Inflation Reduction Act Offers Opportunity for Eos Energy Enterprises, Inc. and Energy Storage Customers to Capture Substantial Long-Term Value While Significantly Reducing Emissions
October 31 2022 - 6:15AM
Eos Energy Enterprises, Inc. (NASDAQ: EOSE) (“Eos”), a leading
provider of safe, scalable, efficient, and sustainable zinc-based
energy storage systems, today announced the expected impacts on the
energy storage industry and on Eos from the recent passage of the
transformational Inflation Reduction Act (“IRA”) and Eos’s shift in
strategy and revised outlook for fiscal year 2022.
“We believe that one of the important benefits of the IRA is
that it will significantly reduce the costs of battery cells,
modules, and energy storage systems, particularly for those
manufactured in the US which we expect to accelerate the domestic
energy transition,” said Joe Mastrangelo, Chief Executive Officer
of Eos. “We continue to see accelerated demand in our robust
opportunity pipeline. The IRA encourages the building of a clean
energy future in America and Eos is well-positioned as one of the
only at-scale US manufacturers of proven long duration energy
storage.”
The IRA features significant economic incentives for both energy
storage customers and manufacturers that begin for projects placed
in service after December 31, 2022. Customers placing new energy
storage facilities in service after this date will be allowed to
claim at least a thirty percent investment tax credit (“ITC”) under
certain conditions. The IRA also offers an extra ten percent credit
if the project is in an “energy community” and another ten percent
credit if the project satisfies domestic content requirements,
which will be set forth when the implementing regulations are
finalized. Mastrangelo continued, “The ten percent bonus for
domestic content is a strategic advantage for Eos resulting from
our near-sourcing and Made in America strategy, and we currently
anticipate that projects utilizing Eos batteries would qualify for
the bonus.”
Starting in 2023, there are also meaningful production tax
credits (“PTC”) that can be claimed on battery components
manufactured in the US and sold to customers which could apply to
Eos, including credits for ten percent of the cost incurred to make
electrode active materials, $35 per kWh of capacity of battery
cells, and $10 per kWh of capacity of battery modules. These
credits are cumulative, meaning Eos expects to be able to claim the
tax credit amount for each component. The IRA directs the Internal
Revenue Service to pay manufacturers the cash value, also known as
direct pay, of production tax credits for making battery
components, and therefore, these credits may be a new source of
cash flow for Eos. The direct pay option is valid for up to five
tax years, after which any such tax credits can be sold to other
companies for cash.
Benefits for energy storage customers and manufacturers will
begin in 2023. Eos has worked proactively and in partnership with
its customers to push out orders originally scheduled to be
produced and delivered this year to 2023 so that both Eos and its
customers can better realize the benefits offered by the ITC. Eos
intends to finalize production and delivery on the Pine Gate
Renewables Eastover project in the fourth quarter of 2022 and to
reduce production on the current generation product thereafter.
This results in a revised full-year 2022 revenue expectation in the
range of $17 to $20 million, shifting the remaining revenue
originally planned in 2022 to 2023.
Mastrangelo added, “Against the backdrop of the new IRA
legislation and major progress on our new battery design, the Eos
Z3™ battery, we believe reducing output on our current product and
focusing our team on tooling the factory for Eos Z3 battery
production is the best capital allocation decision for the
Company. We believe this decision will deliver long-term value
creation for both our customers and our shareholders.” The Eos Z3
battery builds off the same stable, proven chemistry that has not
fundamentally changed for the better part of a decade. The Eos Z3
battery is designed and purpose-built for scalability and cost. It
is simple with 50% fewer battery cells per module and 98% fewer
welds than the current product.
“The Eos Z3 battery product is a paradigm shift in design which
significantly reduces assembly complexity,” said Francis Richey,
Senior Vice President of Research & Development at Eos.
“Incorporating conductive plastic into our patented bipolar
electrode design reduces cost and weight and improves
manufacturability and system performance.” The Eos Z3 battery is
designed to be capable of significantly higher manufacturing
throughput and reduced cycle times at full-scale production which
will allow Eos to maximize the PTC relative to the current
generation product.
As previously disclosed, Eos has been invited to the due
diligence stage of the U.S. Department of Energy’s (“DOE”)
Renewable Energy and Efficient Energy Loan Program. The DOE Loan
Programs Office’s (“LPO”) invitation to Eos to enter into full due
diligence represents an important progression in the LPO’s
evaluation of Eos’ loan application. This stage includes LPO
performing its due diligence of Eos’ project to expand
manufacturing to support at least 3GWh of production capacity.
During this stage, Eos and LPO will work to negotiate a Term Sheet
setting out the principal terms and conditions of the loan. This
work provides the LPO the foundation to advance the loan towards a
Conditional Commitment. Although the DOE LPO’s invitation to due
diligence is not an assurance that the DOE will offer a Conditional
Commitment or provide a loan to Eos under the DOE LPO, Mastrangelo
concluded, “We believe Eos is positioned well in this process since
our products and technologies are an enabler to greenhouse gas
emission reduction and decarbonization. In addition, the Company’s
Made in America and job creation strategy meet many policy
objectives of the IRA and broader White House Administration.”
About Eos Eos Energy Enterprises, Inc. is
accelerating the shift to clean energy with positively ingenious
solutions that transform how the world stores power. Our
breakthrough Znyth™ aqueous zinc battery was designed to overcome
the limitations of conventional lithium-ion technology. Safe,
scalable, efficient, sustainable — and manufactured in the
U.S. — it's the core of our innovative systems
that today provide utility, industrial, and commercial customers
with a proven, reliable energy storage alternative. Eos was founded
in 2008 and is headquartered in Edison, New Jersey. For more
information about Eos (NASDAQ: EOSE), visit eose.com.
Forward-Looking StatementsThis press release
includes certain statements that may constitute "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to,
statements regarding the tax credits available to our customers or
to Eos pursuant to the Inflation Reduction Act, statements
regarding our ability to secure a loan from the Department of
Energy LPO, or our anticipated use of proceeds from any loan
facility provided by the US Department of Energy, statements that
refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying
assumptions. The words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intends," "may," "might," "plan,"
"possible," "potential," "predict," "project," "should," "would"
and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is
not forward-looking. Factors which may cause actual results to
differ materially from current expectations include, but are not
limited to: changes adversely affecting the business in which we
are engaged; our ability to forecast trends accurately; our ability
to secure conditional commitment or final approval of a loan from
the Department of Energy; our ability to generate cash, service
indebtedness and incur additional indebtedness; our ability to
develop efficient manufacturing processes to scale and to forecast
related costs and efficiencies accurately; fluctuations in our
revenue and operating results; competition from existing or new
competitors; the failure to convert firm order backlog to revenue;
risks associated with security breaches in our information
technology systems; risks related to legal proceedings or claims;
risks associated with changes in federal, state, or local laws;
risks associated with potential costs of regulatory compliance;
risks associated with changes to U.S. trade policies; risks
resulting from the impact of global pandemics, including the novel
coronavirus, Covid-19; and risks related to adverse changes in
general economic conditions. The forward-looking statements
contained in this press release are also subject to additional
risks, uncertainties, and factors, including those more fully
described in Eos’s most recent filings with the Securities and
Exchange Commission, including Eos’s most recent Annual Report on
Form 10-K and subsequent reports on Forms 10-Q and 8-K. Further
information on potential risks that could affect actual results
will be included in the subsequent periodic and current reports and
other filings that Eos makes with the Securities and Exchange
Commission from time to time. Moreover, Eos operates in a very
competitive and rapidly changing environment, and new risks and
uncertainties may emerge that could have an impact on the
forward-looking statements contained in this press release.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and, except as required by law, Eos assumes no
obligation and does not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Contacts |
Investors: ir@eose.comMedia: media@eose.com |
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