Energy Vault Holdings, Inc. (NRGV) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to Energy Vault's First Investor and Analyst Day. On stage, I'd like to welcome Bernie Colson, who's going to take us through the safe harbor language.

Good morning. Welcome to Energy Vault's Inaugural Investor and Analyst Day. Thanks for being here with us today, those here in New York as well as those joining us virtually. The full Investor and Analyst Day presentation, first quarter financial results press release and [ abridged ] earnings presentation are all available now on our Investor website. We will be referring to these materials throughout the day. A replay of this event will also be made available later today on the Investor Relations page of our website. The entirety of the Investor and Analyst Day is being recorded and broadcast virtually. Please note that Energy Vault's first quarter 2024 earnings release as well as today's Investor and Analyst Day presentation will contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. We caution everyone to be guided in their analysis of Energy Vault by referring to our SEC filings for a list of factors that may cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. [Presentation]

I'm delighted to welcome to the stage, Robert Piconi, our Chairman of the Board and Chief Executive Officer.

Okay. Good morning, afternoon and evening to everybody. I appreciate all of you that have joined us here in New York this morning. It is great to be back. I also want to welcome everybody that's dialing in. We have a few hundred people actually that have dialed in for this event. So welcome to all of you. . Great to be back here, where just over 2 years ago, we took the company public on Valentine's Day in 2022. Amazing the last 2 years from what it's been. And I think in terms of timing and as I think about the timing of us having this dialogue and this concept of Unlocking the Vault and what we've done in the last 2 years in different solutions all over the world, 4 corners of the world, different technologies; it is the right time to have this discussion. And why is that? This is now a discussion not about what will come or what needs to be proven or what we are going to do, it's building off a base of what we've already done from turning over a gigawatt hour already in the United States, for example, in battery projects, getting our technology up and operating, for example, in China. It will be a very data-driven discussion today, as you would expect. This is an Investor Day. So I think there'll be a lot of transparency. We have a new CFO that I'll be introducing here in a minute that's going to be covering most of that. But it will also be a customer-driven discussion, meaning this is a discussion that's going to come from also testimonials from our customers that are operating the systems that we built and delivered. So in terms of us having a dialogue, I think, with investors now about what we've done in the last 2 years, but then very importantly, what we're going to be doing in the next few years as an investment thesis, it's quite a strong and compelling message we feel that we've put together today. And with what we're doing in the energy storage space and transforming how we deploy solutions, how we solve customer problems from a mentality and mindset, I hope you'll agree with me that we're really innovating in ways no one has ever done in energy storage and at a speed and velocity that has not been seen. On the agenda here, we've got, I think, a great portfolio of things to discuss. I'm going to spend some time upfront talking about some of the state of the business. We are going to get into some numbers here right away and go over some of the things we are announcing new today. So part of this day is not only about getting into what we've done, getting into what we're going to be doing over the next few years, so we will be sharing some of that guidance; but today, we're also announcing new customers, new products, new regions and also sharing a little bit about our business model, opening up the kimono a little bit on how some of these things are going to flow over the next few years. We've got a great and deep set of discussions around our product portfolio, so I think that's fundamental and important. It's a great, I think, time for us to be talking about that technology, given what's happening in the market. Uniquely, just in the last 2 weeks, I've spent 10 of those days going around the world, into China, also in Saudi Arabia that I'll talk about for the World Economic Forum and then coming back here -- actually flew back over the [ Pole ]. So it was quite a round trip. I'm going to share some of those perspectives because there are some transformational things happening in energy, transformational in terms of the amount of just the pure terawatt demand that we're seeing and that the world is seeing and a lot of questions of how we're going to meet that demand. Absolutely, I think what would be undisputed and not disputed at all is energy storage is going to play an important role. We're going to be finishing with Michael Beer, our new CFO, that's I think -- what is this your -- I think fourth week or third week, Michael, on the job? Fourth week in the job. Very excited to have Michael here in -- having him covering the bulk of what we're going to be going over financially, both in terms of the results we announced yesterday that hopefully many of you have seen as well as importantly, some guidance as we look in standing today over the next 18 months. So it's another, I think, unique time, given we're progressing here in 2024. We have pretty good visibility, as you would expect, in terms of the rest of this year, but as well as what we have underway into 2025. So Michael is going to be covering that. We will insert some question-and-answer periods within this and a lot of very exciting content and videos directly from our customers. That's how we lead, that's what drives our company at the end of the day. We can say and you can believe what you want from what comes from our mouths, but at the end of the day, it's the customer that decides who's best. They're choosing us, that feels great, and we're going to share with you what that's going to look like over the next few years. Okay. We're going to start with numbers, and let's first start by looking back over the last 2 years. We built almost $0.5 billion of revenue over the last 2 years. I think in energy storage, it is obviously a newer space from a technology perspective. But as an energy storage company, there's some that have been around for 10 to 15 years, pretty unprecedented in what we've done here in the first 24 months of revenue and with a gross margin profile that is quite unusual in this space as well. So to have a blended double-digit gross margin, a combination of businesses, where we've been able to monetize, for example, our gravity energy storage in a long-duration market that is still evolving and still can be described as nascent, I think that's going to be changing more quickly than we thought. I'll share with you why in a little bit, but also built and built a very large funnel. Marco Terruzzin is here, our Chief Product and Commercial Officer, that if you start from the left side, almost 10 gigawatt hours of things that's either awarded or shortlisted, very interestingly, over 60% of that, that's awarded and shortlisted, comes from either existing customers where we've already turned things over or strategic partners, investors. So obviously, a high confidence there. We're going to talk about that a little later. Contracted of the 2-gigawatt hour, some of which we've seen in some of the revenue already, but a full gigawatt hour now in operation, and you're going to be hearing from our customers in that regard. But very importantly, in our first 2 years, all the projects that we've delivered, on time, on budget, safe. And again, no surprise -- the priority that is today, especially with some of the incidents that have occurred in some of the technologies, but with the team we've built, not a surprise to me that we're managing that very well and all with quality. Akshay Ladwa's here, and he is going to be talking a little bit about our software and our execution that he's driving for the company. And then I think very importantly for investors, strong cash position, we have managed that, we continue to manage that well. It's very important because that gives us the optionality and the flexibility as a company to do things like investing in our R&D centers and new customer centers that you're going to learn more about today to make some strategic investments as we've done in key strategic partners and just keep the working capital going through a business that's been a tough last 2 years between the interest rate environment, what's happening on the geopolitical arena. So we have to continue to plan for the unexpected and continue to manage as the stewards of investor and shareholder money. No debt on the balance sheet. And I think importantly, we have not nor do we have plans to do any dilutive type of financing. And I think if you look at a company of our size and scale and our growth, that's something quite unique, something we're proud of, but always looking now, as we're growing more and more, for continuing to look at ways to get growth capital into the company with some of the business models that we're going to be sharing with you today. If you look on the right side of that page, across our gravity, our battery and hydrogen portfolio, very interestingly, monetizing in the business model in different ways. Gravity, through licenses and in some of the biggest markets in the world like China, we are building out and have built out over a gigawatt hour of lithium-ion batteries. And then another business model with the green hydrogen, the largest one in the U.S. announced with the largest California utility, we own that project, it's a 10.5-year tolling agreement. So different technologies, different business models, all managed in a progression that we feel very good about and with a customer set, as you read there, that is really some of the largest players in their respective either states or in their category like IPP. So China, if you follow us closely, which I think most of you either on the call or in the room do, we had some big announcements over the weekend, the first operation and testing successful of the systems, that's charging and discharging our first gravity system in [ Rudong ] in China. It was grid interconnected last year in December, mechanically complete a little earlier in the Q3. So everything has progressed despite 2 COVID shutdowns in Shanghai, progressed in a very positive way with that and up to in including this past weekend. I was just there the week before in Shanghai, I'll share a little bit more from that trip. We also announced with China Tianying an extension of another 7.5 years of our license agreement, which will bring future royalties. On the left-hand side, some, again, top customers, Wellhead, one of the largest and oldest companies in California of gas peaker plants, but now going with hybridization, that came online in the summer at a very critical period. For those of you that know California, it's a tough market, especially if you're building things right in the middle of a neighborhood, which is where this was. So not a small achievement there at an important time for Wellhead. Nevada Energy, the largest energy company, our largest utility in the state of Nevada, completed a project in 4 months [ 440 ] megawatt hour, never been done in that time frame before to get them up and energized before the end of the year. Big accomplishment of the team putting that together and the partners we used. Jupiter Power, the largest IPP in ERCOT, BlackRock backed, another battery project brought online and energized just January last quarter and now bring -- brought to final completion here this quarter. So a lot happening that culminated in the Pacific Gas and Electric announcement we made about 1.5 years ago and now building and delivering that project this summer. It was a great culmination if you look at the first 12 months we had demonstrating our energy solution approach of addressing an ultra-long duration need that Pacific Gas and Electric thought could only be solved with gas because of the nature of what was requirement. They bring in diesel gen every year, we proposed a sustainable solution. We designed it. We architected it. We brought the best technology to the market to do it. And now we're deploying it. Again, another first and will be one of the first ones operational. And it really solidifies our leadership globally in long-duration technology to have these technologies not only announced, not only being built, the gravity system they're operating in China, and now this ultra-long duration microgrid will be operating this year. All first, very excited, and that everything I've just described and spending some time on it really starts with leadership and people. I'm talking about this upfront, it's not just about the 10 people that you see on this chart, it's the 180 strong of our employees. That's not a large number, by the way, it shows the flexibility of our business model and also the -- not only the CapEx-light, but the resource-light way we deal with technology development, but are very resourced to work with our customers in developing projects as well as executing those projects safely and on time. We've done it. So it's not something that I'm standing here saying we're going to do. We have been doing that. It is a strength and core value of this company to be known about delivery and execution. The other thing if you look at this team from a leadership perspective, we are very global. This is not a U.S.-centric team at all. Everyone you see here is here, except Andrea Pedretti, our CTO, who's Swiss by birth, but living now in California, and he's hosting a technology collaboration session with also some customers, hence he could not be here in-person. Going to -- Icoren is here, our Head of HR. They're in the back from Turkey originally, worked in Switzerland, from the health care area, Pfizer, Amgen out in California. We were lucky to grab her when we were out there and avoided a move. But again, global multinational, functionally excellent and the people function and has been a partner as we've built this company very quickly. Laurence Alexander is here, you heard from him a little bit earlier, based out of the U.K. and handles all of our marketing PR activity. Michael Beer, we announced a few weeks ago and is here there in the back of the room, our new CFO, and will be taking through a lot of the financial areas. But a lot of experience, no stranger to high-growth and public companies. Josh McMorrow is based out of Germany, is also here, our Chief Legal Officer of the company and just a wealth of experience dealing globally in all the parts of the world, where we're strong in building and growing. Chris Wiese here also in the front. Chris, I worked with for over 20 years across 4 companies. So we know each other, that's for the good and the bad, I guess, you say. And that makes work very well and very lucky to have him. Pulled him out of retirement to come and help us out. He's in Texas there, where we are announcing a new solution center for energy that's already being built in collaboration with [ Enel Green Power ]. Marco Terruzzin, our Chief Product and Commercial Officer, an Italian by birth, has worked all over the year -- all over the world, including 7 years in China after the Kyoto Protocol, looking at putting in place new carbon pricing models there. So just a wealth of experience. Akshay Ladwa, from India originally, more experience, I think, from an integration perspective than most in the world, having spent a lot of time at [ Greensmith ] Energy and integrating over 100 projects in 12 countries. There is a reason we've been able to commission these systems in the last 12 months, bring them up safely, bring them up at the quality customers expect. And it's not just about developing good technology. It starts with people and experience. Those customers that were on that prior stage do not give orders to new customers that present risks to them. Public utilities do not take risk. Companies like Wellhead, tried and true, very conservative company, they do not take risk. They do bet on people, and they do bet on some of the best people in the industry. I feel very good about this team. Finishing here, Kevin Keough, who we crossed path at [ Danaher ] company, many of you in the financial community know in the corporate development side and assisting us on development initiatives for the company. Okay. Starting off here to talk a little bit about what are we announcing today that's new. There is a lot new. I think with Energy Vault, you can always expect the unexpected. There's a lot that goes on behind the scenes we get done with a very efficient team. With China, you saw that we announced the first operation of the system and the testing of the system, the discharging of the system for the first time. But we also announced an extension [ of that ] license agreement. And that's fundamental. You'll remember that they paid and prepaid $50 million upfront to have that right to deploy the technology. Of course, what's the most exciting part for us is getting to deployments at volumes. So having this first system up and running now. But already, they had started 6 months ago, a second system that was already out of the ground. Obviously, it shows a lot of confidence from them, but already announced also 3.7 gigawatt hours of projects in gravity. I mean that's a number that is not announced by any other long-duration storage technology. Showing the flexibility of the technology that the mandate in China for hours, they are using that system for 4 hours. So just tremendous in terms of the confidence in building that out. That is a long-technical-life asset. That's part of the reason they're deploying it initially for the 4 hours. Long duration will come in China as well. But I don't think we could have chosen a better place, given it's the largest energy storage market in the world. Shortly, China will be deploying and have been at a pace of renewables greater than the rest of the world combined. And that's not a light statement, with a mandate of 20% of storage at power times 4, what's going to probably become 6 hours. Those are big numbers, you can do the math on that. You've seen the numbers on China. There's a reason we went there to get the technology developed in a way that positions us well. And a lot of confidence, I hope, it gives the investor community the fact that when I was there 10 days ago, signing a doubling of the time of the license agreement around our core EVx technology there. So not a lot of companies doing that. I think in China these days, we've worked very well with our partner, China Tianying. The other thing to mention that we announced already is another license agreement for gravity in South Africa. That's not just South Africa, that's the SADC region, so that includes 16 member states. Very excited about the potential there. I'll mention, and it's with one of the largest public -- or the largest publicly traded EPC in South Africa, WBHO, the company is called GESSOL itself, which is a partnership that was created to build out the technology. What's not on here is [ ACWA ] Power. So this is public already, but [ ACWA ] Power, which is a $35 billion-plus desalination plant player, one of the largest in the world. They're also one of the largest EPCs backed by the Public [ Investment ] Fund in Saudi Arabia. They did a competition of 20 different companies for long-duration energy storage to look at helping the needs, in particular, in South Africa with projects in energy storage to combine with renewables. And we were one of the 2 companies selected. So that was released, I believe, in March by [ ACWA ] Power directly, and we are moving on that partnership and now looking at locations not just in Africa with them. So very excited about that, given what that brings. And then very excitingly, just to move down the page to the left, we announced this, this morning the entry into Australia and an entry into what is not just a country but a continent. I think one of the most important growth markets for energy storage in the world, they're looking at some fascinating things in that continent, including building out massive solar to leverage that sun, looking at building out subsea DC cables to go to places like Singapore, for example, or into Southeast Asia to power some of the largest cities in the world, but also a very strong utility and IPP environment in and of itself. A lot of companies there like one of our investment partners, Korea Zinc, big strategies there to make green hydrogen. To make green hydrogen with the sun, you need long-duration storage to drive electrolysis, where essentially you are splitting water, making green hydrogen. So that's going to be very important. But to have a market entry where we -- what we announced this morning with ACEN, which is based in Southeast Asia, but has -- is an IPP and operations in Australia. It's one of the owners of one of the largest solar plants, the New England Solar Plant in Australia, 720 megawatts. So this 400 megawatt hour that we announced this morning with ACEN is going to be coupling to that solar development for storage. So very excited. There's actually 2 projects that's a part of that 400-megawatt hour. We will be getting started on that in the second half of this year and having it deployed through 2025. Another very large project we developed that's listed here is -- and will be the largest battery project in the world developed there in Australia, working on that, and you'll be hearing more about that project. But suffice to say, we have other things going on in here in Australia as well in our very near-term pipeline and funnel, but a lot going on in a country that we've always represented is a strategic growth priority for us. You'll remember that we appointed our first non-U.S.-based Board member last quarter, Stephanie Unwin. She's the CEO of Horizon Power. So there was no coincidence there in terms of the timing, as we have been developing in the Australian market since even back to the IPO. Recall that Korea Zinc invested $50 million in the company in January just before the IPO. So Korea Zinc is based in , obviously, in Korea, but they're the largest nonferrous metals producer in the world. So that's not only zinc, that's silver, that's lead, a soft metal called indium, which is a rare earth metal. So all of that core ore operations is in Australia. And they have publicly stated global aspirations there around green hydrogen, the development of that in being one of the largest net exporters from Australia into Southeast Asia, into Korea with that. And very excited to have them as a strategic partner in supporting what their plans are. They want to have the first 100% green zinc production facility. I -- really, I can't speak enough about them and their -- in not only setting goals, but putting wood behind the arrow with investment and build-out. So with their subsidiary, Arc Energy, they acquired over 9 gigawatts of wind and solar projects. So this was all publicly announced in the last 18 months. So they are moving and developing and really excited about that partnership. On the right side there, some of the new portfolio of things that we're announcing. And if you look at those pictures and the development of what's behind that, that we're going to share in some detail today, we're announcing many new applications of our gravity that -- those applications are focused on, first of all, economics. So really achieving the lowest levelized cost over time. As you know, gravity is not new, it's actually the law in some aspects and something that's the basis of what today is about 95% of all energy storage, which are pumped hydroelectric dams. So we are leveraging those applications, continuing to innovate. You're going to hear from some of our innovation leaders on this today. You'll see there EV0, EVy. Some of these things are also expanding our total addressable market, so this will be new. We're very excited today to be announcing a new strategic partnership with Skidmore, Owings & Merrill. Because they have a large office here in New York, for the people in the room, you may know them. So they're one of the most renowned engineering and architectural firms. Bill Baker is here, he will be up on stage with me today. He is a part of SOM, was the lead designer and architect around the Burj Khalifa, the largest building in the world, 820 meters. There are going to be many large superstructures built, many, many over the next 10, 20, 30 years. We can do it very efficiently now. But most importantly, we are going to be mandated, and it will be required to look at things like carbon payback on these buildings. And we've been innovating around integrating energy storage, in particular, gravity energy storage; in the design of superstructures and tall buildings. So very excited to share that. It does introduce a whole new addressable market for us that I think from a financial or an analyst perspective, would not have been included in how you've been thinking about some of the things that are addressable to us. I think one of the -- hopefully, the confidence as we've earned is that we are no stranger to taking technology and applying it to solve either customer problems or environmental problems in a very strong way. This is another example of that. We're also going to have Dr. Jose Andrade that's been working with Energy Vault since the beginning, the Chair of Mechanical and Civil Engineering at Caltech, which probably has one of the most world-renowned seismic studies in the world. So we're going to be talking about and sharing a little bit about what we're doing on that technology side and what that means in terms of how we're thinking about the evolution of the company and the evolution of the gravity technology. And then finally, we're going to be talking about some other projects that are known, I think, to the community in terms of the PG&E project with Calistoga. That is one that we are keeping on our balance sheet and have a 10.5-year tolling agreement. In Snyder, Texas, we also acquired a 57-megawatt interconnect. That's another project we are going to be owning, keeping on our balance sheet, we are and will be doing project financing. So from just a cash perspective, there's pretty attractive models out there to project finance these, given the -- all of these projects are low double-digit unlevered IRRs. We're going to talk a little bit more about this market and how we see it evolving. But we see a very attractive space here for attractive assets to own them. We don't have to own them for their life. There's obviously a lot of companies where we can flip those out to for cash as needed. But they are assets and a part of our business model that we will be continuing to evolve as we want to become as a public company, much more predictable a bit in our cash flows as our revenues go every year. I think one of the things you've seen with us is the nature of being a young company and in a new growth space. And I don't want to apologize for this, but we have lumpy cash flows and lumpy type of revenue. It's a nature of being in a new growth area. I'm personally no stranger to it from 33 years working across both public companies, some of the largest and new start-up and innovative companies that are growing fast. But I think incumbent upon us as we do our planning, to look at our business models, look at the leverage of our team today, look at how we spend our CapEx and our OpEx and putting in place something that is going to be a very strong business model for shareholders and excited to share a little bit more about that with you today. And then finally, we have an R&D center that we've been building out, a customer solution center that's a part of the initial collaboration within [ Enel ] Green Power in Texas. We acquired an interconnect from them there. We have a research and development collaboration agreement with them that initially started with a project we're going to turn over and now has a lot of global aspirations around 33 countries in [ Enel ] Green Power. In addition, they want to see a lot of our newer technologies proven out at a commercial scale. And so this isn't just about one application of gravity, but as you're going to hear, it's about some of these new applications of gravity. For example, taking advantage of slopes that exist, and there are many. Meaning in each country, there are thousands of places where instead of building a structure and that cost to build a structure like EVx, we can leverage existing terrain, leverage, for example, our same technology with our composite blocks or as you're going to learn today, even with water in a modular pump hydro solution, which is what we received the award from [ ACWA ] Power for, that achieves economics that have not been achieved in long duration or projected. And that's because we're limiting that construction cost and leveraging some of the terrain. So a lot of those new technologies are going to be built out in this solution center. It's underway. It's happening this year. We will have technologies shown and demonstrated within this year. And some of these new things you're going to learn about today. So very excited this will consume, I think, a good chunk of even some of the product in the portfolio, discussion that we're going to have with some of the leaders, and we're going to sprinkle in direct customer testimonials. There is no substitute. And as much as I think about my team, as you can tell, you all will be the judge of me in the end. However, there is no substitute to hearing directly from our customers, where we build projects, turn them over, they're live and operating and listen to them talk about how we've executed together. Return from this trip, two things to highlight here, and I'll start in China in the bottom right. That was the beginning of the trip that led to the announcement of the new agreement. And no coincidence, but the full operation of the system and as witnessed by some of the government officials locally, this was an important milestone for us, not only all the milestones that were achieved for the last 6 months as we brought that system up and going through what's a complex process in China in a government mandated and controlled environment, even at each province level, in achieving what we did in terms of showing that operation. A lot of discussion on, "Hey, how is Gravity doing? How is the [ first ] system coming? Is everything going to work as planned?" The CNBC was there, CNBC Asia. They did a 30-minute video. We're translating it for you. One of the key outputs of that is the performance above expectations. We're going to be sharing more of that as our local partner puts that data together. So you'll be seeing some more updates on that. Very exciting, very exciting also the extension of the agreement. The other trip we had was in Riyadh. It was accompanied by Bill Gross, who's a Co-Founder of Energy Vault, also the Founder of Idealab. Really interesting to be a part of that meeting that it was called a global meeting, looking at collaboration, development and energy. And the energy topics, we all know, not only renewables but getting into the equity of energy and energy development and as well, the fundamental question coming out of those sessions that had a breakout group that's advanced energy solutions. There's multiple CEOs, from across the world, a part of that, both new technology and existing. So I've been a part of that for about 18 months. We signed a new collaboration agreement with the World Economic Forum, as you see there. The main question coming out of there fundamental with all the growth that's coming and even well above their projections, I'm going to share some data, how are we going to meet that demand for energy? And do we have this pending energy crisis coming? It got a lot of dialogue, interesting [ nuclears ] come strong back into an [ SMR ], strong back into this discussion. And this coexistence that's going to be, what I believe, will be for a long time, especially with some of the new technologies that make even fossil fuel more efficient and less GHG emitting. We're going to need all the power we can get. Absolutely, renewables and storage will play a key component of that, but it really is massive. And if you look at some of the data out here, and this is just -- I'll start with on the left-hand side, what you're looking at in 2023 is about under $1 trillion of investments that have been made versus by 2030. So that's not a 2050 number, that is a 2030 growth of the investment that would be required. It's, I think, $4 trilion to $5 trillion. So we would be on track for 2050 net carbon neutral. So this is definitely a WEF, World Economic Forum, type of topic because it puts things front and center on what our countries doing to try to increase that spending. It is a large gap, I think, in what we see today. But the other thing is more, I think, impressive in a way is this chart on the right-hand side, which what you're looking at is just in 2 years and what was forecasted in 2022 versus the light blue, it was forecasted in 2023. So in just 1 year, the forecast have massively ramped in terms of what that worldwide energy storage demand outlook in gigawatt hours is going to be. And that's just in 1 year. And what is not a surprise, I know, to all of you of why is that happening, this isn't only about this part on the left here, this demand growth and what's happening with electric vehicles and electrification, but think about the last 3 to 6 months what's been so topical. So this is about now generative AI and just pure processing, hyperscalers, bitcoin. But with all of that productivity that AI is intended to enable, that is going to suck a lot of power. And a lot of people are now thinking about how are we going to meet that demand. A lot of that with the wind and solar build-out, you see their supply variability that will create more intermittency and therefore, a higher demand. And I know this is no surprise anybody here, storage will continue to be a strong imperative for that. And as you look at this with that same chart on the left, this breaks it out a little bit by segment. We typically -- and as a company and I think just as an industry, it's hard to go out more than 3, 5, 8 years just because things change so much. If you go back to when we founded the company, if I go back to that 2018, 2017, we had a view of the world then that thought long duration would be here and be even half of the market of new deployment right now, and it's actually still developing, still developing. We uniquely are monetizing our long-duration technology through licensing. No one else is doing that in a very highly profitable way that will bring future royalties with volume when it comes, and it will come. But this gives you a sense just by technology, the types of numbers that are going to be spent. We're very focused in this next 2, 4, 6 years that drives our technologies that we're bringing to market today for that future. And even with hydrogen, the development of hydrogen, we don't believe it's any silver bullet out there, I think, for the world. But it will have a place in some key applications. As the microgrid backup that we developed, it was the only way to sustainably back up a city of 5,000 residents turn off the diesel gen that they have to roll in there every year during the fire season. So the numbers are all there. I know we see them, but it is -- when you step back and look at just in the last 12 months, what's been developed, it's pretty staggering. And it has and continues to, I would say, adapt my perspective and our country's perspective on things that we may accelerate a bit more to deal with it. And if you start with the regions of the world where those opportunities are, 90% are in 5 countries. So I want to simplify this a bit for investors, this is part of unlocking the vault and opening up a bit how we look at the world. All of this, of course, information will be public and online here. But this will give you some of the data that's behind what we're doing, why are we an energy solutions provider? Or why are we unique in that? We're the only energy storage provider in the world that's providing short-, long- and these new ultra-long duration solutions. Clearly, it has to prove out with investors of they believe that will be valuable. Obviously, that's not reflected in the stock price today. But as we focus on it, just to get into the data a bit, these countries represent where we have a lot of focus. I would not roll out and especially from what I've learned in the last 3 months, India is doing a lot of things with some of the biggest industrial customers in the world that are based out of India, are looking at big initiatives that are looking at 24/7 renewal. And if you think about 24/7 renewable for industrial, think about what I mentioned about this generative AI and more data centers in that need because that is absolutely a 24/7 need that today cannot be met in a renewable way for 24/7. That's economic, it's economic. So I think very exciting there. I would add that South Africa is also a very interesting and developing market. It won't have the numbers yet, just like India doesn't today. But suffice to say, the things that do get done there, and I'd say, in particular, India; when they're done, they will be large, they will be large. Nothing will be done small, as those things come and catch up. So focused on those high-growth technologies and focused here in the highest-growth geographies, we have not only infrastructure over the world, but a lot of our initial customer deployments are in the same spaces. As I said, I think I think Southern Africa and Africa is a continent in developing as typical like they did in telecommunications, skipping generations of tech and jumping right to wireless, I think they're going to skip some earlier generations of tech and go right to the more sufficient storage coupled with renewables. As we move on then and I think as we're developing out in the regions, just to remind everyone a bit on what helps inform our perspective as a company is our Strategic Advisory Board. That's made up of the people that have invested in the company along the way. That's not only our founding investor Idealab, which is the longest running technology incubator in the U.S., arguably the most prominent for sure. They're looking at technologies 5 to 10 years out. That's interesting. Cemex, one of the top material companies, material science is fundamental to what we do. SoftBank, known to everyone in terms of the largest VC side. Aramco, the largest energy company in the world. We spent the whole week there, where the WEF was 2 days, but my entire executive team was there for meetings with Aramco. There are many tentacles to Aramco. They have tremendous global aspirations. They're an investor in us, and we will be playing a role in supporting them and helping them achieve that strategy. And then moving forward, the mining sector has a lot of decarbonization to do, hence, investments from BHP. Largest mining player, Korea Zinc., as I mentioned, the largest nonferrous group; and then CNTY, which is environmental waste remediation in China. These things inform us -- [ Enel ] Green Power as 33 countries, based in Italy, another important player there. We do a lot of collaboration with them. All of this is an asset that we carry that helps inform where we're putting in our R&D and to make sure it's customer-focused and customer-centric. So if you look at this -- the aspect in our Chief Commercial Officer, Marco Terruzzin talks about this all the time, which is we don't approach the customers and just try to shove our products down their throat. We listen, we understand what their problems are, and we bring the technology to market to help solve it, it's fundamental. From calls with customers in Australia with new customers, from the meetings with Saudi Aramco to the customers in the U.S., the feedback on this strategy is very positive, it is very unique. And that's what's leading to some of these massive deals. I mean, entering a continent like Australia with 2.6 gigawatt hour as you enter, that doesn't happen by accident. And that's why we're very excited about what that future is going to hold. From a long-duration perspective and what we're doing, and I've talked about these things, we've booked business, we've monetized, received cash on royalties at 95% gross margins. I think no question globally, we're bringing things to market in long duration faster than anyone else with multiple technologies that is live in '24. No one else can say that. That will inform us and help us learn, as you do in new tech, to help optimize, optimize for economics, learn from customers, continue to build out. Going to the short duration market, you're going to hear from Akshay Ladwa. I know this was a surprise a few years ago or even a year ago to investors when we started announcing battery projects. We built and invested in a few years before a software platform to give us flexibility to manage the coexistence of generation tech. By the way, that's not just renewable, that's also fossil fuel-based various storage technologies, not just our own and manage that in a way that also enables new applications around optimization of charging and discharging asset management. That is why we're getting selected. As I said, it starts with the experience for the team to do it. We've done that well in the initial projects, been a big part of the revenue number and even all positive unit economics. I know that was something that as we started to announce those things, a lot of questions, "Hey, are you buying those projects or bidding them low because you want revenue? Or how are you going to operate? You have a new software system, how are you going to turn that over well? Aren't you going to get exposed to liquidated damages?" The numbers speak for themselves. I've covered them. [ They ] said, It starts with the people, most of whom are not in this room, they are from Energy Vault and bring that experience. Strategically, then to start to begin to bring it home here and summarize before we turn it over and take a break, largest market and growth regions, that's where we're focused on addressing from a market perspective, and we're going to be sharing more about that portfolio today. As I mentioned, this theme of becoming more predictable in terms of our cash flows and therefore, how we project our revenue, as I said, we've got 2 years, we're in our third year, still young in an emerging growth area. Obviously, that is a high bar as a public company, but something we do not take lightly, hence, our management of cash, the fact that we have no debt, but also looking at -- and really getting perspectives on where are the profit pools in this ecosystem of energy storage. So we've done a lot of work here in looking at where those profit pools come from and how we look at more recurring revenue streams. The license and royalty model will be a big part of that. We're going to be sharing numbers, but the numbers are not small. The bookings are [ now ] only $100 million in the licenses alone, of which $60 million or so we've recognized. The cash payments are over 10 years, okay? We're going to share -- Michael will be sharing more about that. But the royalty potential, very conservatively, is at $200 million plus over the same next 8 to 10-year period. So excited as these things get to play out. You've seen the numbers in terms of the demand requirement, that's going to be very exciting. And then we're very focused, as hopefully understand and see, on the profit potential of this portfolio and how it evolves. And you're going to see that in what we're going to be guiding on gross margins. Not only what we achieved in the first 2 years, we had a little higher hardware content, hence, the single-digit gross margin in '23 alone. But as you're going to see -- as you saw in our first quarter, 26% on pure battery projects. So no licensing revenue in there. And as we're going to guide '24 and '25, you'll see they are double-digit unit economics, which, again, at this stage, as a company, I think, is meeting our expectation. We'll do better as we build this company. I'll -- just a few minutes on our business model here. We've talked about our licensing and how that's been playing. You see some of the numbers there. We've been building and turning over a project that carries an EPC component, which tends to have about a 10% type of margin, 5% to 10%, depending on how the project goes, because you're responsible for another supply chain. We will continue to do that potentially more on what's called an EEQ or an engineered equipment basis where we may not do the EPC, but provide the integrated solution. That's something we're looking at every project. As you've seen in our numbers, they've always been positive unit economics. It will continue, and it will increase as you're going to see in our projections. But there's also another segment that you're going to learn more about today in the Own and Operate. And these are things where we have existing projects today on our balance sheet. We believe there's going to be more opportunity for that. We believe there's going to be more volatility in pricing in the market. The severe weather events are not going to stop. I think they're going to continue and potentially accelerate, which is unfortunate. We need to really focus on cooling down the planet. So we're going to continue to see things that we haven't seen before. And I think this demand for energy, the variability, the volatility in those markets and therefore the pricing plays well into how we're positioned, especially with the strategic partners that I mentioned and the investors and what some of their aspirations are. In terms of how that manifests itself across the portfolio, we've got our product portfolio on the left side there in the different business models. No surprise, Gravity in our software. We can and will continue to license that. So you can expect more from us there. The build and transfer we can do across everything. It just depends on the region of the world. We didn't go set up shop in a big way in China for obvious reasons, South Africa, certain regions of the world, there's no reason for us to go spend that money in cash and tie up cash sometimes in those countries, the license model works, but we can also build in certain developing places. And from an Own and Operate can really do that anywhere across our technologies. Obviously, we own the software and can do the asset management. We have bid optimization. Akshay Ladwa is going to talk a little bit more about this. So all the tools we need to operate, operate efficiently and really achieve differentiated results in that market. We have them and have developed them in-house. Going forward, and I'll wrap up here in the next few minutes. [ Gravity ], we've talked about continuing licensing. It's operating now. We have a lot of new applications, a lot of which we will be building out, taking advantage of topology or taking advantage of new designs and structures. That's not only going to be higher profit, higher revenue, but that introduces new addressable markets in the building sector that probably people weren't thinking about us applying gravity, too. So that's exciting. The market today is conventional battery, 95% of everything is getting deployed globally. Again, we're going to be doing more in longer duration going forward. This 24/7 need it is becoming more prominent with the terawatt growth, but we will continue to build on this KORE Power, you're going to see a testimonial there. That's an investment we made, if you recall, in a domestic provider for domestic content for lithium-ion batteries. We have very special advantages with that investment that the CEO himself, Lindsay Gorrill is going to be sharing with you on a video today. And in green hydrogen and these microgrids, we see a lot of opportunities to replicate what we're doing in Calistoga for Pacific Gas and Electric. Craig Horne, who's here today, will be sharing more about that with you. And then this the Own and Operate model, which I think will continue to become a bigger part of our portfolio, given the amount of capital that's interested in facilitating and financing these and financing these in an attractive way and how those economics and IRRs work. Those projects just to give you a little preview, owning those projects come with somewhere around 70% EBITDA streams through the life with an assumed type of project financing model. So attractive where we're going to do it and I think helpful as we evolve the company. So I'll finish here. Like we started with data, I'm giving you a little preview of what Michael Beer is going to be covering of what the next 2 years are going to look like. So from what we see today, and we also -- and Michael is going to be sharing a little more simplified way, we talk about our sales funnel in terms of what's contracted, what's actually booked. So what's in our backlog. And then what's that near-term 12- to 24-month either project awards and short listings or advanced shortlisting. So we've simplified that by one phase of the funnel as far as what we report publicly. I think that will be more clear and more near term. Obviously, the numbers are large anyway, but really pulling that a little closer in terms of the time frame of converting awards, for example, the bookings is something we're trying to improve upon as we build the company. But if you look at this next 2 years, we're looking at a range of $500 million to $700 million of revenue. There are -- the reason that range is a little wide. You can imagine, as I've shared, there are some large projects that we work on. We don't try to be everything to everyone and all customers. We focus on the largest opportunities in the largest regions. It's just -- it's worth it and always with customers that aren't one trip ponies. They are customers that have a portfolio of things that they're going to be doing over the next 10-plus years. It's about building those relationships and delivering with quality. So there's a confidence for them to want to do more with you. That's why we focused on the large ones. And hence, over 60% of that that's in this near-term awards and short listings for conversion. Over 60% of that today as we look at 2025, are with existing customers or with strategic investors, for example. So that's a high level of confidence that gives us in putting these numbers out and forecasting gross margins of 15% to 20% in that period, reaffirming what I said last quarter, so adjusted EBITDA positive in 2025. So I think that's something that I hope gives a lot of confidence given what we're looking at and some of the things we're going to talk about in the portfolio today. Okay. That completes my section. I want to call up and introduce Akshay Ladwa here, and I'll turn this over to you, Akshay. Akshay joined the company in 2021. I already mentioned some of his background. He has a background even before he joined Greensmith in, I think, 2011, you joined Greensmith. Okay. Here, I'm going to pass the time here to you. But it's been great to work with Akshay. He's been the architect behind our software that brought to market very quickly that's enabled not only our battery portfolio, but our ability to do these hybrid architectures for customers. Interestingly, of the 100 projects that he did when he was at Greensmith, 100% safety record. So that's key and part and parcel to how we built the company and attribute to that experience that I mentioned. So I'll turn it over to you.

Thanks, Rob. Good morning, everybody. My name is Akshay Ladwa. I run and manage the Energy Vault Solutions at Energy Vault. Here's a quick recap of the last 2 years, started at the end of 2021. We immediately got into action, developed our software suite of products, then we expanded ourselves into the lithium-ion battery energy storage space. And finally, the team that you will see as I talk about the different solutions we offer short, long and ultra lung and finally, the software, it's focused around hybrids as we walk through these different type of assets that needs to be orchestrated. The underlying team is being able to have a hybrid power plant. All of that is enabled by our software suite of products, which we will look at a little bit later on today. As quoted in the BNEF, the world needs a lot of energy storage. The numbers are big and the suite of products that we offer here. [Presentation]

That was a really nice video for our 440-megawatt hour project in Nevada. Out of the 100-plus projects have been part of, I think this one is probably in the top 5. It takes a lot of dedication and a really talented team to be able to execute a project of the scale in the really short amount of time. I remember spending by turning 40 on the site. I brought my family over for Thanksgiving, and we had a lunch event on site and also Christmas night is a very important night. That's the evening of Christmas, we ran full capacity, 220 megawatts. As we get into the short-duration battery storage systems, the products that we are building here at Energy Vault are anchored around 3 separate fundamentals. The first one is we do not believe in having a very prescriptive well-defined and a constrained product. We'd rather believe in having a platform, allowing our customers giving them the flexibility because every each of these projects is very unique. Every customer is trying to solve for different constraints. The second one is the economics. Economics is at the heart and it's right in the center of how these projects pencil out, spending my time back at -- before Energy Vault, I was over at Brightline Power, which is a large IPP and a project developer with the understanding of how the projects need to be penciled out so they can actually get to reality, economics is right in the middle. Finally, as we just saw the video of being able to deliver the projects execution is super important. The lithium ion battery storage project at Energy Vault is called B-VAULT. The B-VAULT comes in 2 separate output options. We have the DC and the AC output option. It gives the flexibility for our customers, not only with regards to the selection of the supply chain and equipment, but also different contracting mechanisms. We can offer them just as Rob mentioned, either an EEQ or an EPC as a full wrap, but also, as we've seen in the last 2 years, there is a significant amount of new entrants into the market. The battery suppliers are now going vertically integrated, which means they're not only manufacturing cells and packs, but they're also starting to manufacture these 20-foot battery enclosures. Some of our customers we work with, we find they have MSAs with such suppliers, whether they'd like to use that and NV Energy is a real good example of that. Finally, looking at our portfolio, we often come across projects where the customer has constraints around land or around permitting. So the standard off-the-shelf available equipment is not able to fit the site, fit the need of the customer and Wellhead is a real good example of that. 2023 was a big execution year for us. We delivered design, built, engineered, delivered these 3 projects. As you look across the chart here, we've got the first picture for Wellhead, which is 68 megawatts in CAISO; second one, for NV Energy, 220 megawatts in Nevada, regulated utility; the last one in ERCOT, 100 megawatt, 200 megawatt hours. Different equipment, different states, different equipment, different application. The only thing that is able to tie them together is the integration expertise from Energy Vault. The underlying integration and engineering expertise, which is how do we integrate this variety of different technology into the application that the customer is trying to solve for and the execution capability. All of that is enabled by our VAULT-OS software platform, which we have a section later on today. The B-VAULT battery energy storage product is built around the DC as well as the AC output options. We have a supply chain that we have established partnerships within Asia. Again, we're not really prescriptive with the battery that gets integrated, but rather we have a suite of different options that our customers can choose from based on the needs of the project. The speed at which this product was built, design build certified. This is -- it is fully certified for UL9540 as well as all the NFPA safety requirements. And we built our first project in ERCOT using the exact product. The speed at which this was able to come together was possible because of the expertise of our team. We're on to the second generation of our product between the first generation and the second one, we've improved energy density by over 35%. And with that improvement, we were also able to improve the cost -- drop the cost of integration, excluding the batteries by about 25%. Four main pillars as we designed and build a product, flexibility, flexibility around the architecture, flexibility around the supply chain. Second one is availability. As we look at these more severe weather events, energy storage system monetizes the maximum revenue around such events, the price and the volatility in the electricity market is higher during such events. So the product that we've designed is able to function at negative 40c all the way to 45c, without taking any derate. It's able to function in higher seismic areas or wind gust. So the product is available to the customer. And most importantly, which I will talk about, this is not a me-too product, but there was a unique feature, which is the AC architecture. On the supply chain flexibility, we saw the 3 projects from last year. First one is using NMC batteries from Samsung. The second one is using the BYD cubes, which is LFP, large-format LFP. And finally, the last one is using LFP from REPT. We have different batteries that can be easily integrated into the B-VAULT platform product. Further, we find customers that have already made interconnection application. Like I was in Australia last week. We are working with ACEN that has locked in a particular inverter into the interconnection application. Such customers will require a solution that can work with that very specific power electronics. For them, we have the DC-vault option, which allows, again, integration of different type of batteries into that. Further, to increase our energy density, we are developing a stacking solution. And this will instantly double the amount of energy density, which is possible into the projects. What's unique about our B-VAULT is the AC-vault architecture. If you look at the way most of the lithium-ion battery storage is being built today is mostly around 2 separate architectures. You have a DC-vault architecture, which is you have a central storage inverter between 3 and 5 megawatts. Behind those inverters, you have multiple different enclosures, which is building up your AC cluster, and you keep duplicating that as you want to build a larger project. Then you have products such as the Tesla Megapack and Sungrow, Titan, where it's still the same architecture where the battery is connected with the inverter. You have a string of battery connected with one single inverter. In both of these architectures, you will notice, the power and energy is always coupled, which means if I would like to add additional inverter to get more power, I always have to have additional batteries. Should we lose an inverter, we also lose the energy behind it and to overcome this issue, what the industry does today is they add additional inverters. They're not able to optimize the CapEx. If I go sign up for a project with 98%, 99% availability with such architecture, there is a need to add additional inverters, additional batteries, the cost of the project goes up. The architecture that we have developed at Energy Vault, we have decoupled power and energy. We've broken the relation between them, the coupling between the power and the energy. What happens in our architecture, is all of the batteries are always connected with all inverters. We use modular inverters. We don't use string inverters or the central storage in our AC vault. We use modular inverters. With the modular inverters, all inverters always connected with all batteries. So if we lose an inverter, the battery is still available. If you lose a battery, the inverter is still available. This allows us by default to have a project with a higher availability, because should we lose an inverter, we only lose a couple of hundred kilowatts. This allows us to also be very optimized with the way we can size our projects. We don't have to always move in increments of multiple megawatts. We can move in smaller chunks, which means the cost of the project is much more optimized. Furthermore, as we look at augmentation, as we're now starting to see in California, projects moving from 4 hours this 6 hours, 8 hours, augmentation is very easy. To do the augmentation, we can simply move these inverters into additional newer battery enclosures. Because they are decoupled, we can mix batteries as well. You can bring a different type of technologies because they're not coupled together. Supply chain is a big element of the battery energy storage industry. The optionality that we like to bring to our customers. We have the strategic partnerships with manufacturing of the lithium-ion batteries over in Asia, both China as well as outside of China. And finally, the contracting structure. This is an important one, BYOB, which is bring your own battery. And again, the NV Energy, I think, is a really good example of this. We are looking at customers, which have a particular MSA they are trying to bring to the table, but they're looking for integration partners. Somebody who understands how to design and build the energy storage system using that particular battery. This is a contracting mechanism, also quite popular from the solar side where the developers themselves provide with the solar modules but they're looking for an EPC to do the full wrap. There's a lot of momentum behind IRA and which is important to us, and we would like to have our customers access to domestic content. And with that, we made a strategic decision to invest into KORE Power. This is very important to us, and let's hear from KORE Power. [Presentation]

The job is not done until the electrons pass across the meter and our customers realize the acceptance of the asset into the market. I think that's why execution is very important to us. We talked about the product we can build a great product, but until the system is into the market, that's when the customers cost realize the economic benefit. We've built a great team around execution. As I said, by my personal experience is over 100 projects, but everything we built here with the team behind us, the software, the hardware, everything was built in the last 12 months. The first project that we turned on in Wellhead, which was our first instance of our EMS was commissioned in less than 2 weeks. It was one of the fastest commissioning that we had seen in the CAISO region. 2023, where we delivered the projects, the gross margins were between 5% and 10%. As we look at 2024 and 2025, we believe we will be in the double-digit margin. And how do we get there is by first and most important is the supply chain, being able to have access to domestic content, being able to have the strategic MSAs. The second one is the unique product architecture. The one I mentioned about our B-VAULT, which allows us to be very optimized with our system sizing, we are able to go and execute projects which are much more cost competitive. Finally, it's about the projects that we are looking at. We're not looking at cookie cutter style projects. We're looking at portfolios, which the customer has a problem that they're trying to solve for and to be able to solve those issues, being able to listen to the customer, work around the constraints they have that requires us to be creative, bring out solutions, which naturally demand higher margins. To summarize our battery strategy, number one, not be prescriptive in fine with a standard product, but rather have a platform, which enables our customers to have the degrees of freedom and the flexibility to choose, pick and choose solutions which work for them. The second one is focus on the economics, focus on the problem that the customer is trying to solve for and work around a solution that enables that. And finally, it's the execution. With that, we'll take the next few minutes for questions.

Thank you. We've got time for a couple of questions from the audience. If there are no questions, we'll move on. Thank you, Akshay. Okay. I'd like to welcome on stage for our fireside chat. Rob Piconi; Bill Baker, who is the Consulting Partner at SOM; and Dr. Andrade Jose from Energy Vault.

Great. We're going to be back up here, and this is actually one of the most exciting things that I've been a part of and to be able to talk about here today and announce it here today, I have Bill Baker up here with me from SOM, who really needs no introduction from a global perspective and things he's done you can read there above of some of the superstructures, Bill has designed and architected all still standing and all still doing well by all accounts. And just amazing, I think, because of the things that we're taking on in gravity and the types of structures that the 150-meter structure in China getting built for our first system, but actually really opening our eyes to the art of the possible, what can be done in superstructures. And as you all are probably aware, to make gravity work higher is better. It's better for economics, it's better for energy density. And you look at some of these structures and think about these designs and how does that withstand the elements? How does that withstand wind hurricanes, things like this in the zone. So very excited on that. And also Dr. Jose Andrade, here, who's been working with Energy Vault from the very beginning with Idealab. Dr. Andrade is very well known in the areas of civil and mechanical engineering, the chair at Caltech in Pasadena there in Southern California, also in their seismic studies, which I think Caltech probably one of the best in the world, given California and generally looking at how to make our structures more safe. So very excited to have both of you here. And maybe, Bill, I'll start with you and we've gotten to know each other here a little bit. And I know actually through meeting Jose and being a part of some forms with him, got you interested here in Energy Vault, but would love to maybe just a little bit of introduction of what you've been doing with SOM and then sort of the why behind and the interest in working with Energy Vault.

Well, I've been with SOM since 1981, so over 40 years. And SOM is a unique architectural engineering firm, because we have both architects and engineers inside the same firm, and we've been doing tall buildings ever since -- even before I became. We did -- in the 1960s, we did the world of the tallest building built in the 1960s. We built the tallest building, which was built in the decade of the 70s. We had the tallest building that was built in the decade of the '80s. And then of course, and in 2010, we had the Burj Khalifa go up. And so -- and basically, it's over 0.5 mile tall. And so we have this integration of architecture engineering where we can do tall. But we're also in the middle of an energy crisis -- environmental crisis. And in my world of architecture and engineering, we know that 40% of the carbon in the world comes from our buildings, either through the construction or the operations. So the hottest topic in architecture is how do you deal -- how do you build in a sustainable way. There's a huge urbanization going on. In 2010, half -- for the first time, half of the people in the world lived in cities. And we're on our way going from our way going from 8 billion people in the world to going to be up to 10 billion people in the world in the not-too-distant future. And so -- and all this stuff has to get built, and there's 2 kinds of carbon that we worry very much about, which is operational carbon. The carbon it takes to run the buildings and in-body carbon, the carbon it takes to build the buildings. And so a bit Andrade, a bit Jose at Caltech, some lectures there, and they got me involved and we got very, very, very excited about the technology that Energy Vault was creating, because we saw it as a huge opportunity to address both of those issues. I tell you, all the young architects and engineers, they all want to work on this project. And all of my partners at Skidmore are all over this thing. We look for ways to do this to bring this into the built environment, both as either individual batteries just stand-alone batteries. And hire is better, okay? And holding this up, this has potential energy. I've stored energy by -- say, I'm a solar -- I pulled it up on the ground. I've started energy. If I store it twice as high, twice the energy. If I go 10x is high, 10x energy. So height makes a big difference, makes a big difference in the energy that we can store and the efficiency. And so that's where we're all going and excited about.

Great. Well, thanks for sharing that. Jose, maybe I can ask you, you've been involved in Energy Vault really since the beginning. And when we met and as we chose to create a company and looking at gravity, initially, as we looked at the long duration storage market, the thesis behind as renewables become a greater part of the grid that introduces more intermittency and therefore, as that percentage goes up, the need for long-duration storage. But talk a little bit about your journey with Energy Vault and then come back to how you met Bill and why that's, let's say, interesting and exciting for you in this combination.

Yes. So I'll be happy to do that. So yes, as you said, Rob, I've been with Energy Vault since 2017. And the concept really captivated me because back at that time, we were looking at EV1, right? This idea of moving these masses up and stocking them up to create potential energy, the kind of energy that Bill just described, right? And yes, height is your friend. And so I've been interested in seismic studies of complex systems, and this was a very complex discontinuous problem that happened to have the potential for energy storage. So I fell in love with the project right off the bat, met Rob, met Andrea Pedretti and just started to simulate and model the system, sorry, to try and understand the mechanics, their behavior. And in that path, in that journey, EVx came along -- and the challenge there for that product was to optimize construction, create new materials that we could deploy faster, cheaper, better for customers, right? And we did tremendous work there and tremendous innovation that we're very proud of, and we see the results in China. And but EVx is 150-meter tall structure, and it has some degree of ability to store energy. But if you could go taller and when you look around here in Manhattan, you have plenty of inspiration, right, that there's plenty of tall structures. You start to think that there is something that you can do beyond an EVx beyond 15 years, you could reach much higher altitude. And you could kill 2 birds with one stone by bringing storage where demand is, because the bulk of the demand, as Bill said, as we migrate to cities, is coming from cities and so that is the journey. And when we started to think about going taller and becoming more effective and efficient, I knew Bill from 10 years ago, he had come to Caltech to give a lecture and we hit it off. And so the first person I called when we thought about going taller was Bill Baker, the father of the tallest building in the world.

Yes, it's exciting. I think in this collaboration, what I've seen, and you have a firm Skidmore, Owings and Bill Baker himself that have built structures, as you said, since the '60s, the tallest structures in the world and the integration of a technology that we've developed, combined with that practicality of what it takes to build and permit these structures where the economics get crazy when you get to the 300, 400, 500 meter. And Bill, coming back to you, just on the question, we've designed, for example, a structure of 1,000 meters, 1 kilometer tall for certain parts of the world and looked at different integrations of both our block technology and a modular pumped hydro using water technology. Talk to me a bit about carbon payback and how you -- in first, traditionally in the structures like the Burj Khalifa, was there even one. And then as you look at looking at our block technology and then maybe the hydro type of technology in that 1 kilometer structure, to talk a little bit about how carbon payback works.

What's -- in the world of architectural engineering, we need to build these things, but we feel bad because we're creating a carbon problem in the process. Because there is no carbon payback on an office building or residential skyscraper. They -- you have to spend carbon to build them. And so we have this deficit that we have to deal with. One of the -- so here's this opportunity to do this in such a very tall structure. So structured that you build locally, it will never catch on fire. It will -- you can be [ dense ] in a downtown location. They'll last for a long time. They are 100-year-old skyscrapers in this town. The Woolworth building just down the street here is over 100 years old. The Empire State Building soon is going to be 100 years old. These structures if you maintain them last essentially forever. And so we're looking at these -- working with Jose, where we're looking at these towers. We can get up to a kilometer tower, store a way over a gigawatt hour of energy and the carbon payback is between 2 and 4 years. Think about that. You can do such a massive structure with the carbon that you're offsetting will pay for it and the structure is actually kind of around 2 years. Just -- this is the -- we have a sustainable engineering group in the office. And so they ran the [indiscernible] on there. How much body carbon is in the concrete and the rebar and there's a little bit of steel, but not much. And so then what is the -- and then how -- every day, you can fully charge and fully discharge this battery. And so how many cycles do you do? Because right now, my understanding, this is not my role, this is your role, batteries are generally used as a transition for the Duck Curve or whatever that is. But at night, all the energy is fossil fuel or most of it is fossil fuel. And if we're really going to go sustainable and where people live on renewable energy, you got to store enough to carry you through the night. And this is -- if you assume that there's like 30 kilowatt hours per household in the U.S., okay? And you have -- and say half of it is during the daytime, you get from solar and another half from a battery, a gigawatt hour battery could take 60,000 to 70,000 households of a fossil fuel, which is huge. You can do whole cities if one were strategic about this.

Yes. Yes. The potential is amazing and very excited about making that a reality. One last question for you. And a lot of people to the general public, then general eye and probably a lot the people in the room, when they think about a building 1,000 meters tall, The Burj Khalifa is 820. I know you said we can go to 1,500, and you uniquely can say that, Bill. But in a 1,000-meter building, what -- I mean, people think about generally like wind and these things, especially at that heights and the structure, one of the ones that we've been working on actually is a cylindrical shape. How does that work? Why is that the best shape, for example, at that high and let's explain us a little bit for the [indiscernible] person, how can you build it that tall? And how can you support whether it's our hydro or modular pump hydro, the water solution is interesting or even the blocks. How does that work?

Well, I mean, it's a very stable shape. And we're quite interesting about this whole technology. Yes, you have a lot of weight very high in the air. So that's what you're trying to do. Try to put a lot of weight, very high in the air. And -- but in the process of that, it helps you proportion the structure that is very, very stable. And the advantage of a cylinder is that it's really robust and stiff and we're actually seeing that there's very, very little and in some cases, no premium for wind load or minor seismic. Because of the structure you need to hold up the weight, if it's properly configured and easily built, I mean one of the reasons that the bridge fleet have got built is because we designed it for how it was going to be built. And the construction technology that we're looking at with [ José ] totally conventional, very fast, easily done anywhere in the world that it can be built quickly and efficiently. And there's always like a moral obligation to do this. Because if you could start in a few years, we can build one of these things and take those people off the fossil fuel grid, it would be tremendous. And if we don't -- the sooner we do it, the sooner we can start having people completely on renewable energy.

Yes. Well, look, moving from more obligation or more imperative, let's say, to mandate and just to put this in perspective for investors. So what does it mean? First of all, we have a segment of the market in terms of the building of superstructures in dense locations where there's a lot of energy Manhattan, New York is a great example. To share a stat with you that I learned yesterday by visiting the Skidmore office. Every month, up to 2060, which is longer than -- I mean, it doesn't make sense going past that in the world, we're going to build what is the equivalent of New York City every month in structures. So you think about doing that across the world and that massive build. And as of now, people thinking about that traditionally, you heard Bill talk about it's not only carbon footprint when you use a building its carbon footprint just in the -- in what you build in the structure itself. Moving from more imperative to mandate here, given what's happening in the world with the heating up the planet and things, it's clear to me that there are going to be changes countries have already, for example, in energy storage, China has done it. They mandated 20% at power for every renewable asset that gets built I envision a world where there will be changes in permitting and policy relative to ensuring there's integration of more sustainable aspects of the building itself, integration of either how buildings are powered, how they're using and there's technologies using software to make, for example, HVAC and the systems operate more efficiently through using AI, but in the building materials itself. For example, carbon sequestration in those building materials and absorbing carbon that we're involved with a lot of research with that. So it's from our perspective as a company, we feel the imperative as we're building things with gravity as you build these out. And even in all of our energy solutions, we're building because everything needs a foundation. It really behooves us to ensure it's done sustainably. But we believe from an investment thesis perspective, this is going to be a requirement. As is our culture, we're getting in front of us. We believe we bring a lot of technology and have a lot of ability to leverage how we think about leveraging material science and structural and civil engineering, just like with our gravity system that came together with those 2 things plus AI software to create an energy storage breakthrough. I think it's going to be the same here and very excited about the partnership, Adam Scott, a lot of the partners that I know couldn't be here, they're a partner meeting up state, but very excited about building that together.

And we see this change in architecture. Because if you're going to build a building, it's both a building for occupants and it's going to be a battery, you want them both to go tall. And with this huge organization, this Manhattan every month, I think it's going to have a big change in the energy world, but also a big change in architecture.

Well, thank you, Bill and Jose. And everyone will be seeing an announcement about our partnership. It is exclusive. So meaning it is something we're going to do together for the world. You've seen the footprint of the buildings, Jakarta and China. I had the list of 15 of them that I looked at before going there, but literally every region of the world and excited given that coexistence we're going to have in innovating together there. So thank you, Bill and Jose. Thank you. I think we have a video we're going to play here. [Presentation]

Okay. With that, and that glimpse the future there. Let me call out Marco Terruzzin, our Chief Commercial and Product Officer who will join us after the 10-minute break, I see.

Yes. We'll just going to go for a 10-minute break. We'll keep the 10 minutes. So if they can be back in the room, please, that would be great. [Break]

[Presentation] Please welcome on stage Marco Terruzzin, our Chief Commercial and Product Officer.

Good morning. My name is Marco Terruzzin, Chief Commercial and Product Officer at Energy Vault. First of all, I want to say thank you to the 180 people that I work at Energy Vault with a lot of passion to do something relatively straightforward. Listen very carefully to what a customer wants, what are their needs and converting these in a viable economically attractive and environmentally sustainable solution. Our business strategy. When we come to the go-to-market of our solutions is based on 2 fundamental pillars. Something that is kind of an imperative for us. Number one, having a very good understanding of what are the market needs. We want to make sure that we invest our more -- most scarce resources, most important resources that essentially is time and financial resources on the solution that really are accepted and needed by the market in the short term, in the medium term and in the long term. The transition to award with a low carbon intensity of our economy require practicality in the short term and vision to make sure that we are investing in resources today and something that will be accepted economically, financially and environmentally a few years from now. The second paramount point or principle that we have to guide our business strategy is to make sure that we adopt a solution approach that we don't put ourselves in a corner where we have a limited number of tools to address a larger service available market because that will give us access to large projects and it will improve also the profitability of our solution. If differently, we focus just on one solution, on one product, we will inevitably in a large market like the energy market and the subset of that at the energy storage market in a fight where we have just to compete on price. With these 2 fundamental principles, we have been able to drive very, very, very interesting result when we come to privity energy storage. First, we have been able to accelerate the adoption of this technology. We have a presence in 4 continents. We have been able to deploy the technology. We have been able to establish a commercial business model that had been accepted and duplicated across multiple continents. Second point, we have been very profitable in this effort because as a public company, we have to make sure that what we do is financially attractive for investors. And because if it's financially attractive for investors, we will have a leverage to elaborate more and expand our business. The third element that was the result of this approach based on understanding deeply the need of the customer and having a solution approach was the result that we are able to improve constantly the unit economics. If we use that -- if we refer, for example, at the first part of the introduction, of our solution, the short term -- the short duration presented by Akshay, it's obviousl,y, it's evidence that lithium-ion battery price have come down. Why? Because there has been an efficiency, economy of scale on the material on the design of the system. And we have to do -- we have to do the same also for gravity. We had to work on the design. We have to work on the leverage all the fundamental unit economics of gravity that help to reduce the unit cost and increase the attractiveness from an economic and financial point of view. Why gravity is so attractive from a utility perspective, the companies that I can rate-base this solution, and that can install these assets for a period of 30 or 40 years. First of all, because gravity has been the backbone of the power industry for almost 100 years to store electricity. There was nothing else than a pump hydro essentially to help nonflexible asset to store like a nuclear power plant, a coal power plant and in certain extension also combined cycl,e, gas turbine to provide flexibility, to provide regulation to frequency and allow the loader always to be balanced with the generation. So the technology, the concept is proven and is solid, and it's very well understood, particularly by the utility sector. Second thing the gravity energy storage technology is attractive because it doesn't dissipate. It doesn't lose a lot of energy when you go through an entire cycle. The round trip efficiency is almost at par with the best available technology, lithium-ion. We are above the 80%. And when you are a utility -- when you are a customer and you have to make a decision on which technology you want to have in your system for the next 50 years, if you have a system that lose 50% of that energy that you use to charge, I think 2x. There can be a solution that maybe is just a bridge in the short term, but round trip efficiency is very important in the overall picture on the total cost of ownership for a customer. It's highly sustainable because it's safer. You do not have an environmental hazard that are embedded in the technology by itself. It's a technology that enable circular economy. There is an advantage also from a supply chain perspective. And for sure, elaborates and unleash domestic content. It's very important, and particularly in this economic moment for a different region of the world to guarantee jobs and guarantee GDP locally. There was an evolution. Clearly, in India Design as José, Andrea, Rob, also Bill Baker they were mentioning, we started with the initial interpretation of gravity using a design that was quite advanced, but was not ideal from a market acceptance point of view, the energy and power, they were not completely independent. So we started to evolve in our interpretation of the technology going from the initial tower, the EV1 to the EVx and now we are introducing our other design. There are in line with the market expectation, using different storage medium, not only solid, but also liquid because when you unleash the high of the system, don't need any more double density represented by the solid masses, but you can use water. And if you use water, everything becomes easier because you can use a traditional pump turbine and use for 100 years in every pumped hydro station and that has created us -- created an opportunity for us to elaborate on multiple designs. And here, in this graph, you can see basically in 2 dimensions on one side, the ability to elaborate on liquid, water because it's simple. It's very intuitive, and the industry, both customer and supplier understand how to elaborate and provide equipment to work with water. On the other side, is taking advantage of the geographical information hills that do not require the construction of the building. And that helps us with -- help us and the market with the economics of this solution. Converting this from an economic perspective, that means that we have a 2-dimension to play with. Number one, how gravity fit regional and national development plan. The fact that we have been able to start from China was a challenge from one point of view, but also a significant win because we have been able to introduce the technology and get this technology adopted by the National Development and Reform Commission in China as a strategic technology for the transition in a market where nobody has doubt that our unit economics are very important. So being able to be present in China and are currently having 3.7 gigawatt hour under construction is a testament that the technology makes economic sense. So there is a first dimension represented by the need of the country in terms of job creation, localization of the technology and the supply chain. The other element is that we have to continue to evolve the technology to improve the attractiveness of the unit economics. In the same fashion as other technology like a lithium-ion, they have to continuously operate on the reduction of the cost of cathode and anode. They have to continue to work on the reduction of cost of balance of plant. And this is what we have been doing introducing this new design. Round-trip efficiency. I've already said that is extremely important and having a round-trip efficiency above 80% across the entire spectrum all the solution that we are introducing -- that we have already introduced in the market with EVx and the new solution with a hybrid utilization in a urban center or eventually using also water, it's essential to be commercially attractive. Another element that is important from a go-to-market is, of course, the levelized cost of storage. And when we consider solution for a duration of 6 hours, 8 hours, the example of the Calistoga energy storage project that we are developing, and it will be operating by the summer of this year. 48 hours of duration are the evidence that the market is transitioning there. It's true that the entire industry was expecting a transition -- a faster transition. 6, 7 years ago, there was a discussion about our long duration energy storage, how much long duration energy storage would have been deployed by this time. The good news is that energy storage has become so important for the industry that just the 2 hours and 4 hours have been adopted at a much larger scale than expected. And when long duration energy storage will come, you come at an even larger volume than what is expected today or was expected a few years ago. So the delay in the deployment of a long duration energy storage is not necessarily a negative thing. I think it is a positive thing because as it help the industry to familiarize with the need and the deployment of energy storage solution in a way that is opening up the transition to longer duration energy storage, and we have a solution for the short, the extra long and the long duration specifically with gravity that are economically attractive. We have enabled 180 people, 2 years as a public company. We have a footprint from the United States to China, from Australia to Europe with ongoing construction activities and active commercial engagement. We have been very strategic in our go-to-market by every segment of the geographies, making sure that we were every time profitable. We are building here in the United States, gravity as you'll see with a very nice video just a few minutes from now. We have invested in Texas with a Solution Excellence Center. We are developing new design, and we are testing the product market fit of solution that will be deployed a few months from now -- a few years from now in the market. But at the same time, we wanted to make sure that we aware and we are profitable in our deployment and engagement with customers through license. This is the reason why we have started with a country like China, where we have not only the revenues because of license, but we have also the prospect revenues coming from the royalties due to the installation and implementation of these gravity energy storage system. The expansion that was announced today by Rob in South Africa is another testament of the appetite that utilities and large energy users have for a gravity energy storage system because that is a technology that doesn't have a storage medium degradation doesn't have a self recharge and is an asset that can be a rate base. We are also investing here in the United States and likely to make sure that we are technologically advanced that we are not falling behind in terms of implementation and technical solution, the innovative design that can be deployed across the globe. Now I want to finalize this short part related to gravity with the video describing what we have been doing in Snyder, Texas with our Solution Excellence Center. [Presentation]