Invinity Energy Systems plc (LON:IES), a leading manufacturer of vanadium flow batteries (VFBs), continues to make significant strides in the renewable energy sector. According to a recent research report by Canaccord Genuity Ltd, analyst Alex Brooks highlights the company’s robust performance in 2023 and its promising outlook for the coming years. Invinity’s financial health, innovative technology, and strategic market expansions are central to its growth trajectory.
Strong Financial Performance and Positive Cash Flow
Invinity’s fiscal year 2023 results align with Canaccord Genuity’s forecasts, reflecting a strong working capital performance and a positive cash position. As of the end of May 2024, the company reported cash reserves of £53 million, surpassing expectations by at least £3 million. This improved cash flow underscores Invinity’s efficient capital management, contributing to a more optimistic financial outlook.
Alex Brooks notes, “We are making a number of minor amendments, chiefly reflecting a more positive cash position for the group after strong working capital performance in FY23 and 1H24E.” He further emphasises the company’s substantial revenue growth prospects for 2024 and 2025, with expectations for 2024 to be the first year of positive gross margins due to higher volumes.
Technological Advancements and Market Expansion
Invinity’s vanadium flow batteries offer a durable and cost-effective solution for long-duration energy storage, essential for integrating renewable energy sources into the grid. The technology’s ability to endure over 40,000 charge/discharge cycles with minimal degradation positions it as a viable alternative to lithium-ion batteries, especially for utility-grade storage.
The company’s strategic expansions in the UK and North America highlight its growing market presence. In the UK, Invinity’s low-capital intensity model is exemplified by the expansion of capacity to 500 MWh at the Motherwell and Bathgate sites. Automation at Bathgate is expected to further reduce costs. Significant announcements regarding the 30 MWh UK LODES project are anticipated, potentially driving major revenue streams over the next six to nine months.
In North America, Invinity’s largest revenue market in 2023, key projects such as Chappice Lake in Canada and the Viejas microgrid project underscore its market leadership. The company is awaiting confirmed funding for 84 MWh of demand across six major projects awarded in September 2023, including a 12 MWh project at the Pacific Northwest National Laboratory (PNNL).
Analyst Insights and Future Outlook
Brooks remains optimistic about Invinity’s future, retaining a BUY rating with an unchanged target price of 65p. He asserts, “We continue to expect substantial revenue growth this year and going into 2025, and note that we expect 2024 to be the first year of positive gross margin for the group, on the higher volume.”
The report underscores the importance of long-duration storage solutions globally, driven by decreasing costs of solar PV and wind energy. Invinity’s VFB technology is well-positioned to capitalise on this trend, offering reliable and cost-efficient energy storage.
Final Thoughts
Invinity Energy Systems plc is poised for significant growth, driven by its innovative vanadium flow battery technology, strategic market expansions, and strong financial management. Analyst Alex Brooks’ positive outlook reflects confidence in the company’s ability to achieve substantial revenue and profitability in the coming years. As the world continues to transition towards renewable energy, Invinity’s role as a key player in the energy storage market becomes increasingly vital.
