuels, with its ex-military leadership and conditional DoE loans, which has promised in the past to supply GE with sustainable aviation fuel (SAF). The company has gone strangely silent on this deal lately, but it was listed in offtake agreements on its most recent earnings call.

Elsewhere in Energy Vault’s earnings call, there was much talk of technology agnosticism through the monetization of software and battery management systems (BMS), to the point where hydrogen was mentioned more than gravity. This talk of product agnosticism is something we would usually applaud, but when a company claims to be listening to its customers and providing what they want, and that isn’t its existing  proprietary product, the company’s focus needs bringing into perspective.

Changing management is also turning some heads, the interim CFO that has been active over the last 6 months will be standing down to be replaced by a new CFO with significant experience within the energy sector, or less charitably, experience within the oil and mining industries at companies like Baker Hughes and Anglo American. While this shouldn’t necessarily be a cause for concern, our inherent trust in oil executives is limited.

Energy Vault remains an enigma in many ways, its gravity-based storage solution turns heads and attracts significant investment, and it makes a great product to point at during a funding round. But what happens when this products fails to get delivered or when it has significant operational caveats that limit its usefulness? Advertising the solution to energy storage using a novel approach has its benefits in securing funding and deals, but the caveat is that if it doesn’t work you either go back to the drawing board or you abandon it altogether. It seems like Energy Vault is doing both while pretending to do neither.