Energy Vault Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2024

There are 6 speakers on the call.

Operator

Good day, and welcome to the Energy Vault's Second Quarter 2024 Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Michael Beer, Chief Financial Officer for Energy Vault. Please go ahead.

Speaker 1

Thank you. Hello, and welcome to Energy Vault's 2nd quarter 2024 financial results conference call. As a reminder, Energy Vault's 2nd quarter earnings press release and presentation are available now on our Investor website and we'll be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations portion of our Web site. This call is now being recorded.

Speaker 1

If you object in any way, please disconnect now. Please note that Energy Ball's earnings release and this call contain forward looking statements that are subject to risks and uncertainties. These forward looking statements are only estimates that may differ materially from the actual future events or results due to a variety of factors. Please refer to our 10 Q filing for a list of factors that cause our results to differ from those anticipated in any forward looking statement. We undertake no obligation to publicly update or revise forward looking statements, except as required by law.

Speaker 1

In addition, please note that we will be presenting and discussing certain non GAAP information. Please refer to the Safe Harbor disclaimer and non GAAP financial measures presented in our earnings release for more detail, including a reconciliation to comparable GAAP measures. Joining me on the call today is Robert Piccone, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert Piccone.

Speaker 2

Great. Thank you, Michael. And I also want to officially welcome Michael Beer for the 1st quarterly earnings that he's taking over for our prior CFO. He joined us in April as we announced on our last earnings call. So welcome, Michael.

Speaker 2

Great to have you here. We're also taking this call from Lugano, Switzerland from our international headquarters here where we conducted our board meetings last week and our management meetings here this week. During our inaugural Investor and Analyst Day last quarter in May at the New York Stock Exchange, where we updated investors on our vision, strategy and 2 year financial guidance. We outlined a bold plan with the following 3 strategic tenants. First, to address the largest and most attractive growth regions for energy storage, very critically addressing them in the business model that is most cash accretive, most profitable and the lowest risk for investors.

Speaker 2

Just to emphasize on this first point as an example, how we address the storage market for example in China versus Australia versus the U. S, 3 of the largest markets in the world might be different considering the 3 factors I just mentioned and allows us to choose from a license royalty model, a build and transfer model or a build, own and operate model. Secondly, we outlined a plan to deliver more predictable and recurring revenue streams. Obviously, especially important as a public company as pure play integrators will continue to be subject to the EPC build schedules of customers that can move in 3 to 6 months increments pending permitting and other external factors that can expose us to lumpy quarters as we are experiencing here this year after the 1st 2 years of very strong growth. Our unique multi technology and multi business model approach to the market allows us some degrees of freedom to adapt our solution mix of license royalty, build transfer and build operate to best optimize our future cash flow streams.

Speaker 2

Thirdly, offer the high growth and profitability potential within the Energy Storage segment. This really is about how we are optimizing our product mix and business model to drive the high unit economics in our sector, Whether from our technology agnostic fit for purpose approach to the solutions we develop under the umbrella of our AI enabled EMS platform or from the ability to utilize the most attractive commercial structures and business model including project bonding capacity in excess of 1,000,000,000 dollars we have multiple levers at our disposal that we're using to deliver growth at and above the market gross margins and unit economics we've outlined. As we turn to our Q2 results, we demonstrated progress across all three dimensions of our strategy and in line with our latest 2024 guidance and ramping revenue later in the year due to the timing on new project starts and the then large concurrent 2025 deployments. Firstly, relative to growth in the largest and most attractive regions, we announced newly booked deals as noted in the press release with 2 projects with AFIN in Australia, a large and important growth region with more coming and uniquely as a region with the local industrial presence of investors like Korea's Inc.

Speaker 2

And BHP, 2 of the largest mining companies in the world in their respective sectors. I'll be announcing another new regional expansion for our gravity technology in just a few minutes that has not been previously announced. Secondly, relative to more predictable and recurring revenue streams, we have strong execution progress on the 2 projects that we will own and operate. First, the largest green hydrogen storage project States in Calistoga, California for Pacific Gas and Electric, California's largest public utility and the CrossTrails battery project in Snyder, Texas, both of which we chose to maintain on our balance sheet given the long term IRR attractiveness of recurring margin revenue streams which will smooth the top line volatility over time. While these choices reduce revenue recognition this year in 2024, they will offer Energy Vault and investors additional high margin contribution and revenue predictability going forward.

Speaker 2

As we're in the process of implementing project financing on these projects, we are expecting to return more than $40,000,000 to the balance sheet in the Q4 of this year while increasing the IRRs on these projects in the process. These projects are expected to be online in Q3, 2024 within this quarter and Q2 2025 respectively and projected to add $8,000,000 to $10,000,000 in recurring EBITDA profit streams annually over the next 10 plus years. And thirdly, relative to growth and profitability, we reported strong unit economics at 27.8 percent gross margins despite the lower revenue due to the mix of the projects, improving adjusted EBITDA up 12% year over year, which was also positively impacted due to lower cash operating expense, which was reduced by 23% over the prior year due to proactive measures taken by the company in Q4 2023 and continued vigilance and cost containment, operating efficiency and continuing to tune our business model for product and solution realization. I want to give a little more color on some of the commercial highlights from our release and then we'll turn it back to Michael, our CFO to review the detailed financials and get to some questions.

Speaker 2

Regarding the overall sales funnel, we ended the quarter with a solid contribution of new commercial opportunities, aided significantly by the prior second half twenty twenty three and early 2024 successful completion of large scale battery storage projects at Nevada Energy just outside of Las Vegas, Wellhead in Southern California, Jupiter Power in Texas and the recently announced in our Q2 expansion into the Australian market with the 2 projects with Aethon totaling 400 Megawatt Hour. In line with our growing our global presence, we have also taken steps to deepen our leadership bench and our investment in our commercial teams and thus very pleased to welcome Wes Fuller as our new Global Head of Sales. Wes has built a successful career joining Energy Vault most recently from Cowen Schneider Electric and Siemens. I know I speak on behalf of our leadership and those employees that have had initial exposure with Wes, but it's been a pleasure to get to know him better as he has ramped up here the last month. He clearly brings a significant track record of delivering results in large scale dynamic and high growth clean energy transition.

Speaker 2

Getting back to the clean energy transition. Getting back to the numbers, in total, the company ended the quarter with a developed pipeline of $2,800,000,000 of which over half is associated with projects being developed by either existing customers or strategic partners and investors, which obviously gives us a lot of confidence on conversion of that funnel into contract bookings. This figure rose about $100,000,000 from our Investor and Analyst Day in early May. Meanwhile, our backlog of $264,000,000 now reflects the projects with 8 in Australia, as well as new long term service agreements at Nevada Energy, increasing roughly 17% since our Analyst Day. While we expect a substantial portion of the project related work to be recorded over the next 18 months, as we have seen the actual percentage of completion accounting can create lumpiness from 1 quarter to the next.

Speaker 2

As I highlighted earlier with increased contribution from newly owned and operated assets and a higher mix of software sales and long term service agreements, we expect to improve this visibility while reducing volatility over the medium to long term, the end result being a more profitable sales mix for the company. From a balance sheet and liquidity perspective, we remain in great shape as Michael will cover more in detail with over $110,000,000 in cash and no debt. And as mentioned earlier, looking at attractive project financing structures for our own projects, which will add cash back to our balance sheet while improving IRRs on these projects. From speaking recently to many of our investors, they've appreciated our stewardship of their investment and our management of our cost structure and cash and what remains a very dynamic and ever changing market environment and thus avoiding any cost convertible debt or other dilutive financing structures and we will continue to do so. While we expect capital markets as well as energy storage trends will remain dynamic to the least, we remain highly encouraged by the structural and secular trends across the energy storage industry, particularly related to the massive uptick in pure power demand from generative AI and data centers, and thus downstream requirements for renewable energy storage and backup storage solutions.

Speaker 2

The demand now for economical 20 fourseven Renewables Solutions has been accelerated 5 to 10 years in my opinion as the world cannot meet the current and upcoming power demand renewably. That demand for 20 fourseven Renewables is here today, yet no economical solutions to implement exist. This not only represents a tremendous opportunity, but is really core to our mission and founding of the company. But it is also an imperative, really a moral imperative for our planet and a massive inflection point for renewables and storage as the world seeks to turn back to all forms of power generation fossil, small modular reactor, etcetera increasingly as these new chips heat up the data centers, these same data centers will be heating up the world at an accelerated rate. Enter therefore innovation and what Energy Vault and many companies like us are focusing on.

Speaker 2

It is our mission as a company and the passion of our people that will solve it through teamwork, innovation, courage, fortitude and pure will and execution despite the obstacles thrown in front of us. As we look toward the balance of 2024 2025, we will continue to make progress on our core objectives, leveraging our unique technology and solutions based approach across all durations and targeted geographies to create real and sustainable competitive advantage in an otherwise highly commoditized space in conventional batteries. As demand for long and ultra long duration storage continues to grow, EnergyVault is and will continue to be uniquely positioned to capture a growing market share. I would like to finish to touch upon what we announced yesterday and a new announcement and regional expansion with our gravity energy storage that has not yet been previously announced. As some of you may have seen, we announced yesterday with site and concession owner Carbon Sulchis, a new 100 Megawatt Hybrid Gravity and Lithium Ion Energy Storage Project on the island of Sardinia at the location of the largest former operating coal plant and mining site in Italy and one of the largest by subterraneous coal reserve sites in Europe.

Speaker 2

Beginning with a courageous vision of Francesco Lippi, CEO of Carbon Solutions to transform the coal site to a carbon free technology hub while preserving jobs for the local community, EnergyVault is entering now to accelerate its vision with a new hybrid energy storage system approach to address the unique topology, which includes 500 meter depth mining shafts. This unique solution leverages Energy Vault's new modular pumped hydro gravity energy storage technology called the EV0. The 0 by the way because we are returning to some of the original incarnations of our technology using water reservoirs. The first full commercial scale EV0 units will be delivered to the site in Sardinia in the next 60 days. And then installation, testing, commissioning and operation will commence and be completed in 2025.

Speaker 2

The gravity system will be complemented by a lithium ion battery array with all power discharging, asset management and economic dispatch orchestrated by Energy Vault's, VaultOS Energy Management Software Platform or EMS. This first of a kind hybrid system represents a unique solution to a very specific and unique need to capture energy storage leveraging existing infrastructure, in this case mine shaft and gravity, which is the basis of 90% of all energy storage in the form of some hydroelectric dams today. And finally before I turn it back to Michael, it gives me great pleasure to announce that we are again expanding our regional presence with our first EVX gravity energy storage system in Brazil. With Brazil's state owned oil and gas conglomerate Petrobras. Petrobras is committed to a clean energy transition in Brazil and we are happy to support their efforts with our gravity energy storage systems to be co located at one of their refining sites.

Speaker 2

We will be sharing more details on this exciting relationship and regional expansion in the coming months. With that, I'll turn it back to Michael Beer, who will share more financial details for the quarter. Michael?

Speaker 3

Thanks, Rob. During the

Speaker 1

Q2, the company reported revenue of $3,800,000 reflecting the successful completion of battery projects in the U. S. Along with contribution from software and long term service agreements. Consistent with our full year guidance, revenue was down versus prior year due to the timing of projects and percentage of completion accounting. The company did announce a new battery storage project in Australia with Aspen during the period, but we expect most of that revenue to be recognized later this year and next as part of our $264,000,000 revenue backlog.

Speaker 1

Including our new Gravity license in Southern Africa with Gasol, we expect to recognize later this year along with 1 to 2 new battery storage projects expected to commence construction before year end, we are reaffirming our full year revenue guidance of $50,000,000 to $100,000,000 Our gross margin was 27.8% for the 2nd quarter, up from 9.8% a year ago, reflecting favorable revenue mix as projects were completed. Through the first half, the gross margin is tracking at 27%, above the guided range of 15% to 25% for the full year 2024.

Speaker 2

From an

Speaker 1

adjusted EBITDA perspective, during the Q2, our adjusted EBITDA was negative $15,800,000 which improved 12% or $2,300,000 year over year. Adjusted operating expenses declined 23% in the quarter on a year over year basis to $16,900,000 GAAP results included a $1,700,000 restructuring charge associated with the reorganizational and realignment as well as other cost side measures discussed earlier this year and during the company's Investor and Analyst Day on May 9. Along with the $600,000,000 impairment associated with the company's move into corporate office in Westlake Village, California. As a result, the company expects adjusted OpEx to be reduced by $3,000,000 to $4,000,000 in the second half or $6,000,000 to $8,000,000 on an annualized basis and be around $15,000,000 per quarter in the second half of twenty twenty four. The other key non cash items added back in Q2 were $9,500,000 of stock based compensation expense and $1,700,000 in net interest income.

Speaker 1

Management continues to expect adjusted EBITDA within the range of negative $45,000,000 to negative $60,000,000 for the full year. From a cash perspective, as of June 30, 2024, the company had $113,000,000 in cash, cash equivalents and restricted cash, leaving us well positioned to continue our growth strategy and execute on our projects. Our primary uses of cash are cash operating expenses and working capital needs associated with equipment purchases for our energy storage projects and expenditures for those projects we have chosen to own and operate, which will be largely offset by anticipated project finance and the monetization of tax credits. Restricted cash remains very manageable at just $6,100,000 a slight increase from the prior quarter, reflecting cash back letters of credit for new project awards. This is well below the $35,600,000 at year end 2023.

Speaker 1

As Rob mentioned, we maintain bonding capacity in excess of $1,000,000,000 to facilitate additional growth projects as we desire. Management still expects our year end cash balance to be within the range of $75,000,000 to $125,000,000 With that, I'll hand the call back to Rob.

Speaker 2

Great. Thank you, Michael. Just in closing here, as I normally do, I want to start by thanking all of our employees in the company for their dedication to the mission and working through what remains a volatile dynamic environment both for energy storage, geopolitically and with all the many we have, they're focused on our customers in the end and delivering for our customers. Also official welcome again to Michael Beer and joining our leadership team as well as Wes Fuller most recently in his global sales role. With that operator, we will turn it back to you and be ready to answer some questions.

Operator

We will now begin the question and answer session. The first question comes from Thomas Voiez with TD Cowen. Please go ahead.

Speaker 3

Appreciate you taking the questions. First one for me, just given the focus on owning and operating specific projects following the Investor Day, are there specific applications of your technology where you're more likely to own and operate when looking at kind of the graphite portfolio? You have an EVX system up and running in China. You just had announced the EVO system, but you'll also be an owner and operator. Should we kind of expect more attention for those systems and maybe an EVY than say additional EVX projects?

Speaker 3

How do you think about that split?

Speaker 2

Great. Thank you, Thomas. Good to hear you. Yes, there is no specific technology that's a focus relative to own and operate. And I think if you look at the first two that we were already developing on our balance sheet, the Calistoga project, which is a combination green hydrogen, so ultra long duration with lithium ion there.

Speaker 2

And then the second one is a pure battery energy storage in Texas. So we're going to look at that based on the economics of the project, the fit for us. Also project financing becomes important. That's one of the verticals in the financial markets that's remained quite robust and attractive. So we look at that and really not as specific to the technology, but more to the attractiveness of the project.

Speaker 2

So to be clear, you can expect that you may see combinations of gravity and lithium ion like we just announced for Sardinia, for example, and we announced that we're planning to own and operate that site. We've already announced the green hydrogen lithium ion and the pure play lithium ion. So the main focus there is going to be across our portfolios. We evolve it and looking at some of the pure build and transfer models and looking at some of what we call EEQ projects where we're just delivering equipment and not having the exposure on the EPC side where we take risk on construction and some of the other supplier side. So we're going to balance that and I think have a portfolio that can we believe optimize both our cash, cash returns as well as the longer term profitability and fundamental unit economics of the business.

Speaker 3

Appreciate. That's very helpful. And then for the follow-up, I was just hoping we could get a bit more maybe a performance update for Rudon and how that EDX is performing, anything you could share as far as just round trip efficiency or maybe other performance metrics to let us know how that system is operating?

Speaker 2

Sure. Yes, we're just awaiting the final approval to operate fully to the grid. As we announced before, we're already charging and discharging to the grid. And there's been announcements locally in China that our partner did. The last ones we saw were June 19.

Speaker 2

They hosted a media day where they demonstrated the project to a host of both local media and media from other provinces. So we are still just awaiting the final approval They are locally on full charge and discharge for the asset. We actually have a team there even on the ground. 1 of our technical teams and support teams are there with C and T Y here as we speak actually this week. So we're awaiting that and part of their visit there is to also take performance measurements on a multi slice basis there.

Speaker 2

So we're expecting something shortly, Thomas, and we'll be announcing those performance metrics as we get that from the site.

Speaker 3

Excellent. Thanks so much. I'll hop back in the queue.

Speaker 1

Thank you.

Operator

The next question is from Stephen Gengaro with Stifel. Please go ahead.

Speaker 4

Thanks. Good evening, I guess there. So a couple of things. I think first for me, when we think about your sort of 2 year revenue guidance and I sort of I see some of the project announcements you've made in your backlog. But when we as we sort of try to evaluate that and we think about what awards you need, can you just maybe talk a little bit about sort of the pipeline of opportunities and what we should be looking forward to kind of increase the confidence in the revenue guidance for the next sort of the aggregate 2 year period?

Speaker 2

Sure. I think some of the milestones you should look for over the, let's say, the rest of the year since we're in about 4, 4.5 months left are specific conversions of projects from that developed pipeline category into actual bookings. So I think that's going to be important. We at the Investor Day, Stephen you'll recall, we actually highlighted some very large projects there and did not name it. In some cases, we didn't yet have the approval yet to name the customer.

Speaker 2

So I think you should look for conversion of some of those to awards and bookings that then would fill in what we announced over the next our 2 year revenue that we announced essentially, which was the $500,000,000 to the $700,000,000 So obviously from where we sit today and given the nature of some of the larger projects in our portfolio, you would need to see some of those convert here in the coming in the second half of the year, let's say. The other thing I referenced, as I mentioned in my upfront portion, is that a lot of those deals in that developed pipeline are also with strategic investors or in some cases partner companies in the sense that they're people that are known to us. They aren't new customers. They may be even customers as I mentioned earlier, that we've already done projects with or completed projects with. So that obviously gives us and gave us a high level confidence to be able to project that 2 year revenue.

Speaker 2

So I would say those markers are going to be important. I think some of the things we announced and I'll give a little bit more color on that regionally. So I think Australia is going to continue to play a large role as we've announced the first project that's underway with ASIN. ASIN is quite a large player in Southeast Asia and having the storage portion and part owner of one of the largest solar sites, 7 20 Megawatt in Australia. I think as you're aware and as I mentioned in my remarks, we have strategic investors in Australia and Korea's Inc.

Speaker 2

And BHP and they're obviously investing in some of their own green energy transition and things that they've made public. So I would say some of those I would look for those milestones over the coming 3 to 4 months and you really need to see those, right? Because for us to convert and get to the revenue levels we projected, you're going to need to see some larger project announcements.

Speaker 4

Got it. Okay. That's very helpful. And then the other one, just quickly, when you think about build and transfer, own operate, etcetera, are you is that completely customer driven for some of this stuff that you truly want to own and operate because of the long term returns and recurring revenue? How do you balance that?

Speaker 2

By the way, it is a balance, but it's more of the latter on how we think about portfolio. And as we look at the profit pools in our energy storage ecosystem, and that's from

Speaker 5

sort of the supply and equipment side

Speaker 2

all the way up through the integrator side of the house into services and software, but also into an independent power and the power ownership and provision back to utilities or to end users. So when you look at that ecosystem, we've done a lot of work in looking at where those profit pools are, but as well and as you well know as a public company, if we were to just play for example which we don't today, we're a little more diversified than that, but if we were just to play in the integrator space you're subject to the lumpiness that we see. And even in our large growth the 1st 2 years, our 1st year, dollars 148,000,000 our 2nd year, dollars 345 plus 1,000,000 we had quarters that were very lumpy and being no stranger to public companies as you know, Stephen, it's tough to maintain that type of quarterly cadence and thus both for profitability, for cash and as we look at attractiveness and diversity in our portfolio, we believe this is a strong strategic move for us to make for investors. And from just a pure cash and return perspective, what we think over the mid to long term, there's really not a public corollary to a portfolio like we've developed and including a strong portfolio as a storage IPP, where you've got long term contracts, you have EBITDA streams of 75% profit plus and again with assumptions in and around the type of project financing we believe we can get.

Speaker 2

And when you have a player like us that has the team that's experienced in a way in terms of building projects, commissioning them and understanding how to service them over time. You leverage that experience set into operating and delivering over time and it gives you the ability to leverage and understand supply chain operation, where to take money out of the system, where to optimize costs. No secret lithium ion batteries have come down in price so much and all of a sudden these other components, the balance of plant become a larger percentage of project and we've got tremendous expertise, probably some of the best in the world in civil and structural engineering, the material science around looking at taking both cost out, but also optimizing construction sequencing, taking time out of the sequences it takes to actually build and therefore, the overall labor cost and provisioning of materials at sites. These are all things that when you get into margins, like we're talking about, which as we've reported here, even into the 15%, 20%, 25%, if we want to push those even higher, we really are pulling apart that cost equation. And we're taking out in some sense some of the profit pools that

Speaker 3

you would

Speaker 2

typically pay others to in moving to that own and operate model as well. So I think it's more to posing your question the latter part, less customer driven in the sense of we do have customers in the case of Calistoga PG and E, that first one where that was an RFP that was designed as a PPA or a tolling type of an agreement. So that one was something customer driven, but with something that earlier on we've had a lot of interest in that project and we could have sold that project. We had interest and continue to have interest. However, it's something given the returns we've looked at and this business model for the reasons I've mentioned, I think make a lot of sense for us to retain that.

Speaker 4

Great. That's great color. Thank you.

Speaker 1

Thank

Operator

you, Steven. The next question is from Noel Parks with Tuohy Brothers. Please go ahead.

Speaker 5

Hello. I had a couple of questions. I was wondering if you could give some perspective, now with the announcement about the project in Italy, the former mine site. Just as far as implementation timeframe for an EVX system, sort of moving from China, where things stood at the point that that project got kicked off, to Schneider and now to this project in Italy. I just wondered what is what's maybe going likely to go faster with the subsequent project And whether there's anything that might go slower just I don't know supply chain or other issues?

Speaker 2

Yes. It's a great question, especially as you refer to the project in Sardinia where as I mentioned we're actually going to have the full scale, EV0, which are essentially these special vessels that are made out of fabric. And we for a lot of competitive reasons and confidentiality, we haven't shared a lot with the market about it. I think sharing the fact that we're actually delivering full scale fabric vessels that I'm referring to here on the call since you asked for the first time. We are moving very quickly because in this case, if you look at this, what we're referring to as a modular pumped hydro system, we have IP around an ultra low cost way to hold liquid, in this case, water.

Speaker 2

And all the other components in our modular pumped hydro system for Sardinia where we're going deep into mine shafts are from existing infrastructure that's utilized in pump hydro. So, PEMSTOC, a turbine. So these are things that have been used with pumped hydroelectric for 100 years. So as a result, to your question on speed, and since we've done testing on this solution for the last 18 months, so this has all been done under the radar. We've been testing this new modular pumped hydro system and circulating it.

Speaker 2

That's actually now been an under accelerated life testing over 10 years of time. This is a system that's going to move very quickly and we'll have applications not only going below ground. So that is something new. That's a new segment that I think we haven't referred to really yet other market. There's other sort of fledgling and early seed stage type of gravity companies that started to target that market.

Speaker 2

We're doing it at scale now. And in addition, that same modular pumped hydro system can be utilized leveraging slopes and mountainsides. So it was actually designed and this is public, I'll reference it, but we received an award from Aqua Power, which is half owned by the public fund, the PIF in Saudi Arabia. So they're a large Middle East CPC. They're also one of the largest operators of the desalination plants through the region.

Speaker 2

And they work in places in Africa. So they awarded us over 20 other companies a technology award with this new EV0 concept and now we're working in South Africa on the first site in implementation above ground. So to close on your question, the EV0 and that this technology and something that's been in development will move quite quickly, I think, relative to EVX, for example, that I think you're referencing because that's a project that has been in the 18 months plus in the first large scale system in China. And as I just announced in Brazil, we're going to have a first system with the largest oil and gas player there. So we've been working on various iterations of our gravity technology that is one of them.

Speaker 2

Always great to talk about new products, not just with a product, but talk about it in the scope of customers. And I think the Aqua Power announcement that was done back in February March that's public as well as what we just announced today with Petrobras in Brazil. It's exciting. They're new projects. And then I think Sardinia with the new modular pumped hydro is going to be a nice reference point and proof point for the technology as we announce within 2025.

Speaker 5

Okay, great. And then, I was thinking back to actually the introduction of EVS Energy Vault Solutions and the vision set forth then about integration of sort of full energy management system level function. And now with these different variations, even on deployment of gravity storage, it sort of seems that that software layer is going to become even more critical. And I guess I'm just wondering, at this point, is the development of the software, is it at a point that it's sort of product size where it's sort of standalone value can be assessed or looked at? Or does it need to be viewed more as just kind of the customization of a particular project, every project somewhat bespoke in how it's going to be implemented?

Speaker 2

Sure. By the way, great question. So first of all, it's absolutely productized as we're we've delivered and we are operating over a gigawatt hour of projects that we've ramped up since over a year ago starting with Wellhead in June was the first battery project there that we ramped up the software with and it's been operating there for over a year there. We ramped up Nevada Energy and then Jupiter. So we got quickly to the gigawatt hour and about to make that 1.3 gigawatt hour as Calistoga will be orchestrated and operated across the green hydrogen solution with lithium ion together.

Speaker 2

So that's a hybrid system. By the way, just to share the fuel cells just arrived today on the site in Calistoga and so excited about that. We have the large tank is arriving Friday and so we're getting that project here also enough. But in any event to the first part of your question, it's not only productized today, but it's been the last year and that's been the basis of what's been operating these systems. And I'll also share before I get to the second part of your question that if you were to ask any of our customers where we've deployed that 1st gigawatt hour about what they thought were some of the strengths about our performance and our execution.

Speaker 2

I think uniformly, they would all reference the performance of that software and the commissioning speed that we were able to bring that up and that's a reflection of the people that built that system, the experience set that we built, the talent of the team we built to bring that up, Akshay Labois and his team, Shaheen who leads our at least some of the software development, Brad Israel and I could go on with other names, but the people that have really built that up and built that up in a way that allowed it to operate immediately without any significant hiccups is really unprecedented. There wasn't a company that announced and delivered within 12 months of gigawatt hour ever at the very beginning in their 1st year. And we're building upon that now Calistoga coming online. We have these follow on projects not only in Australia, but some in the U. S.

Speaker 2

And others now that are going to be coming up. And it is orchestrating across multiple technologies and that's exciting. This same platform by the way can also orchestrate across generation technologies and not just renewable, so wind, solar, but any fossil based. So it really brings that asset management component and a lot of the predictive analytics and a lot of the AI capability that gets into the economic dispatching capabilities. And then to the second part of your question, which is absolutely fair around, is this something that could be sold standalone?

Speaker 2

Well, absolutely, since it's productized and if you look at customer sets that are looking to optimize how they're going to manage the coexistence of generation, the coexistence of different storage technologies. So very interestingly, up to this point, unless there's a new company announcement today I haven't seen, we're the only energy storage company that's delivering on multiple duration, multiple technology today under a single platform. And it puts us in a position to solve problems and respond to RFPs with solutions that people weren't even contemplating. And I mentioned that because of Pacific Gas and Electric was expecting a natural gas solution to solve this problem for the replacing diesel gen in the town of Calistoga. And we responded with something that was actually sustainable and no one else did and much lower cost than what they were looking at.

Speaker 2

And that capability is something that we want to leverage not only for new storage solutions, but you can imagine customer sets that have to manage this coexistence of storage, multiple storage technologies that they may be buying piecemeal because they're trying to solve different problems, different applications. There is no single bullet or sorry, silver bullet in storage because the nature of what we're solving for is different by customer, by application and use case. So there's always going to be different and optimal technologies to solve different problems. And I think uniquely we've got a lot of the capabilities to solve that. So we are in discussions with customers who are looking at leveraging our software to help them solve their existing infrastructure needs.

Speaker 2

We do demonstrations. We have customer sets that allow us to visit their sites that are offering you today from the ones we've delivered. And obviously, there's no better way and proof point to a new customer than having them talk to an existing one and have them see things operating real time. And

Speaker 5

just to clarify, if you had a customer who did elect to install the platform, more or less standalone, Would a customer like that be sort of pretty willing to be announced as opposed to some of the like your large industrial customers that want to wait?

Speaker 2

Yes. It's every customer is a little bit different in the timing of when they want to announce something. Some are comfortable with earlier announcements, others want to wait till something to operate and some of them just will not announce really anything except acknowledge that a system is operating. So it really just depends. But I think as we get into standalone software sales, you'll be hearing more about that.

Speaker 2

And I think those customers, depending on if it's a utility or IPP or in this case, there's a lot of industrial customers that are managing their own electrification or clean energy transition where they don't have the confidence or the prior experience as managing electrons, I guess I'll say because where they're buying infrastructure in renewable and then need a couple of storage, they really need that across their asset base. So I expect you'll see announcements about that and we'll try to share as much as we can as we develop those solutions.

Operator

This concludes the question and answer session. I would like to turn the conference back over to Robert Piccone for any closing remarks.

Speaker 2

Thank you, operator. Again, I just want to thank everybody who joined the call here and all of our investors that support the company and we'll look forward to be sharing further updates in the future. Thank you very much.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Energy Vault Q2 2024
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