Dive Brief:
- Energy storage provider Energy Vault Holdings has executed its first gravity energy storage license and royalty agreement with a U.S.-based renewable developer, for projects that will initially be developed in the Western U.S., the company announced while reporting its second-quarter earnings Tuesday.
- Energy Vault’s gravity energy storage technology involves lifting and lowering blocks to store and dispatch energy, and is best for storage applications with a four-hour duration or longer, according to the company. It did not name the counterparty to the agreement, and plans to provide updates on the deal in the next quarter or two.
- The company also plans to continue directly building energy storage projects, particularly in North America, Chairman and CEO Robert Piconi said on an earnings call Tuesday. The licensing agreement “is a specific application and architecture of the gravity energy storage technology that this specific developer has been talking to many customers about developing and implementing – so we did a specific license agreement with them,” he said.
Dive Insight:
Energy Vault said that its gravity technology license includes a new application of its pre-existing technology, and the license-only part of the contract is expected to produce $33 million in revenue. The first part of the agreement will focus on projects in the Western U.S., Piconi said.
While Energy Vault intends to continue building projects directly, the license model fits really well in some parts of the world and some aspects of the technology, he added, “because we’re obviously not in the construction business ourselves.”
These types of license agreements also make sense for investors, he said.
“From a business model perspective, it allows us to monetize our technology and our [intellectual property] especially for certain applications or iterations or new architectures, in a way that has us garner that profit and even have a lot of that profit a little more risk-free, let’s say, as others can focus on getting the technology built out,” he said.
In May, Energy Vault signed a “technology license option agreement” with a company affiliated with a member of its board, the company said in the SEC filing. The agreement permits the customer to exercise options to enter into licensing agreements in certain territories to use Energy Vault’s gravity storage technology for a $500,000 fee, according to the filing. The customer exercised its option for one of the territories for a contracted value of $33 million to be paid over 10 years, Energy Vault said.
Energy Vault reported revenue of $39.7 million for the second quarter – attributed to progress on its U.S. energy storage projects – and said its near-term commercial funnel has increased by over 27%, or 10 GWh, year to date. The company, based in Westlake Village, California, lost $26.2 million in the quarter compared to a $6.2 million loss in the year-ago period, according to a filing with the Securities and Exchange Commission.
In the U.S. market, where companies now have the benefit of Inflation Reduction Act incentives, the company is seeing increasing interest for long-duration storage, Piconi said.
“As our gravity energy technology is 100% local U.S. content in any event, we can maximize the various IRA incentives as a non-lithium energy storage medium and long-duration technology,” he added.
The company will soon close out a contract for a 68.8-MW/275.2-MWh battery energy storage project, in Southern California, and expects to complete final site approvals in the third quarter. It is also making progress on a hybrid battery and green hydrogen system in Pacific Gas & Electric’s service territory – an 8.5 MW microgrid that could generate up to 293 MWh over 48 hours, and will power a substation in Calistoga, California, that is frequently affected by proactive outages to prevent wildfires.
The company has received approvals for the project from the California Public Utilities Commission and the local Calistoga municipality, and earlier this year procured the hydrogen storage tank and fuel cells for the system from Chart Industries and Plug Power, Piconi said. Energy Vault expects to begin constructing the project in the fourth quarter, and complete it by mid-2024.
Earlier this month, Energy Vault announced the commissioning of a 25-MW/100-MWh project near Shanghai, China, that will be the world’s first grid-scale gravity energy storage system using its proprietary technology. The system is being built close to a wind farm, and will be used to balance China’s national grid. Energy Vault expects the facility will interconnect to the grid in the fourth quarter.
