nrgv-20251231
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-K
___________________________________
(Mark One)
For the fiscal year ended December 31, 2025
OR
For the transition period from _________ to _________
Commission file number 001-39982
___________________________________
ENERGY VAULT HOLDINGS, INC.
___________________________________
(Exact name of registrant as specified in its charter)
4165 East Thousand Oaks Blvd., Suite 100 Westlake Village, California 91362
(Address of Principal Executive Offices) (Zip Code)
(805) 852-0000
Registrant’s telephone number, including area code
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share NRGV New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o Nox
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o Nox
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yesx No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ̈ Accelerated filer ̈
Non-accelerated filer x Smaller reporting company x
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment on the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x
The aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2025, based on the closing price of $0.72 for shares of the Registrant’s Class A common stock as reported by the New York Stock Exchange, was approximately $67.6 million. Shares of common stock beneficially owned by each executive officer, director, and holder of more than 5% of our common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The registrant had 172,975,047 shares of common stock, par value $0.0001 per share, outstanding as of March 13, 2026.
Table of Contents
TABLE OF CONTENTS
Page
Cautionary Note Regarding Forward-Looking Statements 3
Part I
Item 1. Business 5
Item 1A. Risk Factors 15
Item 1B. Unresolved Staff Comments 46
Item 1C. Cybersecurity 47
Item 2. Properties 48
Item 3. Legal Proceedings 48
Item 4. Mine Safety Disclosures 48
Part II
Item 6. [Reserved] 49
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 70
Item 8. Financial Statements and Supplementary Data 72
Item 9A. Controls and Procedures 124
Item 9B. Other Information 125
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 125
Part III
Item 10. Directors, Executive Officers and Corporate Governance 126
Item 11. Executive Compensation 126
Item 14. Principal Accounting Fees and Services 126
Part IV
Item 15. Exhibits and Financial Statement Schedules 127
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
•changes in our strategy, expansion plans, customer opportunities, future operations, future financial position, estimated revenues and losses, projected costs, prospects and plans;
•the implementation, market acceptance and success of our business model and growth strategy;
•our ability to develop and maintain our brand and reputation;
•developments and projections relating to our business, our competitors, and industry;
•the impact of macroeconomic uncertainty, including with respect to uncertainty about the future relationship between the United States and other countries with respect to trade policies and tariffs;
•changes in tax laws and government regulations and the impact of those changes on us, including as a result of the One Big Beautiful Bill Act and its changes to the Internal Revenue Code of 1986, as amended and the clean-energy tax credits established under the Inflation Reduction Act of 2022;
•investment in development projects that may not achieve commercial operations in our predicted timeframe or at all;
•our efforts to diversify our supply chain to lessen the impact of tariffs;
•our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;
•expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012;
•our future capital requirements and sources and uses of cash;
•the international nature of our operations and the impact of war or other hostilities on our business and global markets;
•our ability to obtain funding for our operations and future growth; and
•our business, expansion plans and opportunities, including our expansion into owned and operated projects.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Additionally, our discussions of environmental, social, and governance (“ESG”) assessments, goals and relevant issues herein or in other locations, including our corporate website, are informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. References to “materiality” in the context of such discussions and any related assessment of ESG “materiality” may differ from the definition of “materiality” under the federal securities laws for SEC reporting purposes. Furthermore, much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. For example, we note that standards and expectations regarding greenhouse gas (“GHG”) accounting and the process for measuring and counting GHG emissions and GHG emissions reductions are evolving, and it is possible that our approaches both to measuring our emissions and any reductions may be at some point, either currently
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or in the future, considered not in keeping with best practices. In addition, our disclosures based on any standards may change due to revisions in framework requirements, availability or quality of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report on Form 10-K. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
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PART I
ITEM 1. BUSINESS
Organization
Energy Vault Holdings, Inc. (together with its subsidiaries, “Energy Vault” or the “Company”) is a Delaware corporation. On February 11, 2022, we completed a business combination with Energy Vault, Inc. (the “Merger”) and, in connection with the closing, changed our name from Novus Capital Corporation II to Energy Vault Holdings, Inc.
Mission
Our mission is to build, own, and energize the world’s critical energy infrastructure.
About Us
Energy Vault delivers a diversified portfolio of energy storage solutions to third parties, including proprietary gravity, battery, and green hydrogen-based technologies, supported by our technology-agnostic energy management software and integration capabilities. Beginning in 2024, we initiated a multi-year transition from primarily delivering projects through build-and-transfer arrangements and licensing models toward a more integrated model that includes selectively developing, owning, and operating energy storage assets, while continuing to provide technology, integration, software, and long-term services to customers. We believe this strategy is supported by our experience across multiple storage technologies, system integration and controls capabilities, and established global presence, as well as access to project-level capital through our Asset Vault platform.
Through this integrated model, we offer utilities, independent power producers, and large energy users solutions that may include standalone energy storage, integrated generation and storage configurations, and related power infrastructure. We manage projects across the lifecycle, from sourcing and development through permitting and interconnection, engineering and construction management, commissioning, and operations, and we provide software enabled monitoring, controls, and services intended to support asset availability, operational efficiency, and lifecycle performance.
Build, Own, and Operate Projects
In 2025, we advanced our “Own & Operate” strategy by placing our first two owned energy storage systems into commercial operation. Through our Asset Vault platform, launched in 2025 with a $300 million preferred equity commitment from Orion Infrastructure Capital and affiliated funds (collectively “OIC”), we are pursuing a targeted deployment of approximately 1.5 GW of energy storage capacity across the U.S., Australia, and Europe.
In May 2025, our Cross Trails Battery Energy Storage System (“Cross Trails”) in Snyder, Texas achieved commercial operation, marking the first asset placed in service under our Own & Operate strategy. The 57 MW / 114 MWh two-hour battery energy storage system (“BESS”) is supported by a 10-year offtake agreement with Gridmatic, an AI-enabled power marketer. The offtake agreement is the first physically settled revenue floor contract to be signed for a BESS in the Electric Reliability Council of Texas (“ERCOT”) region. Cross Trails serves as the first deployment of our second-generation B-VAULT AC product and is operated using our VaultOS Energy Management System.
The Calistoga Resiliency Center (“CRC”) is a hybrid microgrid energy storage facility located in Calistoga, California that integrates hydrogen fuel cells with lithium-ion batteries. We designed the CRC in cooperation with the City of Calistoga and Pacific Gas & Electric (“PG&E”) to provide reliable power with zero on-site emissions during public safety power shutoff (“PSPS”) events caused by elevated wildfire risks. CRC achieved commercial operation in September 2025 and is operated by the Company under a long-term energy services arrangement with PG&E as the utility partner and distribution system operator. The facility provides 8.5 MW of power at peak capacity with approximately 48 hours of duration, with water as the byproduct at the point of use. In July 2025, CRC received California Public Utilities Commission approval to pursue market-based participation in the California Independent System Operator (CAISO) energy and ancillary services markets, which is expected to provide additional revenue when the facility is not operating in island mode for resiliency events.
In Australia, we acquired the Stoney Creek Battery Energy Storage System (“Stoney Creek”) from Enervest Group. The acquisition was announced in March 2025 and completed in August 2025 following approval from the Australian Foreign Investment Review Board. Stoney Creek is a 125 MW / 1.0 GWh (8-hour) BESS project to be located in New South Wales (“NSW”), Australia, and is being developed under the framework of the NSW Electricity Infrastructure Roadmap, supported by a 14-year long-term energy service agreement with Australian Energy Market Operator (“AEMO”) Services.
In October 2025, we acquired SOSA Energy Center (“SOSA”), a 150 MW / 300 MWh BESS project to be located in Madison County, Texas (ERCOT North), representing the first project formally acquired under our Asset Vault platform.
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Originally developed by Savion, a subsidiary of Shell plc, construction began in the fourth quarter of 2025 and commercial operation is expected in the second quarter of 2027.
In February 2026, we and our Australian development partner, Bridge Energy Pty Ltd, were awarded a 14-year Long-Term Energy Service Agreement by AusEnergy Services for the Ebor Battery Energy Storage System project in New South Wales, Australia. The 100 MW / 870 MWh project is expected to provide eight hours of dispatchable capacity and is expected to commence operations in 2028, subject to obtaining necessary contractual and regulatory approvals. We hold an exclusive option to acquire and construct the project, which will utilize our proprietary B-VAULT technology and EMS, and will be owned and operated under our Asset Vault platform.
We are actively discussing projects with public sector and private developers in many markets to continue to expand our owned project portfolio, including those in the U.S., Australia, and Europe.
Asset Vault Platform
In 2025, we launched Asset Vault, a majority-owned subsidiary dedicated to developing, building, owning, financing, and operating energy storage system projects. In support of this strategy, we entered into a preferred equity investment arrangement with OIC, providing a $300 million capital framework to fund the acquisition and development of a portfolio of energy storage assets. Asset Vault supports a vertically integrated model in which the Company can self-perform engineering, procurement, and construction activities (“EPC”) and provide long-term service arrangements, while also owning and operating assets to generate recurring cash flows, subject to project financing, permitting, interconnection, offtake execution, and other factors.
AI Compute Infrastructure and Modular Data Centers
We are evaluating opportunities to develop, build, own, and operate modular “powered shell” data center infrastructure designed to support high density compute workloads, including artificial intelligence applications. These modular data centers are intended to be deployed in standardized, scalable configurations and may be delivered as powered facilities with customer supplied compute equipment. We intend to commercialize these projects through long term contracted arrangements, which may include power purchase agreements or tolling style structures with data center operators and other compute focused customers. This initiative represents our entry into the AI infrastructure market and is expected to complement our Asset Vault platform through long term, contracted powered shell deployments.
We expect these projects to leverage our integration capabilities and digital operating platform and our energy storage hardware and software platforms and, where appropriate, to be paired with energy storage and other generation and resiliency configurations.
In connection with this initiative, we have entered into a strategic framework agreement with Crusoe to pursue modular data center projects, which we expect to enable phased deployments beginning in 2026. Under the framework, we expect to support the phased deployment of Crusoe Spark modular AI factory units at our technology center in Snyder, Texas. The initial program is scalable up to 25 MW of total load and is intended to support Crusoe Cloud customer demand, including managed inference services. We currently expect the initial deployment to be located at our Snyder, Texas site near Crusoe’s Abilene, Texas data center campus, although the timing and scope of any deployment will depend on final site design, customer contracting, interconnection and permitting, equipment availability, and project financing.
Our Energy Storage Solutions
We sell and license our energy storage solutions to third parties, in addition to selectively owning and operating energy storage systems that incorporate our energy storage equipment and software. Our diversified portfolio of energy storage solutions is designed to enhance grid stability and efficiency.
Once energy is stored in our solutions, it can be discharged to the grid in a controlled and reliable manner when needed. Our energy storage solutions are designed to accommodate a wide variety of power sources and support multiple use cases, including renewable integration, peak capacity support, ancillary services, and resiliency applications.
Our solutions include:
•B-VAULT: Our electrochemical BESS solution designed to meet short-duration energy storage needs, typically in the range of one to four hours, including both AC and DC-coupled configurations. B-VAULT is designed to utilize purpose-built battery and inverter systems with an architecture intended to lower costs, improve performance, and promote project safety, and is offered as a suite of fully integrated battery energy storage equipment designed for reliability, flexibility, and availability. In addition, in December 2025 we launched B-VAULT FlexGrid, a configuration designed for industrial, commercial, and small-utility applications in the 2–25 MW range.
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•G-VAULT:Our proprietary gravity energy storage system (“GESS”) solutions are designed to address longer-duration energy storage needs and are generally intended to support multi-hour shifting applications. G-VAULT is a family of gravity energy storage products that use a mechanical process of lifting and lowering composite blocks or water to store and dispatch electrical energy and is designed as a long-life infrastructure asset. We have commercialized certain gravity energy storage technology and associated material science primarily through licensing arrangements and continue to evaluate partnership models for co-development and technology deployment. During 2025, the Company completed a commercial demonstration unit in Snyder, Texas, which is being used to showcase and demonstrate the Company’s gravity storage products to potential customers (the “Snyder CDU”). Also during 2025, the Company formed a joint venture with Skidmore, Owings & Merrill, an architecture and engineering firm, to design, research, develop, and commercialize gravity energy storage system technology for use in high-rise building towers.
•H-VAULT: Our hydrogen or hybrid energy storage system (“HESS”) solutions, including systems that integrate hydrogen fuel cells with battery storage, are designed to meet customer-specific resiliency and duration requirements. H-VAULT combines fast-response battery functionality with longer-duration capabilities enabled by hydrogen-fuel-cell configurations. For example, the CRC is a hybrid system integrating battery storage with hydrogen fuel cells designed to provide multi-day resiliency support during Public Safety Power Shutoff events.
•Software Solutions: Our proprietary, technology-agnostic software solutions are designed to monitor, control, and optimize energy storage and generation assets across multiple use cases. Our software solutions include:
◦VaultOS Energy Management System (“EMS”): EMS provides real-time monitoring, operational control, and optimized dispatch across an array of generation and short to ultra-long duration energy storage assets.
◦Vault-Bidder: Vault-Bidder uses artificial intelligence to leverage diverse, live data from directly monitored assets and external drivers to provide dispatch and revenue optimization. Vault-Bidder utilizes price forecasts to generate optimal bids for participating markets and can serve a diversity of use cases, including (but not limited to): island grids, stand-alone storage, and hybrid power plants.
◦Vault-Manager: Vault-Manager converts diverse, real-time data into clear asset performance visibility and insights, facilitating improved decision-making regarding maintenance, augmentation, and expansion. Advanced battery asset management capabilities offer comprehensive visibility into performance, reliability, maintenance, financial, and environmental key performance indicators at the portfolio, site, and asset levels.
Industry Overview
The utility scale energy storage industry continues to expand, driven by accelerating electricity demand, the ongoing global transition toward renewable generation, and heightened focus on grid reliability and resilience. In the United States, recent federal and reliability sector publications emphasize that load growth expectations have increased, with data centers and artificial intelligence workloads, electrification, and new large industrial and manufacturing facilities among the most cited drivers of incremental demand.
In parallel, the build out of renewable resources continues to increase the need for flexible capacity. Because wind and solar output can be intermittent and location dependent, grid-scale energy storage is increasingly deployed to balance supply and demand, support transmission constrained regions, provide ancillary services, and improve system resiliency. These dynamics are reflected in reporting by the U.S. Energy Information Administration on planned U.S. utility-scale capacity additions, which in recent years have largely been driven by solar photovoltaic and battery storage.
Software and controls remain increasingly important as storage penetration grows and market participation becomes more complex. As renewable generation and energy storage portfolios expand, owners and operators continue to seek software solutions that support dispatch decisions and enable optimization, enhance asset performance, and support participation across evolving wholesale market products and operational requirements.
Our ability to expand revenue depends on continued adoption of energy storage solutions and our ability to source, execute, and operate energy storage projects with attractive economics. Market growth continues to be supported by improving energy storage economics, including declining technology costs and continued standardization for battery storage technologies, and increased energy demand driven by data centers and the need for grid stabilization.
Government policies, regulations, and financial incentives also remain important drivers of energy storage deployment. In the United States, the Inflation Reduction Act of 2022 (“IRA”) related energy tax incentives continue to support investment in energy storage, including incentives applicable to standalone storage and potential bonus credits, including domestic content, for qualifying projects. To the extent that government incentives are reduced, eliminated, or permitted to expire,
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including as a result of the One Big Beautiful Bill Act (“OBBBA”) and its changes to the Internal Revenue Code of 1986, as amended (the “Code”) and the clean energy credits established under the IRA, or if eligibility requirements become more restrictive, customer demand and project economics could be adversely affected, including as a result of changes in governmental policy priorities.
These changes include, among others, permanently restoring an EBITDA-based business interest deduction limitation, permanently restoring 100% bonus depreciation for certain property, permanently restoring immediate expensing for certain domestic research and experimental expenditures, and changes with respect to incentives. The OBBBA also implemented new foreign entity of concern (“FEOC”)/prohibited foreign entity (“PFE”) restrictions that apply to all technology-neutral credits (Section 45Y and Section 48E of the Code) (the “Technology Neutral Credits”), the advanced manufacturing credit (Section 45X of the Code), and other related incentives. Such FEOC/PFE rules deny the availability of Tech Neutral Credits by, inter alia, imposing restrictions on ownership, debt, and effective control (including through the grant of rights through various agreements or licensing rights that are otherwise retained by such entities) in respect of certain PFEs, including, but not limited to, Chinese entities. Under these rules, project owners or component suppliers with disqualifying foreign-entity ties must satisfy new sourcing, ownership, and debt tests or potentially forfeit credit eligibility. Preliminary interim guidance has been released by the U.S. Department of Treasury and IRS that further clarified methods for calculating material assistance cost ratios and provided a safe harbor for purposes of determining a taxpayer’s material assistance from a “prohibited foreign entity.” The U.S. Department of Treasury and the IRS have indicated that more comprehensive guidance relating to these limitations is forthcoming which will be relevant to our business and operations.Legacy IRA credits under Sections 45 and 48 of the Code for projects with construction commenced by December 31, 2024, remain fully grandfathered and unaffected by the FEOC/PFE regime. It is possible that our stock ownership could change in the future such that we become a PFE. Final eligibility and compliance will depend on forthcoming U.S. Department of Treasury, IRS, and FERC (as defined below) guidance on domestic-content metrics, PFE ownership testing rules, PFE material-assistance certifications, and storage-specific interconnection standards. We continue to monitor these developments. Some of these changes could dampen demand for battery energy storage systems in the U.S., while other changes preserve robust support for standalone battery storage.
We believe we are well positioned to capitalize on these industry trends through our competitive pricing and scalability, the attributes of our energy storage solutions that span short duration and longer duration use cases, and our integrated capabilities across development, system design and integration, software, and long-term operations and maintenance, including under our Own & Operate strategy. Our strategy is intended to enable us to apply our technology and operating capabilities across both owned assets and customer projects, while continuing to utilize third party suppliers and other partners where appropriate. The OBBBA, which was enacted on July 4, 2025, contains a broad range of changes to U.S. federal income tax laws, including with respect to incentives enacted under the IRA.
Strategy, Strengths, and Differentiation
We leverage our differentiated technologies, integration capabilities, and software to provide economical solutions across short, long, and ultra-long-duration energy storage needs through (i) sales and licensing of our energy storage products and software and (ii) selective ownership and operation of energy storage assets. In 2025, we advanced our Own & Operate strategy through the launch of our Asset Vault platform.
We expect the energy storage market to be characterized by high growth and rapidly evolving use cases and requirements. Many market participants are primarily focused on solutions built around a single storage technology and/or rely on third-party platforms for software controls and optimization. By contrast, we have designed a technology-agnostic software platform intended to orchestrate and optimize the management of multiple energy storage and generation asset types across diverse applications. This approach is intended to broaden the use cases and duration scenarios that can be addressed by renewable generation and to support grid reliability use cases, including peak capacity, resiliency, and outage support.
Our strategy is supported by an integrated offering across development, system design and integration, software, and long-term operations and maintenance, including under our Own & Operate strategy. In 2025, we demonstrated execution across the project lifecycle after reaching the commercial operation milestone for Cross Trails and CRC.
Our range of solutions and commercial models is intended to provide customers and partners flexibility to address current needs while supporting future requirements as markets and regulations evolve. We also continued expanding our commercialization pathways in 2025, including acquisitions and development activity in Australia (Stoney Creek) and Texas (SOSA), and expansion through licensing our B-VAULT technology in India. For these reasons, we believe we are well positioned to compete successfully in the evolving market for energy storage solutions.
Own & Operate Asset Site Selection and Investment Criteria
We have developed investment criteria intended to support disciplined capital deployment into attractive energy storage projects on a discretionary basis, including through our Asset Vault platform. We evaluate a range of market, project,
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development, and economic factors, including jurisdiction-specific regulatory and policy considerations; market structure and monetization pathways (including contracted offtake, tolling, and merchant exposure); capacity and duration requirements; siting and constructability; permitting and environmental diligence; interconnection status and grid constraints; expected revenue stack (including energy, ancillary services, and capacity, where applicable); counterparty credit considerations; and the availability and monetization of government incentives, subsidies, and tax credits (including IRA-related credits and potential bonus credits). We also consider project delivery and operating factors such as EPC and supply chain execution risk, technology configuration, performance and degradation/augmentation assumptions, and long-term operations and maintenance requirements.
In addition to majority ownership opportunities, we may pursue minority equity investments alongside strategic partners when aligned with our return objectives, which is designed to allow us to participate in customer project economics while also providing traditional third-party project services, integration, software, and turnkey technology solutions.
Third-Party Project Delivery
For projects delivered to third-party customers, we primarily rely on two delivery models: (i) EPC delivery and (ii) engineered equipment (“EEQ”) delivery. Under an EPC model, we serve as the general contractor in which we rely on third-party EPC firms and subcontractors to perform construction activities, while our dedicated teams provide project management, engineering and integration oversight, and commissioning support. Under an EEQ model, we are responsible for delivery of the equipment within our scope of supply and for resolving issues within that scope, and we may also provide specialized technical and commissioning services for the project.
Business Model
As a result of our ability to deliver energy storage solutions to third parties and selectively own and operate energy storage assets, our business model includes:
•Sales and delivery of energy storage solutions to third-parties, including (i) constructing and delivering fully operational energy storage systems under an EPC model and (ii) delivering energy storage equipment under an EEQ model, which may also include related commissioning and technical support services.
•Development, ownership, and operation of energy storage assets intended to generate recurring cash flows through contracted arrangements and/or market participation.
•Minority equity investments in customer projects where we also provide EPC, EEQ, software, and/or long-term services, allowing us to participate in project economics while strengthening alignment with strategic customers.
•Software revenue, including licensing and subscription arrangements for asset management and use case applications.
•Service revenue, including long-term service arrangements that may include maintenance, monitoring, performance management, and other lifecycle services.
•Intellectual property revenue, including licenses and royalties associated with our energy storage technologies and related know-how.
Manufacturing and Customer Support
Our manufacturing, assembly, and construction model is designed to support scalable global execution and local deployment requirements. The components of our B-VAULT, and H-VAULT solutions are primarily sourced from third-party suppliers and can be procured from multiple sources worldwide. We typically procure batteries at the cell, module, or rack level and engage qualified contractors and integrators to assemble batteries and related balance-of-system components into outdoor enclosures and other modular equipment that are shipped to project sites for installation and commissioning. We also seek to mitigate supply chain constraints for certain components (including high-voltage equipment) through multi-sourcing and strategic supply arrangements.
The physical structure of our gravity energy storage solutions is based on our proprietary designs, with many components manufactured by suppliers to our specifications. Certain components are produced at supplier facilities, while others may be produced closer to, or at, the project site. Most electrical system components are generally off-the-shelf in nature and can be procured from multiple sources worldwide.
In EPC arrangements, construction at project sites typically involves establishing regional and country-level infrastructure to support local deployments through a contracting model, supported by our project management and engineering oversight. In 2025, we expanded regional support capabilities, including the establishment of a service and logistics center in central Switzerland to support deployments and after-sales service across the EMEA region.
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We provide our customers with limited assurance warranties to ensure our products are free of defects. We also provide maintenance, customer support, and repair services for energy storage systems, including preventative maintenance and software upgrades, when customers enter into long-term service arrangements and software licensing agreements. Our long-term service offerings are designed to provide customers with flexible scope options that may include preventive and corrective maintenance, performance and availability support, and operational support over an asset’s lifecycle.
Supply Chain
We seek to maximize our involvement in key aspects of the global, domestic, regional, and local supply chains that support our solutions. Through our supply chain procurement and supplier qualification processes, we aim to provide customers with vetted sources of integrated components for their energy storage needs while maintaining flexibility and resiliency in sourcing. Given our technology-agnostic approach, we source equipment from a variety of global suppliers and seek to avoid undue reliance on any single supplier, geography, or component, although availability and pricing for certain components may be subject to market conditions. While we seek to diversify sourcing, certain components have historically been sourced from limited geographies. On February 9, 2026, we executed a definitive supply agreement with Peak Energy securing 1.5 gigawatt-hours of Peak Energy's U.S. manufactured sodium-ion battery systems.
The markets our suppliers serve are materially impacted by government legislation, regulation, and trade policy. We monitor enacted and proposed legislation in the countries and regions in which we operate and seek to structure our sourcing and project delivery strategies to optimize project economics and compliance. In the United States, IRA-related incentives, as amended by the OBBBA, continue to support investment in energy storage, including the Technology Neutral Credits applicable to energy storage technology the construction of which began after December 31, 2024 and potential bonus credits (including domestic content) for qualifying projects, and the IRS has issued additional guidance regarding the domestic content requirements and related safe harbors.
However, evolving Technology Neutral Credit eligibility requirements and restrictions related to FEOCs/PFEs may affect the availability of certain tax credits, including the Technology Neutral Credits, and may influence supply chain decisions for projects, including those seeking to monetize tax incentives.
We are also subject to changes in international trade regulations, import controls, taxes, tariffs, and quotas, including tariffs on steel, aluminum, and batteries, as well as other trade actions that may affect the cost and availability of certain components. Changes in U.S. tariff policy applicable to China-origin lithium-ion batteries and related components increased volatility in the cost and availability of certain inputs used in our solutions and contributed to delays or cancellations of certain third-party sales opportunities due to anticipated cost increases. In addition, certain export-control measures impacting battery-related materials and equipment could further affect lead times and supply availability. In response, we have evaluated alternative sourcing options, including suppliers with manufacturing capabilities outside of China, to mitigate tariff and trade-related impacts; however, we cannot assure that these mitigation efforts will be available on commercially reasonable terms. For additional discussion of risks relating to our supply chain and exposure to international pressures, see Part I, Item 1A. “Risk Factors.”
Marketing and Sales
We seek to position Energy Vault as a long-term strategic partner for customers and counterparties across the energy storage value chain, including utilities, independent power producers, developers, and commercial and industrial customers. Our marketing and sales approach is intended to support both (i) third-party project delivery and equipment sales and (ii) our Own & Operate strategy through Asset Vault, including engagement with capital partners and project counterparties.
Our marketing strategy includes the following:
•Brand Visibility, Awareness, and Education: Through branding, web marketing, and thought-leadership content, we engage a broad set of stakeholders and seek to build awareness of our technology, project delivery capabilities, and software solutions.
•Drive Demand: Our outreach strategy is designed to drive qualified lead generation and accelerate customer adoption through targeted marketing initiatives, including digital campaigns and industry engagement.
To achieve this, we employ the following:
•Integrated Marketing: We take a targeted approach to integrated marketing campaigns intended to maximize efficiency of spend while increasing visibility in key markets, generating qualified leads, and supporting commercial conversion.
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•Lead Generation Model: Our campaigns are designed to drive customer engagement through multiple channels, including our website and digital outreach, as well as industry conferences, events, partner referrals, and other direct and indirect channels.
•Sales Model: Our sales model focuses on energy storage projects where customer objectives and use cases benefit from our integrated solution offerings, including system design and integration, software-enabled controls and optimization, and lifecycle service capabilities. We pursue opportunities across multiple customer segments and applications, including utility-scale deployments and configurations designed for commercial and industrial and small-utility applications.
•Geographic Focus: While we maintain global coverage, our geographic focus for our B-VAULT business includes North America, Europe, and Australia. We also continue to expand commercialization pathways through licensing and royalty arrangements in international markets, including India. Our geographic focus for our G-VAULT business remains centered around jurisdictions in which we have executed license and/or royalty arrangements and where project development pathways align with our commercialization strategy.
Target Customers
Our target customers include independent power producers and developers, utilities and municipal utilities, grid operators and other load-serving entities, government and public-sector organizations, and industrial and commercial organizations with significant electricity needs. Our solutions are designed to be technology-agnostic and configurable across a range of applications and durations, which we believe positions us to address a broad set of customer requirements as energy storage adoption continues to expand globally. In addition, under our Own & Operate strategy, we may contract with offtake counterparties and other market participants in connection with assets we own and operate.
Competition
We expect competition in the energy storage industry to remain intense and to continue evolving as deployments scale, use cases expand, and market participants respond to changing policy, trade, and supply chain conditions. Competitive dynamics in short-duration BESSs have been influenced by continued manufacturing scale, declining lithium-ion battery pack prices, and vertical integration, which can support deployment growth but also increase pricing pressure across the supply chain. For example, BloombergNEF reported in December 2025 that stationary storage battery pack prices declined materially in 2025, reflecting a rapidly changing cost environment for storage system providers.
We believe the principal competitive factors in the energy storage market include:
•Total project and lifecycle economics, including equipment and integration cost, operating cost, warranty terms, and expected performance over the project life;
•Safety, reliability, and quality, including compliance with applicable codes, standards, and permitting requirements;
•System performance and flexibility, including duration, efficiency, operating characteristics, and integration with renewable generation and the grid;
•Track record, bankability, and customer references, including demonstrated ability to deliver and operate projects at scale;
•Project execution capabilities, including engineering and integration expertise, commissioning, and schedule certainty;
•Supply chain resiliency and compliance, including supplier diversification, lead times, and the ability to meet evolving domestic content, trade, and import requirements;
•Software, controls, and optimization capabilities, including the ability to support participation across market products and operational requirements; and
•Lifecycle service capabilities, including long-term operations, maintenance, monitoring, and performance support.
For our third-party energy storage delivery business, our key competitors within the shorter duration BESS market include Tesla, Inc., Fluence Energy, Inc., FlexGen Power Systems, Inc., Sungrow Power Supply Co Ltd., and other integrators and OEMs, as well as battery manufacturers and suppliers that may compete on certain projects or influence competitive dynamics through pricing and supply availability.
Within the longer duration energy storage market there are system manufacturers with products in various states of viability utilizing various technologies including ESS Inc., Eos Energy Enterprises Inc., Hydrostor Inc., Primus Power, Form Energy, Inc., Gravitricity Ltd., and other solid-state battery manufacturers.
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For our Own & Operate business, competition comes from existing and emerging independent power producers and other asset owners and developers that pursue similar contracted and merchant opportunities. We believe our integrated approach, including development, engineering and integration, software, and long term operations and maintenance capabilities, and our focus on emerging critical energy infrastructure segments such as data centers, differentiate us from our peers in both domestic and international markets.
Some of our current and potential competitors have longer operating histories and greater financial, technical, marketing, and other resources than we do. These factors may allow competitors to respond more quickly to new technologies or changing customer requirements, engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns, and adopt more aggressive pricing policies, which may enable them to compete more effectively for energy storage projects.
Intellectual Property (“IP”)
We rely on a combination of patent, trademark, copyright, unfair competition, and trade secret laws, as well as confidentiality procedures and contractual restrictions with our employees, contractors and third parties, to establish, maintain, and protect our proprietary rights. Our success depends in part upon our ability to obtain, maintain, and enforce proprietary protection for those aspects of our technology and software that provide us with a competitive advantage, to mitigate the risk of infringement of the proprietary rights of others, and to prevent others from infringing or misappropriating our proprietary rights.
We have developed a patent portfolio to protect certain elements of our proprietary technology. As of December 31, 2025, we had 32 issued patents and 19 active patent applications pending in the U.S. Outside the U.S., we have 26 issued patents and 28 active patent applications pending in other countries throughout the world. We have five Patent Cooperation Treaty (“PCT”) patent applications pending. Our issued patents are expected to start expiring in 2039.
We primarily rely on copyright, trade secret laws, confidentiality procedures and contractual restrictions to protect our software. We also pursue the registration of our domain names and trademarks and service marks in the United States and internationally. As part of our overall strategy to protect our IP, we may take legal actions to prevent third parties from infringing or misappropriating our IP or from otherwise gaining access to our technology.
Regulatory Environment and Compliance
Federal, state, and local government statutes and regulations concerning electricity materially influence the markets for our products and services. These statutes and regulations directly affect our owned asset business and indirectly affect our third-party sales business. Regulatory frameworks often relate to electricity pricing, market participation requirements, competition with utilities, and the interconnection of customer-owned generation and storage. In the United States, governments and regulatory bodies, including state public utility commissions and federal agencies, periodically modify these statutes, regulations, tariffs, and market rules, which may affect the economics of energy storage projects and the value proposition of our solutions.
Each of our owned installations and our customers’ installations must be designed, constructed, and operated in compliance with applicable federal, state, and local regulations, codes, standards, guidelines, policies, and laws. To install and operate energy storage systems, we, our customers, or our partners (as applicable) must obtain permits and approvals from authorities having jurisdiction, including approvals related to building and fire codes and operational safety standards. Industry codes and standards applicable to BESS, including those addressing installation safety, fire and life safety risk mitigation, and associated test methods referenced in applicable fire codes, continue to evolve.
Energy storage systems typically require interconnection agreements and related approvals from applicable utilities, transmission providers, or grid operators in order to operate. Interconnection processes may require technical studies and may result in network upgrade requirements, and the timing and cost to achieve interconnection can be impacted by regulatory requirements and queue conditions. In the United States, the Federal Energy Regulatory Commission (“FERC”) has adopted significant interconnection reforms (including Order No. 2023) intended to address interconnection queue backlogs and improve certainty in interconnection processes, which may influence timelines, costs, and data requirements for energy storage and generation projects. In addition, a pending FERC rulemaking proceeding (in Docket No. RM26-4), may materially affect the economics of any projects that are designed to serve behind-the-meter loads.
For owned assets and certain customer projects, our operations may also be affected by wholesale market participation rules and reliability requirements applicable to independent system operators and regional transmission organizations (including, but not limited to, ERCOT). Changes in market rules may impact the prices our BESS assets pay for charging energy or receive for discharging energy or ancillary services.
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Our operations are subject to stringent and complex federal, state, and local laws and regulations governing occupational health and safety and labor practices. For example, we are subject to requirements under the federal Occupational Safety and Health Act, as amended, and comparable state laws that protect and regulate employee health and safety.
There are government regulations pertaining to the storage, transportation, handling, and disposal of hazardous materials. We and our suppliers, as applicable, are required to comply with these regulations in connection with operating and servicing energy storage systems and delivering systems into the market. For example, U.S. regulations address the management of waste batteries under “universal waste” requirements, and regulatory requirements relating to end-of-life management and recycling continue to evolve.
Increasing government regulation and enforcement related to supply chain transparency and import compliance (including forced-labor-related restrictions) may also impact sourcing, lead times, and compliance processes. For additional discussion of risks relating to governmental regulation and compliance, see Part I, Item 1A. “Risk Factors.”
U.S. Energy Storage Regulation and Legislation
The U.S. Congress, Department of Treasury, Internal Revenue Service (“IRS”), Department of Energy, FERC, and state and local authorities continue to review, implement, and modify policies, incentives, regulations, and legislation that can affect the economics and deployment of energy storage, including through tax credits, permitting and interconnection rules, and wholesale market participation frameworks. The timing, interpretation, and implementation of these programs can vary across administrations and may involve phased guidance and rulemaking over time. As a result, there can be uncertainty regarding eligibility, compliance requirements, and the timing and magnitude of benefits available to any particular project.
Federal Energy Tax Incentives and Related Guidance
U.S. federal tax incentives remain an important driver for energy storage investment. The IRA expanded and extended certain clean energy incentives, including enabling investment tax credits for standalone energy storage subject to eligibility requirements. In addition, for property that began construction after December 31, 2024, the tax credit regime generally transitioned to “clean electricity” Technology Neutral Tax Credits.
In 2024 and 2025, the U.S. Department of Treasury and the IRS issued significant additional guidance and regulations relevant to energy storage project economics and structuring. This includes, among other items, rules and clarifications addressing eligibility and definitions applicable to investment tax credits, including guidance clarifying that certain co-located energy storage configurations may remain eligible even when sharing power conditioning equipment with a co-located qualified facility.
The Technology Neutral Tax Credits generally include a base credit rate with the potential for an increased credit amount where prevailing wage and apprenticeship (“PWA”) requirements are satisfied (often described as a five-times multiplier relative to the base amount), subject to applicable rules and exceptions.
Projects may also be eligible for bonus credits under certain circumstances. For example, the domestic content bonus may be available where required steel, iron, and manufactured product thresholds are met, and the U.S. Department of Treasury and the IRS have issued and updated elective safe harbor approaches intended to simplify certain aspects of domestic content determinations. The energy community bonus may also be available for projects located in qualifying areas, and the IRS has issued guidance and FAQs related to energy community determinations. In addition, the Section 48E low-income communities bonus credit amount program can increase the Section 48E credit by 10% or 20% for certain qualifying smaller facilities, subject to program rules and allocation requirements.
The IRA also enabled monetization mechanisms that can be relevant to project financing, including credit transferability and elective payment (often referred to as “direct pay”) for certain taxpayers, each of which includes compliance requirements (including, in many cases, pre-filing registration).
2025 Legislative Developments and Evolving Compliance Requirements
On July 4, 2025, the OBBBA was signed into law (Public Law 119-21) and became effective in 2025. Among other tax changes, the OBBBA modified certain Technology Neutral Credits, among others, and introduced additional compliance requirements, imposing restrictions on ownership, debt, and effective control and including supply chain and sourcing restrictions and limitations related to material assistance from PFEs. The applicability of these requirements depends on the specific credit and project facts, including timing considerations such as when construction begins. The U.S. Department of Treasury and the IRS have issued guidance in this area, and additional guidance and implementation practices continue to evolve.
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Tariffs and Trade Policy
U.S. trade policy and tariff regimes can impact the cost and availability of energy storage components and project inputs. For example, the United States has finalized tariff actions under Section 301 of the 1974 Trade Act (“Section 301 tariffs”) covering certain China-origin products, including an increase in the tariff rate applicable to lithium-ion non-electric vehicle batteries to 25% effective January 1, 2026. In addition, U.S. tariffs on steel and aluminum under Section 232 of the Trade Expansion Act of 1962 (“Section 232 tariffs”), were increased to 50% effective June 4, 2025 (subject to certain country-specific provisions).
Separately, on February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), finding that IEEPA did not authorize the president to impose such tariffs.
While this decision does not impact the Section 301 or Section 232 tariffs, it is uncertain how future repercussions of the ruling and other changes in trade policy would impact our operations, supply chain, and cash flows.
Given the evolving nature of tariff policy, changes in tariffs, import restrictions, and related trade measures could increase our costs, disrupt our supply chain, and adversely affect project economics and customer demand.
Environmental, Social, and Governance
Energy Vault is committed to sustainability as reflected in our mission, our focus on responsible business management practices, and our approach to integrating sustainability as a key objective in product design and operations. We seek to operate as a responsible partner to our suppliers, customers, and other stakeholders as we execute our strategy and scale our solutions, including through our growing Own & Operate activities. We publish environmental, social, and governance (“ESG”) data, goals, and progress annually in a sustainability report, which is available on our website.
In 2025, the Company received a Corporate Sustainability Assessment Score of 74 (out of 100) as reported by 2025 S&P Global Sustainable1. S&P Global’s scoring framework measures sustainability performance relative to industry peers within its applicable industry classification. The Company was featured in S&P Global’s 2025 Sustainability Yearbook and received the sole Industry Mover designation for achieving the strongest year over year improvement in the machinery and electrical equipment industry.
The Company’s sustainability strategy is organized around three pillars: (i) Purpose, (ii) Products, and (iii) Partnerships.
Purpose
We seek to embed responsible business practices across our organization and to integrate ESG considerations into our business operations, product development processes, and reporting. Our Sustainability Team works to evaluate relevant impacts and priorities and to implement monitoring and reporting processes to track progress. We also maintain cross-functional engagement intended to support coordination across key functions (including operations, supply chain, and product teams), and to enhance internal accountability for executing our sustainability priorities.
In addition, we maintain and continuously improve management systems and governance processes intended to support responsible operations, including quality, environmental, occupational health and safety, information security, anti-bribery, and compliance management systems certifications (including ISO 9001, ISO 14001, ISO 45001, ISO 27001, ISO 37001, and ISO 37301).
Products
We seek to deliver high-quality energy storage and software solutions designed to support grid reliability and enable increased renewable energy penetration. We maintain quality and environmental management systems intended to support consistent execution and continuous improvement across our operations.
We invest in research and development intended to improve the sustainability attributes of our solutions, including evaluation of materials and end-of-life considerations where applicable. As part of our sustainability program, we conduct lifecycle assessments on products to evaluate and optimize the sustainability impacts of our technology across the product lifecycle.
Partnerships
We believe collaboration with suppliers, customers, and other partners is important to scaling energy storage deployments responsibly. Our sustainability initiatives consider relevant global external frameworks and standards and are intended to support transparency and continuous improvement. We are a participant in the United Nations Global Compact and aim to align our practices with its principles.
We have also established emissions-reduction targets and our near-term Scope 1 and Scope 2 targets have been validated by the Science Based Targets initiative (“SBTi”).
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ESG Reporting
Maintaining an environment of transparency and accountability allows us to share our commitments and progress with all stakeholders. Our focus on transparency with respect to sustainability and ESG is reflected by the publication of an annual Sustainability Report, which is available on our website; however, information contained on our website is not incorporated into this filing by reference.
Human Capital Management
At Energy Vault, we believe our employees are critical to executing our strategy and supporting our customers. We seek to foster a positive, equitable, and safe work environment and to maintain regular communication with employees through various channels such as emails, manager communications, and periodic all-hands meetings to support transparency and engagement.
Employees
As of December 31, 2025, we employed 142 full-time employees and six part-time employees, distributed across six different countries. None of our employees are represented by a labor union or collective bargaining agreement. We have not encountered any employment-related work stoppages, and we believe we maintain constructive relations with our employees.
Culture and Engagement
We maintain ongoing culture and engagement programming designed to reinforce our purpose, vision, mission, and values and to support a culture of recognition and continuous feedback. These efforts include structured workshops and employee resources intended to promote consistent leadership and communication practices across the organization.
Compensation and Benefits
We offer compensation and benefits programs intended to be competitive within relevant labor markets and to support our talent strategy. Our compensation programs are designed to align employee incentives with business objectives and Company performance. We provide base pay that is intended to be competitive based on position, skill set, experience, and geographic location, and we may also provide annual incentive awards and equity awards.
We also offer employee benefits that vary by country and region. These benefits may include a 401(k) plan, pension plan, life insurance, medical and dental insurance, vision insurance, health savings accounts, vacation pay, holiday pay, and parental leave.
Corporate Information
We file or furnish periodic reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, proxy statements, and other information with the Securities and Exchange Commission (“SEC”). In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically. Our website is located at http://energyvault.com and our reports, amendments thereto, proxy statements, and other information are also made available, free of charge, on our investor relations website at http://investors.energyvault.com as soon as reasonably practicable after we electronically file or furnish such information with the SEC. The information posted on our website is not incorporated by reference into this Annual Report or any of our other securities filings unless specifically incorporated herein by reference.
ITEM 1A. RISK FACTORS
Certain factors may have a material adverse effect on our business, financial condition, results of operations, and prospects. You should carefully consider the risks and uncertainties described below, as well as the other information in this Annual Report, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, results of operations, financial condition, and prospects. In such an event, the market price of our securities could decline, and you could lose all or part of your investment.
Risk Factor Summary
Below is a summary of the principal factors that make an investment in our common stock speculative or subject to risk. This summary does not address all of the risks facing our business. You should consider the risks in this summary together with the detailed discussion of risks that immediately follows this summary in this section titled “Risk Factors,” as well as the other information in this Annual Report on Form 10-K.
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•Our limited operating history and our rapidly evolving industry make it difficult to evaluate our business, the risks and challenges we may face, and future prospects.
•The engineering of our systems is in continuous refinement to improve system cost and efficiency. There is no guarantee that we will be successful in implementing all improvements under the expected schedule.
•Changes to United States tariff and import/export regulations.
•Our systems’ performance may not meet our customers’ expectations or needs.
•There is no assurance that non-binding letters of intent and other indications of interest, including awards, submitted proposals or short-lists, will result in binding orders or sales. Customers may cancel or delay the non-binding letters of intent and other indications of interest in our sales pipeline. As a result, our operating results and cash flows may be materially lower than our expected results of operations.
•The failure or inability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems and their failure or inability to deliver them in a timely manner or to the quality standards required, could cause installation delays, cancellations, penalty payments and damage to our reputation.
•Our business is subject to risks associated with construction, cost overruns and delays, including those related to obtaining government permits and approvals, electrical interconnection, and other contingencies that may arise in the course of completing installations.
•Our B-VAULT, G-VAULT and H-VAULT products are based on established principles that are deployed in a novel way to create new technologies to store energy and potential customers may be hesitant to make a significant investment in our technology or abandon the technology they are currently using.
•Material weaknesses in our internal control over financial reporting could have a significant adverse effect on our business and the price of our common stock.
•We are an early-stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future, and we may not be able to achieve profitability in the future.
•Our total backlog, bookings, and developed pipeline may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations.
•Our developed pipeline of awarded or shortlisted third-party EPC, EEQ, and long-term service opportunities, and the long-term economics associated with potential projects identified for our Own & Operate portfolio, may be subject to change and be impacted by anticipated equipment and commodity costs, tariffs, as well as changes in foreign currency exchange rates in markets in which we source materials or conduct business.
•As we conduct business in a host of geographies and may engage in activity with those operating sensitive energy infrastructure, including markets subject to capital controls, our ability to collect payments or conduct business may be impacted or change without advance notice.
•Our energy storage products involve a lengthy sales and installation cycle, and if we fail to close sales on a regular and timely basis it could harm our business. Moreover, the long sales cycles for our energy storage products may cause us to incur significant expenses without offsetting revenues.
•Our owned projects are based on our estimates of construction costs, timelines, future revenues, and operating costs. If those estimates are inaccurate, our anticipated revenues and profits may be materially and adversely affected.
•Our systems include complex software and technology systems and do not have a meaningful history of operation, and there can be no assurance such systems and technology will perform as expected or that software, engineering or other technical defects will not be discovered until after a system is installed and operated by a customer or by us. If our energy storage systems contain manufacturing or construction defects, our business and financial results could be harmed. In addition, the development and updating of these systems will require us to incur potentially significant costs and expenses.
•If any of our products are or are alleged to be defective in design or manufacturing or experience other failures, we may be compelled to undertake corrective actions, which could adversely affect our business, prospects, operating results, reputation and financial condition.
•If we fail to protect, defend, maintain, or enforce IP rights on which our business depends, including against existing or future competitors, our growth and success may be adversely affected.
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•Third parties may assert that we are infringing upon their IP rights, which could divert management’s attention, cause us to incur significant costs, and prevent us from selling or using the technology to which such rights relate.
Risks Related to Our Business and Our Industry
Our limited operating history and our rapidly evolving industry make it difficult to evaluate our business, the risks and challenges we may face and future prospects.
Prior to the first half of 2022, we focused principally on developing and proving our fundamental gravity energy storage technology, marketed as our G-VAULT products, which we are seeking to further refine and commercialize. Beginning in 2022, we expanded our offerings to include BESSs and hydrogen or HESSs. In 2024, we launched our B-Nest product, which we no longer market. We began a multi-year transition from providing this technology portfolio solely to third parties through a build-and-transfer model or licensing model. To date, we have only completed five BESSs, only one HESS in Calistoga, California, and only two gravity energy storage solutions, one of which has since been decommissioned. As a result, we have a limited history operating our business and constructing energy storage systems, and therefore a limited history upon which you can base an investment decision.
Our future growth in a nascent and rapidly-evolving industry is dependent on a number of factors, including rising demand for clean electric power solutions that can provide electric power with lower carbon emissions and replacement of conventional generation sources and the adoption speed of digital software applications to modernize the efficiency of power assets and the electric grid. Among other renewable energy market trends, we expect our business results to be driven by declines in the cost of generation of renewable power, decreases in the cost of manufacturing battery modules and cells, customer needs for services and digital applications, commercial, legal, regulatory, and political pressure for the reduced use of and reliance on fossil fuels and electric power generation that relies on fossil or other non-renewable fuels, and a rapidly growing energy storage market driven by increasing demand from utilities, independent power producers, and large energy users. However, predicting future revenues and appropriately forecasting and budgeting for our expenses is difficult, and we have limited operating history to predict trends that may emerge and take hold and materially affect our business. Our future operations and strategy are therefore subject to all of the risks inherent in light of the expenses, difficulties, complications and delays frequently encountered in connection with the growth of any new business in a nascent industry, as well as those that are specific to our business in particular.
Our projections are subject to significant risks, assumptions, estimates and uncertainties. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.
Our projections are subject to significant risks, assumptions, estimates and uncertainties. Such projections reflect our current views with respect to future events or our future financial performance, are based on assumptions, and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by our projections. We may not actually achieve the plans, expectations or objectives contained in our projections, and the underlying assumptions may prove incorrect. Such deviations may be due to factors outside our control or currently unknown to us. For example, our actual revenues, market share, timing for achieving business milestones, expenses and profitability may differ materially from our expectations. Therefore, undue reliance should not be placed on any of our projections.
As we develop and own more storage projects ourselves, we make projections about construction costs and timelines, and future revenues and operating costs. The profitability of our projects are highly sensitive to these projections and if our actual results or performance differ materially from our projections, then the profitability of our owned projects could be materially less than our projections or result in losses to the Company.
Our business model depends on acceptance of our technology by our customers, retaining existing customers, obtaining new customers, and the success of our business model.
As a recent market entrant in a developing industry, our results of operations and financial condition are dependent upon our success in establishing or entering new markets (including data center developers), developing and commercializing our energy storage systems, and undertaking marketing activities. We face significant risks associated with our business strategy of targeting utilities, independent power producers, and large energy users, such as data center developers, and deploying our energy storage systems at a scale that leads to broad market acceptance and profitability. The relative success of our energy systems will be dependent upon a number of factors, including their ability to provide our customers with reliable and dependable energy storage for the durations that they require, while still being cost-effective, and our ability to effectively manage any customer concerns.
In addition to the development and acceptance of our core energy storage technologies, we anticipate further developing and marketing our digital platform for the management and optimization of energy storage systems. If this platform is not
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adopted by users of our energy storage products or on a standalone basis, we may not recoup our investment in its development and our results of operations may be negatively impacted.
Our energy storage systems involve a lengthy sales and installation cycle, and if we fail to close sales on a regular and timely basis it could harm our business. Moreover, the long sales cycles for our energy storage systems and other factors may result in significant fluctuations in our results from period to period.
While our customers are increasingly familiar with our technology, the period between initial discussions with a potential customer and the sale of even a single product typically depends on a number of factors, including the potential customer’s attitude towards innovative products, their budget and decision as to the type of financing it chooses to use, as well as the arrangement of such financing. While our customers are evaluating our products, we have incurred, and expect to continue to incur, substantial sales, marketing, and research and development expenses to customize our products to the customer’s needs. As a result, these long sales cycles may cause us to incur significant expenses without ever receiving revenue to offset those expenses.
This lengthy decision making process is followed by substantial fulfillment periods. Currently, we believe the time between the entry into a sales contract with a customer and the installation of our BESSs could range from 9 to 18 months, subject to significant risks.
These lengthy sales and installation cycles increase the risk that our customers fail to satisfy their payment obligations or cancel orders before the completion of the transaction or delay the planned date for installation.
In addition, we expect that long sales cycles and the expected limited number of customers for our energy storage systems will cause fluctuations in our operating results from period to period. As a result of how we recognize revenue and other factors beyond our control, small fluctuations in the timing of the completion of our sales transactions could also cause operating results, financial condition and results of operations to vary materially from period to period.
In addition to the other risks described herein, the following factors could also cause our financial condition and results of operations to fluctuate on a quarterly basis:
•the timing of customer installations of our energy storage systems, which may depend on many factors such as availability of inventory, product quality or performance issues, or local permitting requirements, utility requirements, environmental, health and safety requirements, weather and customer facility construction schedules, customer interconnection timing, availability and schedule of our third-party general contractors;
•size of particular customer installations and number of sites involved in any particular quarter;
•delays or cancellations of purchases and installations;
•the timing of when control of uninstalled materials transfers to the customer;
•fluctuations in our service costs;
•weaker than anticipated demand for our energy storage systems due to changes in government regulation, incentives and policies;
•weaker than anticipated demand for our energy storage systems due to our customers’ inability to finance their projects;
•interruptions in our supply chain;
•the timing and level of additional purchases by existing customers;
•unanticipated expenses incurred due to changes in governmental regulations, permitting requirements by local authorities at particular sites, utility requirements and environmental, health and safety requirements;
•disruptions in our sales, production, service or other business activities resulting from our inability to attract and retain qualified personnel;
•shortage of raw materials from our suppliers and associated price increases due to fluctuations in commodities prices; and
•availability of spare parts from our suppliers.
Finally, our revenue, key operating metrics, and other operating results in future quarters may fall short of the expectations of investors and financial analysts, which could have an adverse effect on the price of our common stock.
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We depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity.
The loss of any significant customers or partners or reduction in our business activities could cause our revenues to decrease significantly and increase our losses from operations. If our products are not successful and we cannot broaden our customer base, we will continue to depend on a few customers for the majority of our revenues. Additionally, if we are unable to negotiate favorable business terms with these customers in the future, our revenues and gross profits may be insufficient to allow us to achieve and/or sustain profitability, continue operations, or remain a going concern.
The engineering of our systems is in continuous refinement to improve system cost and efficiency. There is no guarantee that we will be successful in implementing all improvements under the expected schedule.
Our business depends on our ability to succeed in implementing our energy storage systems and introduce innovative and competitive energy storage technologies. As our energy storage systems are highly complex, this process is costly and time-consuming.
Any future energy storage deployments may incur more costs than we expect. Our business, reputation, results of operations and financial condition may be materially adversely affected if we do not successfully implement our systems or to the extent that such implementation occurs later or costs more than we expect, or if innovations by our competitors achieve broader or earlier market acceptance. Examples of costs that we cannot control include the costs of electronics due to global allocation shortages or costs associated with construction delays.
If we are not able to reduce our cost structure in the future, our ability to become profitable may be impaired.
Over time, we must effectively manage the equipment and construction costs of our energy storage systems to expand our market. While we have sought, and will continue to seek, to manage our costs, the cost of components and raw materials, for example, could increase in the future. Any such increases could slow our growth and cause our financial results and operational metrics to suffer. In addition, we may face increases in our other expenses, including increases in wages or other labor costs, as well as installation, marketing, sales or related costs. We may continue to make significant investments to drive growth in the future. To the extent that the price of electricity from the grid is low in certain markets, we will need to continue to reduce our costs to maintain our expected margins in those markets. Increases in any of these costs or our failure to achieve projected cost reductions could adversely affect our results of operations and financial condition and harm our business and prospects. If we are unable to reduce our cost structure sufficiently in the future, we may not be able to achieve profitability, which could have a material adverse effect on our business and prospects.
Operational costs can be difficult to predict and may include costs from requirements related to the decommissioning of our systems.
We rely heavily on complex machinery for our operations and our production involves a significant degree of uncertainty and risk in terms of operational performance and costs. When fully operational, our energy storage systems will consist of large-scale machinery comprised of many components assembled on-site for our customers or for our owned projects. The components of our energy storage systems are likely to suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of our energy storage systems or their constituent components may significantly affect the intended operational efficiency and performance. In addition, our energy storage systems may need to be decommissioned from time to time, and the related costs could be significant given the size and complexity of our energy storage systems. Operational performance and costs, including those related to project stoppage, can be difficult to predict and are often influenced by factors outside of our control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with construction, commissioning, testing or decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to demonstration facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.
Furthermore, in recent periods, our internal operations have grown in complexity. We may in the future continue to grow our operations, both in terms of complexity and headcount. Any continued growth could increase our operational costs and failure to manage such growth could lead to additional costs in the future.
Our energy storage systems have significant upfront costs. We will need to obtain financing to fund our own projects and our customers may need to obtain financing to help finance purchases. If we or our customers are unable to procure third-party financing or if the cost of such financing exceeds our estimates, our business would be adversely affected.
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Our energy storage systems have significant upfront costs, and certain customers may need, or may prefer to acquire, third-party financing to purchase our systems. We will need to obtain third-party financing to continue our transition to owning assets as well as selling energy storage products.
Therefore, our growth, including the deployment of our energy storage systems, may to an extent depend on our own and our customers’ ability to attract third-party financing partners. The ability to obtain third-party financing depends on many factors that are outside of our control, including the ability of third parties to utilize tax credits and other government incentives, interest rate and/or currency exchange fluctuations, the borrower’s perceived creditworthiness and the condition of credit markets generally. We expect that the financing of customer purchases of our energy storage systems or our own projects will be subject to customary conditions such as the borrower’s credit quality, and if these conditions are not satisfied, such customers may be unable to finance purchases of our energy storage systems and we may not be able to fund our own projects, which would have an adverse effect on our revenue. To the extent neither our customers or us are able to arrange future financings for any of our current or potential projects, our business would be negatively impacted.
In attempting to attract new customers to support our growth, we intend to refine our customer offerings based on experience. Moreover, new types of product offerings may require our customers to find partners willing to finance these new projects, which may have different terms and financing conditions from prior transactions. If the terms of these transactions or the structure of these projects fails to attract financiers, we may not be able to proceed with growing our business and our potential for growth may be limited. Additionally, financing options are also limited by the borrower’s willingness to commit to making fixed payments regardless of the performance of the energy storage systems or our performance of our obligations under the customer agreement.
Further, our sales process for transactions that require financing require that we and our customers make certain assumptions regarding the cost of financing capital. If the cost of financing ultimately exceeds our estimates, we may be unable to proceed with some or all of the impacted projects or our revenue from such projects may be less than our estimates. Actual financing costs for potential customers may vary from our estimates due to factors outside of our control, including changes in customer creditworthiness, macroeconomic factors, the returns offered by other investment opportunities available to our financing partners, and other factors.
If we or our customers are unable to procure financing partners willing to finance deployments of our products or if the cost of such financing exceeds our estimates, our business would be negatively impacted.
The economic benefit of our energy storage systems to us and to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change.
The electricity stored and released by our systems may not currently be cost-competitive in some geographic markets, and we may be unable to reduce our costs to a level at which our energy storage systems would be competitive in such markets. To the extent that either we as an owner or our customers anticipate selling power into markets as a merchant generator, our customers and the Company may not be able to achieve the anticipated level of revenues and profits. As such, unless the cost of electricity in these markets rises or we are able to generate demand for our energy storage systems based on benefits other than electricity cost savings, our potential for growth may be limited.
Our energy storage systems’ performance may not meet our customers’ expectations or needs.
Our energy storage systems will be subject to various operating risks that may cause them to generate less value for our customers than expected. These risks include a failure or wearing out of our equipment or the equipment that our equipment connects into, an inability to find suitable replacement equipment or parts, or disruption in our distribution systems. Any extended interruption or failure of our projects or our customer’s projects, including systems we operate under long term service agreements, for any reason to generate the expected amount of output could adversely affect our business, financial condition and results of operations. We have experienced outages in the past, including at our Cross Trails BESS, and could continue to do so in the future. In addition, our customers’ willingness to acquire additional systems or services from us may be impacted in the future if any of our systems incur operational issues that indicate expected future cash flows from the system are less than the carrying value. Any such outcome could adversely affect our operating results or ability to attract new customers.
If our estimates of the useful life for our energy storage systems are inaccurate or we do not meet service and warranties and performance guarantees, our business and financial results could be adversely affected.
We provide limited warranties and performance guarantees for our energy systems. We make investment decisions for our owned projects based in part on an estimate of the useful life of our products. To date, we have deployed five operational BESSs and our estimates about product performance and life may prove to be incorrect. Failure to meet these warranties and performance guarantee levels for our customers may require the purchase price to be adjusted downward based on agreed-upon performance targets, or require us to make cash payments to the customer based on actual performance, as
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compared to expected performance. Failure to meet these expected performance levels on our owned projects could materially and adversely impact the expected performance of such projects.
We intend to explore alternative, co-active use case opportunities for our systems, but there is no assurance that such opportunities exist or that they would be as beneficial to us as we expect.
We intend to explore alternative, co-active use case opportunities for our energy storage systems. For example, we intend to explore opportunities in energy-intensive industries such as vertical farming, data centers, direct air carbon capture where our systems may be able to benefit from existing infrastructure, including physical enclosures and electrical systems, that are built into the designs for our energy storage systems. Even after we spend time and resources exploring such opportunities, there is no assurance that they exist on terms that are commercially acceptable to us. Moreover, even if we enter into agreements to make use of such opportunities, such opportunities may not be as beneficial to us as we expected at the time of entering into the underlying agreement. Any of the foregoing may adversely affect our business, financial condition, results or operations and prospects.
There is no assurance that non-binding letters of intent and other indications of interest, including awards, submitted proposals or short-lists, will result in binding orders or sales. Customers may cancel or delay the non-binding letters of intent and other indications of interest in our sales pipeline. As a result, our operating results and cash flows may be materially lower than our expected results of operations.
Our success depends on our ability to generate revenue and operate profitably, which depends in part on our ability to identify target customers and convert such contacts into meaningful orders or expand on current customer relationships. To date, we have only deployed five operational BESSs. While our contracts do provide that our customers will be obligated to pay us certain fees in the event of termination for their convenience, such fees may not be sufficient to cover our costs and we would not realize the expected revenue associated with such cancelled contracts. Potential and contracted customers may abandon their indications of interest, or fail to honor contractual obligations and non-binding letters of interest may be cancelled or delayed by a customer for any reason or its terms may be amended in a manner adverse to us in connection with negotiating a definitive sales agreement. For that reason, there can be no assurance that any current or future indications of interest (including awards, submitted proposals or short-lists) or non-binding letters of intent will result in binding orders or sales. Furthermore, in light of our limited operating history, it is difficult for us to predict the rates at which the non-binding letters of intent or other indications of interest in our pipeline will result in binding orders or sales. It is also difficult for us to predict how quickly we will be able to fill binding orders in the event that we obtain multiple orders. In addition, revenue is expected to be recognized in stages, and customers may in some cases delay actual cash payments regardless of progressive billings. Additionally, a customer’s ability to make payments could decline during the sales process, even to the point of insolvency or bankruptcy. As a result, our operating results and cash flow may be materially lower than we expect.
Our future growth depends upon our ability to maintain relationships with third parties, and the terms and enforceability of many of these relationships are not certain.
We expect to rely on engineering, procurement, and construction, or EPC, firms as third-party general contractors to install energy storage systems at our own and our customers’ sites. We are likely to work with a limited number of such EPC firms, which may impact our ability to facilitate installations as planned. Our work with contractors or their sub-contractors may have the effect of our being required to comply with additional rules (including rules unique to our customers), working conditions, site remediation and other union requirements, which can add costs and complexity to an installation project. In the future, the timeliness, thoroughness and quality of installation-related services performed by our general contractors and their sub-contractors may not meet our expectations and standards and it may be difficult to find and train third-party general contractors that meet our standards at a competitive cost.
In addition, a key component of our growth strategy is to develop or expand our relationships with third parties. For example, we are investing resources in establishing strategic relationships with market players across a variety of industries, including, large renewable project developers, data center developers, commercial agents, environmental organizations and unions, to generate new customers or to grow our business. These programs may not roll out as quickly as planned or produce the results we anticipated. A significant portion of our business depends on attracting new partners and retaining existing partners, and such relationships may not be predicated on enforceable agreements or any agreements at all.
We depend upon component and product manufacturing and logistical services provided by third parties, many of whom are located outside of the U.S.
A significant amount of our components, including batteries utilized in our BESS offerings, and products are manufactured in whole or in part by a few third-party manufactures. Many of these manufacturers are located outside of the U.S. If a catastrophic event occurs relative to these third-party manufacturers, or the political, social, or economic conditions shift
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within their respective geographies or between trade partners, we could experience business interruptions, delayed delivery of products, or other adverse impacts to our ongoing business. We have also outsourced much of our transportation and logistics management. While these arrangements may lower operating costs, they also reduce our direct control over production and distribution. Such diminished control could have an adverse effect on the quality or quantity of our products as well as our flexibility to respond to changing conditions. In addition, we rely on third-party manufacturers to adhere to the terms and conditions of the agreements in place with each party. For example, although arrangements with such manufacturers may contain provisions for warranty expense reimbursement, we may remain responsible to the customer for warranty service in the event of product defects. Any unanticipated product or warranty liability, whether pursuant to arrangements with contract manufacturers or otherwise, could adversely affect our reputation, financial condition, and operating results.
We may be unable to achieve our strategic priorities in emerging markets.
Emerging markets are a significant focus of our strategic plan. The developing nature of these markets presents a number of risks. We may be unable to attract, develop, and retain appropriate talent to manage our businesses in emerging markets. Deterioration of social, political, labor, or economic conditions in a specific country or region may adversely affect our operations or financial results. Emerging markets may not meet our growth expectations, and we may be unable to maintain such growth or to balance such growth with financial goals and compliance requirements. Among the risks in emerging market countries are bureaucratic intrusions and delays, contract compliance failures, engrained business partners that do not comply with local or U.S. law, fluctuating currencies and interest rates, limitations on the amount and nature of investments, restrictions on permissible forms and structures of investment, unreliable legal and financial infrastructure, regime disruption and political unrest, uncontrolled inflation and commodity prices, fierce local competition by companies with better political connections, and corruption. In addition, the costs of compliance with local laws and regulations in emerging markets may negatively impact our competitive position as compared to locally owned manufacturers.
The failure or inability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems and their failure or inability to deliver them in a timely manner could cause installation delays, cancellations, penalty payments and damage to our reputation.
We rely on a limited number of third-party suppliers for some of the components and raw materials such as batteries, inverters, enclosures, and transformers for our BESSs. If any of our suppliers fail or are unable to provide sufficient components or raw materials at the level of quality required, or if our suppliers fail or are unable to or unwilling to provide us with the contracted quantities (as we have limited or in some case no alternatives for supply), or if our suppliers cancel the contracted quantities without sufficient lead time to order the materials from another supplier, or if our suppliers fail or are unable to deliver the components or raw materials in a timely manner, then delays, cancellations, penalty payments, or damage to our reputation could occur, which could have a material adverse effect on our business and our results of operations. If we fail to develop or maintain our relationships with any of our suppliers, or if there is otherwise a shortage, lack of availability, or cancellation of the purchase of any required raw materials or components, we may be unable to manufacture our energy storage systems or such products may be available only at a higher cost or after a long delay.
Additionally, there are increasing expectations in various jurisdictions that companies monitor the environmental and social performance of their suppliers, including sourcing of materials and compliance with a variety of labor practices, as well as consider a wider range of potential environmental and social matters, including the end-of-life considerations for products. In addition, increasing concern and focus on limiting forced labor may result in additional regulations targeting the markets we operate in and from which we source products and materials. Certain existing laws impose prohibitions on the importation of goods made with forced labor or compulsory prison labor, including the Tariff Act of 1930, the Uyghur Forced Labor Prevention Act (“UFLPA”), and other global laws against forced labor. The UFLPA places restrictions on imports from Xinjiang, a key source of materials in global supply chains. Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or to design supply chains to avoid certain regions altogether. Failure to comply with such regulations can result in fines, reputational damage, import ineligibility for our products or product components, or otherwise adversely impact our business. Current or future supply chain interruptions that could be exacerbated by global political tensions, such as the situation in Ukraine, conflict in the Middle East, including the current conflict between the U.S. and Iran, and public health emergencies, could also negatively impact our ability to acquire necessary raw materials and components. Such delays could prevent us from delivering our energy storage systems to customers within required time frames and cause order cancellations. Developing required raw materials and constructing required components for our products are time and capital intensive. Accordingly, the number of suppliers we have for some of our components and materials is limited and, in some cases, sole sourced. We may be unable to obtain comparable components from alternative suppliers without considerable delay, expense, or at all. If our suppliers face difficulties obtaining the credit or capital necessary to expand their operations when needed, they could be unable to supply necessary raw materials and components needed to support our planned sales and services operations, which would negatively impact our sales volumes and cash flows.
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Our systems often rely on interconnections to distribution and transmission facilities that are owned and operated by third parties, and as a result, are exposed to interconnection and transmission facility development and curtailment risks.
A primary potential use case for our energy storage systems involves interconnection with electric distribution and transmission facilities owned and operated by regulated utilities, and independent system operators, necessary to deliver the electricity that our energy storage systems produce. A failure or delay in the operation or development of these distribution or transmission facilities could result in a loss of revenues or breach of a contract because such a failure or delay could limit the amount of electricity that our energy storage systems deliver or delay the completion of our construction projects. In addition, certain of our energy storage systems’ generation may be curtailed without compensation due to distribution and transmission limitations, reducing our revenues and impairing our ability to capitalize fully on a particular project’s potential. Such a failure or curtailment at levels above our expectations could adversely affect our business.
Our business is subject to risks associated with construction, cost overruns and delays, including those related to obtaining government permits and approvals, electrical interconnection, and other contingencies that may arise in the course of completing installations.
Our business is subject to risks relating to construction, cost overruns and delays. The installation and operation of our energy storage systems at a particular site are generally subject to oversight and regulation in accordance with national, state, tribal, and local laws and ordinances relating to building codes, health and safety, environmental protection, FERC and specific Independent System Operators (“ISOs”) regulation and related matters, and typically requires obtaining and keeping in good standing various local and other governmental approvals and permits, including environmental approvals and permits, that vary by jurisdiction. In some cases, these approvals and permits require periodic renewal. It is difficult and costly to track the requirements of every individual authority having jurisdiction over energy storage system installations, to design our energy storage systems to comply with these varying standards, which may change over time, and for us and our customers to obtain all applicable approvals and permits. We cannot predict whether or when all permits and approvals required for a given project will be granted or whether the conditions associated with the permits and approvals will be achievable. The denial of a permit or approval or utility connection that is essential to a project or the imposition of impractical conditions would impair our or our customer’s ability to develop the project. In addition, we cannot predict whether the permitting and approvals process will be lengthened due to complexities and appeals. Delay in the review and permitting process for a project can impair or delay our or our customers’ abilities to develop that project or increase the cost so substantially that the project is no longer attractive. Furthermore, unforeseen delays in the review and permitting process could delay the timing of the installation of our energy storage systems and could therefore adversely affect the timing of the recognition of revenue related to hardware acceptance by our customer, or our own ability to generate revenue from our owned projects which could adversely affect our operating results in a particular period. Delays relating to construction may also bring about cost overruns, which could further adversely affect our business.
In addition, the successful installation of our energy storage systems is dependent upon the availability of and timely connection to the local electric grid. Before beginning construction on an energy storage system, we may be unable to obtain in a timely fashion or at all the required consent and authorization of local utilities to ensure successful interconnection to energy grids to enable the successful discharge of renewable energy to customers. Any delays in our customers’ ability to connect with utilities, delays in the performance of installation-related services or poor performance of installation-related services will have an adverse effect on our results and could cause operating results to vary materially from period to period.
The size of our G-VAULT products may negatively impact our ability to enter into contracts with customers or obtain government permits and approvals.
Our G-VAULT products require a considerably larger space for their deployment than comparable systems based on certain technologies such as lithium-ion technology, and this can result in a significant delay in the permitting process. In addition, the size of our G-VAULT products may represent an impediment for deployment in denser areas or areas with restrictions on the height of buildings. And, in light of the size of our systems, we generally require hard soil or the ability to get to bedrock in order to deploy our systems. These factors may negatively impact our ability to enter into customer contracts or obtain government permits and approvals, each of which may materially affect our business.
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Our G-VAULT and H-VAULT products are based on established principles that are deployed in a novel way to create new technologies to store energy and potential customers may be hesitant to make a significant investment in our technology or abandon the technology they are currently using.
The design of our G-VAULT and H-VAULT products are based on established principles that are deployed in a novel way; the products are intended to provide longer energy storage durations than are provided by other types of energy storage systems.
Potential customers who previously invested in alternatives to our innovative products may not deem a transition to our existing or future advanced energy storage solutions to be cost-effective. In particular, recently the costs of lithium-ion batteries has declined precipitously making our advanced products less cost efficient in comparison. Moreover, given the limited history of our advanced products, potential customers may be hesitant to make a significant investment in our products. Our business, results of operations, financial condition and prospects could be adversely affected to the extent that customers, for any reason, do not adopt our systems or migrate to our systems from another energy storage technology.
We face additional risks to the extent that customers choose to purchase energy storage and dispatch of electricity from systems we build and in which we retain an ownership interest rather than purchase an energy storage system.
In certain circumstances we enter into tolling arrangements in which customers purchase the energy storage and dispatch of electricity from us while we retain an ownership interest in the system. To date, we have entered into two such tolling arrangements, but we are actively looking at additional opportunities.
We could face additional risks when we own and operate energy storage systems, as compared to when the customer owns and operates energy storage systems that we build. For example, we may need to seek equity and/or debt financing to fund the construction and operation of any energy storage systems built in connection with a project for a customer who chooses to enter into a tolling arrangement. Such financing may not be available on terms acceptable to us, if at all. Moreover, we expect that any such indebtedness would be secured by a lien on the related energy storage system, and the governing debt agreement may contain covenants imposing operating and financial restrictions on our operations. In addition, until any such debt is repaid, we may not be able to generate meaningful cash flow from the project. Moreover, the failure of our customers to make payments could trigger an event of default under such governing debt agreements, which could result in the acceleration of repayment of our outstanding indebtedness or even entitle our lender to foreclose on the collateral securing our debt. In addition, to the extent equity financing is also used, our right to receive cash flows from the project could be subordinated to the other equity investors.
Additionally, there could be a material adverse effect on our operating results and our cash flows to the extent we own and operate our energy storage systems for the benefit of customers under tolling arrangements. For example, we would not expect to receive any payments from the customer until the system is completed and expenses relating to insurance premiums, personnel, and our interest payments under debt agreements would be increased, and such increases may be material. We could also be required to provide ongoing maintenance and repair services or could face liability for any damages or injuries if the system malfunctions. Additionally, we would be subject to the risks of termination of the agreement by the customer and the inability to replace the customer would result in the system failing to generate revenue. We may also incur liabilities as a result of a performance failure or other breach of our obligations in connection with the operation of the system.
We may also be subject to additional legal and regulatory restrictions to the extent we own and operate an energy storage system, including relating to the transmission of energy. Such legal and regulatory restrictions could increase the costs of compliance and potentially subject us to threatened or actual litigation or administrative proceedings, each of which could have a material adverse effect on our business, operating results and financial condition.
Increased attention to, and scrutiny of, ESG matters could increase our costs, harm our reputation, impact our share price or access to or cost of capital, or otherwise adversely impact our business.
Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices. Expectations regarding ESG initiatives and disclosures and consumer demand for alternative forms of energy may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain products, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.
While we may at times engage in initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company or to respond to stakeholder expectations, such initiatives may be costly and may not have the desired effect. Expectations regarding Company management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. For example, we may ultimately be unable to complete certain initiatives or targets, or execute on any opportunities we have identified, either on the timelines initially announced or at
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all, due to technological difficulties, unforeseen costs, inaccurate forecasts, or other constraints, which may be within or outside of our control. Such initiatives and targets are often aspirational and we cannot guarantee we will be able to meet or make progress against any such initiatives or targets. Moreover, actions or statements that we may take based on expectations, assumptions, hypothetical scenarios, or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation. If we fail to, or are perceived to fail to, comply with or advance certain ESG initiatives (including the timeline and manner in which we complete such initiatives), or to not keep pace with peers on ESG initiatives and/or disclosures, we may be subject to various adverse impacts, including reputational damage and potential stakeholder engagement and/or litigation. For example, there have been increasing allegations of greenwashing against companies making certain ESG claims due to a variety of perceived deficiencies in performance, efficacy, or methodology, including as stakeholder perceptions of sustainability continue to evolve.
Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and processes to assess companies’ ESG profiles in making investment or voting decisions. Unfavorable ESG ratings or recommendations could lead to increased negative investor sentiment towards us, which could negatively impact our share price as well as our access to and cost of capital or the ability to complete projects. To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees, customers, and/or business partners, which may adversely impact our operations. While many stakeholders expect companies to pursue ESG initiatives, some stakeholders and regulators (both domestic and international) have expressed or pursued opposing views, legislation, and investment expectations with respect to ESG-related matters. Certain employment or business policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve. More recent political developments could mean that we face increasing criticism or litigation risks from both advocates and opponents of such matters, including various governmental agencies. Such sentiment may focus on our environmental commitments (such as reducing GHG emissions) or our pursuit of certain employment or business practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violated laws based, in part, on changing priorities of, or interpretation by, federal agencies or state governments. Unfavorable press about ratings or assessments of our ESG practices, regardless of whether or not we comply with legal requirements, may lead to negative investor sentiment toward us, which could have a negative impact on our business. We may ultimately be subject to regulations that are not uniform in nature or reflective of shared regulatory goals. Our efforts to respond to varying requirements may not be successful and/or may subject us to additional stakeholder engagement. Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
Should we pursue acquisitions in the future, it would be subject to risks associated with acquisitions.
We may acquire additional assets, products, technologies, or businesses that are complementary to our existing business. In particular, we are actively seeking new opportunities for our Build-Own-Operate model. The process of identifying and consummating acquisitions and the subsequent integration of new assets and businesses into our own business would require attention from management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the expected financial results. Acquisitions could also result in the use of cash, potentially dilutive issuances of equity securities, the occurrence of goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business.
If we complete future acquisitions, we may not ultimately strengthen our competitive position or achieve our goals and business strategy. We may be subject to claims or liabilities assumed from an acquired company, product, or technology; acquisitions we complete could be viewed negatively by our customers, investors, and securities analysts; and we may incur costs and expenses necessary to address an acquired company’s failure to comply with laws and governmental rules and regulations. Additionally, we may be subject to litigation or other claims in connection with the acquired company, including claims from terminated employees, former stockholders or other third parties, which may differ from or be more significant than the risks our business faces. If we are unsuccessful at integrating future acquisitions in a timely manner, or the technologies and operations associated with such acquisitions, our revenue and operating results could be adversely affected. Any integration process may require significant time and resources, which may disrupt our ongoing business and divert management’s attention, and we may not be able to manage the integration process successfully or in a timely manner. We may not successfully evaluate or utilize the acquired technology or personnel, realize anticipated synergies from the acquisition, or accurately forecast the financial impact of an acquisition transaction and integration of such acquisition, including accounting charges and any potential impairment of goodwill and intangible assets recognized in connection with such acquisitions. We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any future acquisitions, each of which could adversely affect our financial condition or the market price of our common stock. Furthermore, the sale of equity or issuance of equity-linked debt to finance any future acquisitions could result in
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dilution to our stockholders. The occurrence of any of these risks could harm our business, operating results, and financial condition.
Our operations are international, and expanding operations in some international markets could expose us to additional risks.
Our operations are international, and we continue to expand our business internationally as we seek to partner with customers, suppliers and other partners around the world. We currently have operations in Switzerland, Australia, United Kingdom, sales agents in other territories, and our signed purchase order and letters of intent are with counterparties around the world. Managing further international expansion will require additional resources and controls including additional support, manufacturing, and assembly facilities. Any expansion internationally could subject our business to risks associated with international operations, including:
•conformity with applicable business customs, including translation into foreign languages and associated expenses;
•lack of availability of government incentives and subsidies;
•challenges in arranging, and availability of, financing for our customers;
•potential changes to our established business model;
•cost of alternative power sources, which could be meaningfully lower outside the United States;
•availability and cost of raw materials, labor, equipment for manufacturing or assembling our energy storage systems;
•difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and customers, and the increased travel, infrastructure, finance, and legal and compliance costs associated with international operations;
•installation challenges which we have not encountered before which may require the development of a unique model for each country;
•compliance with multiple, potentially conflicting and changing governmental laws, regulations, and permitting processes including construction, environmental, banking, employment, tax, safety, security, grid minimum performances, and data privacy and protection laws and regulations;
•compliance with U.S. and foreign anti-bribery laws including the Foreign Corrupt Practices Act and the U.K. Anti-Bribery Act;
•greater difficulties in securing or enforcing our IP rights in certain jurisdictions, or greater chance of potential infringement of third-party IP rights in new jurisdictions;
•difficulties in funding our international operations;
•difficulties in collecting payments in foreign currencies and associated foreign currency exposure;
•restrictions on repatriation of earnings;
•compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and compliance with applicable U.S. tax laws as they relate to international operations, the complexity and adverse consequences of such tax laws, and potentially adverse tax consequences due to changes in such tax laws;
•increases or decreases in our expenses caused by fluctuation in foreign currency exchange rates;
•changes in tariffs and import/export regulations imposed by local governments;
•changes in regulations regarding the use of waste materials in our products;
•changes in regulations that would prevent us from doing business in specified countries;
•failure of the supply chain in local countries to provide us with materials of a sufficient quality and quantity delivered on timelines we expect;
•the impacts of government spending on infrastructure projects and more broadly, including any impacts of government debt defaults or budget crises (including in the United States);
•the outbreak of war or other hostilities, including the current conflict between the U.S. and Iran; and
•regional economic and political conditions.
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As a result of these risks, any potential future international expansion efforts that we may undertake may not be successful.
In addition, nearly all of our letters of intent are denominated in U.S. dollars, and certain of our definitive agreements could be denominated in currencies other than the U.S. dollar. A strengthening of the U.S. dollar could increase the cost of our solutions to our international customers, which could adversely affect our business and results of operations. In addition, if an increased portion of our operating expenses is incurred outside the United States and is denominated in foreign currencies, we would be subject to increased financial impacts resulting from fluctuations in foreign currency exchange rates. If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected.
Our future growth is dependent upon the pace and depth of energy storage technologies, which are emerging industries, as well as our competition. If the markets for energy storage do not develop as we expect, or if they develop more slowly than we expect, our business, prospects, financial condition and operating results could be adversely affected.
Our future growth depends upon factors in our industry, including with respect to our competition, the speed at which the market adopts energy storage for grid reliability, our ability to penetrate such market and the state of energy storage technologies. Because energy storage is an emerging industry, it is evolving and characterized by rapidly changing technologies, changing government regulation and industry standards, and changing consumer demands and behaviors. If this market does not develop as we expect, including if it develops more slowly than we expect, demand for our energy storage systems or any digital platform that we may develop, our business, prospects, financial condition and operating results could be adversely affected.
Additionally, the energy storage market is largely driven by installed capacity of renewable electricity generation and increasing demand for renewable sources of power. Since many of these renewable sources of power are intermittent, like wind and solar, the energy produced by them must be stored for use when there is demand. Should government requirements for these intermittent power sources be relaxed or social desires for lower-carbon sources of energy decline, there could be a detrimental impact on one of our primary markets.
Even if renewable energy and energy storage become more widely adopted, our energy storage technology may not achieve widespread market acceptance or may be less cost-effective as compared to competing technologies.
Our business depends on the acceptance of our products in the marketplace. Even if renewable energy and energy storage become more widely adopted than they have been to date, potential customers may choose energy storage products from our competitors that are based on their technologies. If they do so, it may be difficult to later transition such potential customers to products offered by us. Moreover, the marketplace for renewable energy storage products is rapidly evolving, and competing technologies of which we are currently unaware may emerge in the future. If the energy storage technology that supports our products does not achieve market acceptance, then our business and results of operations would be materially adversely affected.
The growth and profitability of our business are dependent upon our technology being more cost-effective than competing energy storage technologies. To the extent our offerings are not eligible for various regulatory incentives, while those of our competitors are, it may adversely impact our competitiveness or otherwise adversely impact our business.
We operate in highly competitive energy industries and there is increasing competition. Many of our competitors and future competitors may have significantly more financial and other resources than we do and if we do not compete effectively, our competitive positioning and our operating results will be harmed.
The energy markets in which we compete continue to evolve and are highly competitive. Many of our current and potential competitors are large entities at a more advanced stage in development and commercialization than we are and in some cases have significantly more financial and other resources, including larger numbers of managerial and technical personnel, to increase their market share. For example, several companies, such as ESS Inc., Eos Energy Enterprises Inc., Hydrostor Inc. and Primus Power, have each announced plans and demonstrated prototypes of products that would compete in the energy storage market, and battery vendors with whom we compete, such as Tesla, Inc., Fluence Energy, Inc., LG Chem, Ltd., Samsung Electronics Co., Ltd and Contemporary Amperex Technology Co. Limited, have already commercialized their respective energy storage solution products. Companies such as Tesla, Inc., Fluence Energy, Inc. and Wartsila Corporation have developed or are developing their own energy management software. If our competitors continue to penetrate the renewable energy, energy storage and energy management software markets, we may experience a reduction in potential and actual market share. Furthermore, certain industry participants against whom we do not currently compete (including, in some cases, our suppliers) may shift their strategic focus and begin competing directly with us. To date, we have focused our efforts on recruiting management and other employees, business planning, raising capital, selecting applicable third-party technologies, establishing and attempting to establish partnerships with potential suppliers, customers and ecosystem partners, developing our gravity, battery, and green hydrogen energy storage systems, a digital platform, and general corporate development.
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We expect competition in energy storage technology to intensify due to a regulatory push for lower-carbon energy sources, including intermittent sources such as wind and solar, continuing globalization, and consolidation in the energy industry. Developments in alternative technologies or improvements in energy storage technology made by competitors may materially adversely affect the sales, pricing and gross margins of our future energy storage systems and any digital platform. If a competing process or technology is developed that has superior operational or price performance, our business would be harmed.
Furthermore, our energy storage technology also competes with other emerging or evolving technologies, such as thermal storage, chemical storage, and carbon capture storage and sequestration. If we are unable to keep up with competitive developments, including if such technologies achieve lower prices or enjoy greater policy support than our technology, our competitive position and growth prospects may be harmed, which would adversely affect our business, prospects and financial condition.
Some of our current and potential competitors have longer operating histories and greater financial, technical, marketing and other resources than we do. These factors may allow our competitors to respond more quickly or efficiently than we can to new or emerging technologies. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to more effectively compete for new energy storage projects and energy management software customers.
We intend to continue committing significant resources to establish a competitive position. There is no assurance we will successfully identify the right partners, or that products and technologies developed by others will not render our energy storage systems and any digital platform that we may develop obsolete or noncompetitive, any of which would adversely affect our business, prospects and operating results.
If we are unable to attract and retain key employees and hire qualified management, technical, engineering, and sales personnel, including a highly skilled management team with diverse experience in the energy storage sectors, our ability to compete and successfully grow our business could be harmed.
We believe that our success and our ability to reach our strategic objectives are highly dependent on the contributions of our key management, technical, engineering and sales personnel. The loss of the services of any of our key employees could disrupt our operations, delay the development and introduction of our products and services, including with respect to our prototype products, and negatively impact our business, prospects and operating results. In particular, we are highly dependent on the services of Robert Piconi, our Chief Executive Officer. None of our key employees is bound by an employment agreement for any specific term. We cannot assure you that we will be able to successfully attract and retain senior leadership necessary to grow our business. Furthermore, there is increasing competition for talented individuals in our field, and competition for qualified personnel is especially intense in the renewable energy and energy storage industry in the U.S., Australia, and Switzerland, where our offices are located. Our failure to attract and retain our executive officers and other key technology, sales, marketing and support personnel, could adversely impact our business, prospects, financial condition, and operating results.
We believe that it is vital to our operating success that we recruit and retain key personnel, including a highly skilled management team with diverse experience in the renewable energy and energy storage sectors. If we fail to maintain a highly skilled management team, we may not be able to achieve our strategic objectives, which would negatively impact our business and operating success. In addition, because our industry is still in a nascent stage, there is and will continue to be a scarcity of skilled personnel with experience in our industry. If we lose a member of our management team or key employee, it may prove difficult for us to replace such employee with a similarly qualified individual with experience in the renewable energy and energy storage industry, which could impact our business and operating success.
Labor disputes could disrupt our ability to serve our customers and/or lead to higher labor costs.
As of December 31, 2025, we employed 142 full-time employees and six part-time employees, none of whom are represented by unions or collective bargaining agreements. If a union sought to organize any of our other employees, such organizing efforts or collective bargaining negotiations could potentially lead to work stoppages and/or slowdowns or strikes by certain of our employees. Additionally, the EPC firms that we rely upon to install our energy storage systems may have employees represented by unions or collective bargaining agreements. Any work stoppages and/or slowdowns by certain of our employees or certain employees at the EPC firms we contract with, could adversely affect our ability to serve our customers.
Further, settlement of actual or threatened labor disputes or an increase in the number of our employees covered by collective bargaining agreements could lead to higher labor costs and could impair productivity and flexibility.
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Changes in business, economic, or political conditions, including overall changes in demand, are beyond our control and could impact our business, resulting in lower revenues and other adverse effects to our results of operations.
Economic uncertainty and associated macroeconomic conditions, including heightened inflation, capital markets volatility, interest rate and currency rate fluctuations, and economic slowdown or recession, have resulted and may continue to result in unfavorable conditions that negatively affect demand for our products and exacerbate some of the other risks that affect our business, financial condition, and results of operations. Both domestic and international markets experienced inflationary pressures in 2022 and parts of 2023 and, while inflation has moderated recently, inflation rates in the U.S., as well as in other countries in which we operate, may increase again in the near-term. In addition, the Federal Reserve in the U.S. and other central banks in various countries have raised, and may again raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, has had and may continue to have the effect of further increasing economic uncertainty and heightening these risks. Interest rate increases or other government actions taken to reduce inflation have resulted in recessionary pressures in many parts of the world. Furthermore, currency exchange rates have been especially volatile in the recent past, and these currency fluctuations have affected, and may continue to affect, the reported value of our assets and liabilities, as well as our cash flows.
A significant downturn in the domestic or global economy may cause our customers to pause, delay, or cancel spending on our offerings or seek to lower their costs by exploring alternatives. Reductions in energy demand due to economic downturns or increased interest rates can make projects in which we invest to be less profitable than our expectations, if at all. To the extent purchases of our offerings are perceived by customers and potential customers as discretionary, our revenue may be disproportionately affected by delays or reductions in energy storage spending. Also, competitors may respond to challenging market conditions by lowering prices and attempting to lure away our customers.
Similarly, our business depends on the overall business and global or regional political conditions, which are beyond our control.
We cannot predict the timing, strength, or duration of any economic slowdown or any subsequent recovery generally, or any industry in particular or how global business and political conditions may change. To the extent that general business, economic or political conditions, including overall changes in demand for our products, decline, our business, financial condition and results of operations, including revenues, could be materially adversely affected.
The productivity of our facilities or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general may be affected by factors outside of our control, which could result in harm to our business and financial results.
The productivity of our facilities or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general could be adversely affected by events outside of our control, such as natural catastrophic events, geographical instability, wars, and other calamities. We cannot assure you that, collectively, our process and procedures to recover from a disaster or catastrophe will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, cyberattacks and other information security incidents, break-ins, war, riots, terrorist attacks, pandemics, or similar events outside of our control, certain of which may become more frequent or intense as a result of climate change. The severity of such factors and frequency at which they occur are also outside our control. If such factors occur our business, financial condition and results of operations, including revenues, could be materially adversely affected.
We are subject to a series of risks related to climate change.
There are inherent climate-related risks wherever business is conducted. Certain of our facilities, as well as third-party infrastructure on which we rely, are located in areas that have experienced, and are projected to continue to experience, various meteorological phenomena (such as drought, heatwaves, wildfire, storms, flooding, freezes, and winter storms, among others) or other catastrophic events that may disrupt our or our suppliers’ operations (as well as grid connections), require us to incur additional operating or capital expenditures, result in facility shutdowns, decrease productivity, result in operational risks and increased risks to employee safety, or otherwise adversely impact our business, financial condition, or results of operations. Climate change may increase the frequency and/or intensity of such events. For example, in certain areas, there has been an increase in power shutoffs associated with wildfire prevention. Climate change may also result in various chronic changes to the physical environment, such as changes to water levels, air quality, and/or ambient temperature and precipitation patterns. Physical risks may also compound and contribute to further or more intense impacts. While we may take various actions to mitigate our business risks associated with climate change, this may require us to incur substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk. For example, to the extent such events become more frequent or intense, we may not be able to procure insurance to cover all potential losses on terms we deem acceptable.
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We are subject to certain risks associated with the energy transition. We anticipate there will be costs associated with transitioning to lower emissions technologies, as well as risks associated with newer technologies, including risks that particular technologies we invest in may not ultimately prove successful or financially viable, as well as other risks that may not presently be known to us. Similarly, the price and availability of various inputs for the products we offer, including electricity and various metals, vary in response to market trends, which may result in higher costs and/or operational disruptions, or other adverse impacts. These impacts may also be exacerbated by various responses from policymakers, including in manners that may, for national security or other factors, do not promote the availability or affordability of such materials.
Additionally, we expect to be subject to increased regulations, reporting requirements, standards, or expectations regarding the environmental impacts of our business. For example, policymakers in various jurisdictions, including the United States, United Kingdom, Australia, European Union, and the State of California, among others, have adopted or are considering adopting greenhouse gas (‘GHG”) pricing mechanisms, GHG emission limits, and/or requirements for the disclosure of certain climate-related information, which may require us to incur significant additional costs to comply and impose increased oversight obligations on our management and board of directors (“Board”). Such regulations may also impact our supply chain and the cost of various materials used in our offerings; while we are working to find alternatives to certain materials, we cannot guarantee that we will be able to find suitable alternatives at a cost, quality, or timeframe that is acceptable to us. Government efforts to promote climate resiliency may also result in increased regulatory obligations across a range of laws, not all of which may be primarily climate-related. The expectations of various stakeholders, including customers and employees, regarding such matters likewise continues to evolve. In addition, previously proposed or adopted requirements, including regulations addressing GHG emissions and climate-related disclosures, have been or may be withdrawn, legally challenged, or subject to potential repeal in certain jurisdictions, and such regulatory reversals, together with uncertainty surrounding the future status of these requirements, could reduce demand for renewable energy, including energy storage products such as ours, which could adversely affect our business. Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations.
Fuel prices, including volatility in the cost of diesel or natural gas or a prolonged period of low gasoline and natural gas costs, could decrease incentives to transition to renewable energy.