Energy Vault Claims Highlight The Lack Of Due Diligence In Cleantech SPACs

In an earlier article I picked apart Energy Vault’s two designs to date, both of which are obviously terrible, but in different ways. The first would have been a failure of epic proportions, with a CO2e per kWh in the range of coal in the best case scenario and a short lifespan. The second was differently bad, with a CO2e per kWh worse than natural gas generation and undoubtedly much higher costs. If only there were an alternative.

And, of course, there is.

For the comparison, I’ll use the obvious gravity storage technology, pumped hydro. I’ll specifically use the closed-loop, off-river pumped hydro model. That’s the one Australia National University’s Dr. Mattew Stocks assessed with his research team, using GIS models to identify 53,000 sites with more than 400 meters of head height near transmission and off protected land globally, and maintained in the ANU global pumped hydro atlas.

The closed loop, off river, and high head heights are important. The combination means that there is very little real concern about environmental impacts. No fish runs blocked. No downstream loss of silt. Very small reservoirs. Taking Stocks’ example, a 500-meter head height facility with a gigaliter of water would store a gigawatt hour of electricity, which puts the 35 MWh Energy Vault building in humbling context. It would require two reservoirs, each a square kilometer in area, basically big ponds. Per Stocks’ study, there are 100 times the resource potential as global energy storage requirements, and 200 times the resource in the US alone.

Remember the formula for potential energy, which is mass times gravity times height? Yeah, if you have an order of magnitude more height, you have an order of magnitude more energy for the same mass. And all masses are not created equal.

Do you know what the carbon debt of water is? Approaching zero. In some cases they just let the reservoirs fill up with rain. In most they run a pipe over from a nearby river, stream, or lake to move the small amount of water required, and to keep it topped up as evaporation takes its toll. In many cases, the water run is partially downhill to the lower reservoir, so energy costs are typically far less than moving the same water to the upper reservoir and charging the system. There is a carbon debt from building the tunnel between the reservoirs and piling up the dams, but it’s a tiny fraction of building weights and massive steel structures to hold them off of the ground on a per MW of capacity basis, or per kWh of delivered electricity.

Pumped hydro’s proven efficiency is 80%+ round trip, and it’s undoubtedly better than what Energy Vault will demonstrate at some future date. Pumped hydro lasts for over 100 years. We built the first one in 1907. When I spoke to China Light and Power, the Hong Kong utility, about their Guangdong facility, they’d shifted it to lights out, zero-human on site operation a decade earlier. Proven maintenance costs are about 1% of initial capital costs per year, once again vastly better than Energy Vault has any chance of achieving.

Naturally, Energy Vault disparages pumped hydro with what I would charitably call vast misrepresentations in their investor deck.

• • Large land requirements (few opportunities for new build)
  • Harms ecosystems / carbon intensive materials
  • High costs / low efficiency
  • Not scalable – difficult to optimize location near generation resources

The first is false, as the ANU study shows. The second is so hypocritical it’s hard to stomach, as the previous article made clear. The third is ridiculous compared to what Energy Vault will deliver. And the fourth is hilarious given that one Scottish developer alone, ILI, has 2.5 GW / 60 GWh between three projects. Clearly when Energy Vault presents, they hope no one in their audiences is actually knowledgeable about grid storage or grid operations.

The assertions that they make about pumped hydro are vastly more applicable to them. It’s almost like psychological projection.

There is a reason why the vast majority of grid storage today is pumped hydro, and the vast majority of grid storage under construction today is also pumped hydro. Energy Vault’s complex, carbon-intensive, ineffective, inefficient scheme need not apply.

So What Do The Markets Think?

Energy Vault stock chart courtesy Google

The reverse takeover SPAC deal was only completed on February 14th, and the stock has lost $1.2 billion already, or 40% of the market cap. The SPAC vehicle holders took their money and ran. Energy Vault only got $235 million out of the deal, and its ability to raise money against equity is now severely diminished. I expect further stock price declines will occur regularly over the next few years as it becomes apparent that they don’t have a climate solution.

This is similar to a lot of SPAC cleantech deals, a trend I’ve been tracking for a while. SPACs are what IPOs were in the dot-com era, and what ICOs were in 2016, an unregulated free for all of speculators and dubious pitches that don’t require due diligence. The SPAC hype bubble for urban air mobility electric vertical takeoff and landing air taxi companies like Joby, Archer, and Lilium is off $20 billion and counting since March 2021. Investigations and lawsuits are targeting Lilium for alleged false claims, and I expect more of that kind of thing in the SPAC space (no, I’m not saying that will happen with Energy Vault).

So Why Am I Bothering To Write About It?

Clearly, the company has serious problems with its solution and its claims. I hadn’t bothered to work up the numbers on its first prototype and claims about it previously because I have internalized the carbon debt of concrete, the failure rates of large scale mechanical equipment, and gravity storage calculations. No napkin math was required to laugh and ignore it.

But Bill Nussey and others poked me about it a couple of times, and so I at least owed it to him to get the numbers on the table. I mentioned Energy Vault in passing in my recent article using the frame Nussey had used for my podcast with him on Freeing Energy a couple of months ago, how would I spend a billion in bets on grid transformation. They obviously had their market debut within the past week, so it’s actually topical, something I don’t strive for.

Further, my fewer than 50 words on Energy Vault out of the 2,150 words in the piece triggered a reaction from Energy Vault, or at least its PR firm, whose work must be a bit challenging these days given the headlines of the stock price plummeting and terms like “highly speculative.” Cory Ziskind of ICR reached out to offer me time with the Energy Vault folks, and I demurred, at which point he basically suggested that I was intellectually dishonest for not wasting my time.

This is not to say that most of the people involved with Energy Vault have their hearts in the wrong place by the way. The investors who had their money in the SPAC that ate Energy Vault likely did, but that’s a different story. I’ve dealt with an absurd number of clearly non-viable technologies, from airborne wind energy to hydrogen-for-fuel to direct-air capture of carbon, and usually the people in the firms have convinced themselves that they have a solution, or hope that they can find a way to overcome reality, or at least that’s an interesting engineering challenge with lots of dollars attached that has a faint hope of being viable. But I’m uninterested in spending time with them when I could spend time with people doing seriously good work, like Karsten Temme of Pivot Bio or Anders Forslund of Heart Aerospace.

I would happily spend time helping the money guys, Gross and Gates, get their investments better aligned with empirical reality, but offers to assist Gates have fallen on deaf ears since 2016, and they are surrounded by strong-willed advisors already, so I hold out no hope of that. I prefer to engage with people building real climate solutions and being honest about them. At least Heliogen had some interesting tech in its use of machine learning to autofocus the mirrors, something I thought would eventually find applicability. But Energy Venture? There’s zero useful intellectual capital in it.

And so, my time paying attention to Energy Vault draws to a close. My assessment of its viability as a climate solution with hard numbers working from their sources and high-quality third party references made clear what my trained intuition told me the first time I looked at the erector set looking for funding. Energy Vault’s tech is not a solution, and while it will work at least for a while, it won’t be cheap, it will have lots of failure conditions and it will be high-carbon. The market appears to be agreeing, yanking money out rapidly.

I’ve been assessing and publishing on grid-scale storage options for years. I’ve looked at the embodied carbon, the thermodynamics, the chemistries, the deployments, the economics and the research. I’ve spoken to grid storage researchers and deployers globally. I’m strategic advisor and board observer for the multiple-award winning Agora Energy Technologies, a company developing a CO2-chemistry based redox flow battery, and I’m engaged professionally in pumped hydro as well, something I’ll be able to write more about later. I write, speak and consult on grid-scale storage regularly, and have spent time with a couple of the biggest investment banks in the world as well as VCs working through my observations. What some may consider bias, others would consider professional expertise. I’ll leave it to readers to be the judge.