Co. Launches Battery Capable of Up to 1 KWh of Storage
Research Report

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Disclosures for VSA Capital, Invinity Energy Systems Plc., December 3, 2024

Investment Analyst Certification In my role as a Research Analyst for VSA Capital Limited, I hereby certify that the views about the companies and their securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. Non-Independent Research This is a marketing communication. It is non-independent research as it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Important Disclosures This research report has been prepared by VSA Capital Limited, which is party to an agreement to be paid a fee as corporate finance advisors and arrangers with, or has provided investment banking services to, Invinity Energy Systems, or has been party to such an agreement within the last twelve months, and is solely for, and directed at, persons who are Professional Clients as defined under Annex II of the Mark ets in Financial Instruments Directive, Directive 2004/39/EC, or as defined in the FCA Handbook. Persons who do not fall within the above category should return this research report to VSA Capital Limited, Park House, 16-18 Finsbury Circus, London EC2M 7EB, immediately. VSA Capital may distribute research in reliance on Rule 15a-6(a)(2) of the Securities and Exchange Act 1934 to persons that are major US Institutional investors, however, transactions in any securities must be effected through a US registered broker-dealer. 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Thus, investors should be aware that the Company may have a conflict of interest that may affect the objectivity of this report. To view our policy on conflicts of interest and connected companies, please go to: http://www.vsacapital.com/policies/conflict-of-interest-policy. VSA Capital acts as Corporate Adviser/Broker to Invinity Energy Systems and is therefore classed as a connected company. VSA Capital has a holding in securities issued by Invinity Energy Systems, or in derivatives related to such securities .Investors should consider this report as only a single factor in making their investment decision.

Definition of Ratings VSA Capital Limited uses the following stock rating system to describe its equity recommendations. Investors should carefully read the definitions of all ratings used in each research report. In addition, since the research report contains more complete information concerning the analyst’s views, investors should carefully read the entire research report and not infer its contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor’s decision to buy or sell a stock or investment fund should depend on individual circumstances and other considerations. VSA Capital Limited’s recommendations are defined as follows: BUY: The stock is expected to increase by in excess of 10% in absolute terms over the next twelve months. HOLD: The price of the stock is expected to move in a range between -10% and +10% in absolute terms over the next twelve months. SELL: The stock is expected to decrease by in excess of 10% in absolute terms over the next twelve months. In addition, on occasion, if the stock has the potential to increase by in excess of 10%, but on qualitative grounds rather t han quantitative, a SPECULATIVE BUY may be used. Distribution of VSA Capital Limited’s Equities Recommendations VSA Capital Limited must disclose in each research report the percentage of all securities rated by the member to which the member would assign a “BUY”, “HOLD, or “SELL” rating, and also the proportion of relevant investments in each category issued by the issuers to whi ch the firm supplied investment banking services during the previous twelve months. The said ratings are updated on a quarterly basis. Equities breakdown: 26/02/23 BUY SPEC BUY HOLD SELL Overall equities coverage 90% 10% 0% 0% Companies to which VSA has supplied investment banking services 100% 100% n/a n/a

Invinity Energy Systems Plc. (IESVF:OTCMKTS; IES:AIM; IES:AQSE) commercially launched ENDURIUM, its fourth-generation, modular vanadium flow battery (VFB) for large-scale, up to 1 gigawatt-hour (1 GWh) of, energy storage, reported VSA Capital Head of Transitional Energy Phil Smith in a Dec. 3 research note. Invinity is on track to fulfill its first orders for ENDURIUM before year-end.

"The company is financially resourced to support the growth opportunity for ENDURIUM," Smith wrote. "News of ENDURIUM's commercial success will be a major driver for the share price."

Based in the United Kingdom (U.K.), Invinity develops VFBs for utility-scale grid storage. Its longer duration energy storage (LDES) technology, featured in ENDURIUM, has advantages over competing lithium-ion batteries, purported Smith, and is backed by 81 patents, some granted, others pending.

619% Return Potential

At the time of the report, Invinity was trading at around £14.6 per share, and VSA's target price on the company is £105 per share, noted Smith. The difference between these prices implies a potential return for investors of 619%.

Invinity remains a Buy.

Large-Scale Storage Capability

Smith highlighted that ENDURIUM stands out for its ability to store energy on a very large scale. Among the improvements featured in this latest generation of the product are greater energy density, reduced storage cost, easier maintenance and better round-trip efficiency. 

Specifically, ENDURIUM is engineered to scale from 10 megawatt hours (10MWh)–1 GWh and comes with configurable charge and discharge durations spanning 4–18 hours. These specifications, the analyst added, meet the requirements for electricity grid stability and immense renewable energy installations.

The dominant product in battery energy storage systems, or BESS, markets is batteries with up to two hours' worth of storage time, materially shorter than that of ENDURIUM, the analyst wrote.

"ENDURIUM is specifically designed to address the growth of LDES within the global BESS market and to offer competitive advantage over lithium-ion in LDES," Smith added.

Smith described the opportunity in the grid-scale battery storage sector and "significant" and "high." He cited a forecast statistic from BloombergNEF, that in 2024 100 GWh of battery energy storage systems, or BESS, are expected to be installed worldwide.

Commercial Interest Already

Smith described the commercial plan for ENDURIUM and early interest in the product. Invinity will sell ENDURIUM directly into core U.K. and North American markets. In Asia and the rest of the world, however, it will pursue a royalty model with strategic partners; ENDURIUM will carry an intellectual property-protected license.

Smith noted Invinity already has some confirmed customers, Gamesa Electric and Everdura Technology Co. in Taiwan, for example. Everdura has ordered 14.4 MWh of product and has a reseller agreement with Invinity targeting 255 MWh of system sales. Everdura will manufacture ENDURIUM under a license in Taiwan, and Invinity will get royalties on products Everdura ships.

In the U.S., ENDURIUM is earmarked for 84 MWh of projects backed by the U.S. Department of Energy (DOE). "Invinity expects to meet enhanced U.S. domestic content requirements from 2026," wrote Smith. For the North American market, Invinity has manufacturing facilities in the U.S. and Canada.

In the U.K., the product qualifies as a Stream 2 technology for use in projects qualifying for support under the federal government's new cap-and-floor mechanism for LDES. For the U.K. and European markets, Invinity will manufacture ENDURIUM at its facilities in Scotland.

Well Cashed Up

Invinity is well-positioned financially to support the commercial growth of ENDURIUM, wrote Smith, having £49 million (£49 M) in cash as of June 30, 2024.

"We estimate cash at the end of full-year 2025 (FY25) of £25.9M, rising to £26.7M by the end of FY27," wrote Smith.

Revenue, EBITDA Estimates

The analyst provided VSA Capital's revenue and EBITDA projections for 2024, 2025 and 2026.

The investment bank and brokerage estimates that in FY24 Invinity will generate £4.8M of revenue on shipments of 7.5 MWh of product and post an EBITDA loss of £21.2M. (In FY23, in comparison, Invinity shipped 32.5 MWh of product.)

For FY25, VSA forecasts growth of Invinity revenue to £24M from sales of 51 MWh of systems plus ancillary services. EBITDA loss for the year is projected to be £19.8M.

For FY26, further revenue growth to £111.1M is expected on sales of 243 MWh of VFBs plus ancillary services. EBITDA is forecasted to turn positive in 2026 and reach £0.8M for the full year.