To make the switch to clean energy, U.S. power grids are going to need a lot of batteries — including those that can store power for far longer than the two to four hours that lithium-ion batteries can cost-effectively deliver today.
Days ago, the Department of Energy offered a $398.6 million loan guarantee to Eos Energy Storage, one of a number of companies that have been struggling to deliver a longer-duration battery to serve that growing need.
Eos has deployed its zinc-based battery technology in a variety of smaller-scale projects that have discharged more than 1.4 gigawatt-hours of energy over their collective lifetimes. It has gigawatt-hours’ worth of batteries under order from clean energy developers, utilities and government agencies, according to its most recent quarterly earnings report.
But Eos has only recently begun updating and automating its manufacturing processes to support the kind of large-scale production necessary to meet its order backlog and drive costs down. And three years after going public via a reverse merger with a special-purpose acquisition company (SPAC), Eos has had to continually raise debt and equity financing to cover costs that continue to outpace its revenue.
The LPO loan guarantee announced today is conditional, meaning that Eos has to meet certain milestones before it closes the deal and puts the low-cost capital to work. If Eos does win the loan guarantee, it could use the federal pledge to cover any losses to loans to the company from private-sector lenders to attract even more low-cost capital — a necessary step in its quest to scale up and reach profitability.
“Even with an LPO loan, we’ll need capital to scale the company,” CEO Joe Mastrangelo said in a recent interview. “And you have to remember, the size of the market out there is a drop in the bucket compared to the potential for the company in the long term.”
Eos also represents a first foray into non-lithium-ion batteries for the LPO, which has played an important role in lending money to early-stage wind and solar power developers and to Tesla for its first EV factory. The office has seen a resurgence under the Biden administration, offering more than $10 billion in loans to U.S. EV battery manufacturers since 2021, and billions more in support for lithium-ion battery recyclers, materials production facilities and lithium mining and processing projects.
Should the loan guarantee from LPO’s Title 17 Clean Energy Financing Program come through, Eos hopes to harness the federal backing to become among the first alternative battery chemistries to break through. To do so, it must contend with the challenges of succeeding in an industry littered with failed and now-defunct companies — Alevo, Aquion, Imergy and ViZn are a few. So far, it’s simply been too hard to compete against the dominant lithium-ion technology, whose cost has been driven down by decades of mass production for use in consumer electronics, electric vehicles and storing power at the building and utility installation scale.