Member Info for BESST

BESS revenues are driven from volatility in the energy markets and this can never be predicted.

Gore Steet have unfortunately been on the receiving end of a period of low volatility and stable energy markets.

How could anyone invest in this stock with the expectation of stable, consistent dividend? If you want that, go invest in a solar or wind fund, backed by long term, low return PPAs.

Gore street is set up as a merchant fund, with a low portion of contracted revenue. Dividends can't be guaranteed - but you can expect to have years which outperform significantly. Admittedly fund directors should have set expectations better but what's the fixation on being paid these unrealistic consistent dividends, when it's clear to everyone revenues can't justify paying them.

Pricing data is publicly available to anyone through a platform called modo. Taking 15 days of slightly improved revenues is a dangerous game. The improved revenue is no indication of future performance.

I thought I might share some recent industry updates that should provide long term certainty to the value of this business.

The UK is currently consulting the industry on 'Long Duration Energy Storage'. The aim is to provide support mechanisms to bring online new Long duration technologies. The consultation is talking of projects of at least 100MW/600MWh

Land. Currently they're looking to exclude Li-ion technologies, opening the door for the likes of Invinity.

Ireland also released a consultation for Long Duration Storage at the back end of last year. They don't exclude li-ion but are looking to procure multiple technologies, again positive for Invinity.

However it's worth cautioning that these support mechanisms will only come into effect from 2026 onwards, so there's a long road until we'll see mass take up of longer durations batteries.

In the meantime, the UK and rest of Europe are starting to feel the effects of 'too much' storage, given the mass deployments in 2022/2023. As such investment may well drop as companies don't see the return on their assets. Without strong government support it's unlikely we'll see significant interest in Long duration storage companies like Invinity.

This stock is certainly short term pain, long term gain.

I attended a key battery storage event yesterday in the UK. It was a full day session hosted by a leading industry consultancy and had most of the main players. I think what was abundantly clear is there's no financially viable use case for anything other than lithium ion (at scale). This is largely due to lithium batteries being the cheapest they've ever been and the revenues still be suited to shorter duration batteries. This will be a really big challenge for Invinity. However what is exciting is the amount of regulators and network operators around Europe trying to create new markets for Long Duration Energy Storage, such as Ireland (https://www.eirgridgroup.com/site-files/library/EirGrid/LDES-Call-for-Evidence-EirGrid.pdf) . These policies are exciting but they will take time to be delivered. There's a huge opportunity but vanadium flow is still a few years off being a commercially viable product..

The Capacity Market is a mechanism which most mature energy systems have, ensuring security of supply. An owner of a battery energy storage site will receive revenue each year to ensure they have capacity available to the Grid in times of system stress. It's a core part of the battery storage business case, offering fixed revenue for either a year, 10 years of 15 years depending on your contract - essentially making storage assets more 'bankable'. Storage systems are currently heavily penalized in the market, as they're given a high de-rating factor. This means they only receive a portion of this revenue relative to traditional thermal generation (gas plants etc). Matt will be pushing for lower de-rating factors, to increase revenue. Currently in the GB market there's discussion of possible cap and floor mechanisms to help provide a minimum investment return for asset holders. Flow batteries aren't great at delivering frequency (fast, second by second response) services that currently make up the majority of battery revenue, so it's pretty critical Invinity push for other revenues to make their batteries attractive to utility storage investors. This is the issue in all markets not just GB.

Though I don't believe this to be an issue with Invinity, the recent short report on EOS energy is a worthwhile reminder of the risks surrounding the speculative stocks in the energy space. EOS energy, a competitor to Invinity, has been found to have an questionable pipeline of work, with GW's of opportunities contracted with dubious entities. The EOS market cap is largely based on their pipeline, as is Invinity's. Important to scrutinize these numbers whenever they're presented to ensure the pipeline is achievable and tangible. For those interested in the short report, it makes for grim reading for EOS shareholders:

https://iceberg-research.com/2023/07/27/62-of-eoses-backlog-is-with-financially-distressed-bridgelink-whose-renewable-energy-assets-were-foreclosed-and-auctioned-off-in-may/

Thanks Serge. The Mistral project absolutely has the right ambitions however for me the key word is 'targeting'. This would supercharge this stock if it could achieve such targets but clearly with such a low market cap the markets are yet to be convinced.

This spreadsheet might be useful:

https://docs.google.com/spreadsheets/d/1okFQhRku6q_WNlHdhYG15tylTZp9XDSJYQE0Gh37_1A/edit#gid=0

It looks at all the different electricity storage forms and compares them and, as you can see with Vanadium, efficiency is low. My concern lies in the fact that other technologies could be cheaper and more efficient...but without costs and specs from other competitors, it's hard to know!

Results were as expected and, in my mind, this steady progression is necessary to give investor confidence.

My question is, does anyone know how Invinity compares to other long duration energy storage companies such as EOS energy and ESS tech? For the short to medium term, flow batteries won't edge out lithium ion. Battery revenues still come substantially from frequency services and fast action responses and flow batteries cant compete in this area. It's only when we see energy market trading that flow batteries will really become competitive (because of their ability to cycle with minimal degradation).

My fear is that the long duration storage market will begin to consolidate in coming years as the market understands which technology is most effective between iron, zinc, vanadium etc with my fear that vanadium being made redundant. If you look at the likes of EOS, they have an order backlog exceeding $500m, which Invinity are a few years from achieving. Can anyone comment as to the price and efficiency of invinity's product to others on that market?

Agreed, lithium-ion batteries are needed but their current revenue stack comes almost exclusively from helping deliver second by second responses (frequency services). They're not great at storing renewables, as consistent full charges and discharges (cycling) of these batteries damages their state of health and requires significant replacement of cells. Lithium-ion does have a roll to play in enabling a green grid but this comes predominantly from frequency services which have a *limited demand*. I do fear SMS have arrived late to the party and could face disappointing returns from these investments.

I used to love SMS plc stock however I have significant reservations about their recent entry in the world of utility scale battery storage. There has been a massive flood of investment into this space and the UK currently faces significant over-build of utility batteries in the short to medium term, saturating the revenue available to them. Taking the average EBITDA contribution per MW across the 140MW currently operational, you'd expect approx £8.5m of EBITDA from these batteries per year. However the performance of these batteries over the last two months would indicate they'll deliver closer to £4.9m. If they continue to build out their pipeline, this issue will only become worse. There could be some seriously underwhelming trading updates over 2023 and beyond as they write down investments and see lower than expected revenue.