Invinity Energy Systems Plc · LSE:IES
Invinity Energy Systems — redT energy — Investor Presentation (September 2018)
47 slides from Invinity Energy Systems's investor presentation, September 2018
Slide 1: Investor Presentation
Investor Presentation September 2018 redT energy plc (AIM:RED) 1
Slide 2: Presentation Team
Presentation Team Scott McGregor Fraser Welham Chief Executive Officer Chief Financial Officer CEO since 2009, CFO 2006 – 2009 Joined 2018 from Green Investment Bank (GIB). Extensive experience within mining (Rio Tinto), finance (Merrill Lynch) and Extensive experience financing technology (
Slide 3: Executive Summary
Executive Summary Energy storage to enable cheap baseload renewables Trusted energy storage expert with 20 years in the sector In-house proprietary flow machine technology Energy storage solutions (including finance) in key sectors; C&I, Grid, Large Solar Gross pipeline £1.1bn, risked £188
Slide 4: Sector Opportunity
Sector Opportunity Macro trends in global energy and the role energy storage will play in our future energy system 4
Slide 5: The Future of Energy
The Future of Energy Distributed energy storage infrastructure is now open for business This is real, economic, distributed infrastructure Centralised Distributed Energy Type Levelised Cost (UK) Average cost of UK Electricity: Coal 13.7p – 17.1p / kWh 12p+/kWh (Centralised) Nuclear 8.5p – 12.3p / kW
Slide 6: A Changing Generation Mix
A Changing Generation Mix Source: World Energy Outlook, 2017 Source: Aurora Energy Research, 2018 More renewable (wind and solar) Movement towards ‘flexible’ capacity retirement of Coal and CCGT (Gas) 6
Slide 7: Solar + Storage: Tipping Point
Solar + Storage: Tipping Point Price of Energy Power Price Volatility Grid Service Revenues Tending to $0/kWh Peak Prices Rising USA, UK + others coming online Free abundance of energy Energy storage is enabling more renewables to come online Cheaper, cleaner energy, globally 7
Slide 8: Maximise Use of Cheap Solar Power
Maximise Use of Cheap Solar Power 1. Utilise circa. x2 as much cheap solar 2. Average peak energy cost in UK ~12-14p Source: redT 8
Slide 9: Stationary Energy Storage Market
Stationary Energy Storage Market GW Pumped Hydro 99% Li-ion Bespoke 1% New market driven by economics Projects Renewable + storage Freq. ( currently 0.1%) Power Resp MW Flow = pumped hydro in a box Small solar Grid Services (All) (<2 hours) Renewable Firming (4 hours – 24 hours) Back-up Network Rein
Slide 10: Company Overview
Company Overview redT energy – key differentiators, technology and position within the sector 10
Slide 11: redT – Industrial Energy Storage
redT – Industrial Energy Storage Trusted - Energy storage solutions expert 20 years in energy storage. 100’s of client models Key clients; Technology - IP proven, patents, know how Solutions & Finance – infrastructure business models Energy storage machines and Lithium batteries Low risk inf
Slide 12: How redT Technology Works
How redT Technology Works 60kW, 300kWh energy storage machine 20ft HC Container 15kW, 75kWh SkW Stack module Electrolyte tanks redi energy storage
Slide 13: redT – Flow Machine Technology
redT – Flow Machine Technology Differentiation within the energy storage sector Pumped Hydro in a box - Doesn’t degrade High cost of degradation – Single application use Lowest Levelised cost, financeable, infrastructure asset High Levelised cost, requires regular replacement 25 year Cheap Power Reg
Slide 14: redT – Flow Machine Technology
redT – Flow Machine Technology Pure Vanadium Redox Flow Machines Gen 3 Technology with embedded functionality to enhance customer returns Simple Durable Low-Risk Flexible Energy Infrastructure 14
Slide 15: redT - Business Model
redT - Business Model Year 1 20+ Year Annuity Stream Product Operation Capex Warranty % capex p.a. Value Service & Maintenance % capex p.a. based pricing Energy finance model Asset Management Services margin Energy Trading % of revenues p.a. % margin Grid Services Revenues % of revenues p.a. Finance
Slide 16: Development Map
Development Map Development Commoditise Scale 1999 - 2014 2014-2017 2017-Present Stack technology proven Manufacturing commoditisation Functional, performing team Gen 3 launch (Margin product) – System prototyping & testing embedded functionality, improved power output, efficiency and capa
Slide 17: Market Opportunity
Market Opportunity Core Customers: 1. Commercial BTM C&I 2. Grid Storage 3. Large Solar + Storage FTM 17
Slide 18: Segment 1: Commercial BTM C&I
Segment 1: Commercial BTM C&I redT PV + Energy Storage Infrastructure Sector facts: Energy costs core to business (water sector 50% of Upside more revenues site costs) Low risk infrastructure investment Perform all services, remain flexible Flow Machines: All Services Pressure due to rising en
Slide 19: Case Study: Anglian Water
Case Study: Anglian Water Anglian Water: Distributed treatment sites 50% costs are energy 30% renewables by 2020 Installed to date 15% renewables (106GWh) redT solution can accelerate decarbonisation by doubling renewables by site 7,000 sites in the UK Annual energy cost of £77m redT & A
Slide 20: Segment 2: Grid Storage
Segment 2: Grid Storage Market Value: $bn’s – initial markets UK, Australia & Germany Hybrid Lithium: 40MW, 40MWh Flow: 10MW, 50MWh Single revenue risk Diversified asset Source: redT Sector Facts Sector Opportunity Grid assets subject to policy and market risk Flexible Diversified Asset for trad
Slide 21: Case Study: German Grid Storage
Case Study: German Grid Storage Initial project Further Phase 11MW, 44MWh – capex €35-40m 800 redT units 2nd project identical to initial project 44MWh Both Projects - Extensions additional 20.5MW, 80MWh Third project - 150MW 600MWh Total investment ~€400m German SCR Market – Energy storag
Slide 22: Segment 3: Solar/Wind + Storage
Segment 3: Solar/Wind + Storage Long duration energy Wind Solar storage Baseload Energy (Now) < $90/MWh (Future) < $50/MWh Market Value: $bn’s – the future of distributed energy 2018 – marginally economic By 2021 – Solar cost reduction will drive this as major segment 22
Slide 23: Investment Opportunity
Investment Opportunity Our business model, achievements, outlook and leadership 23
Slide 24: Commercial Pipeline
Commercial Pipeline Deal Stage Gross Conversion Weighted Project £60m £57m 95% Development (1,776 units) (1,687 units) £198m £50m Quoted 25% (4,787 units) (1,197 units) Early stage £815m 10% £81m £1,073m £188m Core Segments 1 C&I BTM: £115m 2 Grid-Scale: £702m 3 Large Solar & Storage: £256m 24
Slide 25: redT – Scaling with Solutions and Finance
redT – Scaling with Solutions and Finance Market Segment (1) Commercial BTM C&I (2) Grid Storage (3) Solar/Wind + Storage • Baseload power • Low risk infrastructure • Grid services & trading [LCOE: USD90/MWh] Business Model returns using a flexible asset • Grid service and trading • Grid service ups
Slide 26: redT – Scaling with Solutions and Finance
redT – Scaling with Solutions and Finance UK, Australia, Mainland EU Germany, UK, Australia UK, Australia, Mainland EU Markets & Size USD 500m (UK Only) USD multi-billions 3-yr potential: USD multi-billions Near-term projects (Deploy & Start <1 USD10m USD90m USD20m year) Immediate deployment in next
Slide 27: Project Financing
Project Financing Project Financing Status: 1st project ~€40m – 800 units Data room launched on 1st project to initial investor 16 August 2018 Conditional commitment letter received 17 September 2018 Expected financial close 31 December 2018 Initial Project Portfolio $120m – ~3,000 units Tea
Slide 28: Delivery Strategy
Delivery Strategy Customer projects for 2019/20: 1. Project development – 1,687 units 2. Quoted deals - 1,197 units (risked) Business model to cash flow generation: 1. 1,100-1,700 units sales per annum (GM 15-25%) 2. 200-300MWh under operation management (GM 30-70%) 3. Combination of above Execution
Slide 29: Appendix
Appendix 29
Slide 30: HY 2018 Financial Highlights
HY 2018 Financial Highlights Revenue from continuing operations up 33% to £1.2m (H1 2017 £0.9m) Trading loss £5.4m (H1 2017: £2.8m loss) Operating loss from continuing operations £5.7m (H1 2017: loss £3.1m) Half year end free cash £3.9m (31 December 2017: £6.6m) Loans and borrowings £Nil (
Slide 31: Income Statement
Income Statement H1 18 H1 17 Movement FY 2017 £m £m £m % £m Continuing operations: Revenue 1.2 0.9 0.3 33 2.2 Cost of sales (0.4) - (0.4) n/a (0.3) Gross profit 0.8 0.9 (0.1) (15) 1.9 Administrative expenses (excl. SBP) (6.2) (3.7) (2.5) (66) (9.0) Trading loss (5.4) (2.8) (2.6) (92) (7.1) Share-bas
Slide 32: Segmental Analysis
Segmental Analysis redT Camco Group H1 18 H1 17 Movement H1 18 H1 17 Movement H1 18 H1 17 Movement £m £m £m % £m £m £m % £m £m £m % Continuing operations: Revenue 0.2 0.2 - 10 1.0 0.7 0.3 38 1.2 0.9 0.3 33 Cost of sales (0.2) - (0.2) n/a (0.2) - (0.2) n/a (0.4) - (0.4) n/a Gross profit - 0.2 (0.2) (
Slide 33: Cash flow
Cash flow H1 18 H1 17 Movem't FY 18 £m £m £m £m Loss for the year (5.8) (3.2) (2.6) (7.3) Add back: SBP 0.2 0.4 (0.2) 0.9 depreciation 0.2 - 0.2 0.2 FX movements 0.2 - 0.2 0.1 taxation - - - (0.1) Adjusted EBITDA (5.2) (2.8) (2.4) (6.2) Movement in: receivables 1.2 (0.3) 1.5 (1.8) inventory (1.2) -
Slide 34: Balance sheet
Balance sheet 30 June 18 31 Dec 17 Movement £m £m £m Property, plant and equipment 0.6 0.4 0.2 Intangible assets and goodwill 13.3 13.3 - Deferred tax assets 0.1 0.1 - Non-current assets 14.0 13.8 0.2 Inventory 1.8 0.6 1.2 Receivables 1.7 2.9 (1.2) Payables (1.4) (1.5) 0.1 Deferred income (1.6) (1.8
Slide 35: Management Team
Leadership * Also a member of the Board Scott McGregor* Jean-Louis Cols Chief Executive Officer Technology Director CEO since 2009, extensive experience within mining, Joined 2017 from Logan Energy, previously Group Management Team finance and technology industries Engineering Director at Intelligen
Slide 36: Key lessons in energy storage
Key lessons in energy storage What are the key learnings in this industry? 36
Slide 37: Lesson: PV + power + energy = integrated solution
Lesson: PV + power + energy = integrated solution Solar Double or more cheap Minimise Energy KWh Minimise Power KW Solar KWp on site generation Target highest system utilisation Maximise overall highest IRR% & NPV to customer Solar PV and Energy Storage MUST be sized and integrate together to maximi
Slide 38: Lesson: Efficiency vs Degradation
Lesson: Efficiency vs Degradation Degradation has a far larger effect on profits from energy trading than efficiency Source: Aurora Energy Research, redT 38
Slide 39: Unlocking commercial energy storage
Unlocking commercial energy storage Energy storage infrastructure Battery storage High % of business case locked-in Returns at risk Flexibility to change over time Non-flexible business case 39
Slide 40: Supplementary Information
Supplementary Information 40
Slide 41: Changing Generation: Germany
Changing Generation: Germany DE Capacity GW Source: AGEE, BMWi, Bundesnetzagentur, September 2018 41
Slide 42: Solar Generation: Australia
Solar Generation: Australia Source: Australia PV Institute, 2018 42
Slide 43: Falling Global Solar Costs
Falling Global Solar Costs Source: IRENA Renewable Cost Database; IRENA Auctions Database; GWEC, 2017; WindEurope, 2017; MAKE Consulting, 2017; and SPE, 2017. 43
Slide 44: A Changing Global Energy Mix
A Changing Global Energy Mix 44
Slide 45: Disclaimer
Disclaimer IMPORTANT NOTICE THIS DOCUMENT IS CONFIDENTIAL AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA, OR ANY OTHER STATE OR JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL This d
Slide 46: Disclaimer
Disclaimer The securities of the Company have not been, and will not be, registered under the Securities Act, or under the applicable securities law or with any securities regulatory authority of any state or jurisdiction of the United States or under the securities laws of Australia, Canada, Japan,
Slide 47: Disclaimer
Disclaimer To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty or other assurance, express or implied, is made or given by or on behalf of the Company or Investec or VSA Capital or any of their respective parent or subsidiary undertakings or th