JordanSolace

I own assets & chill. Investor in grid enhancing technologies. Prototypes are easy, production is hard ⚡️🔋

[JordanSolace @JordanSolace]

$EOSE 🧵

Was at a bach party this wknd and coincidentally sat next to someone very interesting in the casino… friend on the trip who worked for a PE firm specializing in financing renewable energy projects…. (with connects to Eos gen2.3)

I know lots of folks are upset with the q4 miss and relative quiet on the order front but let me bring up a few things nobody ever talks about.

Before a single Eos batt gets installed.. the developer buying it has to close project financing. This means getting a senior lender, a tax equity investor, and an offtake agreement all lined up simultaneously.

Every party does their own DD and anyone can kill the deal.

Here's who has a say before a project closes: Senior lender sizes the loan to contracted cash flows, tax equity investor claiming the federal tax credit, independent engineers certifying the tech works, offtaker signs l/term capacity agreement, insurer provider wraps project.

Everyone has to be comfortable. Independently.

The federal tax piece alone is huge.. under the IRA BESS projects can qualify for the 30-40% ITC depending on location + domestic content

On a $60M project..thats about $24M claimed in year1. The feds are funding nearly half a project on day1. That’s why it gets built.

The operational cash flows alone don’t justify it. The tax benefits are the engine.

Here's the catch..a tax equity investor will only participate if it’s certified by an independent Engineer.. engineers review field performance, OEMs balance sheet, warranty terms, chemistry etc… then sign off.

That’s the price of admission.. without it.. you wont close.

This is why the “eos tech doesn’t work” has a logical problem.

Mn8 energy is GS backed. The supply agreement is for 750mwh. They have institutional LPs, their own lenders, and a rigoruous DD process… goldman backed firms do not stake their reputation +capital on tech they think has no chance to be bankable.

Same with talen.. a $17B IPP. They would not put their CEO name in a PR for tech they don’t believe in IMO.
Talens play is pairing eos w existing generation in PA to serve AI DC. They have the land, the interconnection, and the hyperscaler relationships.

Doesn’t sound like a favor… it’s a calculated infra bet.

And then you have frontier power. UK developer that submitted Eos tech to OFGEM.. the UK regulator in a competitive bid for the cap n floor program. 11Gwh of projects to round two using Eos tech.

Under the program.. ofgem provides a rev floor..essentially the govt backstops the cash flow the lender will underwrite against

The 228mwh firm order isn’t just a sale. It makes eos look much more viable since it’s being considered within regulated lender-backed frameworks …

NYSERDA plays a similar role domestically.. when NYSERDA selects its tech thru competitive solicitation.. it backstops revs that senior lenders will underwrite against…

A govt backed offtake is the cleanest credit in project finance… that is in our pipeline.. 🔑

So why is conversion so slow?

Maybe bc the chain I just described – lender approval, tax equity, independent engineer certification, offtake, insurance can take 12-24 months from contract signing to commercial operation .. then layer in first of a kind BESS chemistry that has never been financed or deployed at scale… 🤔

These counterparties engaging tells me the tech has cleared initial DD hurdles, but scaling risk remains

Nobody signs a 750mwh as a favor.

Cerbs involvement likely improves access to financing counterparties.. but execution risk still exists. But adding a 3rd BOD member isnt a move you make from a company you are about to walk away from.

Talented finance execs tend to do DD before joining as well.

The risks are real. Mfg execution, runway, order conversion- not dismissing any of it. But the project finance complexities are under appreicated. Just trying to close that gap.

[JordanSolace @JordanSolace]

@NHLJets Grinder. Kid is gonna do well there

[JordanSolace @JordanSolace]

@MrNotAdvice

[JordanSolace @JordanSolace]

@growthrapidly You’re a rookie sir. Do you drive your car staring at the rear view mirror?

Look forward!

[JordanSolace @JordanSolace]

@RsnblAssurance If that’s true… you will have an extravagant day. No better way to start your morning.

Unfortunately can’t see her today

[JordanSolace @JordanSolace]

@NetMelc @NHL @NJDevils Crazy day. Good things are coming

[JordanSolace @JordanSolace]

@NetMelc @NHL @NJDevils We got our guy… didn’t even give up a 1st

[JordanSolace @JordanSolace]

@NetMelc @espn @emilymkaplan Cups galore… we need a goalie so bad.

Connor. A true American hero and a top tier talent 🙏

[JordanSolace @JordanSolace]

@ACEdge They didnt lose NYSERDA.. but yes.. they can bid more competitively imo

[JordanSolace @JordanSolace]

$EOSE

This is the last quarter before the team is officially in the state of the art facility in TH

It’s a race between margins, burn, and cash… but once they are in the new facility early next year…

1) the margin profile will be way different

2) the mfg efficiency has never been as good as it’s been now

3) they will have a competitive product they can bid with into larger
procurements

4) another quarter of discharge data that is melting higher

5) likely more news on the commercial front whether it’s 3rd party or fpusa related bc they can’t go into 2027 with a $670M backlog

By the time various parts of the story are de risked.. the mkt will be ahead of you

Invest from this point moving forward.

4 lines of indensity production at scale in TH doesn’t equate 8gwh imo

This is why we do what we probably shouldn’t be doing… 🦃

[JordanSolace @JordanSolace]

@thaisoul23 Enough to keep me going.. some days it’s all I got!

Are you one of the Glassdoor reviewers ?

[JordanSolace @JordanSolace]

Gross margins shifting to TH will be better.

Just moving line 1 to TH reduces cost bc of the single flow footprint…

Indensity is simpler to mfg and assemble + install in field. It will increase margins relative to the capex high upfront cost + difficult to assemble and install in the field cube

The highest risk item here is the hardest to quantify & it’s mgmt ability to execute on what they tell the mkt

By the time that answer is obvious you’ve either made the $ or buy when it’s de risked

Binary.

[JordanSolace @JordanSolace]

None taken..

Can’t argue with your interpretation of the last 2 yrs.. and yes it fucking blows. Won’t sugar coat it

We (investors) thought they would be able to commercialize the z3 cube in TC, win big deals, and anchor to the unique sale points (moat) we thought eos had

Reality is.. the cube was having hard time penetrating the mkt.. economics do not seem to have worked, and they couldn’t reach mfg efficiency for many reasons but one excuse sticks out… (it’s all we could afford at the time- Joe )

Nonetheless, like you said from this point moving fwd we are betting on 2 things

1) indensity actually being accepted by the mkt and economical (winning bigger deals)

2) TH being the mfg engine that we thought TC would be. Everything I have heard about TH… it’s like comparing a shitty bodega in the lower east side vs. a fine dining spot in the village

It’s actually worlds apart. I think we have a hard time comprehending this bc we don’t see it in the financials yet

But… obviously this ain’t Low risk. Shit can still go wrong. Risk/return @ $1.60

[JordanSolace @JordanSolace]

@RektTargaryen It’s ok my friend. You are forgiven

Another 30% cut really is di minimis at this point

Let’s make it a great day 👍

[JordanSolace @JordanSolace]

@bert_gilfoyle Indensity should sell itself if it performs to spec..

Finally something that pencils they can bring to mkt at scale...

1) Margins
2) Indensity being main sku
3) Field data/ entitlement

Bang the drum on these 3 things in 2 weeks

[JordanSolace @JordanSolace]

@CompoundingTony Great write up Tony 👏

Curious if there are any new lessons you have learned with the Eos investment relative to some of the other earlier ones. Regardless if eos succeeds or fails. reflecting on one or two would be interesting although maybe thats a loaded question

[JordanSolace @JordanSolace]

@xEBITDA They said execution risk could be handicapped… but based on the mkts pricing of it.. smells like opportunity

[JordanSolace @JordanSolace]

@DesignClimate Good question & not 100%

Gut would tell me DC but it’s probably a mix of some sort.. but likely (more) dc

This is a comment from the q1 26 prelims on the mix shift

[JordanSolace @JordanSolace]

$EOSE quick take: 🍺

This is why the incremental margin gains are crucial.. and why I think it will bring institutional capital back to the name in the coming quarters…

Imagine an 800mwh – 8hr contract. Li ion bidders price near $240kwh

Eos also wants the job. What happens depends entirely on which product it bids with. (This is just a hypo..)

Lets say Eos bids on the cube economics: so they guarantee output at ~78% RTE.. Eos needs to oversize ~18% (944mwh).. at $340kwh to build it.

That will cost $321M against $192M of revs. If Eos wins the bid they lose $129M

The alternative is pricing at cost plus margin which is ~$500kwh and losing to li ion on cost…

For cubes.. the economics on these large projects might just be to challenging.. we have felt that over the past couple years is my guess…

You lose the bid or you lose money.

Does not make sense.

Same bid on Indensity… Economics- less oversizing (~840mwh) and a lower build cost… ($200kwh) turns the same bid into +~$24M and about a 12% margin.

Same customer, same price. Different outcome here. 🔑

After all these years.. this is THE bet.

This is why indensity is the product Eos needs to take to mkt. It uses the same z3 tech + DawnOS but in a stackable, forklift serviceable design for the auto assembly.

The density/indoor setting, and cheapness to transport + install allows it to ACTUALLY play where li ion struggles… and make money. 🔑

Why not just bid bigly on indensity today? Because we still need the field data.. so I think eos will prioritize getting these cores into the field (not on massive projects) but ones that (as they have said in whitepapers) can deploy + commission quickly.

Get the discharge figures higher as well as leverage DawnOS cube data….then start bidding on some bigger projects next year (and winning in the niche mkt I think they can carve out).

That right there is the gap FPUSA will bridge… will supply the volume while indensity proves itself out. The 2gwh reservation can help 2027+ any re-ups when you consider what is in the FPUSA pipeline…

The FPUSA cap stack can support additional gwh beyond the 2 right now ($1B+ Project capital) total so frontier doesn’t need more $ in the immediate term.

TH is the finish line.. Q3 rose from 1% to 17% ( L2 production) and eos has improved margins for 8 Q’s in a row.

Mgmt pointed to 70pts+ on the q2 call and Q3 was on pace

L1 consolidating in early 27 will lower conversion cost by 10-15% 🔑

The race is $344M of cash vs the time it takes to get GM+.. if you exclude the $87M DOE advance cash fell ~$107M.. but every Q we get margin progress the risk of massive dilution shrinks…

And if you are the one screaming for orders… just keep in mind… a money losing contract would make dilution way worse

So the strategy … Indensity makes the economics work.. FPUSA fills the volume as data comes in, TH builds it cheaply at scale.. margins are gonna be how we know it is working. Anchor to trend… not absolutes especially not the q3 margin figure in isolation bc it means nothing

More to come on what I wanna see on 11/5.. but I want mgmt. to continue magnifying the path to BE.. any indensity milestones, harp on the field data bc we need more of that, and if possible why cash is sufficient for the time being.

But again.. it’s the margin story that will get institutional dollars flowing again

[JordanSolace @JordanSolace]

@StonkChris Risk mgmt is paramount.. the RR in a lot of those names has only increased in attractiveness

If you don’t acknowledge the rate impact and unprofitable de grossing since June you are kidding yourself.