Progress of Redflow’s Zinc Bromide Flow Battery
The McKinsey Global Institute has listed grid storage as one of the 12 disruptive technologies that could drive truly massive economic transformations and disruptions in the coming years. Lux Research projects the energy storage market to reach 114 billion by 2017. While lithium-ion batteries for power applications captured nearly 80% of the market in 2012, Lux Research estimates that the market share for lithium-ion batteries market will fall to just 13% of the market by 2017. The remaining market will be vanadium redox (33%), sodium sulfur (19%), sodium nickel chloride (15%), and zinc-bromine flow (19%) batteries. This means a potential $21 billion market for zinc-bromine flow batteries, and one publicly traded company looking to take advantage of this is Redflow.
(All numbers in USD) Brisbane based Redflow (ASX:RFX) is an energy storage company which has produced a zinc bromide flow battery developed from technology originally pioneered by Exxon during the oil crisis of the 1970s. Redflow has over 9 years of research and $38 million invested to date on R&D for their battery technology. On November 30th, 2010, Redflow closed a $16 million IPO on the Australian Securities Exchange (ASX) after experiencing strong demand from investors. Investors who would have held Redflow since it began trading in 2010 would have lost just over -90% of their investment so far. Just recently though, the trend has changed, and investors who purchased Redflow exactly one year ago would be up over +85% today. Redflow has a current market cap of $20.2 million and $4.4 million cash on hand.
In November 2010, when Redflow closed their IPO, they had doubled their employee count to 50 over the past 18 months. They had also reached an agreement with Jabil Circuit, Inc, one of the world’s leading contract manufacturers, for planned future larger-scale production of their batteries. Moving forward to early 2014, Redflow announced the appointment of Flextronics as its manufacturing partner instead, an agreement they say was finalized after “an extensive review of potential partners”. In a company update last week, Redflow stated that one of the highlights of the past year was “…finalization of a commercially ready product capable of being manufactured in volume…” With 46 employees currently, the company update also stated that large orders are not expected to require any working capital investments by Redflow. They also forecast a 40% drop in production costs by the end of 2015. Over the past 18 months Redflow has resolved 54 issues with their battery, reduced the number of parts by 50%, and improved electrode performance by 600%.
To date, Redflow has manufactured 600 zinc bromide battery modules (ZBMs) and they are now in the process of fully transferring manufacturing to Flextronics. Last month, Redflow released their half-year financial results and revenues for the 6 months ending December fell -93% to $32,000. This was compared to revenues of $458,000 received for the same period in the previous year. While revenues have fallen almost as bad as the share price has since the IPO, Redflow claims to have worked all the kinks out of their battery and expects to enter volume production with Flextronics in late 2014/early 2015. Provided they can achieve this production milestone, and they have the orders to fill, revenues should then start to increase around that same time frame.
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