Australian battery storage developer Redflow is seeking to raise $12.9 million ahead of the launch of its household “plug and play” battery storage product later this month, with the money to be used for marketing and fine-tuning its manufacturing strategy.
Chairman Simon Hackett says he is pitching in another $3 million of his own money as part of the fund raising, which comes at what he believes is a “pivotal time” in the development of the energy storage market.
Hackett says grid operators around the world are starting to embrace grid-scale storage, but battery storage is also a hot topic for the residential market, with the looming expiry of premium solar feed-in tariffs in NSW, Victoria and South Australia creating a “clear economic trigger point” for households and businesses to add energy storage.
Redflow flagged the imminent launch of its “flow battery” storage product last month. It is yet to reveal details of its pricing, it says its costs will compete with lithium-ion alternatives. And the company says it has seen significant interest (or, as it says, inbound registrations) for the launch of the product.
Many of the first units will go to shareholders who are being offered a shareholder discount offer for ‘early adopters’. “Our aim is to see 2016 be the year that our strongest supporters (our own shareholders) decide to be amongst the first to install an energy system featuring Redflow batteries into their homes and offices.”
The money is being raised through a rights issue seeking $5.6 million, which is underwritten, and a placement to “sophisticated” investors. Hackett – the company’s largest shareholder – is acting as a partial back-stop to the rights issue and pledging up to $3 million.
Redflow says about $4 million of the funds will be used for technical and product development, the product launch and marketing and establishing channels to market, training, installation and product support.
Another $1 million will be spent on product improvements, including the development and release of a new higher energy density battery model, and $2 million will be spent on manufacturing arrangements.
In its prospectus, Redflow warns that “technical elements”, including the battery management system and the external enclosure, have not been fully completed and commissioned and may delay the rollout of the product.
It is not clear if this is a significant problem, or just part of the cautious language required of a prospectus.
“This is an emerging market, and the early uptake in this market will depend upon the residential demand for green low-carbon electricity generation and storage, which will in part be driven by the winding down of government subsidies,” the document says.
“There is a risk that technical and commercial matters may delay the rollout of the residential product and no guarantee that these matters will be finalised satisfactorily either at all or on economically feasible terms.
“There is also a commercial risk that the residential demand will not be as strong as expected, and that changes in government policy will have an adverse impact on that demand.”