The Swiss start-up for electricity storage using gravity is now planning more compact systems.
(Photo: picture alliance/KEYSTONE)
Zurich Energy Vault has long lost its unicorn status: the market valuation of the once celebrated Swiss-American electricity storage provider has fallen from $1.6 billion to around $300 million. But now new trouble is looming: so-called short sellers, who are betting on a continued crash of the share, have focused on Energy Vault.
In a report published on Friday, the activist shortseller Bleecker Street Research accuses management of deceiving shareholders when it announces new electricity storage projects. Energy Vault has yet to comment on the report. The company has not yet responded to a Handelsblatt request.
Energy Vault develops gravity power storage. The principle: Excess energy should be used to lift heavy concrete blocks dozens of meters into the air with cranes. As soon as the energy is needed, the concrete blocks are to be lowered and electricity is to be generated with the released energy.
Energy Vault has been public since February
The technology is based on a pump storage plant. This uses excess energy to pump water uphill. Then, when energy is needed in the power grid, water is released into the valley to operate a turbine to generate electricity.
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Energy Vault advertises that the efficiency of its own gravity power storage can keep up with lithium-ion battery storage, at least if the necessary energy is constantly accessed over a period of two to four hours.
The company had even operated a test facility in the Swiss canton of Ticino, which was connected to the Swiss electricity grid. Prominent investors such as Softbank and Saudi Aramco supported the start-up. Since February, Energy Vault has been listed on the New York stock market through the merger with a shell company.
The pilot plant has now been dismantled. Co-founder Robert Piconi told Handelsblatt in May that the EV1 prototype was no longer needed. The company is pinning its hopes on the more advanced version, the EVx. But for short seller Chris Drose, founder of Bleecker Street, this is an indication that the technology does not work in practice. This can be debunked with the help of high school physics.
According to the allegations, Energy Vault is also deceiving its shareholders with sales forecasts and announcements about new projects. The company has announced a goal of generating combined sales of $680 million in 2022 and 2023. By 2025, revenues are expected to exceed $2 billion.
These sales are to be realized through major worldwide orders. For example, Energy Vault announced electricity storage for a solar power plant in Australia. In the press release, it sounded as if this already supplies more than 100,000 households with electricity. However, Energy Vault admitted to Bleecker Street Research that the project has not yet progressed beyond the planning stage.
Energy Vault wants to use gravity to store energy.
(Photo: PR)
A large order is also said to come from DG Fuels, a US supplier of zero-emission jet fuel. However, research by short investors shows that DG Fuels is a shell company with few employees.
Questionable circular business
Both companies are linked by a questionable circular business: Energy Vault invested one million dollars in DG Fuels. There they thanked them with an agreement “with the potential to generate sales of up to $520 million,” as Energy Vault announced. Bleecker Street said it was highly doubtful whether DG Fuels could ever invest that much money in Energy Vault storage.
A shortseller report published in July by Culper Research also focused on the CVs of Energy Vault managers. A board member previously worked at the Ticino cleantech start-up Airlight Energy. The company is currently in liquidation. A marketing manager is said to have previously advertised a dubious cryptocoin.
Investors who are short will benefit if Energy Vault’s share price falls further. Drose from Bleecker Street Research also makes no secret of why he is publishing the report now. For the first time since the IPO, it is possible for professional investors to build up short positions on favorable terms. Things could get even worse for Energy Vault shareholders.
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