Eos Vitality Storage spent 12 years increase a expertise it says can rival the dominant lithium-ion batteries for storing grid energy. Related startups ran out of money and fell by the wayside, however Eos has survived, and now plans to go away enterprise capital behind and enter public markets by way of merger with a shell firm.
A “particular objective acquisition firm” known as B. Riley Principal Merger Corp. II will merge with Eos within the fourth quarter of 2020, at which level the startup will change into publicly listed on the New York Inventory Alternate. The more and more standard SPAC maneuver permits corporations to entry public markets with out the arduous reporting and roadshow necessities of a standard IPO.
“It is a firm that B. Riley has adopted for a number of years,” mentioned Dan Shribman, CEO of the BPRM II SPAC, in a June name saying the chance. “It’s our robust conviction that Eos is at a tipping level that may generate extraordinarily compelling returns for our shareholders.”
Zero-emission truck startup Nikola Motor used a SPAC to go public in June and merchants shortly bid it as much as a market cap rivaling Ford, regardless of Nikola’s lack of income or autos in manufacturing. Eos and B. Riley hope their SPAC operation will usher in $225 million in new fairness to fund a producing surge.
However the power storage market differs from the autos market, and Eos selected a very tough problem: taking up mass-produced and ubiquitous lithium-ion batteries for the function of storing grid energy as extra renewables come on-line.
The startup beforehand tackled that by claiming aggressive low prices — in 2017, it marketed future pricing at $95 per kilowatt-hour — for a product that took a number of extra years to commercialize than initially promised. Since then, a brand new workforce of former GE executives has taken the helm at Eos. The New Jersey-based firm has delivered a collection of kilowatt-scale pilots, and established a home manufacturing base in Pittsburgh.
Vitality storage is a quickly rising market, and power corporations are plowing unprecedented sums into battery initiatives. However well-known and trusted applied sciences nearly at all times win these contracts.
Different novel storage corporations, like Highview Energy and Hydrostor, put their sources right into a handful of megawatt-scale demonstration crops, and leveraged these to develop even greater crops. Eos centered as an alternative on constructing a modest quantity of diminutive crops, which collectively add as much as greater than 1 megawatt within the area.
After 12 years and $160 million raised, Eos has reached an inflection level, CEO Joe Mastrangelo mentioned in an interview. It’s not proving its expertise, however ramping up for industrial-scale manufacturing, and that requires a distinct type of liquidity.
“We checked out it and mentioned, ‘What is the quickest, most economical option to scale the corporate, and its manufacturing and method to the market?’ — and this was it,” Mastrangelo mentioned of the transfer to public markets. “It may give us a steadiness sheet to have the ability to go after massive initiatives.”
Now Eos should persuade traders that its mental property, manufacturing unit line, pilot initiatives, and allegedly “vital” pipeline of latest enterprise deserve a pre-money valuation of $290 million.
Unique battery tech, unique claims
Betting on progress in battery deployments is a strong proposition, however Eos occupies the riskier class of challengers to the dominant lithium-ion expertise.
Provide chains for the electrical car market and shopper electronics turned lithium-ion cells right into a commodified product that enjoys common price declines. However lithium-ion initiatives are nonetheless an costly option to retailer grid energy, and may catch hearth and even explode if security techniques malfunction. Regardless of that danger, lithium-ion usually claims 99 % market share, in keeping with Wooden Mackenzie’s database of U.S. power storage deployments.
Eos desires to supply an alternate.
It spent the final 12 years growing what it calls a “zinc hybrid cathode” machine. Every cell makes use of a carbon felt cathode that plates zinc onto a ceramic-coated titanium present collector, all of which sits in a proprietary electrolyte answer. It is a static system, in distinction to movement batteries with their pumps and plumbing.
In contrast to lithium-ion, it wants no HVAC system to take care of protected working temperatures, and it may possibly go all the best way from zero or 100 % state of cost.
A number of different battery startups focused zinc as an inexpensive lively materials —ViZn Vitality, Fluidic and e-Zinc, for example. However no one else sells a zinc hybrid cathode, so Eos has to persuade prospects to attempt a expertise they will not discover elsewhere.
In years previous, the corporate did this by making aggressive claims about price. In 2017, Eos CEO Michael Oster and VP of Enterprise Improvement Philippe Bouchard instructed Greentech Media they have been already promoting at $160 per kilowatt-hour. If true, that was radically decrease than lithium-ion pricing on the time. However the determine had some caveats: it referred to excessive quantity orders of the DC system, and due to this fact didn’t embody the price of energy conversion or set up.
An earlier rendering of a whole Eos storage system, circa 2017 (Picture credit score: Eos)
A number of months later, Eos pushed the claims additional. It issued a press launch inviting orders at $95 per kilowatt-hour — for anybody keen to attend 5 years for 2022 supply. In 2019, GTM reviewed inside paperwork during which Eos quoted the DC system price at $222 per kilowatt-hour, significantly greater than the alleged value again in 2017. Oster and Bouchard have since left the corporate.
Within the 2017 interview, the executives additionally mentioned they’d ship their first multi-megawatt installations, developed and financed by third events, later that summer time.
That also hasn’t occurred. Eos did, nevertheless, win a deal in 2015 to provide a 10 megawatt/40 megawatt-hour battery that Convergent Vitality + Energy is constructing for utility PG&E. Eos investor Fisher Brothers, a privately held actual property agency, was additionally an early backer of Convergent, which personal fairness agency Vitality Capital Companions absolutely acquired in 2019.
That 10-megawatt challenge continues to be taking place, Convergent spokesperson Kate Siskel confirmed; which means PG&E’s chapter didn’t kill the deal. However Eos is not taking part, CEO Mastrangelo instructed Greentech Media.
As an alternative, the first megawatt-scale set up is slated for the top of 2020, Mastrangelo mentioned. Motor Oil Hellas signed a contract for a 1 megawatt/four megawatt-hour Eos system to shave peak demand at a refinery in Athens. That buyer is trying to diversify into sustainable power, Mastrangelo mentioned, and favored the non-flammable nature of the Eos product. If it goes effectively, the challenge might open up enterprise for Eos within the industrial market and oil and fuel particularly, he added.
New management workforce stocked with GE vets
The administration workforce at Eos appears to be like totally different than it did within the heady days of 2017. In truth, it appears to be like loads just like the higher echelons of Basic Electrical’s energy sector management a couple of years again.
Mastrangelo, who turned CEO in 2019 after a yr as a board advisor, beforehand led Fuel Energy Programs at GE Energy, one of many greatest fuel turbine companies on the planet. CCO Balakrishnan Iyer served as a VP for enterprise improvement at GE, centered on renewables and sensible grid. Former GE CFO Jeff Bornstein is listed as a board advisor, as is Kevin Walsh, who for years led the renewables workforce at GE Vitality Monetary Companies.
Eos CFO Mack Treece didn’t come from GE, however efficiently developed utility-scale storage as CEO of Viridity, which was acquired by Ormat Applied sciences.
Because the arrival of the brand new management, Eos has stopped boasting about particular pricing in its press releases, and as an alternative emphasizes initiatives within the floor and advances in manufacturing capability. The corporate says it now can construct 75 megawatt-hours per yr, and plans to scale to 500 megawatt-hours per yr within the subsequent 12 months.
“What I might say is, the windshield within the automotive is 5 occasions as massive because the rearview mirror since you’ve received to look ahead,” Mastrangelo mentioned. “I believe wanting ahead, it is vivid. I believe while you look backwards on any firm, you are at all times going to seek out, you understand, stumbles and issues that you could possibly have accomplished higher.”
Regardless of these previous stumbles, Eos by no means ran out of money — a destiny that befell quite a few unconventional storage startups together with Alevo, Aquion, Imergy, LightSource Vitality and ViZn.
“This firm… has survived the place others haven’t, and is positioned to develop, and we will develop in a means that is going to permit the business to have inexpensive, protected and scalable power storage,” Mastrangelo mentioned.
A part of that survival intuition comes from a protracted historical past of securing back-to-back enterprise capital raises by way of the primary half of the last decade. The final of these publicly introduced raises seems to be a personal placement of about $23 million in 2016. Manufacturing companion Holtec Worldwide made an unspecificed “strategic funding” in 2018.
Management boasts that Eos is capital environment friendly in its manufacturing course of. That, and some years’ delay in scaling up manufacturing, might have prevented a pitfall that caught Alevo and Aquion: spending an excessive amount of cash on a manufacturing unit earlier than the market was prepared.
How will Eos compete with lithium-ion?
Within the time it is taken for Eos to get to market, lithium-ion costs have continued falling. Lately, Mastrangelo says Eos is “extremely aggressive” on value, which is totally different from being radically cheaper.
Neither is Eos pitching a imaginative and prescient for long-duration storage, an space the place lithium-ion doesn’t scale economically. Eos usually delivers techniques with 4 hours of discharge length, a format during which lithium-ion competes extraordinarily successfully. However the expertise is technically able to discharge occasions as much as 10 hours with minimal impression on cycle life, CCO Iyer famous.
That leaves Eos to compete on flammability, recyclability and degradation.
Eos says its techniques, stuffed as they’re with an aqueous electrolyte, can’t catch hearth. That distinguishes them from lithium-ion, which generally does catch hearth.
The unanswered query is to what extent this distinction issues to prospects. A high-profile battery hearth and explosion in Arizona final yr didn’t cease a run of record-breaking lithium-ion procurements and company investments since then. The investigation into that occasion, launched in July, provides ideas to eradicate the failures that occurred; main suppliers have already adopted a number of of these rules.
From Eos’ perspective, the patron choice for lithium-ion batteries displays a time when cost-effective, non-flammable alternate options weren’t available.
“It’s only a matter of optionality,” Iyer mentioned in an interview. “The extra folks begin utilizing our product, they’ll beginning realizing that the choice exists.”
Recyclability is a profit, however doesn’t generate profits for a buyer in the course of the asset’s working years. Lithium-ion cells can technically be recycled, however it isn’t at present financial to take action.
An vital early buyer: Duke Vitality
Discipline deployments make clear the place Eos might thrive.
Utility Duke Vitality put in a 30 kilowatt/120 kilowatt-hour Eos system final yr as a part of its ongoing exploration of rising grid applied sciences. Eos expertise provides a brand new “instrument within the toolbox” for grid storage, although it won’t exchange lithium-ion, mentioned Tom Fenimore, an rising applied sciences specialist at Duke Vitality.
“Li-Ion chemistry might be preferable for initiatives of four hours or much less length and the place house (footprint) is a problem,” Fenimore mentioned in an electronic mail.
However Eos was aggressive with lithium-ion on upfront price, Fenimore added, and offered sure benefits on the subject of operations and upkeep, like not requiring air con or hearth suppression.
“The Eos chemistry is greatest suited to every day cost and discharge operations that may reap the benefits of the total 100 % Depth of Discharge functionality,” Fenimore mentioned. That might carve out house for every day photo voltaic shifting, or backup energy functions the place the battery cycles daily to scale back peak costs, he famous.
However Eos batteries even have comparatively excessive standby loss, he added, referring to the cost that dissipates whereas the battery sits round. Every day biking minimizes these losses.
Duke will take into account additional Eos deployments as soon as the brand new third era hits the market, Fenimore mentioned.
That is an early buyer with good issues to say concerning the efficacy and value construction of Eos batteries. However the four-hour length recognized as a candy spot for lithium-ion is strictly the zone Eos has focused up to now.
Successful over shareholders is the following take a look at for Eos. Then comes the battle in opposition to lithium-ion.