U.S.-based manufacturer of long-duration iron flow batteries, ESS Tech, Inc., posted revenue of $686,000 for the second quarter (Q2) compared to zero revenue generation for the same period in 2021.

The company said it started shipping the second-generation Energy Warehouses (EW) in the third quarter (Q3) of 2021 and continued the shipments until Q2 2022. The production costs of the units shipped significantly exceeded the selling prices.

The company recently received final customer acceptance for the units shipped in Q3 2021, while the cost of sold goods associated with these units was zero as ESS said it would use related costs as part of research and development (R&D) expenses.

The net income of ESS surged 357% year-over-year (YoY) to $247,000 as compared to $54,000. The company said that the increase in income was driven by interest earned on ESS’ short-term investment portfolio.

During the period, ESS entered a strategic partnership with Energy Storage Industries Asia Pacific (ESIAP) for the distribution and production of iron flow batteries by using ESS technology in Australia, New Zealand, and Oceania. The collaboration is aimed at meeting the rapid growth in demand for long-duration energy storage in the region.

ESS will initially supply 70 complete 75kW / 500kWh EW systems to ESI in 2022 and 2023. The ESI manufacturing facility is designed to reach a production capacity of up to 400 MW of energy storage annually.

Concurrently, ESI will construct a manufacturing facility in Queensland, Australia, equipped to conduct the final assembly of ESS systems from 2024. The EW systems manufactured at the Queensland facility will utilize core component kits supplied by ESS, including battery modules, proton pumps, and other unique components.

ESS spent $16.16 million on research and development, up 160% compared to $6.2 million in the same period last year. A surge in the purchase of materials and supplies, including freight costs, increases personnel-related expenses owing to expanded headcount and a spike in warranty-related prices led to the increase in expenditure on R&D.

In Q2, ESS ramped up its second semi-automated manufacturing line doubling its annual battery production capacity to 500 MWh.

The company completed the delivery of six of the EW units ordered by San Diego Gas & Electric. All six units would be coupled with solar energy to supply the Cameron Corners Microgrid and deliver the benefits of energy shifting while mitigating the effects of power safety shutdowns for critical services.

During the quarter, ESS delivered one EW to solar system design and installation service provider TerraSol Energies. The warehouse will be deployed next to Sycamore International, a technology recycling firm in Pennsylvania, where it will complement a solar installation to provide business continuity and energy cost savings.

In Q2, ESS inked a contract to deliver an Energy Center to Tampa Electric Company (TECO) to support TECO’s Big Bend Solar Project, which powers 3,300 households. Energy Center will deliver up to 10 hours of capacity and is intended to be used for solar peak shifting and fossil fuel displacement, while the new systems will be delivered by next year.

CEO of ESS Eric Dresselhuys said, “While our operational initiatives to lower costs and increase capacity remain on track, we have encountered supply challenges with certain vendors that may impact our ability to deliver to our plan of 40 to 50 Energy Warehouses this year. With that said, our second semi-automated manufacturing line is now fully operational, adding another 250 MWh of annual production capacity.”

Recently, another battery manufacturer, Solid Power, reported revenue of $4.77 million in the first half (1H) of 2022, a 358% YoY growth compared to $1.04 million.

Earlier this year, the U.S. Department of Energy (DOE) announced $3.16 billion in funding from President Joe Biden’s Bipartisan Infrastructure Law for the expansion of domestic battery production while bolstering supply chains.