Blog contributed by Bolgas
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16/08/2017


redT Energy Storage

 

RedT Energy, a pure play energy storage technology stock, manufactures a vanadium flow battery (VRFB) with a hybrid flow battery and a lithium project currently being undertaken in conjunction with Newcastle University.

RedT was formed from Camco Clean energy changing its name at the end of 2015 following the sale of its legacy carbon assets.

They retained their energy consulting business in Africa that has many years experience of funding and advising governments on energy infrastructure, a profit making side of the business that may bring in valuable client leads for energy storage products. 

 

What is Flow Battery?

A battery that stores energy in liquid format, in this case a vanadium liquid. A simplified explanation is contained within this video:-

https://www.youtube.com/watch?time_continue=2&v=E4U-kXpSU5Q

The clever bit is in the stack unit and the membrane that keeps the charge and discharge separate, it is here that redT has many patents.

 

What is Energy Storage?

With the recent push for climate change we have witnessed huge growth in wind and solar generation assets across the globe. With pricing falling rapidly over the last few years, wind and solar are the cheapest form of energy generation assets. The problem being, however, is the wind doesn’t always blow and the sun does not always shine. In order to bring our networks above 20% penetration of renewables they need energy storage to sit alongside time shifting that energy to a time when it is required, hence energy storage.

 

What types of Energy Storage are available?

I’m sure we have all heard of Elon Musk recently winning a large contract in Australia for a 100MW system,  that being lithium of course. Lithium is a great product but it is really suited to light duties and infrequent use. If used often or with a complete depth of discharge the system will degrade and soon be in the bin. Used well and maintained they can run perhaps for the lifetime of 10 years, however used like say a mobile phone we all know what happens.  

Flow Battery’s are designed as work horses, they can charge and discharge at the same time, be fully discharged twice daily easily and run all day, every day, for years without any degradation. The expected life span is 10,000 cycles, but in reality it takes just a few parts to be replaced and it is good to go for another 10,000 charges and beyond. 

 

Seeding Unit Scheme

Having signed a manufacturing agreement with Jabil, the same US company who make Apple products, redT have now secured and produced a fully third party manufactured product that is operational within the field. The Generation 1 units are being tested. Although most are subject to a strict Confidentiality agreement, we know that E.On are one of those clients testing the product in conjunction with JB Wheaton in Somerset, a building supply firm with an international footprint in Germany and a couple in Africa amongst a few others.

These operational seeding units are smaller 5-40 units, that is measure of power and energy, 5kW being the power and energy stored of 40kWh. Putting that in simple terms when fully charged the units can supply electricity on full power for 8 hours.

The large scale project is a MW system, originally this was planned for installation late last year with a community project up in Scotland on the isle of Gigha. As with many community projects it ran into trouble right at the 11th hour, redT then decided to pull out following the signing of a deal with Centrica to showcase their system, being the largest participant within their scheme, in connection with the Old House, this is now being installed and should be operational anytime now: https://twitter.com/TheOldeHouse/status/887208433287614466 

 

Market Place

Demand for stationary energy storage is set to rapidly increase. Although market estimates and definitions of the market itself vary wildly, most forecasters agree that the sector will be a multi-billion Dollar sector by 2020. Given its highly reliable, low cost product and strategic cost reduction plan, RED appears well placed to gain significant market share in this sector.  

Energy storage is set to be a revolution, moving away from dirty fossil type fuels to cleaner renewable’s generated systems across the globe. This is not about profits it is more about proving a market place. Whoever is successful has the potential to be worth billions, just look at the crazy variations placed on Tesla that is in part because of the energy storage success story.

 

Financials

Following fund raise last December of c£14 million at 8p, according to interims they have €17.2 million cash in bank with annual administration running at around €6 million taking into account the newly recruited R&D and sales staff.

Loans and borrowing = Nil.

The company has retained some legacy carbon credit business that generated some €10 million revenue for the past year, together with Camco Africa that has generated a small profit.

Taking into account tight reigns on admin and cash in the bank the company is well funded for this year and next.

 



Customer Pipeline and Future Income

The company, as explained above, IMO has been set back 6-8 months with the change in large scale demonstration unit, this has now been rectified and should be operational anytime soon.

A newly recruited sales team during H1 2017 has seen a jump in prospective customers with a sales pipeline of €314 million and a final stage of customer selection of €15.9 million stated 13th July 2017* which is a significant jump from the previously reported figures reported 24th April of sales pipeline €250 million and final stage of customer selection €6.5 million**

There is also a letter of intent signed by a UK Energy Project Developer of 490MW grid-connected sites.

* http://www.redtenergy.com/files/2017%20AGM%20Presentation%20final%201.pdf

** http://www.redtenergy.com/files/2016%20FY%20Analyst%20Presentation%20vFinal%20WEB.pdf

 

News to drive share pricing coming weeks/months

The first major news will be completion of the Centrica Project. This is a major project for our largest utility company, full details of this can be found in the link below.

https://www.centrica.com/news/centrica-build-pioneering-local-energy-market-cornwall-0

I expect this to be the first major force in driving the share price as media such as the Financial Times and others will no doubt get behind this story.

Additionally, we have another large project being installed in Africa at the Thaba Hotel, the unit is being installed right now. This is a major project again that will perhaps get good press coverage as it has the potential to solve Africa’s weak grid problem and of course help electrify some 600 million plus people who do not have access today. Big investment from around the globe is being invested to resolve this issue.

Australia - we have a launch into Australia during H2 2017, we know this from below, as it will be a showcase system I am expecting this to be a large system, perhaps 1MW plus.

“redT is looking to capitalise on these positive developments by focusing on volume sales within the UK and an entry into the Australian market later this year.”

https://www.investegate.co.uk/redt-energy-plc/rns/operational-update/201707130700039524K/

Finally, we have other sales generated during the period with a recent product launch aimed at the farming community who have large amounts of wind and solar. Hopefully, this will have kick-started the volume sales.

 

Conclusion

Whilst sales of Generation 2 units have been slower than anticipated, this is IMO due to the delay in having an operational unit for prospective clients to view before making a purchase. This is evidenced in those prospective customer figures above.

Once the Centrica Project is operational there should be some very interesting press releases regarding this. redT are the largest participant within this scheme that could be implemented across the globe by Centrica. That will be superb for the company moving forward. For now, the scheme will enable redT to convert sales and press such as below will be a huge influence in where the share price will go short term.

From FT article September 2016 who are following this closely: -

“The trial is drawing close attention from policy makers and renewables developers. Paul Wheelhouse, the Scottish government’s energy minister, visited the town of Cumbernauld near Glasgow this month to inspect a Gigha-bound redT device as it was put through its paces at Scotland’s Power Networks Demonstration Centre.

Mr Wheelhouse said he was impressed by the technology hidden inside the unprepossessing grey container at the centre — adding that Scotland had scores of islands that might benefit from it. “Clearly, we will learn a lot from what happens in Gigha,” the minister said. “It is exciting to see it deployed in a real-life situation.”

Timothy Cornelius, chief of tidal power developer Atlantis Resources, says the Gigha trial is “of extreme interest”. Atlantis is building one of the world’s largest tidal power arrays in Scotland’s Pentland Firth and expects energy storage to play a big role in future projects, particularly when they involve islands with limited grid connections.

“We fully subscribe to the idea that storage is the revolution,” Mr Cornelius says. “If they can prove [vanadium redox flow works as billed] then Scott McGregor will be one of the first people I call.”

 https://www.ft.com/content/1eb28494-75ef-11e6-bf48-b372cdb1043a 

 



RedT Technical Analysis (TA) chart by bonker99


(Click to enlarge)




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