Adam Levey 🔋

@xEBITDA 100% on the financing. It's extra difficult for batteries as they are long volatility but not the underlying commodity. Cashflows vary a TON year by year for developers/owners. I've been working on this problem for some time. A turnkey solution for developers means a lot.

Trigger warning: Long post after digesting the ER. I think the market is still misunderstanding what the $EOSE/Cerberus JV actually represents. Most people are analyzing this like a normal strategic investment where Cerberus simply decided to back Eos. That’s not really the important part. The important part is that this may be one of the first serious attempts to solve the actual bottleneck in long-duration energy storage: project bankability. The issue with LDES was never simply demand. Everyone already understands the need for dispatchable power, AI/datacenter load balancing, grid resiliency and renewable integration. The real problem was always financing, insurance, guarantees, underwriting and project structuring. Utilities and hyperscalers do not want to coordinate a battery vendor, an insurer, a project finance group, EPC contractors, asset managers, software operators, and energy market specialists for every deployment. They want turnkey infrastructure with predictable economics and credible counterparties standing behind it. That is what Frontier Power USA appears designed to become. The JV effectively creates a vertically integrated deployment and financing platform around energy storage projects. Cerberus brings institutional capital, infrastructure expertise and project structuring capabilities. Ariel Green brings long-duration performance insurance and underwriting capacity. Eos supplies the initial underlying technology stack and manufacturing platform. Together, that creates something much more important than simply “a battery company.” It creates a framework where a datacenter operator or utility can potentially make one phone call and receive: the batteries, financing, insurance, guarantees, project management, operational support, and assistance monetizing various energy market revenue streams. That dramatically lowers procurement friction. The most important piece here may actually be the insurance and financing framework itself as both @AdamLevey7 and @JigarShahDC can probably attest to. Battery projects are difficult to finance because lenders fear technology underperformance and uncertain long-duration cash flows. Most lenders are not battery experts. They care about whether the project performs as promised and whether revenue streams are reliable enough to support institutional debt financing. By wrapping projects with standardized underwriting structures, long-duration insurance coverage and institutional financing frameworks, Frontier potentially lowers one of the biggest barriers preventing large-scale LDES deployment. Infrastructure markets run on trust and underwriting confidence far more than chemistry debates. And this is where I think many investors are still missing the bigger picture. $EOSE does not necessarily need to “win the battery wars” in a winner-take-all outcome to become extremely successful. The LDES market itself may become enormous because the underlying demand drivers are structural: - AI power demand, - renewable intermittency, - transmission constraints, - resiliency requirements, - electrification, - and grid modernization. It is naive to think $EOSE or any other company will be "the one". Multiple technologies will likely coexist. What matters is whether $EOSE secures a durable position inside the financing and deployment ecosystem as the industry scales. The Cerberus JV potentially helps accomplish exactly that. Before this deal, $EOSE was mostly viewed as: “a speculative battery manufacturer.” After this deal, $EOSE starts looking more like “a foundational participant inside an emerging infrastructure financing platform.” That distinction matters enormously. Battery hardware alone eventually commoditizes. Margins compress over time. But financing ecosystems, underwriting frameworks, institutional relationships, recurring project cash flows and deployment platforms create real moats.And ironically, one of the most interesting aspects of this structure is that Frontier itself may eventually become bigger than just $EOSE technology. As a reference, look at GE Finance, Siemens Finance, or any of the Automotive Fincos. These are enormous businesses by themselves. Today, the platform is clearly centered around $EOSE. Frontier secured a 2 GWh reservation agreement tied to $EOSE manufacturing. Cerberus committed $100M of equity capital into Frontier. $EOSE plans to contribute approximately $150M via the rights offering. The Ariel Green insurance structure is specifically designed around $EOSE technology today. But over time, if Frontier successfully institutionalizes the financing side of storage deployment, the platform itself could theoretically finance and deploy multiple technologies across the broader industry. That possibility actually reinforces the thesis. Because it suggests the real moat may not ultimately be: “our battery chemistry is slightly better.” The real moat may be: “we can actually get projects financed, insured, approved and deployed at scale.” Disclaimer: Long $EOSE

@x_times_1 Generally in agreement but this is the worst case to make the point... If the government should be regulating any businesses for safety it should be the "this poison that's fun to drink in VERY small amounts but will kill you in also relatively small amounts" business around kids

The government hates entrepreneurs 🤣

@xiaowang1984 @ISOTraderGeorge 💯

@AdamLevey7 @ISOTraderGeorge Yah just saying the price better capture all the key aspects in the system in this case.

I have no idea why some people keep repeating "batteries will eat gas" as if the battery owners were all on one team that share revenue as opposed to independent investments all trying to max their own returns. In this context batteries are MUCH more able to eat their own returns before they start cutting into gas. And outside of California there probably isn't an unlimited appetite to keep subsidizing the "free" fuel for them to charge from.

@xiaowang1984 @ISOTraderGeorge In other words 1) High forwards are pricing in an event 2) I forward sell volatility insurance priced at those high level 3) I use that to monetize my asset (and build more 4) My assets being there is what prevents the vol event from happening

@xiaowang1984 @ISOTraderGeorge Understandable. If you want BESS and the flexibility it provides during such events, it needs to be able to extract the value from the events that don't necessarily materialize but could have.

@ISOTraderGeorge @xiaowang1984 Exactly why they need to be thought of as a portfolio asset and properly securitized. We've transacted on volatility swaps to help LSE protect against swing. Lots of interesting ways to use BESS to manage DART book. Sometime more value in risk reduction than in the cash flows.

@AdamLevey7 @xiaowang1984 2023 was the most stressful summer since 2011. I'm not sure most battery companies can ride out a stretch of mediocre returns until 2030 or beyond if there's a string of quiet summers. And longer term premiums further out won't last forever if that's the case.

@xiaowang1984 Cure for high prices is high prices and the cure for low prices is low prices

@AdamLevey7 I guess we're seeing with the gas turbines and wells that they learn from losing too much money the first time if it happens within a generation tho lol

@xiaowang1984 This is true for all assets

@AdamLevey7 Yah for sure I wasnt implying that every battery investor would lose money. But there is a finite pool of money to be had that's all. Load increasing will certainly help. But I wonder if there is a trend towards too much investment in the boom times

@xiaowang1984 @clawrence AS saturation is not the same as reduced energy vol bc it's was less hot in 24/25 than in 2023

@clawrence Are they collectively sharing revenue to make up for the losses that plenty of them suffer? Just a thought that the 2hr battery might be better at stealing revenue from the other 2hr and lower batteries than from the gas plants that don't have limits x.com/i/status/20535…

@ISOTraderGeorge @xiaowang1984 @SparkplugPower @clawrence @mattyglesias Some of this is more true than other parts. True for AS but lack of energy vol is more weather/cyclical. Some of us have been forward hedging and extract value from the term. Very excited to snatch up cheap some assets from those who thought 2023 would be forever and never hedged

Batteries have been tremendously successful in accelerating the race to zero on revenue...which also makes for a horrible business model. A significant number of batteries are going to make more money for their 2nd owners when they're sold for pennies on the dollar after some companies get liquidated in the next 3-5 years.

I found this very convincing, I don’t understand the level of interest in the confusing VPP idea when time of day pricing is sitting right there as a more straightforward solution that doesn’t require inventing a new kind of middleman.

@fancy_1982 @JordanSolace Ya I meant revenue

@AdamLevey7 @JordanSolace How do you get to that number? I think Ebitda for them is probably closer to $3B maybe even less Is yours a revenue number?

$EOSE When you think about secular tailwinds you need to anchor to structural forces driving growth for the battery sector (&eos). Some examples such as: - Electrification/grid stress -renewables + storage - longer duration use cases - US Mfg, IRA credits, non flammable & stable - data center buildout Structural growth ^ my point.. and to Lucas's post- the probability the sector is catching a bid relative idiosyncratic eos outperformance is higher than i wouldve guessed a week or two ago. Its more likely than not this sector will continue to run hot into yr end. The EOS-specific announcements we have yet to hear (whether it be orders, operational milestones, meeting revs, f2 etc..) will only add fuel to a fire that has started to burn post q2 folks who meaningfully trim are taking chips of the sector that is catching eyes.. they arent selling eos specific outperformance relative to its peer group. relative to the mkt yes.. but not peers as long as macro can hold and there are no negative eos surprises i think eos goes much higher. they go much higher based off company specific news + meeting guidance if they are able to do that. patience is 🔑 so is executing ... cerb wanted to lock up for another year.. i think we will eventually find out why 😁

@srvc76 The updated design should be none. Energy only markets + liquid forward markets works fine

“Ai demand forces redesign 🤖 … unsustainable stress” - PJM CEO Ceiling is here. #BYOP 🔋

Literally doing this drive today

@NiyerEnergy This list is already the right answer - Not ELCC

Ok favorite modeling problem? - Capacity expansion - Dynamic/ steady state - PCM - ACOPF - Power flow

If you're think "whole system is game theory with BESS marginal and I want in on the SoC management game" apply for my open quant role: apply.workable.com/habitat-energy…

@decent_shittalk wait until they find out about golf courses

If you think data centers are using all the water wait till you find out about farms

@lrntex @fredstaffordcs Hoping beyond hope he means retail choice like ERCOT. He most likely doesn't.

If what Steyer means by "break up" (it's extremely unclear) is "make publicly owned," keep in mind POUs are able to charge much lower rates bc their territories do not, unlike IOUs, encompass high threat fire districts. Making PG&E public will not solve the wildfire liability problem!

@SpearfishingCap @bert_gilfoyle Goldman is underwriting the toll? Who's the offtake?

@AdamLevey7 @bert_gilfoyle Goldman Sachs (tolling agreements) and Nomura/Zions Bank (senior debt) are part of their cap table, along with Cox ($200m / large energy partner) and Eos' financing partner ($25m-$100m / Cerberus).

$EOSE Sounds like Cerberus (and/or other financing partners) will help finance multiple projects for Bimergen.

@RobinMillican These numbers are meaningless without normalizing for temperature. Abundance is fucking awesome but without doing the work, one hot summer upends this data and threatens the narrative. We are right on abundance but should be careful to not leave opportunity for others to grift

Having an abundance orientation works