Swiss start-up Energy Vault is shaking up the battery storage market

Zurich The fact that a new era is beginning at Energy Vault after the IPO is not hidden to anyone at the company’s location in Arbedo-Castione in Ticino. Company boss Robert Piconi has a 20 meter high crane, which pulls up and lowers blocks of stone, dismantled. The six-armed crane, dubbed the EV1, has been demonstrating Energy Vault’s simple yet revolutionary idea of ​​storing electricity using gravity since 2020. “We don’t need him anymore,” says Piconi now. The EV1 will soon be history. He put the money from the IPO into the construction and delivery of the more compact “EVx” power storage system.

The technology is modeled on a pumped storage plant that uses excess energy to pump water uphill, and when energy is needed, dumps water down the valley to run a turbine to generate electricity. Energy Vault wants to bring this principle to regions that have no mountains and no water. Instead, a system of cranes stacks blocks on top of each other when solar panels or wind power supply too much electricity. As soon as electricity is required, the cranes lower the blocks and generate electricity in the process.

Energy Vault is probably the best-known greentech start-up in Switzerland. Piconi has convinced prominent investors like the Japanese tech investor Softbank and the start-up arm of the oil giant Saudi Aramco of its storage solution. Both are – besides Piconi itself – major shareholders. Piconi also has customers: The mining company BHP and the metal producer Korea Zinc want to use Energy Vault’s power storage when switching to low-CO2 production. Since a funding round in September 2021, Energy has officially been considered a unicorn, with a valuation of over one billion dollars.

The start-up is about to transform a multi-billion dollar market. Analysts at the major Swiss bank UBS expect the market for battery storage systems to grow to a total of $385 billion by 2025. By 2030, a storage capacity of more than 453 gigawatt hours (GWh) could be connected to the grid, which corresponds to the annual production of around 80 wind turbines. Energy Vault itself projects grid-connected storage capacity of more than 800 GWh by 2030 by the beginning of the next decade.

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Investor euphoria has cooled off

In February, Energy Vault went public via a so-called spac, a merger with an exchange shell. The start on the capital market was furious: the Energy Vault share initially climbed from ten dollars to more than 21 dollars. But since then, the investor euphoria has cooled: Energy Vault shares are currently trading just above the issue price at $10.70.

For Piconi, however, this is a positive sign: the sell-off in growth stocks has also left its mark on his company. Some of the direct competitors have lost 60 to 80 percent in value. “We are the only ones who are still in positive territory for the year as a whole.”

The CEO also attributes this to the quarterly figures that Energy Vault recently presented for the first time as a listed company. A one-time payment of 50 million dollars for the construction of the first electricity storage facility in China brought the first sales. Operating income before taxes is approximately $32 million, although after deducting IPO costs, the bottom line is a loss of $20 million.

Piconi prefers to talk about the future rather than short-term share price movements or financial figures from the past: 2022 will be “the first year of delivery”. The cornerstone for the first electricity storage facility in China has been laid, and further systems in Australia and the USA are to follow later this year. He sees his technology as an advantage over other power storage solutions on an industrial scale, such as large batteries or thermal power storage.

On the one hand, this is due to the material used by Energy Vault’s gravity accumulators. The new storage generation “EVx” consists of steel constructions up to 100 meters high, which are equipped with horizontal and vertical cranes. With electricity from excess wind or solar energy, they lift blocks weighing several tons and stack them on top of and next to each other.

The blocks consist of recycled material, such as residues from coal production or recycled construction waste, which would otherwise end up in landfills. Energy Vault has specially developed a facility that can be used to produce blocks from local materials at each planned location for the electricity storage. This makes Energy Vault far less dependent on the price and availability of industrial metals like lithium and cobalt, which are currently driving battery storage prices up. “Gravity will always exist,” says Piconi.

Energy Vault has the German market in mind

A research team from the Austrian International Institute for Applied Systems Analysis came to the conclusion in a study that the height difference between the lower and the upper storage location is small. However, she referred to a prototype. The company replies that the modular design of the new “EVx” system makes it possible to adapt the height difference to the local location and the storage capacity.

Energy Vault promises to be able to produce storage solutions at a price of only 60 percent of a lithium-ion battery with the same capacity. And the costs should continue to fall: by 2025 they should be half that of classic battery storage systems. In addition, unlike batteries, the system’s performance does not decrease over time. The gravity storage system is particularly suitable for applications that require a constant power supply with discharge times of between two and twelve hours.

>> Read here: Europe is at risk of a battery bubble

According to Energy Vault, the friction losses caused by the lifting and lowering of the blocks are also low enough to remain competitive with the lithium battery. Tests with the EV1 prototype have shown that around 25 percent of the electricity used falls by the wayside during a charging cycle. The new storage generation EVx should reduce the friction loss to 15 to 20 percent. With a lithium battery storage system, between ten and 13 percent of the electricity used was lost between charging and discharging.

Energy Vault is lucky, says Piconi, that the anchor investors are also customers: other plants, for example in Saudi Arabia, where Aramco is based, could follow. But the Energy Vault boss also has his eye on the German market: For example, his vision is that decommissioned coal-fired power plants could be converted into gravity power storage systems. Because one thing is certain: If the energy transition is to succeed, storage capacities for renewable energies must increase, says Piconi: “The entire industry is lagging behind.”

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