Avi Brenmiller, a mechanical engineer who founded solar energy company Solel Solar Systems and sold it to Siemens for hundreds of millions of dollars (the company later collapsed), is promoting an IPO on the Tel Aviv Stock Exchange (TASE) for Brenmiller Energy, which he founded five years ago. Leumi Partners Ltd. and Epsilon Investment House Ltd. are leading the offering.
The company today published an initial draft prospectus for the offering, which is planned at a company value of NIS 200-250 million before money. Brenmiller Systems, which does not yet have any revenue, is planning to issue a quarter of its shares thus raising NIS 50-60 million. Avi Brenmiller, the company's CEO, who owns all of its shares, is likely to join the offering with an offer for sale.
Brenmiller Energy initially developed and build thermo-solar farms, and its business model was based on building these farms for electricity producers. After doing business for a number of years, the company decided to focus on heat energy storage systems - one of the components developed by the company, which the company says has become its competitive advantage.
The company's device is capable of absorbing energy from a variety of sources: wind energy, solar panels, an electrical grid, water, etc. It stores the energy and supplies electricity by generating steam. The competition in the sector comes from other energy storage solutions, such as pumped storage hydroelectricity and molten salt energy storage, together with a number of other technologies in development, such as cement-based storage. There are also quite a few players in the market storing electricity in giant batteries, such as Tesla and other companies.
The draft prospectus indicates that Brenmiller has invested NIS 130 million in the company to date in R&D and setting up production and computer infrastructure. Brenmiller Energy's financial situation is poor: the company has a NIS 117 million capital deficit and NIS 178 million in accumulated losses.
Brenmiller Energy's accountants write, "Construction of the projects planned by the company depends on obtaining substantial external financing resources in the coming year, until it can generate revenue and make a profit. In the absence of revenue, the company depends on also receiving financing to pay for its current activity, and the company's controlling shareholder has undertaken to support the company for this purpose, including the provision of additional financial resources and postponing the repayment date for his owner's loans." Brenmiller Energy has 30 employees, most of them former Solel Solar Systems employees and three quarters of them engineers.
Brenmiller himself is company chairman and CEO. His two sons, Doron and Nir, are also employed in the company and serve as directors and deputy CEOs (Doron is responsible for business development marketing and Nir for finances and operations).
Integrating energy sources
The company draft prospectus shows that its relative advantage results, among other things, from its ability to store energy produced from a combination of energy sources, and to supply it around the clock to the electricity supplier at a later time, thereby improving efficiency and cutting production costs. The modular technology developed by the company is likely is likely to facilitate optimal utilization (the ability to convert energy at times of low demand to electricity at peak times) and management and integration between different energy sources - renewable and fossil (coal, oil, or gas) for a continuous and regular supply of energy and/or steam, all with no dependence on wind or sun at a particular time, while using environmentally friendly materials. The company's business model is based on selling energy solutions (supply of electrical energy and/or applied thermal energy, and on the supply of equipment or providing technological solutions, with an emphasis on storage), not only to renewable energy manufacturers, but also to other concerns, such as power station producers hooked up to the grid, power station producers not hooked up to the grid, and suppliers of energy to industry.
As of now, the company has no revenue, which is not likely to arrive until after 2018, when construction of two power station projects being promoted by the company in Mishor Rotem near Dimona is slated to begin. Most of the money from the IPO is designated for these projects.
The first, Rotem 1, is a combination of NIS 1.5 megawatts in energy capacity, including energy from solar radiation and from natural gas. Construction is scheduled to begin in the first quarter of 2018, and 20 years of commercial operation is due to begin a year later, after which investment in the facility is expected to total NIS 60 million. The second project, Rotem 2, combines energy from solar radiation, organic waste, and natural gas, with a 10-megawatt capacity. The estimated cost is NIS 350 million, and construction is scheduled to begin in the second quarter of 2019 and be completed during 2020.
The two projects will supply their electricity to Israel Electric Corporation (IEC) (TASE: ELEC.B22) for 20 years. Brenmiller Energy notes that it has established two subsidiaries for the projects, but as of now, the subsidiaries "have not yet begun any real activity, and promotion of the Rotem 1 and Rotem 2 power stations has so far been at the company level." The company projects NIS 58 million in annual revenue from the two projects, plus NIS 28 million more from six other projects with an aggregate capacity of eight megawatts that it is building in New York, Israel, and South Africa and NIS 60 million from a seven-megawatt project to upgrade an existing plant in Spain.
Brenmiller Energy has planned and built a prototype for non-commercial purposes in the Rotem industrial park near Dimona, where the main systems of the company's technology have been demonstrated, including the storage and absorption of thermo-solar energy. "The prototype has been tested by two international engineering companies, and its capabilities show the receiving of heat at high temperatures, its storage for 10 hours, and the production of steam with stable temperature and pressure parameters," Brenmiller said.
The presentation published by the company also indicates that the cost of the electricity supply by its solution is more than 70% lower than the average cost of electricity from independent power stations in the world (those not connected to a national power grid): $0.13 per kilowatt-hour, compared with $0.50 per kilowatt-hour.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 3, 2017
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