ESS Tech, Inc. (GWH) | The Buildout — AI Infrastructure
The Verdict
ESS Tech designs and manufactures iron flow batteries that store electricity for multi-hour durations and are aimed at utilities, hyperscaler data centers, industrial microgrids and defense installations. The company is pivoting from legacy energy storage products to its new Energy Base platform. Its fit to the AI buildout is indirect: rising data-center electricity demand creates need for long-duration storage, and Google is a confirmed offtaker on the company's flagship utility project.
| Market Cap | — |
| Revenue (TTM) | $1M |
| Revenue Growth | −73.8% |
| EBITDA Margin (TTM) | -4063.6% |
| Net Cash | $9M |
| Earnings Beats | 1 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Google is confirmed offtaker on Project New Horizon, a 5 MW / 50 MWh system at SRP's Copper Crossing site, with cost sharing and multiyear operational testing.
- A $9.9 million Air Force / CTC contract places a long-duration storage system at Clear Space Force Station in Alaska; management described it as a landmark defense win.
- FY2025 operating expenses fell 33% to $29.7M, and adjusted EBITDA loss improved 38% to about -$44.3M; management says the reductions are structural.
- VoltStorage acquisition closed February 2026, adding iron salt battery IP and a new chief commercial officer.
- Balance sheet actions included a $15M registered direct offering in January 2026 and $8.6M raised through the ATM equity program.
What We’re Watching
- Two post-call listing/delisting notices in June and July 2026 threaten exchange listing and complicate capital access.
- Project New Horizon delivery is targeted for December 2027, and the flagship project is still undecided between a 10-year PPA and an equipment sale.
- Quantified remaining performance obligations were only $0.9M at March 31, 2026, despite management saying signed Tier 1 customers represent "multiples higher" than cumulative history since 2021.
- The COO departed during the manufacturing ramp; an interim COO is in place, and only a limited number of key suppliers are fully qualified.
The thesis is strengthening on counterparty quality but still unproven on execution and balance sheet. Signed Google, SRP, and Air Force business is real; however, revenue is near zero, Q1 2026 product revenue was negative, and the flagship project's financing structure is unresolved. The open question is whether Wilsonville can deliver first Energy Base units on time and with enough cash to reach 2027–2028 revenue.
Earnings
Q1 2026 revenue was $128,000, down 79% year over year, with product revenue negative $11,000. Gross loss was $7.0M and net loss was $15.9M, as cost of revenue included a $0.8M fixed-asset abandonment and roughly $1.0M incremental inventory reserve.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $0M | −$2M | $1M | −83.3% |
| Gross margin | -5498.4% | 972.2% | -1360.1% | -413830bps |
| EBITDA | −$11M | −$15M | −$17M | −31.3% |
| EPS | $-0.54 | $-1.21 | $-1.50 | −63.8% |
| Remaining performance obligations | $0.9M | n/a | n/a | — |
These are not promises. They are signed agreements with sophisticated counterparties.— Drew Buckley, Chief Executive Officer, 2026-03-05
Management tone: Management emphasized commercial validation through signed agreements and structural cost reductions while acknowledging no material 2026 revenue and further capital needs. It reframed open questions on New Horizon's PPA-versus-equipment structure and did not discuss the Customer A settlement disclosed in the same-day 10-K.
Management Guidance
No formal numeric FY2026 revenue, EBITDA, or net loss guidance was issued. Management expects no material revenue in 2026, with most revenues in 2027–2028. Project New Horizon manufacturing is expected to begin in 2026, with delivery targeted for December 2027; if the 10-year PPA is retained, New Horizon revenue recognition starts in 2028.
Trajectory
Reported revenue is decelerating and effectively reset to zero. FY2025 revenue was $1.6M, down from $6.3M in FY2024, and Q1 2026 revenue was $0.1M. Gross margins remain deeply negative because fixed costs and write-downs run against near-zero revenue; Q1 2026 gross loss was $7.0M on $0.128M revenue. The company describes this as a deliberate wind-down of legacy Energy Warehouse and Energy Center products ahead of Energy Base commercialization.
The Model
The model projects FY+1 revenue of $0.5M and EBITDA of -$42M (-7333.0%), followed by FY+2 revenue of $12.0M and EBITDA of -$25M (-192.0%). The near term is anchored by management's no-material-2026-revenue framing; FY+2 reflects the assumed first meaningful Energy Base deliveries in 2027–2028, with losses narrowing as revenue ramps.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2M | $0M | $12M |
| YoY Growth | — | −68.8% | +2300.0% |
| EBITDA | −$50M | −$42M | −$25M |
| EBITDA Margin | -3118.8% | -7333.0% | -192.0% |
Projections are the median of 5 independent model runs.
No formal numeric FY2026 revenue, EBITDA, or net loss guidance was issued. Management expects no material revenue in 2026, with most revenues in 2027–2028. Project New Horizon manufacturing is expected to begin in 2026, with delivery targeted for December 2027; if the 10-year PPA is retained, New Horizon revenue recognition starts in 2028.
What Could Go Right — and Wrong
- Wilsonville starts Energy Base manufacturing in 2026 and ships first units to named Tier 1 customers by 2027–2028.
- Project New Horizon is delivered in December 2027 and produces operational data by mid-2028 strong enough to unlock a larger SRP follow-on.
- The $9.9M Air Force/CTC system expands the defense vertical with additional awards.
- A quantified backlog disclosure converts management's "multiples higher" signed-customer claim into a measurable order book.
- Sodium-ion development becomes a complementary product line without diluting iron flow focus.
- Energy Base manufacturing slips again, pushing 2027–2028 revenue further out while cash continues to burn.
- Liquidity tightens further than the $13.6M reported as of May 31, 2026, forcing costly or dilutive capital raises.
- Project New Horizon stays a 10-year PPA, forcing ESS to finance and own the asset and delaying revenue into 2028.
- Delisting notices are not cured, impeding capital access and counterparty confidence.
- Only a limited number of fully qualified suppliers causes quality or delay problems on the manufacturing ramp.
Looking Ahead
The next twelve months are about evidence of manufacturing rather than revenue. Management expects Energy Base manufacturing to begin in 2026 and deliveries to signed Tier 1 customers in 2027–2028, with Project New Horizon delivery targeted for December 2027. Key watch items include Q2 2026 results, cash and remaining performance obligations, listing-status cure, any decision to convert New Horizon from a PPA to an equipment sale, and the sodium-ion roadmap.
- Q2 2026Q2 2026 financial results — Tests cash, remaining performance obligations, and any update to the manufacturing plan.
- 2026Energy Base manufacturing start — Tests whether Wilsonville shifts from development and tooling to first production build.
- 2027–2028Tier 1 customer deliveries — Tests whether signed unnamed customers convert into delivered Energy Base revenue.
- December 2027Project New Horizon delivery — Tests whether the first flagship system arrives on the revised timeline.
- 2028New Horizon revenue start — If the 10-year PPA is retained, first revenue recognition begins.
- Mid-2028SRP operational data — Tests performance data needed for a larger SRP follow-on opportunity.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6M | $2M | $1M | -74.6% |
| Gross Margin | -1873.5% | -703.0% | -2787.3% | +117,047bps |
| EBITDA | −$85M | −$50M | −$407M | +41.4% |
| EBITDA Margin | -1350.8% | -3118.8% | -4063.6% | 176,796bps |
| Net Income | −$86M | −$64M | −$61M | +26.3% |
| Free Cash Flow | −$80M | −$54M | −$376M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)-2787.3%
- EBITDA Margin (TTM)-4063.6%
- Net Margin (TTM)-5581.8%
- ROIC-10151.5%
- SBC / Revenue481.8%
The Company
ESS Tech is a long-duration energy storage company specializing in iron flow battery technology. Its current offering is the Energy Base, designed for 10- to 22-hour storage with power decoupled from capacity, aimed at utility-scale grids, hyperscaler data centers, industrial microgrids, and defense installations. The 10-K says the batteries are designed from earth-abundant materials and can be cycled over 20,000 times without capacity fade based on lab-scale results; the call describes unlimited cycling with 0 capacity degradation over a 25-year life.
The company operates as a single operating segment and manufactures in Wilsonville, Oregon, at an approximately 200,000-square-foot facility with automated and semi-automated battery lines. Management says products carry over 98% domestic content. It has no disclosed annual MW/GWh capacity figure, and its older Energy Warehouse and Energy Center products are no longer offered for sale.
Business Segments
Competitive Landscape
The 10-K divides competitors into traditional lithium-ion players including CATL, LG Chem, Samsung, Sungrow, and Tesla, and non-lithium-ion players such as EnerVenue, Invinity, CellCube, CMBlu Energy, Energy Dome, Energy Vault, Eos Energy, Form Energy, Highview Power, Hydrostor, Lockheed Martin GridStar Flow, and Malta. Management positions ESS as one of the only American-made, American-sourced long-duration storage solutions available today, while the source notes scaled peers are operating far larger.
- Verified competitor; source reports $645M backlog, 2.6 GWh, $24B pipeline, and a bankability platform.
- Energy VaultVerified competitor; $1.35B backlog, more than 1 GW under control, and AI/data-center deals with higher EBITDA contribution.
- TeslaNamed lithium-ion competitor; deployed 8.8 GWh of energy storage in Q1 2026.
- Form EnergyNon-lithium-ion competitor; has a commercial 100-hour iron-air deployment with Xcel for Google's ESA.
- Lockheed Martin (GridStar Flow)Named in filings as a non-lithium-ion competitor; not further discussed in the source.
Supply Chain
ESS sits between component suppliers and utility, hyperscaler, and defense energy buyers. Its 10-K says it depends on a limited number of third-party suppliers, with only a very limited number fully qualified.
More on GWH: Earnings recap