24 JUNE 2021
Redflow undertakes capital raising to support growth
Redflow MD & CEO Tim Harris
Key Highlights:
- Capital raising comprises:
- $5 million investment by US based New Technology Capital Group, LLC; and
- pro rata non-renounceable entitlement offer to raise up to $17.71 million (before costs) if fully subscribed
- New Technology Capital Group may provide additional funding of $5 million
- Funding to underpin growth, supporting pursuit of business development opportunities, key projects, completion of Gen3 battery development and general working capital requirements
- Redflow’s Board fully supports the Entitlement Offer and its Directors have each agreed to participate.
- Redflow has today announced a capital raising comprising a $5 million investment by United States (US) based New Technology Capital Group, LLC and a pro rata non-renounceable entitlement offer to raise up to $17.71 million (before costs) if fully subscribed.
Following a series of recent achievements over the last 12 months that have demonstrated ongoing market progress, Redflow has experienced a significantly increased level of customer interest in its unique zinc bromine flow battery technology and its ability to support large scale deployments including large scale MWh projects.
At the same time, market recognition of the need for medium to longer storage duration and the role of flow batteries in the energy ecosystem has materially increased.
Redflow is therefore raising funds to capitalise on its growing set of sales opportunities and market momentum.
Executing on Strategic Priorities
When Redflow last raised capital from shareholders in July 2020, the Company was well positioned to accelerate key engineering projects to deliver a more cost competitive product through the Gen3 Battery and also develop enhanced battery features. Redflow also noted that it would progress strategic growth opportunities, progress supplier cost reduction discussions and continue discussions with potential strategic investors and partners in Australia and overseas.
Since the prior raising, Redflow has executed on its strategic objectives and achieved a number of important milestones, including:
- Signed its largest single global battery sale to Anaergia for 192 batteries to support two megawatt hours (MWh) of energy storage in California
- The Project is valued at US$1.2 million (excluding taxes) for the system and includes development and launch of Redflow’s new Energy Pod Z – its core multi battery module for large scale systems
- Identified a strong market opportunity in the US, with interest levels substantially growing following Redflow’s 2 MWh project announcement
Partnered with Optus to use Redflow batteries in at least 56 black spot sites as part of the Australian Government’s Mobile Network Hardening Program - Received an order in June 2021 for an initial 56 batteries with Industrial Battery Housing units and components for 56 sites from Optus integrator EnerSys for immediate delivery, with a contract value of A$525,000. Further battery orders to complete the battery systems across the 56 sites are expected in the coming months
- Continued to grow its deployment footprint, with over 130 Redflow active deployments globally, representing a 25% increase over the previous 12 months and delivered 1.3 GWh of energy to end customers
- A steady and growing business in Australia through Redflow’s integration partners, including recent participation in the NSW Government Department of Primary Industry Energy Efficiency Solutions project
- Announced collaboration with TRUMPF, a leading European high-tech company with more than A$5 billion in revenues, to deliver scalable high-voltage grid-level energy storage deployments
- Successfully progressed Gen3 development, with end customer trials commencing from December 2020
- Undertaken significant work on analysing additional cost down and productivity potential with the introduction of Gen3, including planning for automation in target manufacturing processes and establishing volume commercial frameworks for key components and materials
- Progressed key engineering enhancements, including the development of Industrial Battery Housing units and the ability to work with existing lead acid systems for the Optus roll out
- Effectively managed costs throughout the COVID period, including moderation of production and reduced corporate costs.
Redflow’s Thailand manufacturing facility is now scaling up to meet battery orders with a confirmed backlog of orders of over 350 batteries as of 21 June 2021.
Having developed a strong order book and growing pipeline, Redflow is well positioned to execute on current and future opportunities in key growth markets, supported by the Gen3 battery planned to be introduced into the production environment at the end of this calendar year. Target markets continue to include telecommunications, commercial and industrial and remote/community systems.
US Focus
Following the significant interest generated from the announcement of the 2 MWh sale with Anaergia in California on 9 March 2021, Redflow is now engaged across a number of promising sales opportunities in the US market which would have a material positive impact on the Company.
In the US, 3.5 GWh of new energy storage went online in the US in 2020, more than was deployed in the six years between 2013 and 2019, when a total of 3.1 GWh was installed. Leading the charge is California, which has one of the one of the country’s most aggressive decarbonisation targets: 100% zero-carbon electricity by 2045. Significant growth is therefore expected in medium to longer duration energy storage in California and other US markets. The new administration of President Biden is expected to accelerate the transition to a green economy and the Secretary of Energy, Jennifer M. Granholm, has explicitly recognised the role of flow batteries in the future US energy ecosystem.
Redflow believes that the US energy storage market provides a substantial opportunity that warrants significant further focus and investment. This will be a key focus of Redflow’s activity and expenditure over the next 12 months. Planned initiatives include business development resourcing and activities, battery certification (including UL certification for Gen3), operational support and opportunities for local sourcing of materials.
Proceeds to Underpin Growth Opportunities
The current round of funding will ensure that Redflow is capitalised to execute on its current contracts, can progress value enhancing engineering developments and can pursue business development opportunities across its key global markets and verticals, with the aim of converting current and future opportunities into sales and revenue.
The proceeds from this capital raising will support:
- Current business development opportunities, and increased business development activities to grow the pipeline of potential future projects, including building a presence in the US
- Completion of Gen3 battery development and its introduction into production in Thailand
- Ramp up of manufacturing to significant increase current capacity and the introduction of automation of key processes as demand grows
Successful execution of key current projects - Core R&D with a focus on identification and testing of new materials and suppliers to drive down cost and improve core battery performance
General working capital requirements.
Click here to read the full version of this Redflow announcement, which includes details of the Capital Raising.
Click here to view all of today’s Redflow ASX announcements.
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