Invinity Energy Systems: VSA Capital
Full Year Results
Invinity Energy Systems (IES LN), which develops Vanadium Flow Batteries (VFBs) for utility scale grid storage, recently announced full year results for the period ending December 31st 2023 (FY 2023). Revenue rose by 511% to £22.0m (FY 2022:£3.6m) from sales of 32.5MWh of battery sales across 15 projects. The PBT loss increased to £23.2m (FY 2022: £18.5m) and end cash closed at £5.1m as the Group invested for growth. IES’ next-generation Mistral VFB technology will be commercially launched in H2 2024 to provide grid-scale longer-duration energy storage (LDES) as renewable generation increases globally. To capture this opportunity, in May 2024, the Group raised £57.4m through a share placing. Mistral has seen the Group’s pipeline grow with over 40MWh of projects that are negotiated and close to signing and over 400.0MWh where it has been selected as supplier. Our forecasts are unchanged with FY 2024 revenue growth of 72% to £37.3m from sales of 57MWh of VFB systems and services, with FY 2025 revenue at £114.0m from sales of 300MWh Mistral VFB systems and £3.5m from ancillary services.
International Opportunity
Grid batteries that can multi-cycle and produce energy for longer periods (Long Duration Energy Storage LDES) than the current 1-2hrs supported by lithium-ion are key to replacing gas in supporting renewables growth and grid intermittency. IES is focused on the UK, U.S. and Asian markets. The UK Infrastructure Bank (UKIB) undertook investment of £25.0m in the recent placing to support LDES projects using IES batteries. The U.S. is the second-largest energy storage market in the world, behind China. IES has more recently won orders in California, the largest state for battery deployment. In Asia, IES highlights a 2.4GWh market from a strategic desire to reduce reliance on Chinese products in many countries in the region. The Group has strategic partnerships in Korea and Taiwan.
Recommendation
IES faces a compelling opportunity for long duration, multi cycle, battery storage supporting renewable energy generation. IES has attracted strategic investment, is gaining significant commercial traction with a clear path to profit in FY 2025, underpinned by the launch of Mistral.
We reiterate our Buy recommendation and target price of 110p.
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