ESS Inc, the Oregon-based storage company that went public via SPAC in 2021 on the promise of iron flow batteries for long-duration storage, has formally abandoned that technology and will redeploy its manufacturing lines and balance sheet toward sodium-ion systems. New CEO Drew Buckley told Energy Storage News the company “wasn’t ready in 2021” to commercialize flow batteries at scale, and that sodium-ion offers a faster path to revenue using supply chains that already exist for lithium-ion. The pivot marks the first high-profile exit from flow batteries by a publicly traded pure-play, and it reshapes the competitive landscape for 4-10-hour storage just as utilities finalize integrated resource plans through 2035.
From SPAC darling to technology reset
ESS raised roughly $465 million in gross proceeds from its 2021 merger with ACON S2 Acquisition Corp., valuing the combined entity at over $1 billion. The pitch centered on the Energy Warehouse, a 3 MW / 12 MWh iron flow system targeting daily cycling with 25-year life and no degradation – specs that, if delivered, would undercut lithium-ion on levelized cost of storage for durations beyond four hours. By mid-2023, however, the company had recognized only $2.1 million in cumulative revenue since inception, and its 2022 10-K disclosed “substantial doubt” about its ability to continue as a going concern. Buckley, who joined as president in late 2023 and became CEO in March 2024, inherited a workforce that had been reduced from roughly 300 to under 100, a Wilsonville factory built for flow battery assembly, and a balance sheet with about $50 million in cash as of Q1 2024.
The technical root cause, according to Buckley, was not the chemistry itself – iron flow batteries do work – but the systems integration required to make them reliable, manufacturable, and cost-competitive at volume. Electrolyte management, sealing, and balance-of-plant controls proved harder to scale than the company’s early pilot projects suggested. Meanwhile, the cost curve for lithium-ion cells dropped faster than ESS’s internal models anticipated, eroding the projected crossover point where flow batteries would become cheaper per kWh. By the time ESS could have reached volume production, the addressable price window had narrowed dramatically.
Why sodium-ion now, and why it matters for the 4-10 hour segment
Sodium-ion batteries share 80-90% of the same manufacturing equipment, electrode coating processes, and cell form factors as lithium-ion, but replace lithium carbonate with abundant sodium salts and often use hard carbon anodes instead of graphite. That means ESS can retrofit its Wilsonville lines – originally designed for flow battery stack assembly – into a cell-to-pack assembly operation with far less capital than building a greenfield gigafactory. CATL, BYD, and Natron Energy have already demonstrated sodium-ion cells at 140-160 Wh/kg, sufficient for stationary storage where energy density matters less than in EVs. At current cathode material prices, sodium-ion cells are tracking 20-30% below LFP on a dollar-per-kWh basis at the cell level, though system-level savings are smaller once integration, thermal management, and power electronics are included.
That points to a strategic repositioning: ESS is no longer betting on a novel chemistry to win the 10+ hour market; it is betting on a known chemistry to win the 4-10 hour market faster than incumbents can retool. The U.S. long-duration storage procurement pipeline – driven by state clean energy mandates, FERC Order 841 participation, and the IRA’s standalone storage ITC – is heavily concentrated in the 4-8 hour range today. Lithium-ion LFP dominates that segment, but supply chain concentration in China and lithium price volatility have created buyer appetite for a geographically diversified, lithium-free alternative. If ESS can deliver a UL 9540-listed, domestically assembled sodium-ion system at a 15% discount to LFP on an installed-cost basis, it captures a niche that flow batteries were too late to serve.
Who this affects
- Utility resource planners: A new domestically sourced, non-lithium option for 4-8 hour duration bids into RFPs starting 2026, reducing single-source risk on LFP and providing a hedge against lithium carbonate price spikes.
- Storage developers and EPCs: Sodium-ion systems will have different thermal runaway characteristics and fire codes than LFP; early engagement with AHJs on UL 9540A test data will determine permitting timelines for projects targeting 2027 COD.
- Policy analysts and state energy offices: ESS’s pivot validates the DOE’s Long Duration Storage Shot’s implicit assumption that multiple chemistries will compete – but it also shows that “long duration” in near-term procurement means 4-10 hours, not 100 hours, redirecting grant and loan program focus.
- Institutional investors in climate tech: The episode reinforces that SPAC-era valuations for pre-revenue hard-tech companies carried technology-readiness risk that public markets underpriced; future capital allocation should weight manufacturing readiness over lab-scale performance metrics.
What to watch next
- Wilsonville line conversion timeline: Buckley targets first sodium-ion system shipments in H2 2025; any slip past Q1 2026 risks missing the 2026-2027 utility procurement cycle.
- Cell supply agreements: ESS has not disclosed its sodium-ion cell partner; a binding offtake with a Tier-1 cell maker (CATL, BYD, Farasis, or a U.S. startup like Peak Energy) is the single biggest de-risking milestone.
- Installed cost verification: Independent third-party LCOE studies on the first 10 MWh of deployed sodium-ion systems will determine whether the 15-20% discount to LFP holds at system level.
- DOE Loan Programs Office engagement: A Title 17 loan guarantee application for the converted factory would signal federal confidence in domestic sodium-ion manufacturing and lower ESS’s cost of capital.
Bottom line: ESS’s pivot is not a referendum on flow batteries – it is a recognition that the market window for first-generation long-duration storage has already been claimed by lithium-ion, and the next window belongs to whoever can manufacture a lithium-free alternative at scale first. Sodium-ion is that alternative, and ESS now has a factory, a team, and a balance sheet to compete for it.
Read the full report at Energy Storage News
Note: facts and figures attributed above to Energy Storage News reflect that outlet's original reporting. Broader context, cross-sector connections, and forward-looking scenarios reflect independent analysis by our editorial team.
About this article: Drafted by Energy Ai with AI-assisted research and writing based on public reporting, then reviewed under our editorial process before publication.
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