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Going public, lithium-ion battery alternative Eos faces uphill fight

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Essential Energy Insights - January 2021


Going public, lithium-ion battery alternative Eos faces uphill fight

SNL Image

An Eos Energy Storage zinc-based battery system in North Carolina. The company wants
to accelerate its growth by going public on the Nasdaq in October.
Source: Eos Energy Storage LLC

Eyeing the emerging multibillion-dollar global market for energy storage, zinc-based battery startup Eos Energy Storage LLC plans to jumpstart its chances to compete with lithium-ion technologies through a proposed merger with an affiliate of B. Riley Financial Inc. Announced Sept. 8, the deal would pump $202 million of new equity into the combined company through a public listing on the Nasdaq.

Founded in 2008, the New Jersey-headquartered storage developer says its technology is safer, more environmentally friendly, longer-lasting and cheaper than those offered by Tesla Inc., LG Chem Ltd. and other lithium-ion battery companies that currently dominate the market.

Eos' system is 30% less expensive than lithium-ion batteries "from a levelized cost of storage perspective," the company said in a presentation attached to Sept. 8 filing with the SEC. And in contrast to lithium-ion storage arrays, which have been beset with a series of battery fires in recent years, the aqueous zinc chemistry is "fully recyclable, non-flammable and non-toxic," according to the presentation.

Although one major lithium-ion battery system integrator, NEC Energy Solutions Inc., recently said it would shut down due to economics, lithium-ion remains the dominant technology in a rapidly expanding market. And despite the urgent need for more storage to help balance power grids that are increasingly reliant on variable wind and solar resources, EOS Energy Enterprises Inc., as the new company would be called, faces an uphill battle, according to analysts and market participants.

"Many companies have promised to out-compete lithium-ion on cost and performance over the last decade, with limited commercial success," Logan Goldie-Scot, head of clean power research at BloombergNEF, said in an email. "Ever cheaper and better lithium-ion batteries remain the preferred technology."

Narrowing opportunity

BloombergNEF expects lithium-ion batteries to stay dominant for years to come, even as demand for longer-duration storage grows. As costs come down, lithium-ion battery suppliers are expanding their current sweet spot of applications requiring 1 to 4 hours of storage discharge to 5 hours and beyond, the market that Eos and other storage aspirants are targeting.

"Cheaper lithium-ion batteries can compete for longer duration contracts, which narrows the market opportunity for companies like Eos," Goldie-Scot said.

In Hawaii, for instance, AES Corp. recently won a contract for an 8-hour system using lithium-ion batteries.

As lithium-ion prices fall, piggybacking on a massive manufacturing scaleup for electric vehicles, "you [can] use them for longer and longer durations," John Zahurancik, COO at Fluence Energy LLC, AES' battery system joint venture with Siemens AG, said in a recent interview.

Questions remain

Nevertheless, Eos has made some progress over the past couple of years. It has launched a small manufacturing facility outside of Pittsburgh, Penn., with partner Holtec International Inc., and doubled the power density of its batteries from two years ago, according to Daniel Friberg, senior vice president of engineering at Eos.

"What I am really excited about is that our battery is made in the USA," Friberg said during an Aug. 24 presentation at the U.S. Energy Storage Association's annual conference, held virtually this year.

The company, which plans to complete its merger and debut on the Nasdaq in late October, is preparing for fast growth. Starting from an estimated revenue base of just $2.5 million in 2020, the company expects to grow to roughly $50 million in 2021, nearly $269 million in 2022, $735 million in 2023 and more than $1 billion in 2024. Executives say Eos has a 14.5 GWh pipeline of projects, of which about 1.5 GWh are committed near-term projects, including a recently announced 1 GWh project in Texas. New manufacturing facilities are also in the works. At the moment, though, the company has only seven systems in operation totaling around 2 MWh of capacity.

"Many outstanding questions remain in terms of commercial viability, and only successful projects and a confirmed contract pipeline will demonstrate whether the need for this technology exists," Goldie-Scot said.