Sabitlenmiş Tweet
$EOSE 🧵
Was at a bach party this wknd and coincidentally sat next to someone very interesting in the casino… friend on the trip who worked for a PE firm specializing in financing renewable energy projects…. (with connects to Eos gen2.3)
I know lots of folks are upset with the q4 miss and relative quiet on the order front but let me bring up a few things nobody ever talks about.
Before a single Eos batt gets installed.. the developer buying it has to close project financing. This means getting a senior lender, a tax equity investor, and an offtake agreement all lined up simultaneously.
Every party does their own DD and anyone can kill the deal.
Here's who has a say before a project closes: Senior lender sizes the loan to contracted cash flows, tax equity investor claiming the federal tax credit, independent engineers certifying the tech works, offtaker signs l/term capacity agreement, insurer provider wraps project.
Everyone has to be comfortable. Independently.
The federal tax piece alone is huge.. under the IRA BESS projects can qualify for the 30-40% ITC depending on location + domestic content
On a $60M project..thats about $24M claimed in year1. The feds are funding nearly half a project on day1. That’s why it gets built.
The operational cash flows alone don’t justify it. The tax benefits are the engine.
Here's the catch..a tax equity investor will only participate if it’s certified by an independent Engineer.. engineers review field performance, OEMs balance sheet, warranty terms, chemistry etc… then sign off.
That’s the price of admission.. without it.. you wont close.
This is why the “eos tech doesn’t work” has a logical problem.
Mn8 energy is GS backed. The supply agreement is for 750mwh. They have institutional LPs, their own lenders, and a rigoruous DD process… goldman backed firms do not stake their reputation +capital on tech they think has no chance to be bankable.
Same with talen.. a $17B IPP. They would not put their CEO name in a PR for tech they don’t believe in IMO.
Talens play is pairing eos w existing generation in PA to serve AI DC. They have the land, the interconnection, and the hyperscaler relationships.
Doesn’t sound like a favor… it’s a calculated infra bet.
And then you have frontier power. UK developer that submitted Eos tech to OFGEM.. the UK regulator in a competitive bid for the cap n floor program. 11Gwh of projects to round two using Eos tech.
Under the program.. ofgem provides a rev floor..essentially the govt backstops the cash flow the lender will underwrite against
The 228mwh firm order isn’t just a sale. It makes eos look much more viable since it’s being considered within regulated lender-backed frameworks …
NYSERDA plays a similar role domestically.. when NYSERDA selects its tech thru competitive solicitation.. it backstops revs that senior lenders will underwrite against…
A govt backed offtake is the cleanest credit in project finance… that is in our pipeline.. 🔑
So why is conversion so slow?
Maybe bc the chain I just described – lender approval, tax equity, independent engineer certification, offtake, insurance can take 12-24 months from contract signing to commercial operation .. then layer in first of a kind BESS chemistry that has never been financed or deployed at scale… 🤔
These counterparties engaging tells me the tech has cleared initial DD hurdles, but scaling risk remains
Nobody signs a 750mwh as a favor.
Cerbs involvement likely improves access to financing counterparties.. but execution risk still exists. But adding a 3rd BOD member isnt a move you make from a company you are about to walk away from.
Talented finance execs tend to do DD before joining as well.
The risks are real. Mfg execution, runway, order conversion- not dismissing any of it. But the project finance complexities are under appreicated. Just trying to close that gap.
English
