Energy Vault Holdings, Inc. (NRGV) is a pioneering force in the renewable energy storage industry, developing and deploying utility-scale energy storage solutions to aid in the global transition to a clean energy future. The company's comprehensive offerings include proprietary gravity, battery, and green hydrogen energy storage solutions, supported by its technology-agnostic energy management software solutions.
In its second year as a public company, Energy Vault has demonstrated remarkable progress, delivering annual revenue of $341,543,000 and a net loss of $98,443,000 in 2023. The company's focus on executing for its customers, maintaining profitable unit economics, and protecting its balance sheet has positioned it for continued growth and success.
Business Overview
Energy Vault's mission is to provide energy storage solutions that accelerate the global transition to renewable energy. The company's innovative technologies are designed to address the intermittency issues inherent in renewable energy sources, such as solar and wind, by storing energy when production is active and discharging it to the grid in a controlled and reliable manner.
Energy Vault's comprehensive portfolio includes its proprietary gravity energy storage systems (GESS), battery energy storage systems (BESS), and green hydrogen energy storage solutions. These technologies are supported by the company's technology-agnostic energy management software, which orchestrates the operation of diverse storage mediums and power generation assets to optimize performance.
The company primarily operates under two delivery models: engineering, procurement, and construction (EPC) and engineered equipment (EEQ). Under the EPC model, Energy Vault relies on third-party firms to construct its storage systems, while the EEQ model involves the company's direct responsibility for equipment delivery, installation, and issue resolution.
Financials
In 2023, Energy Vault reported annual revenue of $341,543,000, a significant increase of 134% compared to the previous year. This growth was driven by the successful execution of the company's project portfolio in the United States, primarily under the build, commission, and transfer model.
However, the company's gross margin for the full year was 5.1%, temporarily impacted by the unfavorable timing of revenue recognition related to hardware deliveries and a high-margin licensing transaction. Adjusted EBITDA for the year was negative $62,100,000, reflecting the timing shifts and the company's continued investment in research and development.
Quarterly Performance
In the fourth quarter of 2023, Energy Vault reported revenue of $87,500,000, a decrease from the previous quarter due to the timing of revenue recognition for battery and gravity projects. Gross profit margin for the quarter was 21.2%, and adjusted EBITDA was negative $14,800,000.
The company's net loss for the fourth quarter was $22,200,000, and for the full year 2023, the net loss was $98,443,000. The primary drivers of the net loss were the company's continued investment in research and development, as well as the timing of revenue and gross profit recognition.
Liquidity
As of December 31, 2023, Energy Vault had $145,600,000 in cash, cash equivalents, and restricted cash, positioning the company well to continue its growth strategy and execute on its projects. The company has also significantly reduced its restricted cash balance to less than $1,000,000 as of the latest reporting period.
In the fourth quarter of 2023, Energy Vault took proactive steps to optimize its cost structure, reducing its quarterly cash operating expense run rate by 25% to 30%. This is expected to enable a 2024 quarterly cash operating expense range of $13,000,000 to $15,000,000, helping to accelerate the company's shift to cash flow positive by the end of 2024 and for the full year 2025.
Operational Highlights
During 2023, Energy Vault made significant progress in the execution and deployment of its energy storage solutions. The company delivered and progressed final commissioning on its first three battery energy storage systems totaling almost 1,000 megawatt-hours, including projects with Wellhead Electric and Nevada Energy.
In the gravity energy storage segment, Energy Vault achieved state grid interconnection for its first 25-megawatt EVx gravity storage system in Rudong, China, and is now working to provide initial performance data in the coming weeks. The company also announced a new development agreement with a large public utility in the state of Washington, utilizing its gravity energy storage technology to address a multi-gigawatt-hour storage need in the Pacific Northwest.
Additionally, Energy Vault commenced construction on the largest green hydrogen project and microgrid system in the United States, in partnership with California's largest public utility, Pacific Gas & Electric. This project, supported by a 10.5-year tolling agreement, solidifies the company's global leadership in green hydrogen technology for long-duration energy storage and microgrids.
Geographic Expansion and Partnerships
Energy Vault has continued to expand its global footprint, announcing a new license and royalty agreement for its gravity energy storage technology in Southern Africa, covering the 16 member countries of the Southern African Development Community (SADC). This represents a significant territorial expansion for the company's gravity storage solutions.
In China, Energy Vault's collaboration with China Tianying has progressed, with three additional gravity energy storage systems of 360 megawatt-hours now underway, bringing the total projects announced in the country to over 3,700 megawatt-hours. The company's first USA-based gravity project with a public utility in Washington state further demonstrates the versatility and applicability of its gravity storage technology.
Outlook
For the first quarter of 2024, Energy Vault expects revenue to be in line with the prior year's first quarter, reflecting normal seasonality and the potential for upside from items that were expected in the fourth quarter of 2023. The company also anticipates stronger double-digit gross margins in the first quarter, driven by the shift of revenue and gross profit recognition from the prior quarter.
Looking ahead, Energy Vault expects to exit the first quarter of 2024 with an unrestricted cash balance in the range of $125,000,000 to $150,000,000, with less than $1,000,000 in restricted cash. The company remains 100% debt-free and is focused on accelerating its path to cash flow positive by the end of 2024 and for the full year 2025.
Risks and Challenges
Energy Vault operates in a highly competitive market, facing competition from both new and existing players in the energy storage industry. The company's success is also dependent on the continued deployment of renewable energy resources, which could be impacted by factors such as supply chain disruptions, inflation, and geopolitical tensions.
Additionally, the company's revenue recognition and project timing can be subject to volatility, as demonstrated by the revenue and gross profit shifts from the fourth quarter of 2023 to the first quarter of 2024. Energy Vault's ability to manage these timing challenges and maintain profitability will be crucial to its long-term success.
Conclusion
Energy Vault's second year as a public company has been marked by significant progress, with the company delivering annual revenue of $341,543,000 and a net loss of $98,443,000 in 2023. The company's focus on executing for its customers, maintaining profitable unit economics, and protecting its balance sheet has positioned it for continued growth and success.
Looking ahead, Energy Vault's comprehensive portfolio of energy storage solutions, global expansion, and strategic partnerships position the company as a leader in the renewable energy storage revolution. As the company continues to navigate the challenges of a rapidly evolving market, its commitment to innovation, customer-centricity, and financial discipline will be key to unlocking long-term value for its shareholders.