ESS Tech is working with Honeywell to advance its tech and hope to bring a product to market. Investors are excited about what the collaboration could mean, and on Monday sent shares of ESS up as much as 20%.
ESS is working on iron flow battery systems, which could be a major part of the solution as the world shifts towards renewable energy. The company's technology utilizes numerous resources like iron, salt, and water to offer energy storage for utility-scale energy storage applications. The technology could solve the problem of using solar, for example, to light up houses overnight.
The market for utility-scale energy storage could be $50 billion right now and could grow significantly from here should renewables continue to gain share, according to the LDES Council and McKinsey & Co. Honeywell wants to help ESS deliver on that promise.
On Monday, the two companies announced a collaboration to advance technology development and market adoption of iron flow battery storage systems. The purchase includes a Honeywell investment in ESS.
Bryan Glover, chief growth officer of Honeywell's performance materials and technology group, said in a statement.
The demand for long-term energy storage is a lucrative market opportunity in the energy sector, and the collaboration of Honeywell and ESS technology can accelerate decarbonization for the commercial, industrial and utility sectors. Our strategic collaboration with ESS will speed up Honeywell's ability to provide comprehensive solutions to our customers while working to advance long-duration energy storage across all industries requiring extensive energy storage.
ESS is a small company, generating just $2.8 million in revenue in its most recent quarter, and is still a long way off from profitability. This is a speculative stock, and investors drawn to the potential of iron flow battery tech should limit it to a small part of a well-diversified portfolio.
It's easy to understand why investors are excited today, he said. Honeywell, a market leader, has a reputation for assessing and advancing promising technologies. The company's eagerness to work with ESS is a clear indication of its potential.