Invinity Energy Systems: All About That BESS

Image courtesy of Invinity Energy Systems

You’ll have to forgive the Meghan Trainor reference in the title, I couldn’t resist. This article isn’t all about that bass, it’s all about that BESS. Battery Energy Storage Systems, and one promising BESS manufacturer in particular that I have recently invested in, Invinity Energy Systems plc (AIM: IES, OTC: IESVF).

Invinity is a leading global manufacturer of utility-grade vanadium flow batteries (VFBs) for large-scale, high-throughput energy storage requirements of business, industry and electricity network operators. With operations in Britain, Canada, USA and China as well as in India soon, it was formed in 2020 following the merger of redT Energy Storage and Avalon Battery¹.

BESS relates to battery technologies used to store energy for future use by businesses, such as data centre operators, industrial users as well as on a national scale by electricity grid operators. Why you might ask. Well, as the need and opportunity for renewable energy has evolved, so has the need to store that growing supply of intermittent energy for when it is needed.

For example offshore wind farms can generate electricity around the clock, however a nation’s electricity grid may not need all that renewable energy overnight when demand is lower. To avoid wasting that energy, BESS can store it for when it is needed during the day. It can also provide backup power for critical applications such as during power cuts. With instantaneous demand response and extended discharge durations as well as decades of service life, that is where Invinity’s VFBs excel.

According to the International Energy Agency, commitments made at COP28 in 2023 require that by 2030 it will be necessary to triple global renewable energy capacity and double the pace of energy efficiency improvements. To facilitate this rapid deployment of solar and wind power, global energy storage capacity must increase sixfold to 1,500 GW by 2030 with utility-scale BESS accounting for 90% of the increase². That is quite some potential opportunity for Invinity to go after!

Currently much of the installed BESS capacity is based on lithium-ion (li-ion) technology, the type of batteries that are also used for electric vehicles and mobile phones. With estimates suggesting li-ion batteries account for 88.05% of the battery energy storage system market share in 2025³. Li-ion has been a popular technology largely due to its lower upfront cost however the dynamics of the BESS marketplace appear to be changing.

For example Invinity has been driving down the costs of its flagship VFBs, marketed as Endurium. Removing about 40% of the product production cost on launch compared to the previous iteration while aiming to reduce the current production cost by a further 40% at least⁴. If achieved that could lead to a production cost that is about 1/3 of the cost of the 2024 product.

There are also recognised problems with li-ion batteries in that their energy capacity diminishes due to usage, as they typically don’t cope well with frequent cycles (of charge and discharge). Just think how quickly the battery life on your mobile phone has rapidly diminished from new. Relatively frequent cycles can be typical of solar and wind supplied BESS which can lead to the li-ion BESS needing replacing approximately every 8-13 years⁵ or sooner according to some.

VFBs don’t suffer from this significant capacity reduction and when looking at the total cost of ownership over a project lifetime, perhaps 25 to 30 years as is common for solar and wind generation projects, VFBs are increasingly cost competitive, as they do not need replacing two or three times or more like li-ion. Quite simply, replacing batteries is expensive and wasteful, so Invinity’s VFBs which are engineered to last over 30 years⁶ offer a compelling proposition. Invinity even state that their product offers ‘The lowest price per MWh stored & discharged over the lifetime of the battery’.

There is also a notable fire risk associated with li-ion BESS. Just search online for ‘li-ion BESS battery fire’ and you’ll see many examples and observations on the challenges of dealing with thermal runaway, as well as why placement is restricted in some areas. The vanadium electrolyte within Invinity’s BESS is majority water… so zero fire risk!

When considering the various risks associated with investing in Invinity, including the risk of capital loss from investing in any stock market listed business, one key risk stood out, and that is the need for Invinity to maintain access either directly or indirectly to the raw materials required for their batteries, vanadium being of particular importance as you can imagine.

As well as being the largest market for BESS, followed by the US and Britain, China dominates vanadium production with up to 70% market share according to some accounts⁷. While no means a guarantee of supply, in July 2025 Invinity entered into a licensing and royalty agreement with Chinese strategic partner Guangxi USENT, a manufacturer of vanadium electrolyte and battery products. The agreement being that Guangxi USENT would establish Endurium manufacturing capacity, reduce production costs and actively market and sell Endurium within China.

Together with Invinity announcing further expansion of strategic relationships in China in September 2025, along with US⁸ and Australian⁹ government incentives to increase their own domestic vanadium production, I feel somewhat reassured on this aspect of risk.

Looking at specific catalyst examples that may be helping to realise the International Energy Agency’s illustration for potentially significant BESS growth in the coming years, the US Inflation Reduction Act 2022 introduced expanded investment tax credits (ITCs) to incentivise BESS construction, and these were largely spared from the recent cuts to clean energy incentives in the so called One Big, Beautiful Bill Act 2025¹⁰.

I suspect this may have something to do with the expectation that AI data centre energy demands are expected to soar, thereby increasing the importance of grid resilience. In short eligible projects receive ITCs that can then be sold to help reduce upfront costs, thereby potentially accelerating deployment of BESS across the US. Invinity’s involvement with various US Department of Energy initiatives also ties in nicely here.

The European Union in addition operates various funded programs alongside national initiatives, with increasing recognition that BESS is a core requirement of the energy transition taking place. Europe’s BESS market is forecast to grow 30% to 40% from now until 2028, with the UK, Germany, Italy, Austria, and the Czech Republic identified as key markets¹¹.

In Britain the government announced a ‘cap and floor’ scheme in 2024 to support the growth of long duration electricity storage (LDES) which includes BESS¹². A ‘cap and floor’ model which provides a guaranteed minimum income for LDES developers, in return for a limit on revenues, thereby reducing risk and encouraging deployment of LDES schemes. The government body, Ofgem, tasked with managing the scheme is expected to announce initial project decisions in Q1 2026, so news on the 20+ proposed projects involving Invinity VFBs is anticipated imminently.

In summary, Invinity is a promising business that appears well placed to capitalise upon a significant potential growth in worldwide demand for utility-grade battery storage, thanks to its increasingly competitive product offering along with global operations. With a 40 GBX ($0.25*) price target from Canaccord Genuity¹³ at more than double the current 18.5 GBX ($0.28*) share price I may look to increase my shareholding in time as success is hopefully achieved.

Thanks to u/EnvironmentalSock210 and u/Competitive_Day_9482 for their excellent source of information on the Invinity Energy Systems sub. 🫶

* Based on the current exchange rate of US$1.366 per GBP£1.

Sources…

¹ https://invinity.com/creating-leading-vanadium-flow-battery-company/

² https://www.iea.org/reports/batteries-and-secure-energy-transitions/outlook-for-battery-demand-and-supply#abstract

³ https://www.mordorintelligence.com/industry-reports/battery-energy-storage-system-market

⁴ 25:06: https://www.youtube.com/watch?v=Ep4CNLFwDDE

⁵ https://nsip-documents.planninginspectorate.gov.uk/published-documents/EN010170-000793-SGHS.BESS.2_Briefing_Note_BESS.pdf

⁶ https://invinity.com/vanadium-flow-battery-lifespan/

⁷ https://investingnews.com/daily/resource-investing/battery-metals-investing/vanadium-investing/vanadium-producing-countries/

⁸ https://www.energy.gov/articles/energy-department-announces-actions-secure-american-critical-minerals-and-materials-supply

⁹ https://www.wa.gov.au/government/media-statements/Cook%20Labor%20Government/Vanadium-royalty-relief-a-win-for-regional-jobs,-emerging-industries-20260204

¹⁰ https://www.buildwithbasis.com/insights/battery-storage-tax-credits-whats-next-amid-the-obbb-act

¹¹ https://www.marsh.com/en-gb/industries/energy-and-power/insights/battery-energy-storage-systems-growth-challenges-safety.html

¹² https://www.gov.uk/government/news/new-scheme-to-attract-investment-in-renewable-energy-storage

¹³ https://www.reddit.com/r/InvinityEnergySytems/comments/1q5dm9r/invinity_energy_systems_derisking_the_financial/