buy-out of Prudent Energyhttps://www.vanspar.com/download/VRB-BusinessOpportunity-Mar-2016.pdf
Summary Opportunity
VanSpar is leading a buy-out of Prudent Energy, bringing in new management and re-capitalizing the company as VRB® Energy. Storage markets are accelerating, and Prudent’s vanadium flow batteries are more cost-effective than Lithium for the 4+ hrs of storage needed for solar, wind and microgrid integration.
Market Need • Grid-connected energy storage is a US$150 billion opportunity in the US alone, and flow batteries are 50% lower cost than Lithium on a Levelized Cost of Storage (LCOS) basis according to Goldman Sachs.
Flow batteries are expected to be almost 20% of global storage markets growing at a >35% CAGR through 2025 per Navigant Research. Core Advantages • VRB benefits from Prudent’s US$70 million investment in battery development including 20 MWh installed at over 50 sites; 800,000 hrs of reliability testing; and a robust IP portfolio of over 60 patents on cell stack design, in-house membrane development, and electrolyte chemistry. • Prudent completed validation testing of Gen2 product in Q1 2015; Gen2 represents a 35% cost reduction, 50% smaller footprint, and 10% improvement in performance vs previously installed Gen1 systems. • Current cost basis for Gen2 product is below $400/kWh in low volume. An additional 25% in cost reductions are already prequalified for Gen3. • Gen 2 VRB-ESS systems are 2-3 times lower LCOS versus Lithium batteries in 4+hour renewable integration and peak shaving applications. Challenges • VRB predecessor Prudent suffered a cash-management crisis in 2013 after expanding too rapidly into 13 countries without fully commercializing its Gen1 product, further suffering losses from a tank failure at its Gills project in California and a major project delay by State Grid. • Prudent conserved remaining cash to finalize Gen2 development and maintain IP portfolio, but suffered a setback in the marketplace.
Go Forward • As part of the buy-out, VanSpar contracted to commission the Prudent 2MW 8MWh battery at China State Grid’s 500MW wind-solar-storage project near Beijing. In January the system exceeded all of State Grid’s requirements for the intensive 240-hour test with 100% availability. This triggers $5 million in payments over three years, and VRB is now well positioned for State Grid’s Phase 2 procurement.
With validated product, ~$3.5 million in inventory, and core team inplace, the company can be re-launched into a rapidly expanding market.
Financials • VanSpar is seeking a $7-$10 million round of investment. • Forward revenue of $200 million on 500 MWh of system sales. • Full five-year discounted cash flow model is available for detailed review.
https://www.vanspar.com/download/VanSpar-Presentation-2016.pdf