ZBB Energy and Zinc Bromide Flow Batteries
With the strong growth in renewable energy sources such as wind and solar, there comes the need for efficient battery storage for the electrical grid since these energy sources are intermittent. In a research report published last year by Lux Research titled “Finding the Perfect Partner in the Global Grid Storage Market”, the global grid storage market is expected to rise from a mere $200 million in 2012 to $10.4 Billion in 2017. To put this growth into perspective, in just over five years this market opportunity will grow by over 7000%. One company that is looking to benefit from this growth is ZBB Energy.
About ZBB Energy Corporation
Wisconsin based ZBB Energy Corporation (NYSEMKT:ZBB) is involved in the design and manufacture of advanced energy storage and intelligent power control platforms that enable integration of renewable and conventional energy sources. In 2011, ZBB acquired Tier Electronics, LLC in to expand its portfolio of intelligent power management platforms. The Company first started trading in June 2007 and since then the share price has lost 97% giving ZBB a minuscule market cap of just around $14 million. ZBB recently conducted a reverse stock split in order to remain trading on the NYSE MKT Exchange.
The ZBB EnerSystem
ZBB’s product offering is a fully self-contained advanced energy storage unit that can operate in a wide range of operating environments and applications. This energy storage unit is composed of the following components:
The technology behind this energy storage unit is the “zinc bromine battery” which is a flow battery that offers 2 to 3 times the energy density (75 to 85 watt-hours per kilogram) with associated size and weight savings over present lead/acid batteries. The core ZBB EnerStore 50 Zinc flow battery module operates silently and holds 50 kWh which would roughly power a home for two days. The battery is said to have an expected life of greater than 20 years for the electrolyte, mechanicals, controls, DC/DC converters and the enclosure. The cell stacks are the only ‘consumable components’ that need to be replaced periodically. The ZBB EnerStore module is said to be entirely recyclable at the end of its life.
Ignoring the horrific share price performance since inception, ZBB’s November 2013 investors’ presentation provides a somewhat rosy outlook for the Company. ZBB claims to be first to market with a substantial lead having shipped more than 5MWhrs and 100 battery systems so far. The Company realized fiscal 2013 product revenue of $7.3 million which was a 224% increase over the prior year. The November 2013 sales run rate was ~9 million with break-even to be realized at a $20 million annual sales run-rate. ZBB claims to be able to scale rapidly to $40 million in annual sales without a significant fixed cost investment. The company’s shipments and backlog over time can be seen below:
The existing sales funnel is said to have approximately 50 opportunities representing more than $40 million of projects. In December 2013, the Company announced it entered into a new product development partnership with South Korean company Lotte Chemical, a $15 billion producer of chemicals and battery components. The non-exclusive agreement allows Lotte to sell the ZBB zinc-bromide continuous flow battery globally with the exception of the United States and China. On January 2014, ZBB made the following statement regarding the Lotte partnership:
With the additional cash flow resulting from these agreements, ZBB expects sufficient capital to fund operations through at least fiscal year 2014, and ongoing contributions to the Company’s operating capital throughout most of fiscal year 2015.
The sales pipeline and revenue growth seem promising and with the depressed share price, there may seem to be an opportunity here. However, there are competing flow battery technologies to also consider such as those offered by 24M Technologies or Ambri that could completely displace the “zinc flow battery”. There are also several other players in the “zinc flow battery” space to consider which we will highlight in future articles, one of which is also a publicly traded micro-cap.
Pure-play disruptive tech stocks are not only hard to find, but investing in them is risky business. That's why we created “The Nanalyze Disruptive Tech Portfolio Report,” which lists 20 disruptive tech stocks we love so much we’ve invested in them ourselves. Find out which tech stocks we love, like, and avoid in this special report, now available for all Nanalyze Premium annual subscribers.