Dive Brief:
- Zinc-based energy storage provider Eos Energy has pushed back against concerns regarding its 2.2 GWh energy storage system backlog, saying in a July 27 statement that its commercial pipeline remains strong, and is growing in line with independent third-party market forecasts.
- A report released by short seller outfit Iceberg Research that same day called into question the backlog, which Eos Energy valued at $535 million at the end of March, saying it is “100% confident that the backlog is fake.”
- Eos Energy’s shares took a hit the day the report came out, declining 24%, and then dropped another 15% the following day. The company is also facing a securities class action lawsuit, alleging it made false of misleading statements, filed in the U.S. District Court for the District of New Jersey.
Dive Insight:
Eos was founded in 2008 and produces a U.S.-manufactured zinc energy storage battery technology that it says can overcome the limitations of lithium-ion batteries in three-to-12-hour duration applications. Last year, the company’s CEO, Joe Mastrangelo, announced that it planned to push out orders scheduled for 2022 to 2023, so that it could take advantage of the tax benefits offered by the Inflation Reduction Act.
In late July, however, Iceberg Research released a report calling into question the company’s backlog of energy storage system orders, noting that one customer — Bridgelink Commodities — represents around half of Eos’ backlog in terms of capacity and roughly 62% of its total monetary value. According to Iceberg, Bridgelink first placed an order of up to 500 MWh with Eos in March 2022, and that contract was increased to 1 GWh three months later.
However, Iceberg says, Bridgelink Commodities’ parent company, Bridgelink Power defaulted on a loan facility in mid-2022, with an outstanding loan balance of $40.7 million as of September 20, 2022.
“The batteries ordered by Bridgelink were intended for renewable energy assets which have now been auctioned off. Yet, EOS continues to include Bridgelink in its backlog…” the group said.
Eos responded to these claims in a July 27 statement that also provided preliminary Q2 earnings results, saying it expected to have revenue of $0.2 million for the quarter, cash balance of $23.2 million as of June 30, and $86.9 million worth of booked orders for the first half of the year.
Eos said it believes Bridgelink Commodities is a separate legal entity that isn’t implicated in its parent company’s legal matters, and had reconfirmed that it “continues to build pipeline and is actively seeking financing for energy storage projects covered by Eos’s multi-year Master Supply Agreement.”
Eos Energy’s shares rose 8.8% July 31, after Mastrangelo and Chief Financial Officer Nathan Kroeker purchased shares. On Aug. 3, law firm Gainey McKenna & Egleston announced it had filed a securities class action lawsuit on behalf of persons and entities who had purchased Eos Energy securities between May 9, 2022 and July 27, 2023. The complaint alleges that the company failed to disclose that Bridgelink is connected to a group whose assets were auctioned off, and that as a result, its backlog was overstated.
