Invinity Energy Systems plc (AIM: IES) (AQSE: IES) (OTCQX: IESVF), a leading global manufacturer of utility-grade energy storage, is pleased to announce that it has signed a partnership and master supply agreement (the "Agreement") with Frontier Power Ltd ("Frontier"), a leading UK-based originator and developer of large energy infrastructure projects. The Agreement initially targets the deployment of up to 2 GWh (2000 MWh) of Invinity's ENDURIUM vanadium flow batteries into projects which will bid into the first application window for Ofgem's UK Long Duration Energy Storage ("LDES") Cap and Floor ("C&F") scheme, expected to be open between Q2 and Q3 2025.
Pursuant to the Agreement, Frontier Power has reserved up to 2 GWh of the Company's manufacturing capacity, on a right of first refusal basis, to support multiple project bids it is currently developing for submission into the C&F procurement process. Frontier will act as lead developer on these projects, securing overall project financing as well as acquiring land, connections and planning permission. Invinity will act as Frontier's exclusive flow battery supplier for LDES C&F projects, with final volumes to be determined by how much capacity is enabled by Ofgem's 2025 LDES window and how many (if any) project bids are accepted1. Upon reaching financial close on any successful projects, Frontier has agreed to pay Invinity a capacity reserve fee in order to support the Company's working capital requirements during the manufacturing process. Additionally, both companies have also agreed to explore further opportunities for collaboration in other territories where Frontier Power is active, including, but not limited, to Japan, Korea, Vietnam, Malaysia, the USA and the EU.
Invinity is currently in the process of upgrading its UK manufacturing capabilities and will continue to scale its capabilities over the coming months and years. This strategy ensures the Company can meet any contractual commitments to Frontier under the Agreement whilst also being able to service other customers in support of the Company's growth plans in the UK and abroad.
Since 2009, Frontier Power has originated, developed, acquired or advised on c.£5bn of assets such as; interconnectors2 (including the UK-Germany Neuconnect project) pumped hydro storage and a £1.0bn portfolio of Offshore Transmission Owner3 (OFTO) assets which Frontier currently manages. Invinity was chosen as Frontier's exclusive flow battery technology partner due to ENDURIUM's numerous advantages over other LDES technologies for large-scale projects in the UK, the Company's proven track record of delivering battery projects across three product generations and successfully scaling manufacturing in line with demand. This strategic partnership marks a significant step forward in the UK's clean energy transition and aims to boost domestic manufacturing, create jobs, and position the UK as a global leader in non-lithium energy storage alternatives.
Long duration energy storage is critical to balance the UK's electricity grid and reduce the significant amount of constraint payments currently required by storing excess renewable generation. Approximately £3bn is spent each year in curtailing excess wind generation in the UK and this is likely to continue to rise as more renewable generation comes online. The widespread deployment of LDES technology, such as Invinity's ENDURIUM batteries, can help to minimise renewable curtailment, making the most of the UK's own sovereign energy sources and providing low-cost, low-carbon, energy on-demand for all, resulting in improved energy security and reduced electricity bills for consumers.
In response, the Department for Energy Security & Net Zero ("DESNZ") decided to introduce a cap and floor regime to encourage investment in LDES. This regime, modelled on Ofgem's interconnector cap and floor regime, ensures a minimum amount of revenue for LDES operators. Conversely, the cap on revenue helps lower costs for consumers in return for their support in guaranteeing the minimum revenue. DESNZ has asked Ofgem to be the regulator for this regime, using their interconnector cap and floor experience.
Humza Malik, Chief Executive Officer at Frontier Power said:
"Our alliance with Invinity is a statement of our intent to revolutionise the UK's approach to long-duration energy storage. Frontier Power's track record in developing critical energy infrastructure, coupled with Invinity's proven battery technology, creates a formidable force in addressing the UK's energy transition challenges. This partnership goes beyond deploying batteries; it's about building a sustainable, secure energy future for the UK while creating economic opportunities across the country."
Jonathan Marren, Chief Executive Officer at Invinity said:
"Frontier Power combines deep energy and project finance expertise with significant relevant experience in developing and financing interconnector projects which operate on the same cap and floor revenue model upon which the LDES cap and floor scheme is being based. We are delighted to be partnered with them using their invaluable experience in this area to address the need for long duration energy storage in the UK and further afield.
"Maximising the use of the UK's own energy resources in the form of wind and solar power is essential to delivering enhanced energy security while also driving down costs for consumers. By deploying our Made in Britain batteries in partnership with Frontier Power and others across the UK energy industry, we are meeting this challenge head on."
