Thanks everyone for coming. We have a really interesting presentation here from Randy and Francis at Eos Energy Enterprises, grid battery storage solutions. They're gonna explain it way better than I am, so I'll just turn it right over to them. Thanks, gentlemen.
No, thanks, Vincent. Good morning, everybody. It's great to be here. I'm Randall B. Gonzalez , the CFO of Eos Energy Enterprises, joined by Francis Richey, our Vice President of Research and Development. He's the brains behind the operation, Ph.D. chemical engineer, and any technical questions will definitely go to Francis. It's nice to be back in person at investor conferences. This is my first one post-COVID. I'm sure it's probably similar for many of you as well. Look, we're in an exciting time in energy transition, and we see all the headlines about, you know, energy security, energy prices, what's going on, just generally geopolitically. I mean, simply stated, the world needs more power.
We wanna generate that power using sustainable sources, but that objective creates imbalances in our existing energy grid. Managing and mitigating those imbalances will require multiple energy storage technologies to provide safe and reliable power. Until now, most of the energy storage systems have been short duration, meaning they produce power reliably for less than four hours. We believe the future will require longer duration, especially six-12-hour battery energy storage systems that provide the flexibility to match intermittency and congestion in the grid. Eos provides stationary storage solutions to meet this market need that we're talking about, the six-12-hour need primarily of energy storage solutions. It's a very large addressable market.
In target geographies, when I say that, I mean U.S., E.U., U.K., India, Australia, New Zealand, you know, the total addressable market is gonna be, you know, 275 gigawatt-hours of energy storage, just stationary energy storage by 2030. Like I said, it's gonna be a mix of technologies between short duration and long duration, you know, with great secular tailwinds that really match the deployment of renewable technologies. As you know, solar and wind primarily become a bigger component of our energy mix, so goes the need for energy storage.
As solar and renewables replace the assets that are generating kind of full time, the renewables are intermittent, which means that in order to generate the same capacity utilization, it requires the energy storage to go along with it. Eos has a proprietary and differentiated technology. Francis will get into kind of the bowels of that in terms of, you know, what it is, the chemistry that Eos has, and the benefits that it provides.
At the end of the day, in terms of the differentiated technology, we built an extensive and robust IP portfolio, which we believe gives us a deep competitive advantage, and really a moat to you know to be a player with you know a strategic advantage. We've made the transition from really R&D engineering to commercializing the technology to now a full-scale industrial provider of energy storage solutions. That's backed up by you know an accelerating pipeline of commercial activity with blue-chip customers to include names like Pine Gate Renewables in conjunction with Blue Ridge Power, Duke Energy, and Ameresco. Lastly, I talked about it in terms of being a full-scale industrial manufacturer. We're rapidly expanding manufacturing capacity.
We have a manufacturing facility in the Pittsburgh area in Turtle Creek, Pennsylvania, East Pittsburgh. Currently, we have capacity at about 315 MWh and growing. We're undergoing currently capacity expansion to get us to 800 MWh of capacity in the second half of the year. Especially compared to lithium-ion manufacturing, we have a low CapEx model, which means that we can deploy about 1 GWh of capacity for approximately $50 million. That's about, you know, 60% below what lithium-ion can do in terms of the investment required. Just to give a quick overview of the market. You know, it's important to understand in terms of energy storage that multiple technologies will be required.
You know, we often get the question, well, you know, how do you compare to lithium-ion? Lithium-ion will always have a place in that short duration market, which means, you know, zero-hours hours, and that zero-three hours means discharge time. You can see the applications there. You know, it's best suited for use cases for ancillary services, energy arbitrage, demand charge reduction. Our sweet spot is in what we call that intraday or medium duration, which really the primary use case is renewable energy shifting. What that means is, you know, the, you know, the sun's not always shining, and the wind's not always blowing. When they are, typically excess energy is produced. You store that excess energy in the batteries.
You shift the discharge of that energy to when those energy sources aren't producing. You can see there in the bottom, the green bar is really where Eos plays in terms of, you know, the use case and the duration. Then on the right-hand side, what we call the inter-day market, which is typically longer duration, 12+ hours. You know, you can see what the applications are, grid resiliency, seasonal flexibility, et cetera. Now I'll hand it over to Francis so he can talk about the product and the technology itself.
Sure. Thank you, Randy, for the introduction there. Yeah, just briefly, Francis Richey. I lead the research and development team at Eos. I think spend a few minutes just kind of going through the technology for everyone from kind of a high level and then hand it back over to Randy from there. I think the unique thing about the Eos battery and the product that we sell is that from day one, we designed it specifically for utility scale, grid scale energy storage. That's different from the sort of incumbent technology, lithium-ion, in the sense that that battery was really designed for a different use case altogether. It was really designed for high power applications, for shorter durations.
We designed the battery from day one, from the moment we founded the company, to have properties that make it specifically useful for grid storage. In that sense, it needs to be sort of a chemistry that is founded and understood. It needs to be simple and easy to manufacture, and it needs to be able to be manufactured at large scale, and the product itself needs to be safe, and the supply chain and all the raw materials need to be readily available. When we set out to design the battery, we really kinda knew we wanted to target that 3-12-hour duration. That's really where, as Randy mentioned, the solar and wind, that's really the duration you'll need to shift the energy around.
We looked at a number of technologies at the outset of the business. We settled on what we call a zinc halide battery. Traditionally and historically, zinc halide batteries are flow batteries. A lot of what our IP and technology is around is taking that chemistry and making it a static battery, similar to what a lithium-ion battery is. The advantages of static battery, we'll get into this in some of the next slides, but in general, you have lower operating costs, and it's a modular, scalable design. The battery itself, the module is made of a few commodity raw materials. Our electrolyte is a zinc halide electrolyte for the most part, aqueous, non-hazardous, non-flammable.
The electrode materials are just made of titanium and graphite felt, which are both readily available. The plastic enclosure for the module itself is a V-0 flame retardant material. All of these things add up together to make it a product that is safe, flexible, simple and durable. We'll get into that on the next slide here. These are sort of the properties of the battery that make it sort of world-class for the application that we're targeting, that four-12-hour discharge duration battery for grid scale energy storage.
I'll kind of highlight, I spoke to a few of these, but one of the things we're most proud of is that the manufacturing and supply chain for all the raw materials or a large majority of the raw materials for the battery is based in the US. Our manufacturing facility is in Pittsburgh, and the majority of the raw materials for our batteries come from areas not far from the Pittsburgh area, which we're very proud of. The other thing that I'll highlight here is that the battery technology is very flexible and durable. What I mean by that is that the degradation profile of the battery is minimal. We expect this battery to last 20 years. We expect to have less than 10% energy degradation over the course of that lifetime.
We expect the battery to last about at least 6,000 cycles from the work that we've done modeling degradation to this point. Like I said, it's a fully recyclable, long lifespan battery. We've proven that out with previous generations of the battery. We work with a number of recycling companies already. Basically similar recycling processes to how lead-acid batteries are recycled. I touched on this. This is, you know, if you think about grid-scale energy storage, the term that from an economic perspective that everyone focuses on is LCOS or levelized cost of storage. Really the advantage of the Eos product here is that the O&M costs are very low.
LCOS is generally made up of CapEx, operating expenditures, and then whatever you pay to buy the power to store in the batteries. We have an advantage in the OpEx here because the batteries have no calendar life degradation, and they're able to operate in extreme environments. You don't have to have active cooling like you have with lithium batteries. These batteries operate at a very wide temperature range, without active cooling, and they can also sit at, you know, low states of charge or zero volts for extended periods of time without degradation. That's what I mean by no calendar life degradation. The product is meant to be taken to sort of these remote locations that maybe have extreme environments.
It's capable of functioning there for very long periods of time with minimal operations and maintenance.
Ambient temperatures of -20 to +50 degrees Celsius, right, Francis?
Yeah. That's very different from lithium, where you generally have to control the whole system in a very tight temperature window. I'll kinda wrap up sort of the technical side of this here with just a high-level overview of kinda where we are from a deployment perspective. You can see the numbers there. I won't speak to those directly, but a lot of what we're doing with the current product this year is deploying systems in the field, and you can see the discharge energy for our systems in the field is sort of rapidly growing there. We expect that to continue to grow almost exponentially over the next six to 12 months as we install more capacity in the field. With that, I'll turn it back over to Randy.
Yeah. Thanks, Francis. So we just wanted to again demonstrate manufacturing capabilities. These are all pictures you see of our Turtle Creek, Pennsylvania, manufacturing facility. This is a U.S.-invented technology, produced in the U.S. with primarily domestic supply chain. You know, pre-COVID, that probably would not have been a compelling strategic advantage. But certainly now with, you know, everything that we've seen with COVID and disruptions and localization, et cetera, that, you know, we do consider it a strategic advantage. Top left picture there is a picture of our hundredth Energy Block being shipped on April thirtieth. Then, you know, there's other pictures of the Turtle Creek facility, you can see of the equipment. Top right is our welder room.
Those are infrared welders, which is how we assemble the polymer, so the outside of the battery itself. We've also hit a recent milestone with 20,000 batteries built. Then we do have a target of 90%+ manufacturing yield, which we have recently achieved. Frankly, as we continue to scale production, we see almost daily improvement in our manufacturing operations. When you think about just the scaling of a technology, scaling a new technology, we've done a lot of work around evaluating our learning rates and coming down our cost curve relative to other technologies in recent history, including lithium-ion, including hydrogen, including others.
We see learning rates significantly better in our product than in some of those other technologies. One of the big reasons why is because what Francis highlighted is the simplicity of, you know, the raw materials themselves. Wanted to demonstrate here what we're seeing just like everybody else is seeing is inflationary pressures in some of our, you know, core components. You can see on the left-hand side, battery material, Energy Block, and then freight of, you know, increases we've seen in cost. We are reducing costs of our product significantly with the scale that we're increasing production through design changes and through sourcing. Sourcing means, you know, as we scale, of course, we're gonna be able to get volume discounts, tiered pricing with our suppliers.
You know, we're also evaluating not only alternative suppliers for components that were previously sole sourced 'cause it was more of a prototype activity to alternative materials as well. You know, Francis will touch a little bit on that when we get to one of the last slides about next generation technology that we're working on now. At the same time, if you look in the middle section, you can see that on the green line in terms of capacity expansion, those numbers, including the 65 for Q1, represents MWh capacity addition. We are underway capacity expansion now, and as we expand, you know, we're adding assets, we're actually utilizing those assets through the capacity expansion.
We expect the ramp up, you know, as we progress through the year to get us the incremental capacity in megawatt hours. The 550 represents incremental to where we are now to get us to 800 MWh capacity for the full year, on an annualized basis by the end of the year. The left-hand graph, where it starts at 100%, is the indexed cost of our product itself. The 100% represents the beginning of the year. As you can see, you know, we're coming down the cost curve because of a lot of factors, but, you know, one of the big ones is, you know, we're scaling production, and that's really helped coming down the cost curve.
Lastly, on the right, this is just a demonstration that we have locked in material pricing and capacity from our suppliers. You can see the vast majority of our 2022 material requirements are under PO. You know, the team has done an excellent job, and we have a world-class operations supply chain team that Eos has been able to attract. That's on the heels of kind of the world-class R&D team that's been assembled. As you can see from you know from having Francis you know at the helm of in charge of R&D and at Eos for a long time. Okay. Wanted to just show everybody in terms of the commercial activity.
We do have a very robust commercial activity. We've seen the commercial activity accelerate in recent months, I would say over the last couple months especially, for a multitude of factors, including, you know, the recognition of the availability or the lack thereof of lithium-ion, as a storage solution, for many reasons, including, you know, some of the raw material components that go into lithium-ion batteries, as well as where those materials are coming from and geopolitical concerns, as well as just supply and demand. Most of the lithium-ion capacity and availability is going to mobility applications, not stationary storage applications.
Again, if you go back to the, you know, total addressable market and stationary storage, what we expect in by 2030 of about 275 GWh, of which the intraday piece of that is gonna be about 45%. You know, that growth from where we are today, 2021, we estimate to be about 17 GWh of storage capacity growing to 275. Most of that growth is coming from the interday and intraday. It's not coming from the shorter duration lithium-ion. You know, again, when we talk about the mix of storage, you know, this is not a like zero-sum game. The energy mix is gonna require multiple technologies.
Our customers realize that they're coming to us, and, you know, we continue to see that acceleration every single day. In terms of our active proposals, we have about $4.2 billion, so that represents about 17 GWh of capacity. Those are, you know, non-binding quotes. As you move to the right, this would be the funnel. We have about, you know, approaching half a billion dollars of LOIs and firm commitments. You know, as you go through the funnels, those LOIs turn into actual booked orders through a master supply agreement or purchase orders. That $67 million represents what we actually booked in the Q1 of 2022. This is just a pictorial of what our orders backlog looks like.
Currently, we're at about $212 million. That represents 28 projects with 15 customers. It's about 827 MWh of backlog. You know, $35 million of that $212 million is long-term service agreements, so it's the recurring revenue component, which typically goes into effect after our standard manufacturer warranty, which is, you know, between two and five years. Just wanted to quickly show, you know, the mix between front of the meter, behind the meter, the various use cases and project sizes. You can see the vast majority of what we're doing now is front of the meter. The use cases primarily is solar integration, so this is solar plus storage.
You can also see the gray piece, the 200 MWh is, you know, standalone, so it's locational capacity, to really help with congestion. Then 50 MWh is microgrid. Then lastly, on project size, you can see most of the projects now are, you know, getting to be kinda larger projects, greater than 50 MWh. We're talking really about, you know, grid scale, utility applications. Okay, I'll let Francis touch on this, in terms of product development.
Yeah. I think, as we move forward, you know, this is kind of our sort of next generation product that we've spent a lot of time working on in the past, I would say a year and a half. Ultimately, the goal with this product was we want to get to gigawatt hour manufacturing capacity, and we wanna get to that scale quickly. We kinda took that as our impetus and designed a manufacturing process and a few material substitutions within our battery module to make that happen. For reference here, just for this group, I think the module we're producing now in Pittsburgh is what you see on the bottom left there. That's what we're calling our Gen 2.3 module. It's about the size of a window unit air conditioner.
It weighs about 220 pounds. It's a rather large module. What we're moving towards with the next generation product will be about 50 pounds. It'll be about a quarter of that size, but have significantly higher energy density and lower cost with some material substitutions that we're working through. We're also moving towards a smaller enclosure design, which makes this even more modular. What we ship right now is a 20-foot shipping container. What we're moving towards with the next generation product is a non-ISO enclosure that will allow us to actually have a higher footprint density for this product compared to the current product. That's what you see there in terms of 2.5x the power density for this new product compared to the old one.
We're cycling this product in the lab right now. We're continuing with our testing. We're doing overcharge testing, checking all of the boxes along this path. You know, as we continue to announce further learnings on this product, we'll keep everyone in the loop.
All right. With that, do we have any questions? Might have time for one. Maybe one.
Your plan from once you get to 857 to do about $250 million in revenue, is that about right?
The 800 MWh of capacity, yeah, should support, you know, I would say about $150 million-$200 million annualized revenue. It depends on what the price of the product is, which, you know, by the way, we've seen a significant increase in quotes and prices in general based on what's going on in the market.
What kinda gross margins on batteries when you get down that cost curve to where you?
We are projecting to be gross margin positive in about 18 months with the launch of the new product.
How much debt do you have now?
We have one convertible note currently, little more than $100 million.
All right. Well, we'll call that time. Thanks, gentlemen, for joining us.
Thank you.