ESS, battery company backed by Bill Gates, SoftBank, opens on NYSE

ESS is trying to solve a critical problem with renewable energy: How to store energy from wind and solar installations when the wind isn’t blowing and the sun isn’t shining.

The company’s proposed solution is long-duration energy-storage batteries made of iron, salt and water, which are much cheaper and more readily available than the elements used in batteries today, such as lithium and cobalt.

ESS’ early momentum attracted $57 million in investments from powerful backers including Bill Gates and Softbank, CEO Eric Dresselhuys told CNBC.

Now it goes public via SPAC to begin trading Monday on the New York Stock Exchange under the ticker symbol GWH. It hopes to raise $308 million through the deal.

“There have been very few solutions for this long duration up until now, and it’s largely driven from the fact that we didn’t rely on energy storage as a major solution for hardening the system,” said Dresselhuys, who became the CEO of ESS this year after decades of energy and technology executive experience.

The company launched in 2011 in the Portland, Oregon, garage of co-founders Craig Evans and Julia Song, who are a married couple as well as business partners. It moved to the Portland State Business Accelerator before expanding to its current 200,000-square-foot headquarters.

The company is backed by Breakthrough Energy Ventures, Gates’ clean energy investment firm; SB Energy, a wholly owned subsidiary of SoftBank; and multinational chemical company BASF, among other investors. The SPAC comes through a reverse merger with ACON S2 Acquisition Corp., run out of private equity firm Acon Investments.

ESS has not recorded any revenue yet, according to financial filings dated Sept. 8. However, Dresselhuys said it has shipped product to customers, including TerraSol Energies in Pennsylvania and Siemens-Gamesa in Denmark; investor documents also claim several other unnamed utilities as customers. ESS has orders in the pipeline from SB Energy and Enel Green Power Espana.

The company lost $245.3 million in the first six months of 2021, but operating losses were only $18.4 million; the remainder was due to losses on reevaluations of warrant and derivative liabilities. Operating losses were $17.4 million for 2021, and the company expects to record its first profit in 2023.

The big breakthrough for ESS is a long-duration iron flow battery built from readily available materials, said Carmichael Roberts, a co-chair of the investment committee at Breakthrough Energy Ventures.

In a battery, the electrolyte is the chemical medium that connects the two ends of a battery, the anode and the cathode. In ESS’ batteries, the electrolyte is made of iron, salt and water.

“The flow battery is cheaper, safer and has better operational life than conventional lithium-ion storage,” Roberts said.

Making a battery out of iron, salt and water means “there’s no toxicity, the technology we build…