TIDMRED
RNS Number : 9524K
RedT Energy PLC
13 July 2017
This announcement contains inside information
redT energy plc
("redT" or the "Company")
Operational Update
redT energy plc (AIM:RED), the energy storage technology
company, is pleased to provide an update on the Company's
operations in the first half of FY17.
Market Update
Customer interest in storage continues to grow across grid
connected markets. In particular, the UK energy storage market has
reached an economic tipping point earlier than originally expected.
UK energy storage applications are now achieving attractive project
investment IRRs with payback periods below 10 years, which is a
strong proposition for energy infrastructure projects. Furthermore,
we see increasingly significant interest for energy storage in
Australia, based on highly attractive investment returns. This has
resulted in the recent announcement of a number of large, grid
connected energy storage projects. In addition to the above, the
sub-Saharan African diesel coupled with storage market continues to
achieve highly attractive payback periods as a result of the focus
on reducing diesel consumption.
Penetration of the UK market has been limited until now to small
scale domestic energy storage, short term (circa 30min discharge)
large scale lithium projects and a number of large pumped hydro
projects. Take up of new technologies outside of these narrow
applications has initially been more cautious than expected due to
customers not understanding the difference between "Power" and
"Energy". redT has focused heavily on re-education of the market
during 2017, and has successfully communicated the functional and
long term benefits of energy storage over short-term power-focused
battery storage to more experienced participants. This has been
well received, as key market participants are now experiencing the
limitations of short term battery storage, such as the inability to
utilise it for multiple services and the need to manage its usage
and other elements, such as temperature, very carefully. Energy
storage machines address these issues and, as a result, the
Company's customer pipeline has increased as the market actively
considers energy over power storage solutions.
Commercial Update and Outlook
Commercial highlights include:
-- Shipping our first large size 15kW-75KWh unit to the Thaba
Eco Lodge site, which is currently in transit to South Africa - a
key project which will demonstrate the value of the systems in
off-grid & microgrid applications
-- Successful commissioning of the 5kW-20kWh machine situated at
the University of Strathclyde in the UK
-- Deployment and commissioning process continues on schedule for;
o The Olde House project, in partnership with Centrica and the
largest energy storage to be installed in Cornwall to date. This
project will act as a flagship demonstration site for redT's UK
customers.
o The RNLI project, a key installation working alongside one of
the UK's best known charities
-- Production in line with customer schedule of 10kW-75kWh and 5kW-30kWh machines
-- Production of a 60kW-300kWh commercial unit for a key UK
agricultural application which will demonstrate commercial revenue
generation from providing UK grid services
The market for durable, long-duration energy storage is
developing stronger than expected, as focus shifts towards
energy-centric technologies such as flow machines. Most notably,
the UK market, considered one of the most challenging for storage,
has reached an economic tipping point earlier than originally
anticipated. Alongside this, the Australian market has also
observed a rapid expansion in interest as the requirement for
storage increases in response to the recent boom in renewable
generation. redT is looking to capitalise on these positive
developments by focussing on volume sales within the UK and an
entry into the Australian market later this year.
Mid-term, the wider market is looking stronger than expected for
redT, which is reflected in the Company's growing final stage of
customer selection and pipeline numbers. In the short-term,
conversion of redT sales to orders has been slower than expectated
due to the market's lack of differentiation between energy versus
power solutions, delays in recruitment and manufacturing as
explained below. However, the Company is focused on developing its
order book for 2018 and its Generation 3 product. Group EBITDA for
2017 remains in line with expectations, with lower redT sales
balanced by the continuing strong performance of the legacy Camco
business.
redT continues to see customer interest grow in its second
generation product and is excited to shortly showcase its flagship
1MWh Cornwall project to interested customers and investors. This
project, conducted in partnership with Centrica, will be critical
in demonstrating the clear benefit of energy storage to generate UK
grid services revenue and utilisation of renewable generation for
customers.
redT currently has 2.25 MWh of machines either deployed in the
field, in transit to customer sites, or currently in production.
redT's commercial pipeline by this stage of development is;
Production and Deployment - 15 x tank unit modules*, 2017 Orders -
6 x tank unit modules*, Final stage of customer selection -
EUR15.9m (265 x tank unit modules*) and active customer pipeline -
EUR314m.
Since the fundraise at the end of 2016, the Company has grown
substantially by investing in its operations and is now positioned
as the front runner within the flow machine market as a result.
Overall, redT remains focussed on delivering its business plan and
providing long term value to its shareholders.
*redT tank unit module = the size of redT's liquid energy
storage machines differ from large 20ft containers to small 6ft
containers. In order to provide relative comparability across
redT's product range, a uniform tank unit module metric is used.
For example; a 20ft, 300 kWh system contains four 75kWh tank
modules whereas a small 20kWh unit contains just one tank
module.
Investment in Operations
The Company is pleased to report that it has filled almost all
key roles set out in its business plan. redT's overall headcount is
up by 70% with the expansion taking place across the key
commercial, engineering, implementation and customer service teams.
The investment in a highly skilled team is critical to the delivery
of redT's business plan. Some functions were recruited in a timely
manner in accordance with the plan, whilst other functions such as
software and application engineering have taken longer than
expected. The industry is facing a shortage of software engineers
and programmers who have the requisite knowledge and experience to
work with unique energy storage technology such as redT's. This is
an industry wide, rather than redT specific, challenge, with redT
having now secured key staff within these functions. In parallel to
core team roles, the Company is in the final stages of recruiting a
Technology Director to lead the engineering function. This
appointment will serve as a catalyst for the delivery of the
Company's intensive engineering and software development plan over
the next 2 to 5 years.
Of particular note during the period was the hiring of David
Stewart as Commercial Director. David joined redT from Jabil
Circuit Inc. and, given his deep and highly relevant commercial and
engineering experience, is already playing a key role in the
strategic growth of the business. David has also been a strong
addition to the executive leadership team, alongside Scott Laird
(Finance Director), with both joining the Board in April 2017.
Further, redT is pleased to announce it has commenced
development of its third generation stack and electrolyte, which
are key to achieving increased product performance and price
targets for its third generation product to be launched in
2018.
Manufacturing and Engineering update
During the year, the Company has successfully diversified its
production facilities, reducing manufacturing process risk and
creating flexibility within redT's supply chain. New product and
low volume manufacturing has been moved to Heights (UK) Limited in
Yorkshire under a new manufacturing contract, increasing the
Company's responsiveness to rapid product development and customer
order flow. Alongside this, redT's relationship with its key
partner, Jabil Circuit Inc., has been restructured to the overall
benefit of redT to provide more flexibility whilst retaining key
strategic benefits of low cost volume manufacturing and global
manufacturing capacity for large orders.
The closure of Jabil's Livingston plant has moved redT stack
manufacturing to Jabil's Marcianise facility in Southern Italy.
This move has benefited the Company commercially through a
reduction in production costs at the new site. The expedited nature
of the Jabil Livingston plant closure has had a short term impact
on timelines and resourcing, however, the move will benefit redT in
the medium to longer term.
In line with its growth strategy, redT is expanding its primary
operational & engineering base at its own Livingston facility.
In addition, the Research and Development facility at Wokingham, is
also being expanded to create additional space for validation,
R&D and materials testing. The Wokingham site will also house a
dedicated customer demonstration and training area.
Scott McGregor, CEO, commented:
"redT, through its determined and patient approach to developing
its business, now finds itself positioned at the forefront of the
flow energy storage machine sector. Experienced customers now
understand the benefits of energy technologies such as redT's flow
machine over short-lived power-focussed batteries. As a Company, we
are well placed to capitalise as the rest of the market begins to
fully understand how to utilise energy storage.
The Company is focusing on delivering its key projects this year
which include installation of the largest energy storage project in
Cornwall, pursuing short term orders and building its orderbook for
2018.
Finally, I would like to personally thank our staff for their
extraordinary efforts and focused work so far this year, growing
the company at such a rapid pace, and our shareholders who continue
to support and work with us to deliver this important technology to
such an exciting market."
Enquiries:
redT energy plc +44 (0)207 121 6100
Scott McGregor, Chief Executive
Officer
Joe Worthington, Investor
& Media Relations
Cenkos Securities plc +44 131 220 9772
Nick Tulloch +44 131 220 9100
Derrick Lee
Celicourt (Financial PR)
Mark Antelme
Joanna Boon
Jimmy Lea +44 (0)20 7520 9266
Notes to Editors
About redT energy
redT energy develops and supplies durable and robust energy
storage machines based on proprietary vanadium redox flow
technology for on and off-grid applications. The liquid storage
medium affords an exceptionally long life of up to 25,000 full
charge/discharge cycles and a 100 per cent usable depth of
discharge. Combined with low maintenance requirements, this
delivers industry leading lowest levelised cost of storage (LCOS)
and total cost of ownership (TCO) results. The modular approach
allows the power and energy components of systems to be
independently sized to meet customer requirements.
Until now it has not been possible to directly compare variable
renewable energy generation sources with diesel or fossil fuel
generation. PV + Storage is now reaching 'grid parity' in many
countries, a paradigm shift in energy production, which will
ultimately enable a distributed energy network optimising
conventional and renewable generation. The redT energy storage
machine has applications in remote power, smart grids, power
quality, and all aspects of renewable energy management.
To find out more about redT products or to register your
interest in purchasing an energy storage machine please go to the
below web address:
http://www.redtenergy.com/register-interest
For sales enquiries, please email enquiries@redtenergy.com or
call +44 (0) 207 061 6233
This information is provided by RNS
The company news service from the London Stock Exchange
END
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