What happened
Energy storage company ESS Tech (GWH +2.54%) is partnering with Honeywell (HON +0.55%) to advance its tech and hopefully bring a product to market. Investors are excited about what the collaboration could mean and sent shares of ESS up as much as 20% on Monday.
So what
ESS is working on iron flow battery systems, which could be a big part of the solution as the world works to shift toward renewable energy. The company's tech uses abundant resources including iron, salt, and water to provide energy storage for utility-scale energy storage applications. If it goes as planned, the tech could solve the problem of how to use solar, for example, to light up houses overnight.
The market for utility-scale energy storage could be as much as $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 companies announced a collaboration to advance technology development and market adoption of iron flow battery storage systems. The deal 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-duration energy storage represents a compelling market opportunity within the energy transition and the combination of Honeywell and ESS technology can accelerate decarbonization for the commercial, industrial and utility sectors. Our strategic collaboration with ESS will accelerate Honeywell's ability to bring comprehensive solutions to our customers while working to advance long-duration energy storage across all industries requiring expansive energy storage.
NYSE: GWH
Key Data Points
Now what
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 promise of iron flow battery tech should limit it to a small part of a well-diversified portfolio.
That said, it's easy to understand why investors are excited today. Honeywell is a market leader with a strong reputation for evaluating and advancing promising technologies. The company's interest in working with ESS is a solid endorsement of its potential.
