Redflow taps market to fast-track Gen3 battery, as virus hits order book

Australian flow battery manufacturer Redflow has launched a new capital raising seeking up to $23 million to complete the development of its next generation battery, and to shore up cash flows that have suffered from the impacts of the coronavirus on its order book.

The Brisbane-based Redflow says it wants to use the down-time in sales and deliveries to focus on the development of its next generation zinc bromide flow battery, which it hopes will deliver a further 30 per cent reduction in costs, on top of the 40 per cent reduction it secured after moving its manufacturing base to Thailand and with the Gen 2.5 battery.

“The current economic environment and a growing focus on renewable energy provide a unique opportunity for Redflow to focus on this critical program, that has already made significant progress over the past six months,” it said in a statement.

“Redflow’s Brisbane based engineering team will be accelerating this work over this COVID-19 impacted period with support from Redflow Thailand. We expect that our Gen3 Battery will deliver at least 30 per cent cost reductions versus current Thailand produced ZBM2 batteries, at reasonable volumes.”

The Gen3 battery will have a new electrode stack, a new electronics board and an updated tank design. The company seeks to make improvements in the supply chain, and in engineering and productivity. It hopes to completed the re-tooling of the Thailand facility for Gen3 in October and begin production and installations at the end of the year.

Flow batteries target a slightly different market to lead and lithium-ion batteries because they are comfortable for discharge times of up to 15 hours, and are suited for institutions of between 10kWh and up to multi megawatt hours. It is also comfortable with deep discharge (to zero) and can operate in higher temperatures without external cooling. And it has low fire risk.

It has targeted the telecommunications market, remote area power systems (which may get a boost after the recent regulatory go-ahead for networks to replace poles and wires with stand alone systems in remote areas), and commercial and industrial use.

Over the last nine months, deliveries have increased significantly and revenue jumped 166 per cent to $1.7 million. But Redflow says the pandemic has caused key customers to delay investment plans, including for battery storage, and particularly one telco customer that was interested in more than 1,000 installations.

“Combined with the inability to travel to our important international markets, (this) has materially impacted realisation of some immediate sales opportunities and our broader pipeline across multiple markets,” it said in a statement. But it now wants to take advantage of the pause to lock in the new generation of batteries and deliver the cost reductions to make it more competitive.

The capital raising seeks a minimum of $6.25 million, half of which will be directed towards product development, research and cost reductions, and another $1.35 million for the re-tooling of the manufacturing facility. It could raise up to $22.9 million if the offer is fully subscribed.