Ess Tech, Inc. · NYSE:GWH
Ess Tech — ACON S2 Acquisition — SPAC Merger (August 2021)
47 slides from Ess Tech's SPAC merger presentation, Aug 2, 2021
Slide 1: Long Duration Energy Storage Systems for a Cleaner Future
Long Duration Energy Storage Systems for a Cleaner Future MAY 2021 CONFIDENTIAL ***Subsequent to the date of this presentation, certain estimates and assumptions with relation to ESS’ financial projections have changed. See footnote disclosure on Slide 43.
Slide 2: Disclaimers
Disclaimers This presentation (this “Presentation”) was prepared for informational purposes only to assist interested parties in making their own evaluation of the proposed transaction (the “Transaction”) between Acon S2 Acquisition Corp. (“ACON”, “we”, or “our”) and ESS Inc. (“ESS”). This Presentat
Slide 3: Game Changing Technology: The Power Grid of the Future Feasible Today
Game Changin Technology The Power Grid of the Futur Feasible Today STABLE. SECURE. CLEAN. CONFIDENTIAL 2
Slide 4: Transaction Overview
Transaction Overview Category Catalyst in Long Duration Energy Storage Solutions Leadership ESS Founded in 2011 to enable the stable, decentralized and decarbonized power grid of the future Offering Size ACON S2 (NASDAQ: STWO): a special purpose acquisition company $250 million cash in trust PIPE si
Slide 5: We Must Reimagine the Grid
We Must Reimagine the Grid Aging Infrastructure Severe Weather Events Rising Renewables Penetration Growing Energy Demand CONFIDENTIAL 4
Slide 6: Energy Transition is Building Momentum
Energy Transition is Building Momentum Stakeholders are aligned to accelerate the energy transition towards a more sustainable future Consumer “Anybody who has the breakthrough on battery storage is Preferences going to have the key to the future” John Kerry (U.S. Special Presidential Envoy for Clim
Slide 7: ESS is a Game Changer in Long Duration Energy Storage
ESS is a Game Changer in Long Duration Energy Storage Stabilizes the Grid Enables up to 100% Allows Proliferation Renewable Penetration of Microgrids CONFIDENTIAL 6
Slide 8: ESS: A Category Defining Investment Opportunity
ESS: A Category Defining Investment Opportunity 1 Large and Fast-Growing TAM: $56bn by 2027 growing at a 33% CAGR1 2 Simple Yet Revolutionary Technology: Iron, salt and water; strong patent portfolio 3 Compelling Value Proposition: Highest performance, lowest cost2 and most sustainable 4 Low Risk Ex
Slide 9: Market Opportunity
Market Opportunity CONFIDENTIAL 8
Slide 10: What Is Long Duration Storage?
What Is Long Duration Storage? Shift Supply to Meet Low Cost to Enable Reliable Demand from 4 12 Hours Replacement of Alternatives (Grid Stability) (Peaker Plants) CONFIDENTIAL 9
Slide 11: ESS Transforms the Value Proposition for Long Duration Storage
ESS Transforms the Value Proposition for Long Duration Storage What Customers Demand How ESS Transforms the Grid Up to Can replace coal and natural gas with solar and Longer Duration 12 hours wind power Flexibility allows multiple revenue streams Greater resiliency to unexpected events Lower LCOS th
Slide 12: Stabilize the Grid and Accelerate Renewables
Stabilize the Grid and Accelerate Renewables US Renewable Energy Penetration (2015-2050)1 Renewable intermittency creates a 57% 65% massive problem for the grid, 47% particularly 25% penetration 36% 40% 31% 23% 15% the Carbon-free is goal 2015 2020 2025 2030 2035 2040 2045 2050 Intermittency and cur
Slide 13: Fortify the Grid for Climate Change
Fortify the Grid for Climate Change Climate change will result in more unpredictable weather events including extreme temperatures, hurricanes and wildfires1 Texas Freeze ESS batteries operate efficiently in extreme hot and cold weather and still maintain grid stability Texas was seconds away from c
Slide 14: Strong and Growing Demand for Energy Storage
Strong and Growing Demand for Energy Storage Cumulative Additions to Global Storage Capacity (GWh) Global Total Addressable Market ($bn) Front of the meter 534 +43% Front of the meter Behind of the meter CAGR Behind of the meter +33% $56 CAGR 397 $46 301 +44% +32% CAGR $39 $28 CAGR 287 $33 $22 226 $
Slide 15: ESS Wins on Performance
ESS Wins on Performance Operational 4-12 hrs 16+ hrs Compelling Performance Flexibility Li-Ion 4 hrs Can cycle when needed with no impact to asset life Longer Asset Life Unlimited cycles, no capacity loss Operates at peak efficiency Li-Ion 6,000 cycles1 independent of outside environment Superior Am
Slide 16: ESS Wins on Cost
ESS Wins on Cost Illustrative Cost Comparison Versus Li-Ion How ESS’ Technology Delivers Superior Economics1 4 hours 12 hours Competitive with Li-Ion at 4 hours; No scaling ESS wins thereafter—Ion Li $200/kWh $200/kWh Marginal cost of $20/kWh $ /kWh) ( $200/kWh $80/kWh Cost Li-Ion LCOS at 4 hours vs
Slide 17: ESS Wins on Sustainability
ESS Wins on Sustainability Sustainability Focus Areas Responsibly Sourced Materials Raw ingredients of iron, salt and water are earth-abundant Global Warming Potential (GWP) 67% lower CO emissions than Li-Ion1 2 Recyclability Contains no toxic materials and 2 requires no special permits for disposal
Slide 18: ESS is a Category Defining Technology for Long Duration Storage
ESS is a Category Defining Technology for Long Duration Storage Vanadium, Sodium Compressed Pumped Li-Ion Li Metal Zinc Bromine Sulfur Air Hydro Low cost at 4 12 hours Field proven1 Earth abundant materials Unlimited cycling Zero capacity fade Wide operational temperature range Environmentally susta
Slide 19: ESS Technology is Proven and Insured
ESS Technology is Proven and Insured Munich RE Aon One Beacon Insurance Investment-Grade 10-year extended Surety and Corporate Bonding Warranty warranty covering battery modules Growing project surety capacity Investment-Grade Warranty continuity Project Insurance insurance provides additional suret
Slide 20: ESS is Winning in the Market Today
ESS is Winning in the Market Today Customer in California Customer in Patagonia Use Case Use Case Microgrid solutions required to mitigate Public Safety Remote grid served by RoR hydro + diesel gensets Power Shutdown impacts Storage systems required to minimize genset usage Li-Ion solutions disquali
Slide 21: Technology Overview
Technology Overview CONFIDENTIAL 20
Slide 22: Technological Breakthrough, Field Proven and Shipping Now
Technological Breakthrough, Field Proven and Shipping Now Technological R&D roadmap for Iron Flow first conceived But “dirty” electrolyte breakthrough Field proven1; S200 additional breakthroughs in 1970s caused rapid degradation Proton Pump eliminates shipping now to extend technology power fade an
Slide 23: Robust Intellectual Property Portfolio
Robust Intellectual Property Portfolio ESS Critical Technology ESS IP Portfolio (-) (+) Power Module Electrode Electrode 125+ Patents Granted Current Collector and in Pipeline Pending Applications Proton Pump Pressure Plate Secrets Undisclosed and Identified Number of Patents Trade Conductive Porous
Slide 24: Business Overview
Business Overview CONFIDENTIAL 23
Slide 25: Strong Team Positioned to Grow the Business
Strong Team Positioned to Grow the Business Management Team CRAIG EVANS ERIC DRESSELHUYS AMIR MOFTAKHAR DR. JULIA SONG President & Founder Chief Executive Officer Chief Financial Officer CTO & Founder (March 2021) HUGH MCDERMOTT MATT BERKEBILE BRIAN LISIECKI RANDY LEWIS Senior Vice President Vice Pr
Slide 26: One Technology Two Products of Different Scale
One Technology Two Products of Different Scale Energy Warehouse at Jean Airport Energy Warehouse™ Energy Center™ Behind the meter solution Front of the meter solution 50kW 90kW configurable range Customizable configuration range First commercial deployment in 2015 Customer trials starting in 2021 Ge
Slide 27: Validated by a Blue-Chip Customer Base
Validated by a Blue-Chip Customer Base Utilities IPPs/Developers Commercial & Industrial EW EC EW EC EW EC Peaker replacements Peaker replacements Energy cost savings Demand Drivers T&D upgrade deferrals Resource adequacy & grid reliability Operational resiliency Wildfire resiliency 24/7 power suppl
Slide 28: Strategy to Scale Globally
Strategy to Scale Globally ESS’ ability to grow is supported by Relationships in Europe and Asia-Pacific Automated manufacturing process Manufacturing Capacity (MWh) Supply chain of readily sourced components and raw materials 16,000 10,000 5,000 2,000 150 2021 2022 2023 2024 2025 150,000 sq. ft. St
Slide 29: 97% Less Capital Required, Ready to Scale Globally
97% Less Capital Required Ready to Scale Globally Simple, Low-cost Production in the USA Simple, automated ESS manufacturing line $in millions/GWh of Battery Module Production Capacity $140 Expensive, complex Li-Ion battery manufacturing line $4 Li-Ion competitor Source Lux Research. CONFIDENTIAL 28
Slide 30: Capital Investment Will Enable Rapid Expansion
Capital Investment Will Enable Rapid Expansion Net Cash for Growth Increase Expand Sales Footprint Manufacturing Capacity Hire new sales team members and $493m1 Fully funds capital plan to increase expand production footprint into 16GWh capacity by from 2025 250MWh in 2021 to Europe and Australia La
Slide 31: Financial Forecast
Financial Forecast CONFIDENTIAL 30
Slide 32: High Quality Pipeline
High Quality Pipeline Projected Pipeline for Energy Center™ and Energy Warehouse™ Global Identified Opportunities Negotiating 28% Qualifying 40% Booked 100% Awarded 66% Negotiating 40% Booked Awarded 6% 5% 20% Energy Center™ Opportunities 2021E 2022E 2023E Energy Warehouse™ Opportunities $2 Million
Slide 33: ESS' Robust Revenue Growth
ESS’ Robust Revenue Growth Projected Revenue by Product Offering ($in millions) $3,562 Growth accelerates as Energy Center deployments start in EC EW EF Services 2023 $2,572 Forecast driven by identified pipeline of near-term opportunities $1,645 ESS expansion into Australia (2023) and Europe (2024)
Slide 34: ESS Delivers Compelling Profitability
ESS Delivers Compelling Profitability Projected Gross Margin ($in millions) Projected EBITDA ($in millions) $1,332 $1,059 $950 $739 $508 $360 $217 $131 ($2) ($13) $47 ($20) ($43) $2 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2021E 2022E 2023E 2024E 2025E 2026E 2027E % Margin 16% 27% 31% 37% 37% % Mar
Slide 35: Potential Upside to Business Plan
Potential Upside to Business Plan New US federal and state policies on infrastructure, decarbonization and national security Emerging mandates in EU and Asia-Pacific on decarbonization and storage Demand impact of USTDA, Power Africa, UNDP and World Bank targets Further economies of scale and techno
Slide 36: Valuation Overview
Valuation Overview CONFIDENTIAL 35
Slide 37: Detailed Transaction Overview
Detailed Transaction Overview Transaction Overview Illustrative Pro Forma Valuation and Sources & Uses ($ in millions, except per share data; shares in millions) Pro forma enterprise value of $1,072 million (0.7x 2025E Revenue) Total Enterprise Value Summary Pro forma shares outstanding 156.5 $465 m
Slide 38: Selected Public Comparable Universe
Selected Public Comparable Universe Battery Storage Fuel Cell and Electrolyzers Renewable Technologies Supporting Supporting Supporting Considerations Considerations Considerations Characteristics Characteristics Characteristics Growth stage  Primarily Technology  Not reliant on Growth is tied
Slide 39: Selected Operational Benchmarking
Selected Operational Benchmarking Battery Storage Fuel Cell and Electrolyzers Renewable Technologies Average: 121% Average: 58% Average: 25%—24 ’21 CAGR 170.4% 72.0% 53.7% 47.3% 105.8% 43.4% Revenue NM 23.8% 15.3% 17.2% Average: 31% Average: 26% Average: 32% 40.7% 31.3% 35.3% 33.4% 30.3% margin 25.0
Slide 40: Selected Valuation Benchmarking
Selected Valuation Benchmarking Battery Storage Fuel Cell and Electrolyzers Renewable Technologies Average: 3.3x Average: 9.8x Average: 12.1x 24.6x Revenue 14.2x 14.6x / EV 7.6x 7.8x 4.7x 4.6x 3.8x 2.8x 0.6x 2027E 2024E 2024E 2024E 2024E 2024E 2024E 2021E 2021E 2021E Average: 13.3x Average: 72.9x Av
Slide 41: Transaction Priced at a Discount to Peer Multiples
Transaction Priced at a Discount to Peer Multiples Implied EV Based on Selected Comparable Companies Trading Transaction Value ($ in millions; implied future and discounted EV rounded to the nearest $5m) Implied Future EV Implied Discounted EV Implied Post-Money EV $8,225 84% discount $3,965 $4,935
Slide 42: ESS Inc: Catalyzing a Cleaner Future
ESS INC CATALYZING A CLENER FUTURE
Slide 43: Appendix
Appendix CONFIDENTIAL 42
Slide 44: PF Summary Financials
PF Summary Financials* Values in 000s 2021 2022 2023 2024 2025 2026 2027 Revenue Product—EW Purchase & Lease $2,381 $22,679 $34,520 $47,203 $66,328 $94,808 $135,248 Product—EC Purchase $14,224 $256,249 $696,998 $1,447,504 $2,222,420 $2,986,242 Product—EF Purchase $4,177 $28,696 $41,797 $50,522 $61,1
Slide 45: ACON S2 Overview
ACON S2 Overview Strategic Sustainability Platform for Success ACON S2 Acquisition Corp. (NASDAQ: STWO) Domain Expertise Public Markets $250mm IPO in September 2020 Criteria: authentic sustainability leader, significant Sustainability Governance value creation potential, strong competitive Global Ne
Slide 46: Energy Warehouse Overview
Energy Warehouse™ Overview Product Summary Product Deployments Behind the meter solution Containerized design for turnkey delivery First commercial deployment in 2015 Fast to build and commission Generation II launched in 2020 Current Specifications Stone Edge Farms USACE 10 kW/60 kWh; 2015 60 kW/22
Slide 47: Energy Center Overview
Energy Center™ Overview Product Summary Front of the meter solution Modular design for utility-Customer trials starting in class 2021 Power capacities starting at in a 3MW “Battery Building” platform Building Blocks for Existing Products Current Specifications Configurable Range: Customizable Quad P