Invinity Energy Systems Plc.'s (IESVF:OTCMKTS; IES:AIM; IES:AQSE) next-generation ENDURIUM vanadium flow battery (VFB) was chosen by nine United Kingdom (U.K.) energy storage developers for their project bids into the Cap and Floor Regime of the Office of Gas and Electricity Markets (Ofgem), reported Phil Smith, head of transition energy at VSA Capital Markets, in a June 23 research note. Ofgem now is vetting the bids for eligibility after which they will move to the final assessment phase, expected to be finished in H1/26.
"Any orders that do result from this scheme are likely to be highly material to [Invinity] with revenues likely to fall in the period of 2028–2030," Smith wrote.
"We reiterate our Buy recommendation. Target price 105p."
About Cap and Floor
This regime sets a minimum and maximum revenue level for energy storage projects and primarily is focused on long-duration energy storage (LDES).
For LDES, the U.K. energy regulator Ofgem is targeting non lithium ion storage with at least eight hours' duration to balance electricity grids as added/integrated renewable energy increases supply volatility. Duration with lithium ion batteries typically is two hours a day. In contrast, VFBs can run for eight hours-plus per day without degradation over many years, but their upfront cost is higher.
Material Growth Opportunity
Whereas the quantities in the bids and the final outcomes of the process are not known yet, any project win would be of significant benefit to Invinity, Smith pointed out. The combination of all nine developers' minimum bid is for 3.6 gigawatt hours (3.6 GWh), but individual bids likely will be much higher than the minimum of 400 megawatt hours (400 MWh) per project. For instance, one of the bidders, Frontier Power Ltd., selected Invinity for half of its bid portfolio, for which it reserved 2 GWh of Invinity manufacturing capacity, reported Smith. If Frontier's reservation is indicative of the other eight bids, the total for all nine could be between 18 and 36 GWh.
Smith noted that typically not all bids are successful in rounds run by Ofgem. However, if, say, only 5% of bids is successful, it would mean another 0.9–1.8 GWh worth of orders for Invinity.
"The growth opportunity in winning such projects would be transformational for Invinity's revenue and profitability, a material increase in absolute revenue forecasts and confidence in the outlook," the analyst highlighted.
Each Cap and Floor project bid is for a minimum of 400 MWh. For a point of reference, based on forecast shipments of 31 MWh and 240 MWh, VSA Capital's revenue estimates for 2025 and 2026 are £25 million (£25M) and £106.3M.
Chances of Garnering Orders
The analyst pointed out that Invinity's chances of receiving orders as a result of the bids is higher because multiple developers selected the company's product.
"With so many different developers choosing Invinity, the company has therefore successfully positioned itself as a dominant technology provider in this field," commented Smith.
Validating Factors
One reason for the high level of interest in Invinity's ENDURIUM VFB is that the technology is proven. For its Cap and Floor Regime, Ofgem requires LDES technology to have already been deployed and operated at scale.
Smith noted that the U.K.'s National Wealth Fund backing Invinity likely played a role in nine developers choosing Invinity for its bids. Because Invinity manufactures its VFBs in Scotland, the bids could help to transform U.K. battery manufacturing capacity.
Targeting Global Market
Invinity is well-positioned to capture "future, wider, structural LDES growth" in the global battery energy storage systems (BESS) market, noted Smith. An estimated 100 GWh of BESS were to be installed globally in 2024. The company designed its ENDURIUM VFB for the BESS market as the product provides a competitive advantage over lithium ion batteries.
Already Invinity is targeting LDES opportunities in the U.S. and, through its long-term partner Everdura, the Southeast Asian and Taiwanese markets as well.
"Today's announcement [of inclusion in nine developers' bids] and the execution of the scheme in the U.K. should help to provide validation of [Invinity's] products for the global stage," Smith wrote.
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