Best stock to invest in – Take A Bromide For Flow Battery Frustration



Best stock to invest in

by Debra Fiakas CFA

The most recent article Vanadium
Flow Battery Stocks: Barely A Dribble
may have disappointed
some investors who were expecting more opportunity for a stake in
building energy storage.  Large scale energy storage is an idea
to which many in the utility industry speak, but few power producers
have made significant investments beyond lithium ion
batteries.  Flow batteries have long been touted as a
cost-effective and technically superior alternative for wind or
solar power storage or for load-balancing efforts on the electric
grid, as examples.  In the last post we looked at the flow
battery producers using vanadium materials as the foundation for the
electrolyte that literally flows through the cells of these novel
battery designs.  In this post we look at an alternative
material  –  zinc bromide.

A zinc bromide salt is dissolved in water and pumped through a stack
of cells in the battery, which functions much like an electroplating
machine.  As the battery charges, the zinc is electroplated
onto conductive electrodes as the bromide forms.  When the
battery discharges, the reverse process takes place as the metallic
zinc ‘plated’ onto the electrodes dissolves into the electrolyte.
The zinc is not used up and can be plated back again in the next
charge cycle.

There are some special considerations for zinc bromide flow
batteries.  One problem is the need to discharge regularly,
otherwise zinc dendrites can form and puncture the separator between
the cell stacks.  The electroplated zinc can be stubborn,
requiring a special, periodic step to fully remove zinc from the
battery plates.


A big plus for zinc bromide is cost.  An inorganic compound, it
can be produced through a reaction of zinc metal and bromide, a salt
of hydrobromic acid.  Zinc is one of the most common elements
on earth and is a readily available commodity.  While
relatively inexpensive, we note that zinc has increased over 30%
from a year ago.  Zinc reached an all-time high price in 2006
at over $4,600 per ton in November 2006, but has since retreated to
$2,615 in early April 2017.

Zinc bromide is already widely used in the oil and gas industry as
drilled wells are prepared for the pumping or harvesting
phase.  Zinc bromide is considered toxic and requires special
equipment and safety precautions for handling.

Primus Power (private) is
selling its EnergyPod 2 for long duration energy storage
solutions. In January 2017, the company announced its second sale
and installation in Kazakhstan for Samruk Energy, a sovereign wealth
fund.  The first system is installed at the Kapchagai solar
power station and the second will at the Yereymentau Wind Power
Station in Kazakhstan.  Primus Power’s management thinks its
EnergyPod is cost competitive because of an extended useful life of
twenty years.  Primus uses titanium for the battery electrodes,
which is enabling up to 15,000 charge and discharge cycles compared
to the usually 10,000 in most other flow batteries.  Earlier
this year Primus management bragged that Microsoft is testing a
storage system using the EnergyPod 2.

Investors can get involved with Primus Power, although there will be
a bit of a wait. The company just completed a private equity
financing, taking in $32 million in new capital.  That brings
total capital raised to $94 million from a widely scattered group of
investors from Hong Kong, Saudi Arabia, Russia and the U.S.

Redflow Limited (RFX: 
ASX) is targeting entirely different markets  – 
industrial, commercial and residential applications.  Redflow’s
ZBM2 battery has capacity of 10 kilowatt hours.  With a
fully enclosed form factor and no need for ambient cooling the
systems seems ideal for storing energy at telecommunications and
other remote sites.   The LCB system links
several ZBM2 units together to deliver peak 300
kilowatts.  It is larger, but still fits in a standard shipping
container.   Event the LCB system can be
positioned in parallel to provide scalable solutions.  For the
residential user Redflow sells the ZCell with a10 kilowatt hour
capacity to store energy from solar panels or wind
installations.  It is fully enclosed in a sleek design that
fits well into the home environment.  

The company is a bit more accessible for investors at least to those
who are prepared to trade on the Australia exchange. Redflow has not
yet delivered profits and so trades with a negative price/earnings
ratio on both a trailing and forward basis.  From a cash
earnings standpoint the picture is still a bit cloudy as the company
has still not reached positive cash flow.  Looking at the glass
as half full, this means Redflow must tap the capital market from
time to time to keep operations going, providing opportunities for
qualified investors to get a piece of the pie.

For U.S.-based investors who do not want to venture too far afield,
there is EnSync, Inc. (ESNC: 
NYSE), a zinc bromide flow battery developer in headquartered in
Wisconsin.   EnSync wants to serve commercial and
industrial markets with a ‘behind the meter’ solution it calls
Matrix Energy Management coupled with its Agile Hybrid Storage
system of zinc bromide flow batteries and lithium ion
batteries.  EnSync also offers the Agile Flow Battery on a
standalone basis.

In the twelve months ending December 2016, EnSync reported $10.8
million in total sales, resulting in a net loss of $18.9
million.  Operations required $10.3 million in cash to support
operations.  At the end of December 2016, the company had $17.6
million on its balance sheet, which could give EnSync the runway
needed to get operations off the ground and to breakeven.

The Matrix Energy Management system and the ability to offer battery
alternatives could be EnSync’s key competitive strength.  The
company recently announced a contract win from the Alliance for
Sustainable Colorado for a facility located in downtown
Denver.  The project involves a 20-kilowatt rooftop solar
installation, 84-kilowatt hour capacity EnSync lithium ion
batteries, and EnSync’s software application to manage internal
loads.

While the zinc bromide battery developers still offer investment
opportunities that are little more than options on flow battery
technology, there appears to be far greater success in the market by
this group than those with vanadium-based solutions.  Our field
work did not uncover any technological reason behind why one group
should have so much more success than the others.  However, we
do note that the vanadium group has more members with a background
in mining or producing vanadium.  It is possible that the
mining or industrial materials production background does not lend
well to the requirements of battery development and market
penetration with a finished product.

Debra Fiakas is the Managing
Director of
Crystal Equity
Research
, an alternative
research resource on small capitalization companies in selected
industries.

Neither the author of the Small Cap
Strategist
web log,
Crystal Equity Research nor its affiliates have a beneficial
interest in the companies mentioned herein.

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