RedFlow Limited (RFX) Earnings Call Transcript & Summary

[Audio Gap] normal if you have any questions, and I have a series that have been e-mailed to me already. If you have any questions as we're going through today's presentation, please type them in the Q&A box, we'll try to cover as many of the questions as we can within the allocated time. And I might just hand across now to Tim Harris, Redflow's CEO and Managing Director, to start the presentation and post the presentation, we'll look forward to the Q&A. Tim, thank you for joining us this morning.

Thanks very much, Ronn, and good morning, everyone, and thanks, everyone, for joining this call. As Ronn mentioned, I'm delighted to be joined by Trudy Walsh, our CFO and Company Secretary; and also Mark Higgins, our Chief Commercial Officer and President of Americas, who's joining us from California today. As Ronn mentioned, I think we'll just follow the standard process where we've given a [Audio Gap] where we are, how we performed and where we're going to, and then allow plenty of time for questions and discussions as we start to look forward and discuss where we can take this business in the near term future. If we go on to the next slide, Ronn, what we wanted to do, I think, right upfront is really paint a picture about where we are and where we have come from. And I think the important message that I'd like to take to people on this call today is that, the last sort of 6 to 8 months have really represented a major pivot point for our business that actually represents a number of years [ for Redflow ] get to this point. We now have over 24 megawatt hours of projects that we announced over the last few months that are going to be delivered over the next kind of 12 to 18 months. Together with some of our backlog, they represent over $23 million of revenue that we'll deliver, which I think is far exceeds any sort of performance that Redflow has had previously. But not only that, we actually have a very rich pipeline as well. So we have over 6 gigawatt hours of qualified sales in our pipeline that Mark will go through later. And the fact that we have announced, what is our biggest project with the CEC, I think, is adding extraordinary stimulus, both in terms of current deals in our pipeline and moving forward. So if we also take a step back, our leadership position as a leader in long-duration energy storage is also underpinned by a lot of our experience. We now have over 270 active deployments around the world. We've delivered up to 3 gigawatt hours of energy to date, and we've accumulated our 24 million hours of operating time. And when you start to look across the landscape of LDES technologies, particularly given the runway to achieve a lot of net renewable targets, both in here in Queensland, but also around the world. Our customers in the market is really starting to lean in and start to appreciate the operational experience and the scalability that Redflow has. And I think very much our deliberate strategy of focusing on our key markets of Australia and the U.S. is really starting to pay dividends. If we go to next slide, please. So [ here are just ] some of the key major milestones that we achieved across the financial year and subsequent months. [indiscernible] our projects that we have with the strong support of the California Energy Commission, I think, represents that data point that we've spoken about before that actually builds upon the 2 megawatt hour [Technical Difficulty] that we have with Anaergia that's now hit over 1.5 years of operating time and represent a bold decision that we took to move into bigger systems. We were delighted to announce our partnership with Energy Queensland that's now culminated [Technical Difficulty] that we're excited about. But also underlying that, there's also a number of additional dynamics that we're able to achieve over the FY '23. This includes close collaboration with the University of Queensland to make sure that we understand our chemistry and technology, and we can make sure that we can get further performance enhancements out of the battery. But also, I think some of the major industry partnerships that Mark has been leading on in the U.S., including Ameresco, Black & Veatch and Faraday that really set the scene for us to accelerate our business, both in terms of the sales pipeline and sales cycle, but also in terms of delivery as well. And lastly, one of the key things, I suppose, that we have been doing because we've seen such an uplift in the -- an interest in the long-duration energy storage market, we've achieved, I think, a significant uplift in terms of industry recognition and engagement. You can see the image there of Minister Ed Husic, the Ministry for -- Minister for Industry at the federal level in Australia, visiting our facility here in Brisbane a couple of months ago. And based on that and other engagements with people like Minister De Brenni, who's the Minister for Energy here in Queensland, we really feel that Redflow is being recognized as a potential important partner as part of the future ecosystem and a very proudly Australian technology that's starting to make some significant inroads into the rest of the world, particularly the U.S. and California. And so, this stuff doesn't happen overnight. It's very much, I think, a culmination of a lot of focus, dedication and effort from the team. But critically, the key measures that we have today is that, a lot of this work really represents that step change, both in terms of the next 12 months, but also well beyond that as well as we start to build up, I think our capabilities, expertise and operational experience and megawatt our systems, and I think our pipeline very much reflects that. So if we take a step back, we'll just go to the next slide, please, Ronn. We believe that we've got an extraordinarily unique and strong position in the market. We have a technology that's been developed over 15 years. We have deep operational experience across a diverse range of deployments, and we have a technology that is designed, optimized and tested for the next wave of energy storage, which is in that medium- to longer-term energy storage market. We have a series of unique features that have been proven and highly valued by some of our end customers when talked to our investors before about our unique hibernation feature. But also fundamentally, when we start to look at our chemistry, we have power, energy density benefits, but also the fact that we're a zinc-based system provides us lots of opportunity to drive down cost, drive margin, but also deliver highly competitive levelized cost of storage metrics to our customers. Our battery is fully environmentally friendly and fully recyclable. And we've spent many years developing and protecting our IP through a combination of patients and other kind of trade secrets. And most critically, we have a low deployment model for our customers as well compared to other flow batteries. And that's proven by the image that you see there, which was the 2-megawatt hour energy deployment, that we've used our energy pods that we've developed over the last couple of years and also continue to refine all the deployments for Energy Queensland and also for the Paskenta project in California. So we're extraordinarily excited to be here. This has been many years in the making. We feel that we're at that kind of strong inflection point for us that we can leverage all the investments that have been made to date. So I'd like to talk a little bit more about where we are and where we're going forward. But what we thought we'd do is just go quickly through the financials for FY '23. But really, what we want to focus our investors on is, what we see beyond -- this year and beyond. So I'll hand over to you, Trudy.

Thank you, Tim. Next -- can you go to the next slide, please, Ronn? So our full year FY '23 results are not reflected in Redflow's progress over the past 12 months with the securing of orders and customer commitments of circa 25 megawatt hours, which includes the CEC Paskenta project and the EQ project for delivery over the next 12 to 18 months. Redflow has been working on securing these commitments and other projects for a number of -- at least the last 12 months, if not some projects a bit longer. Our revenue for the FY '23 was down slightly. It's been impacted by raw material supplier challenges encountered throughout the year. We're now back in production and are ramping up to deliver on the announced projects. Our other income was attributed to an uplift of the FY '22 R&D tax rebate after the initial accrual was included in the 30 June results -- the '22 results and an accrual for our R&D tax rebate for FY '23. Raw materials and consumables are $6.5 million. Raw materials and consumables are not only our cost of goods sold, but includes the immediate expensing of a portion of the Thailand factory costs with some lower factory efficiency during the final factory transition to producing the Gen3 battery earlier in the year and the above-mentioned raw material quality supply issues. It also included our materials used in our R&D program and all the freight costs are immediately expensed to the P&L. We are continuing to see some return to some more reasonable freight rates after the COVID pandemic increases. Our other expenses are approximately 20%. This reflects Redflow's investment in business development, increased staff with the expansion of the business development sales team in the U.S., increased travel costs and marketing costs, including having booths at a number of renewable energy trade events and increased engineering capacity supporting the ongoing development of the battery and supporting products such as our Energy Pod and QuadPod. Moving on to the balance sheet. Can we move to the next slide, please? Yes. Redflow finished the full year with $5.5 million cash at bank. Since then, the entitlement offer has bolstered the bank account by $4.9 million, and we anticipate the receipt of the FY '23 R&D tax rebate of circa $2.5 million in the next couple of months. Our trade and other receivables include the accrual for the FY '23 R&D tax rebate. The increase in property, plant and equipment reflects our ongoing expenditure in the past 12 months to build our manufacturing capabilities. And intangible assets are our continued investment in Redflow's IP and patent portfolio. The significant reduction in trade and other payables is a result of the finalization of the equity issue obligation under the agreement signed with New Technology Capital Group placed the placement in August that was finalized in August 2021. Moving through to our cash flow. Net cash outflows from operation up 28% from the prior corresponding period, a result of lower receipts from customers due to lower sales. As anticipated in the first half of FY '24, Redflow will receive deposits from payments associated with the recently announced projects. It's also impacted by an increase in payments to suppliers, employers due to increased expenditure on travel, marketing and business development and increased staff to support the growing sales demand and ongoing battery development. I want again note some aspects of these results do not reflect the progress that Redflow's made with the recently announced projects and a number of further project announcements anticipated in the near future. I'll now hand back to Tim.

Thank you, Trudy. So what we'd now like to talk about is just the more -- the broader macro view that we're seeing in terms of our key markets and then translating that into what we're seeing on the ground in terms of key deals and opportunities around that as well. Next slide, if we can, please, Ronn? So we know a lot of people who are shareholders and on this call are passionate supporters of renewable energy and the energy transition. And as we start to look back over the year, but look forward, that energy transition is accelerating. I think everyone feels concern about the world's ability to meet the Paris Agreement and climate targets, and there's still lots of friction in the system that we have to get through to meet some of those. But the transition is happening. And it's showing up as we're going through a deeper and wider renewable penetration into the grid, that's throwing up more and more opportunities for companies like Redflow. As you start to see in the graph there, California, as everyone knows, is one of our key markets where Mark is located. But the level of renewable penetration, which is happening in California, and you can see from what's called the duck curve over the years since 2015 is getting deeper. And it's -- and the duck curve is actually turning from a duck curve to a canyon curve. So you're starting to see material amounts of curtailment that's happening of solar and also of wind generation during the day because it simply has nowhere to go. So it's our view that the energy storage market is quickly shifting from kind of stabilization into optimization and energy shifting, which is really where flow batteries and Redflow is ideally suited to. If I can maybe kind of put that into context. In last year, in California alone, there was about 2.4 terawatt hours of curtailment that occurred. If you put that into perspective in Australia, that's probably enough to power about 80% of Brisbane's homes for a whole year. So it's a big problem. It's getting bigger, and it's a market that provides huge opportunities to us. That is only going to grow as further electrification, further renewables penetration happens. And also, we see the tailwinds of the U.S. IRA and other stimulus measures such as the Queensland Energy, Jobs Plan really start to take place. And that's been recognized by people like CSIRO that are talking about the huge need for increased energy storage as we start to go through, but also that real focus on long-duration energy storage. Now talking about it, how it has to become a very important part of the future eco-energy system in the future. Next slide, please, Ronn. So we believe that we're very well positioned for this. As our investors know, we're ideally suited to a 4- to 12-hour plus duration-type profile, but also with our unique hibernation feature, we can extend and delay our discharge profile for a lot longer than that. As everyone knows, that we -- flow batteries are starting to become much more appreciated as part of that ecosystem, including by the Australian government. And the key applications where we're focused on, which is around that bulk energy shifting, integrating maximum renewables and flow batteries with their ability to charge and discharge by 100% to 0% and back up again, are very, very well suited to that. But also our role in providing important resiliency to communities, including people, such as the projects that we're talking about here, but also offsetting potential critical infrastructure investment for utilities as they start to sort of grapple with the challenge of lots of renewable energy that started to be generated at the edge of their networks. So we believe that we're extremely well positioned in the LDES market. We have that operational track record. We have a great technology. And I think that's underpinned by some of the projects that we've announced over the last couple of months. Next slide, please. And I would like to talk about the first projects that we announced a couple of weeks ago was with -- which is with the Energy Queensland. As investors know, we've been working with Energy Queensland for quite a while now and that culminated in the first stage of signing a joint MOU that we announced back in February 2023, where Energy Queensland recognized the potential role of Redflow batteries as we start to look forward to their support for the -- executing the Queensland Energy and Jobs Plan. So on the 2nd of August, we were delighted to announce this project that's a 4-megawatt project that's located at a critical substation at Ipswich that's providing additional network resilience. But also, it's able to absorb a lot of the renewable energy that's generated around that substation store it and then just charge that for a later time. So both increasing renewable penetration but also offsetting potentially infrastructure investment that has to be made that you can offset through energy storage. And this is really a key part of Queensland's $62 billion Energy and Jobs Plan, which has a significant amount set aside for batteries. And the size and scale of batteries that are required when we start to think about the Queensland Energy, Jobs plan, as we've noted before, is in the gigawatt hours. So we're tremendously excited to be announcing this project. We hope it's the first stage and base camp of further projects that we can achieve, not just with Energy Queensland, but also a number of other operators in Queensland, and we have a number of discussions both in Queensland and other markets in Australia that are carrying on. But this is going to be our biggest project in Australia that we've done to date. Just down the road a [ muster ] at Seventeen Mile Rocks. So it's hugely exciting. We're delighted to be working with Energy Queensland, and we look forward to providing our shareholders updates as we start to get through that kind of final contract negotiations that are currently in progress and delivering that project in the second quarter of 2024. The next project that we want to talk about is really, I think, our major reference project, which is the 20-megawatt hour project that we announced at the start of June with the Paskenta band of Nomlaki Indians. This is a hugely important project for us. We've been focused on developing this project for quite a while now. And I think the importance that it has for us in our business both in California and overseas, I think, is very strong. But maybe, Mark, I can hand over to you to take over the next couple of slides just to talk about the project and the impact that you think it's going to have on our opportunities, particularly in the U.S.

Absolutely. I mean, this project for us is transformative. And I think one of the things that I particularly want to highlight and is the reason that we've been so focused on California as a company for a while is, you saw the slide that Tim showed a few slides ago about the duck curve. Now, I think, obviously, the depth of the duck curve has shifted a lot over the past few years. But what I think is less focused on is that, the duration of that canyon that Tim talked about has gotten to the point where long-duration storage is really a critical tool for the energy transition. We've gotten to the point of the amount of renewables and solar, in particular, that we have on the grid. And this is the case in California and the Southwestern United States. It's also the case in Australia. We've gotten to the point where long-duration energy storage is key to the way that the grid is going to be able to manage all of that excess renewables during the middle of the day and discharge over a long period of time. California, in particular, has always been very forward-looking in how they try and develop technology. They did it with solar PV 15, 20 years ago. They did it with lithium-ion technology 5 to 10 years ago. And I'll highlight that 5 years -- or actually in 2020. So 3 years ago, California had 500 megawatts of lithium-ion battery technology deployed in the state. This year, they have 5,600 megawatts of flow. They anticipate by 2030 that we will have between 45 and 55 gigawatts of long-duration energy storage alone deployed in California. So this is one of the markets that is growing 10x probably every 2 years. And in fact, that's reflected in how the CEC itself is funding technologies in the space. In the long-duration storage space, let's look at Redflow as an example, they funded a project of ours at a 2-megawatt hour project 2 years ago. This year, they're funding a 20-megawatt hour project. They've made it clear that their intent is to fund a project that is 10x that size within 2 years of that. Their goal is to support a handful of long-duration energy storage technologies to get them to manufacturing scale that improves cost down, improves the applications on the grid and it ultimately helps create a vibrant market because other buyers, buyers who don't want to be the first mover in large deployments, will see this reference project and say, "I know that Redflow is capable of deploying the projects of that size and scale. I'm comfortable committing to a product of that size and scale." So we're starting to see that really happen now in our own pipeline. And what we've been going through the past couple of years as we enter into these much, much larger markets is, it's an education process, and it takes time. And then the actual process of designing and then ultimately building large infrastructure projects takes years as well. So that is why you see a business development cycle that is kind of a multiyear business development cycle for large-scale projects. But as you can see here, the Director of Energy Research at the California Energy Commission said, this project is a really important one in California's clean energy transition because it is proving that long-duration energy storage that flow batteries, in particular, can help California meet its long-duration energy storage needs that the state has. Can we move to the next slide, please? Mike Gravely, in particular, he is the Program Manager of the Californian Energy Commission's long-duration energy storage program. And he has -- the state legislature in California approved $140 million in the '22-'23 budget cycle for long-duration storage. They approved another of about $190 million in the '23-'24 fiscal year for long-duration energy storage. He has been basically using that $140 million from the last year to fund a handful of projects from what he view has the most commercially viable companies within the long-duration energy storage help them get scale and prove that they can compete on a level playing field with lithium-ion. And a level playing field with lithium-ion, the reason that there are these grant programs in State of California right now because the way that the market is designed tends to -- it takes [Audio Gap] program in California right now [Audio Gap] and longer duration storage project, there's kind of a gap in the revenue streams. Now, the state eventually corrects that from stakeholder processes, but those take several years. So they use these grant programs to help plug the gap and allow a longer duration technology to be competitive in that kind of market scenario. So this is kind of one of the unique things about California seeing. And like we said, this is actually proving the case -- California is proving the case for other customers. It's proven the case in other markets around the world as they look to what California has done and get comfortable that the technologies like Redflow's are capable of meeting grid needs.

Thanks very much, Mark [Technical Difficulty]. So what does this actually mean? And I think as we talked about to our investors a few times, that deliberate focus on the U.S. market and large megawatt hour systems has been that, we think it probably sacrifice about some short-term revenue, as Trudy alluded to before. But the benefits that we think that focusing on some of those megawatt hour systems, and I think that's proven by the profile of us winning the CEC deals and the EQ deals over the last couple of months really means that we can start to put our business into scale. So when those batteries are going to be deployed to both in California and at Ipswich, that's going to lead to nearly 4x increase in terms of the installed base of battery deployments that we have to date. So we've been steadily but very focused on improving the size and scale. 560 kilowatt hours that we've now got batteries delivered to for the Southern Ocean Lodge down in Tasmania. Our 2-megawatt hour system that we spoke about in South Australia -- excuse me. Our 2-megawatt system that we had in California has now been operating for 18 months and has got great feedback from customers, and we've hosted many stakeholders to that meeting. But if you start to look at the scale of this is putting into our business, it means that we can drive productivity. We can drive economies of scale across our supply base. We can improve manufacturing techniques. It's going to improve productivity and quality. But also critically, it's allowing us to focus on the largest part of the market, which is where the scale actually is. And these stepping stones that we've been creating through these projects, we think is going to be incredibly important and also underpins what we see going forward in our pipeline that Mark will talk about shortly. Next slide, please. And it's not only the market we think is changing. We think some of the top-level dialogue and government and the focus on energy storage as part of collaboration around climate change and the energy transition is also gathering pace. And this is underpinned by the MOU signing between California and Australia that Mark and I were honored to be invited to earlier on this month in Sacramento in California that was signed and attended by Governor, Gavin Newsom and also Ambassador, Kevin Rudd, Ex Prime Minister of Australia. So this was a very high-profile event in California with very strong support from across governments. It's the first agreement I think Australia has signed with a subnational government that I think underpins California's role and its profile that's set to become the fourth largest economy in the world, ahead of even Germany, I think, and the U.K., I think, by the end of this year. And this follows the federal agreement that was signed between Australia and the U.S. back in May, and we think provides a huge stimulus in underpinning both government support from both sides as we start to look to invest in our further business in California and in other U.S. markets. And we were delighted about the level of support that was provided by Natural Resources Secretary, Wade Crowfoot, who's talked specifically about our battery and the project that we're doing -- the 20-megawatt project that we're doing in California and also been asked to stand up and represent ourselves in the group that was attended for this reception as one of the Australian renewable energy buccaneers, as referred to by Kevin Rudd. And look, and I think this also underpins what has now been about 12 months of implementation of the Inflation Reduction Act, as we've discussed before with investors, this provides direct stimulus to energy storage in the U.S. and is, I think, a real, I think, tailwind that we're also experiencing that's really driving, I think, interest in energy storage progress, but also in a longer duration energy storage process that we think we're very primed to focus on. And so, on that point, I think following, I think, our projects that we've announced, we have an extremely strong pipeline that we've been developing over years and months that is also accelerating. And maybe, Mark, you can just point to the next couple of slides showing how that pipeline has changed, but also a couple of examples that we can talk about as well.

Yes, absolutely. So the team has been very focused on, like I said earlier, educating lots of different stakeholders who are designing projects in the energy storage space in the United States, in Australia and in other parts of the world. And kind of how the sales cycle works, is we start with making sure that customers have a solid understanding of our technology, how it operates, how it's different from lithium-ion, the use cases where our technology is particularly strong, and that can take some time. Oftentimes, that's done outside of the context of an individual project. Sometimes it's done in the context of projects that are several years out before they are actually likely to be built. And that is certainly the case where you're talking about grid scale projects that are multi-hundred megawatt hour projects. Those ones take many, many years to develop. There is grid connection requirements that can take many years. There's permitting requirements that can take many years. Our goal is to be in the game for those large projects so that when they actually get built, we are there, and we are a contender for winning that work. We have a lot of pipeline in that space. You can see the 5.7 gigawatt hours of prospect projects, and we got another 15.4 gigawatt hours of identified opportunities that we've been talking to partners about in that space. Now, those aren't necessarily the ones that are the most immediate. The ones that are most immediate tend to be smaller projects that meet the profile of the products we've been deploying to date. They are currently multi-megawatt hour projects in that kind of 1- to 20-megawatt hours of sort of a typical size that we're in very advanced customer engagement around. They've seen that we've been able to prove ourselves on the applications that we're working in, and we've got right now. Our pipeline has been about 300-ish, a little more than 300 megawatt hours of products that meet that profile. We've got another 1.5 gigawatt hours of projects that we have submitted proposals for them. We're in detailed commercial and technical discussions around the technology. We may be one of several vendors who are competing for that work. But we still feel like we have a good shot at it because of our commercial track record, our ability to deliver all of the operational data that we have on our technology over the years makes us feel like we're well positioned to be able to win work for applications that are a good fit for our technology. Let's move on to the next slide, please. So let me give you some more concrete examples of some of the projects that we've been working on. We continue the process of engagement with a large Fortune 500 financial company, financial institution. We've been talking with them for years about projects in both their retail bank branches, as well as for a number of their corporate campuses. That engagement continues to be ongoing. They're very enthusiastic about the technology and have been working with us on some very concrete specific projects. And they're just kind of taking those projects through their own cycle and process of identifying the ecosystem to build those out, as well as to go through their own capital approval processes for those projects. That's a good example of kind of that education process. It takes a long time, and then they have to actually design the projects and get it to the advanced engineering stage before they actually go on a contract with Redflow to be able to build that project and we can claim it as a product that is one in our pipeline. We've been working on a number of other projects in the health care space, in particular, hospitals are a particularly good application for us. They have a long-duration energy storage need because of their need for resilience in the case of natural disasters or grid outages. There are actually a lot of requirements in place in a lot of places for them to have that kind of backup power. And they're not really allowing in a lot of markets now to be able to use more like traditional fossil tool-based generation to have that backup power. The other thing is that, there's a lot of funding out there right now to support hospitals moving into clean energy microgrid deployments. And so, we've been working with a number of grant opportunities both in the State of California, as well as at the U.S. Federal level working on those types of projects. This 24/7 renewable microgrid is a concept that we're leveraging from what we've done at the Paskenta project and many other applications that are -- or many other types of customers that have very similar needs. So we've got, for example, a large pipeline of projects in the agricultural space, multi-dozen megawatt hours there. In that space, we have a number of engagements within the U.S. Federal government, in particular, that are also looking to do these kind of microgrids for [ resilience ] and typically solar storage. So you can see that pipeline, that kind of came through our pipeline. We are also starting to make some traction in small-scale front-of-meter projects. The EQ product is actually a first of a kind for us because it really demonstrates our ability to meet the unique needs of network operators who tend to have much more stringent requirements than behind the meter customer or a commercial customer or a kind of off-grid microgrid-type applications. So us being able to prove that we can meet those needs for Energy Queensland is actually huge for us in winning the faith of other utility customers, other network operators and independent power producers and retailers in Australia and elsewhere in the world. So we're very excited about that. We have another deployment that is kind of a one that we're working on with another utility that's kind of a remote microgrid. This is an application that we're seeing both in Australia, as well as in California, where you've got remote communities that are far away from the main lines and the transmission system that are looking to have solar plus storage microgrids help filling the gap and provide resilience for these communities. We've got good engagement in mining companies as well. They're also trying to deal with remote grid applications and decarbonization. A lot of progress being made also with certain global IPPs in our pipeline. A lot of them are starting to look at our technology to deploy pilot deployments so that they can test it out for applications throughout their global portfolio of assets under ownership. And then we are doing some work outside of Australia and the U.S. as well. We have pilot deployment with Israeli Municipal Utility that is looking to identify the technology that they want to use for a solar plus storage, 24/7 clean energy microgrid. That's about 100 megawatt hour opportunity for us as well. So those are -- you can see the theme there. A lot of the focus is on these kind of 24/7 global microgrids, as well as pushing into proving out our ability to deploy in front-of-meter applications for network operators and utilities. I'll turn it back to Tim.

Thanks, Mark. So it's hugely exciting. And I think a diverse group of customers and ends customers, both in terms of applications, profile and needs that I think we're very well suited to. And I think as Mark has said, a number of these are, we would say, is a detailed customer engagement stage that underpins, I think, our excitement about following on from some of these 4-megawatt hour and 20-megawatt projects and other projects in the not-too-distant future. I'd now like to turn to just about an update around Thailand. As investors will know, we've had a particularly frustrating period around production of batteries over the last couple of months, which is really due to a challenge around a particular process in a particular part of our building materials, our 10% HDPE that's used basically in the production of our collectors that goes to the bottom of our stack. I am happy to say now that production has fully resumed in August as per guidance we gave a couple of months ago. And we'll steadily but surely start to ramp up that production to make sure that we can meet the initial requirements of the EQ and the CEC deals. And then at the start of next year, I think, be ready to start to shift into additional capacity and a second shift that kind of takes us into about 40-megawatt hours per annum. During this period, we've been working very hard to make sure that we address this issue that's, not only be caused by the supplier, but also shrinkage rates and what we have to do in terms of our molding of some of the tanks that has meant a bit of an extended delay. But we've also spent the time to validate and introduce a new tank. We've got a new membrane that we've qualified that's going into our batteries and also better processes to make sure that we get productivity and quality improvements as we start to ramp up than where we are today. And the other big thing that we have been doing is just ramping up our Energy Pod. As I think we said before, our Energy Pods that houses 20 of hours ZBM3 batteries is really core to our engagement and projects at megawatt or kind of site and scale. We've taken out the initial design that we had with Anaergia that's now been operationally field, taken some of those lessons and iterated that to work through and really got ready to kind of ramp up that energy product element from where we are today. And clearly, for us, what we want to do is align our ramp up and capital costs, et cetera, as we start to think about the delivery schedule of these key projects going forward. I think as Mark said, as we look beyond this calendar year into 2024 and beyond, you can see [ ASPER ] underpins the size and the shape of our pipeline, there is real interest about where we can scale to beyond our existing facility in Thailand. As Mark mentioned, the size of the opportunity that we're talking to some customers about is in the hundreds of megawatt hours. They continue to do initial projects with us, whether it's a small demo or a larger megawatt hour project like EQ, but the real size of the prize for us and for them is starting to think about deployments in the hundreds of megawatt hours, of which we are now being seen as a viable player. And so, what we've been actively doing is starting to think about what does that facility look like? What automation can we introduce into our battery and design that's going to dramatically reduce increased productivity, but also reduce cost and drive margin into our business? But also, how do we keep an eye out for U.S. localization benefits under the U.S. Inflation Reduction Act about local U.S. sourcing and manufacturing potentially assembly, but also, how can we do that in Australia? I referred to previously about a visit from Ed Husic, the Minister for Industry, who also leads a National Reconstruction Fund, which is a $15 billion fund here in Australia designed to encourage manufacturing here. And we've been having a number of discussions, particularly at the state level in Queensland about what opportunities there are for us based on an underpinning of demand that we can see through the work with EQ and others about further investing in Queensland, and we'll keep our investors and the community update as these progress. So lots of opportunity. We're back on track with manufacturing. We've got a very defined plan for scale up, and we're now actively looking beyond Thailand to see how we can scale to at least 500 megawatt hours, I think probably by the end of 2025, which we think is ambitious -- an ambitious but realistic target. Next slide, please. So really just moving through some of these slides pretty quickly. We have a very pleased strategy that underpins a positive outlook. As Mark mentioned before, we have a very clear focus on the applications, customers and markets where we believe that we can be successful. We don't want to be spread too thin, and we think there's huge opportunity for us in California, other selected U.S. states and Australia. But as Mark mentioned, with the Israeli deal that we've been engaged with a little while, we do want to also respond to opportunities where they think they provide a compelling value proposition, and we think that there's a good chance of us winning some further material business from that. And as we said before, many times, that kind of graduated growth to bigger systems, we think really underpins further success that we can see from our pipeline. Next slide, please. So all of this, I think, is underpinned by many years of investments that our shareholders have supported over many years. We now believe that we're a global leader in long-duration energy storage. We've got the operational experience that underpins our end customers and partners confidence about our ability to execute. We have strong leadership and benefits from our core zinc-bromine chemistry, and we have attractive long-term prospects. So these foundations, I think, have taken many years for us to kind of put in place, but we think that would position us very well as we start to look to the future. And as we look to the next slide, our priorities are very clear. We want to convert some of the deals that are advanced stages in our pipeline and just building the momentum that we've established over the last couple of months. We want to demonstrate our leadership in the alternative long-duration energy storage space and really utilize some of the industry partnerships and government relationships that we have to accelerate our sales and provide some of that underpinning demand. Clearly, for us, as well we need to execute, and we're very focused on executing these key projects that we've talked about because we do know they're going to be a very strong reference point for us for other projects in the market. And as Mark mentioned, that 200 to 400 megawatt hours ambition that the CEC has 4 companies under the program. But at the same time, we also want to make sure that we can be strategic. We have big global ambitions. We think we have the capability to be a gigawatt scale company. And we want to make sure that we're scaling some of those foundations up, particularly around a new facility that we can execute on and in parallel see how we can engage with relative state and national governments about how they can support that scale up in our relative markets. So if we go on to the next slide. Two other updates, I think I wanted to relate to investors on this call. And the first one is the decision by the Board to undertake a strategic review. I think the projects that we've announced in California and also in Australia, I think, have generated a significant amount of industry awareness and interest. And then quarterly, we want to explore ways that both unlock this value with potential strategic partnerships and other capital solutions, but also maximize the benefits that we have for our shareholders. Now, we're at the early stages of this, we're embarked and that's going to take up a considerable amount of time and engagement of the potential partners both here in Australia and overseas. And we'll keep investors updated as we progress on that program. The second piece of news I'd like to share with you is, as we've seen below, Trudy Walsh has been CFO and Company Secretary, has formally advised the Board of her intention to retire at our AGM that's going to be planned in November of this year. I think as investors will know, Trudy has been with the company since shortly after I joined back in August 2018 and is an incredibly important part of the executive team and worked tirelessly with us and with customers and her team to make sure that Redflow's in the great position that we find ourselves today. But based on that Trudy's now decided that her time here is to retire and prefer pursue other interests in their family, grandchildren and horses, and we really wish Trudy all the best and clearly, she's not leaving the building immediately, and we'll still continue to engage her up until the AGM. And so, the Board have commenced the search for Trudy's replacement, and we'll advise the market accordingly as this progresses. So just to close then because I do want to allow some time for Q&A, our growth strategy is paying off. We now have a number of multi-megawatt projects that we think sets up foundation and a strong platform for us to focus on other opportunities in that pipeline and we are now focused on production. Now, if we start to look at the 24-megawatt hours that we've announced, that production outlook is starting to get full as to the end of '23, but as we start to move into kind of 2024. So we need to make sure that we're focused on production and we execute against the manufacturing plan that we talked about previously. But that -- those megawatt hour contracts really reinforce, we think our leading position and the interest that we've got in our key markets. Against that 6 gigawatt hours of pipeline of qualified sales opportunities with a number of those at advanced stages. And the recent entitlement offer, we think, allows us to go forward and execute against these initial stages of the project as we start to see them today. So it puts us in a strong position to execute, whilst at the same time, as I mentioned before, making sure that we're leveraging the growth opportunity we see before us with the most optimized capital structure. So I'd like to thank everyone for their support over the last 12 months. We're tremendously excited about where we are. We feel proud about what we've achieved over the last 3 to 6 months, and we look forward to updating investors as we progress, both in terms of execution of these key projects, but also making further commercial traction in our target markets. Ronn, back to you for some questions, please.

We've got a bunch of questions that have come through the webinar, and there's a few that have been emailed earlier today. Maybe we'll start with Mark and the USD 140 million LDES program in California. Could you provide some color on where Redflow stands in relation to others in terms of project size, strengths, weaknesses? Can you give any color on how many other providers are there? That's from one of our investors.

Absolutely. So there have been 4 projects that have -- or 4 battery vendors that has won awards through the $140 million grant program from last year. There was a, I believe, a 10-megawatt hour project at Invinity won, a 30-megawatt hour project that Eos won and then there was a foreign energy won, there was a 100-hour battery. I think it was on the small side in terms of powering, I don't actually recall the energy rating of that system, but it's a very different type of long-duration storage than what we offer. So those 4 were the awardees from that $40 million -- sorry, $140 million program from last year. Our overall projects, of which we're only one component that it's a large microgrid that provides the majority of energy for the Paskenta Tribe that we're working on. It's a solar plus storage microgrid 5 megawatts of solar and then 20-megawatt hours of energy storage. That overall grant was about USD 32 million. So you can see it's actually a sizable fraction of the overall $140 million that the stated allocated to long-duration storage from last year. And the way that they're going to deploy the $190 million from this year is actually very, very different. They're going through a stakeholder process right now to determine a different way to do that. These awards from last year were really designed to be that seed investment that the state is trying to make into scaling up the long-duration storage providers that they view as the most commercially viable right now.

Maybe a question for Tim. The demand for energy storage is the best it's ever been at the moment. There's some very large scale opportunities out there. Can the company be doing more to build a larger market share?

We can always be doing more, and we don't lack for our ambition in terms of that. I think as we've said before, the key thing that we think was holding us back in terms of our ability to tap into that kind of larger projects and larger into the market is getting momentum at the megawatt hour size and scale. And from where we find ourselves today, where we've got 18 months of operational experience, demonstrating our battery and our chemistry can scale to multi-megawatt hours, having the facts that the California Energy Commission is backing us of only 1 of only 4 companies at the 20-megawatt hour project and the backing by Energy Queensland, we think sets the foundation and the platform for us to lean into those bigger opportunities. If we look where we were sort of 2, 3 years ago, even though we might have thought that, that's a great market for us, end customers and EPC partners needed to see the proof of the battery operating at that level. And also, they didn't want to be the first to kind of leap into that bigger size and scale. And as I think you've seen from Mark and the pipeline that we've seen, the announcement of that has just really shortened. I think that the sales cycle that we've seen in some of the opportunities, but also broadens the opportunities that we're working on. We're still a small company. We still need to manage our resources extremely carefully. There's probably opportunities for us in Europe, Asia and other markets. There's no doubt there's other opportunities that we need to make sure that we allocate our scarce resources effectively and efficiently from where we are today, and that means focusing and building the momentum in those kind of core markets. So what I think you're going to see further on is, some further announcements of projects hopefully in the coming months that might not be on the same size and scale of the CEC but probably, as Mark mentioned before, underpin an initial project for end customers that have potential demand in the tens and hundreds of megawatt hours. And that's continuing on a very clear strategy of us leaning into bigger systems, improving our work, improving our chemistry and improving that we've got a strong commercial element to that. And for people in the industry, that validation, particularly by the California Energy Commission is just really elevating, we think our credibility for the target markets that we want to operate in.

You mentioned in that answer EQ. We've got a question from a shareholder on Queensland. The Queensland energy plan is also working with an iron-based low battery provider. Can you comment on why Redflow's zinc solution is better?

Look, we know that the folks at ESI that are using an iron flow battery called ESS that comes out of the U.S. Look, first of all, I'd like to say, fundamentally, we think there's plenty of room for lots of players in the future energy storage space. And so, we're delighted when other companies or we see our peers in the industry actually announce projects because that means it validates the market for us. When we sort of take a step back and talk to our customers around the differentiation that we have against other flow battery companies, we can talk about the fact that we're a zinc-based company and zinc in Queensland is a pretty important part of the minerals economy that we have here. Our power and energy density, which then provides us with some very strong advantages versus other peers, both in terms of vanadium space and the iron flow space, which is really important in terms of, I think, our C&I customers where space is sometimes an absolute premium. And then also, we think our low deployment profile and costs. So as we've seen by the Anaergia deal, we send our Energy Pods full, the red would be wired up and go and other flow battery companies have a little bit more of a convoluted process to make sure installation and commissioning is the right ones. And then when we look at sort of levelized cost of storage, we think from some of the profile of our battery, including the ability of a hibernated battery puts us in a good position. So in summary, we think the market is big enough for multiple players. We like to think that we're at the top of the tree, but we also celebrate others and the peers because it just elevates our size and our strengths. And we think as we start to move forward, vanadium iron flow, zinc-bromine flow is a great sign of the maturity of the industry, but we also want to win. And we think we've got some characteristics that allows us to do that.