Energy Vault Holdings, Inc. (NRGV) is a global leader in the development and deployment of utility-scale energy storage solutions designed to transform the world's approach to sustainable energy storage. The company's comprehensive offerings include proprietary gravity-based storage, battery energy storage systems (BESS), and green hydrogen energy storage solutions, all supported by its advanced energy management software.

Company Background and Early Challenges

Founded in 2017 by Bill Gross, Andrea Pedretti, and Robert Piconi, Energy Vault has rapidly established itself as an innovative player in the rapidly growing energy storage market. The company's initial focus was on developing a gravity-based energy storage system that uses crane-lifted concrete blocks to store and release energy. In its early years, Energy Vault faced challenges in proving the feasibility and commercial viability of its gravity-based storage technology, investing significant resources into research and development to perfect the design and engineering of its first commercial-scale prototype. This included constructing a test facility in Switzerland to validate the system's performance and safety.

Milestones and Expansion

A major milestone was achieved in 2019 when Energy Vault deployed its first 25MW, 100MWh gravity-based energy storage system in Rudong, China, demonstrating the technology's ability to provide long-duration, utility-scale energy storage. This success led to additional customer agreements and partnerships for further development and deployment of its gravity storage systems. In 2020, the company expanded its product portfolio by acquiring battery storage technology and integrating it with its gravity-based storage solutions, offering customers a more comprehensive suite of energy storage options. To support this evolution, Energy Vault reorganized its operations and enhanced its software and controls capabilities to better optimize the performance of its hybrid storage systems.

Recent Developments

Despite the challenges posed by the COVID-19 pandemic, Energy Vault maintained its growth trajectory in 2021 and 2022, announcing several new projects in the United States, Australia, and other international markets. The company also strengthened its leadership team and expanded its global footprint to better serve its growing customer base worldwide. Energy Vault's unique approach combines time-tested energy storage principles with cutting-edge materials science, modern hardware, and sophisticated software engineering to deliver long-duration storage solutions capable of supporting the grid's transition to renewable energy.

Financials

In the third quarter of 2024, Energy Vault reported revenue of $1.2 million, a significant decrease from the $172.2 million recorded in the same period a year earlier. This decline was primarily attributable to a reduction in revenue from the sale of energy storage products, as the company's BESS projects moved into their later stages. However, the company saw a notable increase in revenue from operation and maintenance services, software licensing, and intellectual property licensing, which collectively contributed $1.2 million in the quarter.

Gross profit for the third quarter of 2024 was $0.5 million, with a gross profit margin of 40.3%. This represented a significant improvement from the 4.2% gross margin reported in the same period of 2023, driven by the higher-margin revenue streams from services and software. For the first nine months of 2024, Energy Vault's gross margin stood at 28.3%, exceeding the company's full-year guidance range of 15% to 25%.

For the first nine months of 2024, Energy Vault reported total revenue of $12.73 million, down from $223.31 million in the same period of 2023. This decrease was primarily due to lower revenue from the sale of energy storage products as the company's projects moved into later stages. The gross profit margin for this period improved to 28.3%, compared to 6.1% in the prior year period, driven by higher margins from energy storage product sales, operation and maintenance services, and software licensing.

In terms of cash flow, Energy Vault reported negative operating cash flow of $9.19 million and negative free cash flow of $36.45 million for the most recent quarter. The company's financial position remains solid, with a debt-to-equity ratio of 0.008 and a current ratio of 1.87. As of September 30, 2024, Energy Vault had $78 million in cash, cash equivalents, and restricted cash. The company also maintains bonding capacity in excess of $1 billion to facilitate additional growth.

Backlog and Project Pipeline

Energy Vault's backlog, which represents contracted but unrecognized revenue, grew by 33% quarter-over-quarter to $350 million as of September 30, 2024. This increase was primarily driven by a new equipment contract with Jupiter Power for a 200-megawatt hour BESS project and a 10-year offtake agreement with Gridmatic for the 57-megawatt, 114-megawatt hour Cross Trails BESS project in Texas. Additionally, the company reported a developed pipeline of $2.73 billion, representing uncontracted but potential future revenue from projects where Energy Vault has been shortlisted or awarded.

Strategic Shift and Long-term Value Creation

The company's transition to a build, own, and operate model for certain projects, rather than solely focusing on EPC and equipment-related revenue, impacted its near-term financial performance but is expected to create long-term value for shareholders. Energy Vault's management expects these owned and operated projects to deliver unlevered double-digit IRRs and project EBITDA margins in the 70% to 80% range, supported by long-term offtake agreements. The company has identified a pipeline of over 30 GWh of storage asset ownership and infrastructure projects in the U.S. and Australia that they plan to execute on.

Innovation and Recognition

Energy Vault's innovation efforts have also gained recognition, with the company's EVx gravity energy storage system technology being named one of TIME Magazine's Best Inventions of 2024. The EVx system combines the company's expertise in civil and structural engineering, materials science, and software automation to deliver a high-efficiency, long-duration energy storage solution.

Product Segments and Offerings

Energy Vault's core business revolves around its Energy Storage Solutions segment, where it develops and deploys utility-scale energy storage solutions. The company offers a range of energy storage technologies, including gravity, battery, and green hydrogen-based systems. These solutions are designed to address the intermittency issues of renewable energy sources like solar and wind by storing energy when production is high and discharging it to the grid as needed.

The company primarily uses two delivery models for its energy storage projects - engineering, procurement, and construction (EPC) delivery, where Energy Vault relies on third-party EPC firms to construct the storage systems under its supervision, and engineered equipment (EEQ) delivery, where the company is responsible for the equipment delivery, installation, and issue resolution within its scope of supply.

In addition to its hardware solutions, Energy Vault offers a technology-agnostic energy management software platform that can orchestrate the operation of its diverse storage mediums and underlying power generation assets. This software platform is designed to help customers optimize the performance of their energy storage systems.

The company also generates revenue from licensing its intellectual property, particularly its gravity energy storage technology, as well as providing operation and maintenance services for customer-owned energy storage systems.

Future Outlook

Looking ahead, Energy Vault expects its full-year 2024 revenue to be at the lower end of its previously provided guidance range of $50 million to $100 million, with potential upside from the timing of revenue recognition from existing and potential license agreements within its gravity energy storage business. The company anticipates gross margins for the full year 2024 to be at the low end of their previously guided range of 15% to 25%. Adjusted EBITDA for the full year 2024 is expected to be within the range of negative $45 million to negative $60 million.

For the fourth quarter of 2024, Energy Vault expects revenue to be back-end loaded due to the timing of equipment deliveries for new projects. The company projects its year-end 2024 cash balance to be within the range of $75 million to $125 million, depending on the timing of project financings and tax credit monetization.

Industry Trends

The energy storage market is showing strong growth potential, with the 2H 2023 Energy Storage Market Outlook published by BloombergNEF projecting a 27% compound annual growth rate through 2030. This trend bodes well for Energy Vault's long-term prospects in the industry.

Conclusion

Despite the challenges faced in the third quarter, Energy Vault's strong backlog, innovative product portfolio, and strategic shift towards owned and operated projects position the company well to capitalize on the growing demand for sustainable, grid-scale energy storage solutions. As the global energy landscape continues to evolve, Energy Vault's unique approach and experienced team make it a compelling player in the energy storage market. The company's focus on expanding its presence in key markets like the United States and Australia, coupled with its diverse product offerings and software solutions, provides a solid foundation for future growth in the rapidly expanding energy storage sector.