Good morning, everyone. Thank you for joining us for this session of the WTR Insights Conference featuring Bimergen Energy. I'm Eric Goldstein, Managing Director of Mobility and Industrial Technology for Water Tower Research, and I'll be your host today. We are pleased to be joined by Bob Brilon, Co-Chief Executive Officer and Chief Financial Officer of Bimergen. Bob, welcome, and thank you for being here today.
Thanks, Eric. It's always a pleasure.
Before we begin, please note that Bimergen's safe harbor statements can be found on the investor tab on their website. We'll aim to address questions submitted during today's conversation or in the management series report that will follow. Please enter your questions in the chat. Investors interested in scheduling a meeting with Bimergen can indicate that interest within the conference portal. For those not familiar with the company, Bimergen Energy Corporation, ticker symbol BESS on the NYSE American, is an independent power provider and project developer focused on utility scale, Battery Energy Storage Systems assets. With coverage across several ISO regions across the U.S., the company owns approximately 30 development stage Battery Energy Storage System projects with a cumulative capacity of around 2 GW.
Bimergen's growth strategy centers on securing project financing, advancing construction, and partnering with institutional counterparties to operate long-term offtake agreements, ensuring stable contract-backed revenue streams. With the housekeeping items covered, let's jump right in. Just question number one, Bob. Can we talk about the evolution of the Bimergen platform? Bimergen has evolved into a U.S. energy infrastructure developer and operator with a substantial battery storage pipeline. As the platform scales, how do you see the balance developing between originating projects, monetizing the development value, and retaining ownership interests that can generate long-term operating cash flow?
That's a great question, Eric. And really one thing to get out there is our business strategy is to build these projects, have ownership interest, and buy low, sell high on energy. We're putting energy into a battery, selling it back when it's a much higher cost, helping balance the grid in those areas. And to your point there is we're going to be involved with every one of the projects that we currently have in our pipeline. That was for 2023 that we had bought back in April 2024, and then we've bought additional projects. And it's interesting when we say buy, we really don't spend cash. We really go out and do a financial engineering where we buy a project and sell a project really as soon as we have a place to put it, and we want to move it forward.
What that means for us is at the end, we want to own a portion or 100% of that project. As it's generating revenues, we're getting that revenue flow through our books, and we're also end up with a good substantial profit from that.
Okay, great. You've highlighted $400 million in potential revenue. You've highlighted a path to approximately $400 million of annual revenue from the broader project portfolio you already have once it's fully developed. Can you walk investors through the major building blocks behind that opportunity. And what gives you the confidence in the scale of the platform.
Yeah, no, happy to. As you mentioned earlier, there's 2 GW worth of power capacity here. And really when you look at our analytics on it's about $20 million per 100 MW capacity. The math is easy there to see. We have 2 GW times the $20 million. That's where we come up with $400 million in revenues. But again, understand that's only from that pipeline that we currently have in place. One thing that's happened for us since we uplisted, we uplisted in February this year onto the NYSE American. When that happened, we really got a lot of credibility as well as a lot of notoriety. So we've had additional developers come to us, and what they don't have is all the pieces to the puzzle.
They can't really take it across the line, get it financed, get it operational. That's why they come to us and they say, "Here, we'd love to have this go under the Bimergen portfolio." Again, all they're looking for is their development fees. We arrange it so they get paid their development fees usually over the first year. As soon as it's operational, then they're taken out of the situation, and we end up with 100% ownership of that project.
Okay, great. Also, Bob, can you touch a little bit upon how you intend to finance these projects? I know you've laid out what is a relatively capital-light business model, especially given the scale of the investment required for all the projects you have. With projects funded primarily at the project level with the help of substantial investment tax credits. Can you just talk a little bit about how that works?
Sure. Again, it's easiest to just use examples. When you talk about a typical 100 MW project, we say that project's going to cost about $125 million to really get it up and operational. That takes about a year. What we're saying there is, okay, we're going to do this with debt. What's interesting is there's several different ways to do it, and you'll see that we've actually hit on a couple different ways so far, and you'll see more in the future. What I mean by that is there's different types of debt. One that we did early on is a strategic debt that's initially for the upfront. What you have out here is the 80/20 rule, where about 20% needs to be, I'll call it skin in the game.
Then the other 80% is long-term debt. That's the larger banks that come in and saying, "Okay, we're going to give this debt to you at x percentage because we see the operations. You have an offtake agreement with a very large group that has a hedge and makes it there's very little risk for the long-term debt guy." The front term, that can be a strategic. An example is we use RelyEZ . They are a battery manufacturer, so they love being involved where they put the money in first, get the construction going. They end up getting an $80 million-$85 million check from the larger bank for their batteries. Their piece gets taken out by the investment tax credit you were talking about.
As soon as we plug into the grid, which is about a year down the road, as I mentioned, that is when we can get up to 50% investment tax credit. That is monetized immediately. You do not have to use it. We have tax equity partners out there that can get us up to about $0.95 on the dollar for that.
Okay, great. Thank you. Just moving on a little bit. We are talking about turning the 2 GW of the pipeline you have into actual operating assets. You have assembled the 2 GW of battery storage projects, as we have mentioned a few times, across multiple U.S. markets. What are the key steps now that move a project from the development pipeline toward notice to proceed and ultimately into commercial operation? Where are you seeing the most momentum today?
Yeah, it is, and it is interesting. It is that pieces of the puzzle that we talked about. Having that development pipeline is first and foremost. You have to have something. Again, that development pipeline has taken two to three years to get into place. When I say that, the group we bought them from did all that work. That was Cole Johnson, who is currently the other Co-CEO. We bought it from his company, those 23 projects of about 2 GW. What is interesting is when you look at what the value is of those projects, you will see in the filings we have done, in the financial statements, that when you put one of these projects, a typical 100 MW project in, you will get between $5 million and $8 million for that project. It comes back to Bimergen on our revenues, on our cash flow.
What that means is out of that 2 GW, you have got about $150 million of value that will be unleashed and will be brought into our cash flow, over this time period. The other pieces of the puzzle are that debt. When you see other strategics come on board, other long-term investors, you will see announcements about the hedge agreements and tolling agreements with large groups. Then you will also see that we will be announcing our construction, which is the engineering, the procurement, and the construction of the actual projects. Those are the catalysts, really. Those are the pieces of the puzzle you need to move things forward to an operational asset.
Okay, great. You mentioned it a little bit, but can we talk a little bit more about the development fees? Because that might be an aspect of your story that maybe investors don't fully appreciate. As you move a project into operation, you receive development fees for doing so. These fees have the potential to be pretty large, as you just mentioned, especially compared to the market capitalization of your company. Can you talk a little bit about how the development fee works? I believe with the divestiture of Redbird, which was announced recently, and we're going to get into that a little bit, you've already started to receive some development fee payments already.
That's correct. In fact, in the early part, when we did the Aggreko projects, the 80 MW, we had a piece that went into development fees, but it's actually deferred revenue because it's waiting for some milestones to happen, which is the long-term debt. You're exactly right on Redbird. Redbird itself, and a couple other projects were sold and put into a joint venture, actually, with the Frontier Group of Companies when that happened. Again, this will be the way it happens with all of our projects. As our projects get put into a joint venture, we'll get paid those development fees. That's where I talked about between $5 million and $8 million is what's on the current contracts and the current joint development agreements that we have in place.
In the one you talked about most recently, it was $5 million for just Redbird, but it also came with a 7.5% ownership. We're not doing any of the financing on that. We put it into the joint venture. All that financing and all the heavy lifting, if you will, of getting that construction done is going to be done through Frontier, Cerberus, and Eos. That's a great project for us. The value there for us is that $5 million that we are receiving upfront, but also that 7.5% interest has a tremendous value. When you look at what these should be throwing off, they should be throwing off $750,000 to $1 million a year, as our portion, once it's up and operational.
Okay, great. You mentioned Cerberus and Frontier, so let's dig into that relationship a little bit more. You announced a transaction with Frontier Power USA, and Cerberus, and that served as an important validation of Bimergen's project development capabilities and the value that you've created by getting these projects going in your backlog. What attracted a large institutional partner to these projects? Could this structure become a repeatable model for advancing other projects in your pipeline? How are you deciding whether to retain a project and operate it, or to sell it to an entity such as Frontier Power?
Yeah. It is a great question. When you look at the agreement, it really shows you that we did not sell it outright. We actually did put it into a joint development, into a joint venture. We do actually have a joint development agreement in place. What that gives us is the structure to do more of these deals going forward. One thing you also may not realize, but if you look in deep enough, the Redbird BESS Project was in our portfolio to start with. We had already taken it through the point of having it ready to build. That is what really brings these type partners to us, is they are looking for somebody that has already done the due diligence.
At the same time, they can trust that when they look into the depths of our details, they can see, okay, yes, they have done all the permitting, they have done the analysis, they have got the engineering studies, so they have things ready to go. That is why people like Cerberus Capital Management and Frontier Power USA come to us, for this type of deal flow.
Okay, great. Let us talk a little bit more about that 7.5% retained interest. So it obviously has the potential to create value for shareholders by selling these projects, but then you are also retaining a piece of it, which will give you some cash flow in the future. An attractive feature of the Frontier Power USA transaction was that Bimergen receives development economics while also retaining a 7.5% interest in the project. How should investors think about the potential long-term value of those retained interests as projects like Redbird BESS Project move into operations? Then can you talk a little bit about the accounting treatment? How do you recognize the value of the retained interest that you have in your project?
Great question. It is a little complex. When you get into GAAP and how the accounting treatment works, there are a lot of facets here. One thing in our Q2 financial statements, we only put $500,000 on the books so far for that 7.5% interest, and that is because it happened there at a time when we did not have the time to go back and do what is called the fair market value discounted cash flows to actually come up with what the actual fair market value is that you can have from independent studies.
That is what GAAP allows you to put on your books, is that value. You will see us basically adjusting that because we call that provisional amount. We expect it to go up probably significantly going into the Q3, and then of course, it will go through the audit at the end of the year.
But if you think about what that 7.5% has in value for you, the discounted cash flows are very significant. Again, for us, it's nice to have a project out there. We're hands-off. We have our own projects we're working forward with. We're doing the construction on, getting the financing, going to have our own cash flows from that, but then have a project over here that somebody else is handling. They're doing it, and in fact, two of those, the smaller projects, the just under 10 MW projects that we sold into that deal, we didn't have those in our pipeline. Those have been brought to us.
We'd done the due diligence on them, and we had them on our sideline saying, "Okay, we're going to find a place to put these, whether we're going to develop them ourselves or we're going to sell them into this joint development agreement or another joint development agreement." In this case, it was great that really the buy and the sell happened on the exact same day. There's no cash flow for us to really worry about there, but it actually does bring us 7.5% of that project also onto our balance sheet.
Okay, great. Let's talk about, I guess, Redbird a little bit and long-duration storage. Redbird is a 100 MW, 400 MWh project expected to utilize the Eos Z3 long-duration battery technology. Why was the four-hour storage the right solution for the Redbird BESS Project in particular? Where do you see long-duration storage creating the most value as the U.S. grid evolves? How have you decided on your battery partner for other larger products that are in the pipeline, such as Wildfire, for example?
It will go project by project, and really it depends on where it's located, what your economics there are, how much alternative energy is coming in, and what you're trying to do to balance that grid. That's how the decisions are made. To your point there just regarding Wildfire, the group from Frontier has said that they have selected it. We have not finalized a definitive agreement, so therefore on our side we have not announced that. What they had said when they did say they have selected it was that they will be doing it on the same terms and conditions, or similar terms and conditions as to what we did with Redbird. That's the expectation. But again, we really didn't want to put anything out there yet until it's a definitive.
As you can imagine, as a public company, we want to make sure that we're keeping things not as guesses, not as hopes, but here's the reality, here's what's happened.
Okay, great. Let's talk about ERCOT South and moving toward operations. The eight ERCOT South projects acquired from Aggreko give Bimergen a meaningful late-stage presence in Texas. What makes these projects particularly attractive, and what should investors understand about the opportunities they move towards commercial operation? Can you give us a sense of what revenue contribution will come from these projects, and are there development fees related to these projects that you'll receive as well?
Yes. The Aggreko projects, they total about 80 MW, and they are eight what they call Texas Tens. The reason we got involved with them, Texas Tens, that means just under 10 MW each. They actually are easier to get through the process, easier to get your final permitting, easier to get really construction done and get it to be an operational asset. Because those aren't all clumped in one area. These 10 MW will be in different areas just outside of different cities. We're excited about how they're moving forward. They were the first ones that we put into the agreement with RelyEZ. We'll be using the RelyEZ lithium batteries on those projects.
When you ask, what does this mean for us, it really proved that you can get these projects going, getting them moving forward, and using our joint venture funds that had been put in there by RelyEZ. They'd originally put $10 million into the joint venture, and so we've used that money to actually move these projects forward. We're right now in the process of getting the long-term debt financing. To your question about what does this mean economically to us, these are very proportionate when you look at numbers. When we say 100 MW typical will bring in about $20 million, then you've got this about 80 MW. That'll probably bring in about $16 million, is what we can expect for the revenues on an annual basis.
Yeah. This was a pretty interesting one because you guys have not put up any actual capital. RelyEZ Purchased those projects for you, and you are operating them? Or can you talk about
Yeah
those projects were acquired?
Yeah, we actually purchased them through contracts. We are using RelyEZ money to actually pay for them. I guess that is the way you look at it, and it is again into a joint venture. We are doing this all through a joint venture, and why that is important to reiterate is when they go into a joint venture, that is when they are not on our books. Also the debt that we bring on board does not have recourse back to Bimergen. We try to have everything in its own little silo.
Every project will be in its own little silo, so that as we bring these forward, once we switch it over and have 100% of the control and actually ownership of that joint venture, that is when you will see it consolidate back onto our books, and both the income and the actual assets and debt will be consolidated onto our books. That happens basically when you are operational. As soon as you plug in, do your investment tax credit, that is when things will actually consolidate back.
Okay. But just so investors understand, your money out of Bimergen's pocket up until that point that the project becomes operational was how much?
Yeah. We didn't put anything into it. We're really just using the GridSpan, which is the joint venture's name, their money to move this project forward.
Okay. When they're fully ramped up, that'll be $16 million of revenue, roughly, as you said.
Correct.
That'll be how much, roughly, in EBITDA to the company?
EBITDA, I'd like to. 50% is a good number. We hope to do a little better than that, but we'll say $8 million of EBITDA.
Okay. And those projects will start to come online any particular timeframe?
Yeah, we had hoped to get some online in fourth quarter. Not sure if that's going to happen, so it'll either be fourth quarter or first quarter next year.
Okay, great. Let's take a look at technology. Bimergen has relationships across several battery technologies and system providers rather than being tied to any one company or any one battery chemistry. How important to you is that technology flexibility, and how do you determine what the right battery architecture is for a particular project? Can you also talk a little bit about the importance of being FEOC compliant for your battery partners, and particularly as it relates to the investment tax credits, which are obviously substantial for all these projects.
Yeah. And actually, you've kind of answered your own question there. Having FEOC compliance gives you 100% of your investment tax credit, instead of limiting you to how much investment tax credit can do. FEOC compliance is, and I wish I knew what the actual acronym stood for, but it really does give you what you need for the investment tax credit. When we're working with these different battery companies, we make sure that we have the option of getting a FEOC compliant battery. What's interesting, there's certain battery companies that we work with that they have, "Here's how much it is for the FEOC compliant, here's how much it is for the non-FEOC compliant." Depending on what you're looking for and if you need that investment tax credit extra.
To the other side of your question is, yes, it is great to actually be technology agnostic. Even though we have great partnerships with both RelyEZ, Eos, there's a lot of other battery manufacturers out there that when we have projects we're moving forward with, when we're not using Eos and RelyEZ financing that we can move forward with, if it makes sense. It's all economics. We're in this to make money for our shareholders.
Okay, great. Let's talk about the project economics and revenue opportunity, which we've touched on a little bit. But once one of your projects becomes operational, there are several potential revenue streams for the company. You obviously have the energy arbitrage, which is the whole basis for your business. There are some ancillary services and contract arrangements where there might be some fees. How do these pieces all fit together? What makes the economics of a well-positioned storage project attractive to you today?
It's interesting when you said well-positioned. It is location, location. It is having that asset in an area where there's a need, and that need is where there is plenty of alternative energy, and so you need to balance the grid. There's maybe some what they call frequency issues, and you're, again, balancing the grid, making sure that you're helping that grid be as efficient as possible. That's what comes to us is when we make sure we've picked the right location, that this is where our services are needed, both the buy low, sell high, to really balance the grid on the electronics, excuse me, the electricity, then that's important. But the other ancillary services are there also. We're there making sure that we've put the asset. Again, these are $125 million assets.
You don't just, okay, put it there and hope that it's going to generate the right revenue for you. You've taken several years to actually go through that analysis, and you've got independent studies done because the bank, the groups like Goldman Sachs, et cetera, come up and say, "Okay, here, we need independent studies to prove that this is going to be a $20 million a year annual revenue so that we can all jump on board.
Okay. Let's get into a little bit of the institutional capital and how you scale the platform. Battery storage has become somewhat of a buzzword over the past 12 months. We've seen a number of companies, battery manufacturers taking some of their capacity that was geared maybe towards things like electric vehicles and repurposing into BESS. BESS is attracting a lot of an increasing interest from infrastructure investors and strategic capital providers and obviously from battery manufacturers as well. How important are the partnerships with groups such as Cerberus and other institutional investors to Bimergen's ability to scale the portfolio while maintaining that capital-light model?
It is really primary. Having the deal flow and then having that capital available is really what makes the engine run. Because we all know you need capital, you need the funds to actually move things forward. You use money to make money. Having those relationships, having those partners that you've worked with before, is very key to our business. It's great that our management team has done this for 20+ years. Again, my side of the business is capital markets. Done this for 35+ years, taken six different companies public. But at the same time, I needed what I have on the other side, and that's the Co-CEO, Cole Johnson, and his group.
He brings in some huge managers that have done this time and time again, had $100 million checks written to them, negotiated the right deals, and that's what's making this work for all of us.
Okay. Makes perfect sense. Just a couple more questions. As we think about AI data centers and obviously rising demand for electricity, we have seen electricity demand has increased meaningfully, as AI and data centers expand across the U.S. How does that changing demand environment affect the need for battery energy storage and projects like you guys are developing, and what is the opportunity you are seeing for Bimergen going forward. Just maybe if you can talk about some changes that you have seen or developments you have seen maybe in the last three to six months.
Yeah. One thing that we got into this, obviously, this idea, this business a few years ago, and we saw where it was headed, and so did Cole and his group. Really looked at what was happening in the world on the side of needing additional energy, but also understanding that there was a lot of energy out there being wasted, meaning you had a lot of energy during certain parts of the day getting curtailed, not getting used. That infrastructure was actually being wasted. That is where you need to have the batteries in place to help balance the grid, make everything efficient. Really the saturation point really it would take a long time before you ever took care of this whole infrastructure. We feel like we have a good runway, a sustainable runway.
When you talk about AI and the data centers, they are just going to add to the need for that efficiency. Right now, what we are doing is we are focused on, we are tied into a substation where we buy the energy from the utility company, we sell it right back to the utility company. We have the option of doing what is called sleeving agreements, whereas if a data center gets built in a certain area and we want to, with our offtake agreement, like a Goldman Sachs, they have got relationships with these large data center guys. If they want to take a portion of that energy and actually have it allocated to that data center and have a sleeve agreement, that can happen for us also. But right now, we are focused on the grid itself, buying and selling.
Again, it is that buy low, sell high, low demand, high peak times. It just makes sense that that is a great business model, but it is also helping the environment, helping the people, getting an efficient electricity flow.
Okay. Makes sense. Last question. Just for investors, what should we be looking for over the next 12- 18 months? What are the major project, commercial operating milestones, any offtake agreements that we should expect to see that will demonstrate the scale and the value that is being created across your platform?
It is exactly that. Announcements about getting additional projects into a joint venture. What that means is that joint venture is going to move forward with construction. It is going to end up with an operational asset. That is important. As we said, the key piece of the puzzle, talking about, okay, do we have additional projects that we are purchasing? We are not purchasing those for cash, but we are purchasing those through financial engineering, if you will. It is financing them through our financing partners. At the same time, having additional partners that we announce. Having partners like Frontier, Cerberus, Eos is great. Having a partner like RelyEZ is also wonderful. As we bring on new partners, because the more the better. We like to spread it around. We like to have partners we can count on.
That is what you will look for in our catalyst, is what are we doing. Then also, as in any company, cash. What is happening with cash? Are they generating cash? Is cash coming in from putting these into the joint ventures? That answer will be yes. It is going to be having a nice cash flow for the company moving forward.
Okay, great. Bob, thank you very much. We appreciate you joining us for this session of the WTR Insights Conference. Thank you to everyone who participated as well. Please look for additional content on Bimergen at www.watertowerresearch.com. For those with further questions or investors wishing to meet with management after this event, please reflect that interest again through the conference portal. Our next conference session will start shortly, and we invite you to stay with us.
Thank you, Eric. I should point out that your analyst report has gotten a lot of traction, and you did a great job of really delving down the good, the bad, the ugly, so people can make their own educated decision about Bimergen. We appreciate it.
You are very welcome.