Proactive Investors - Run By Investors For Investors

Redflow's monetising the global shift to solar and storage, broker

Canaccord Genuity suggests a 12–18mth price target in the range of A$0.41 – A$0.85. This is well above the recent trading price of $0.22 per share.
Redflow's monetising the global shift to solar and storage, broker

Global investment bank Canaccord Genuity says Redflow (ASX:RFX) has a highly competitive and cost-effective battery for the fast-growing energy storage industry.

The broker suggests a 12–18mth price target in the range of A$0.41 – A$0.85. Redflow last traded at $0.22 before the report was published.

The following is an extract from the report.


Monetising the global shift to solar and storage



Strong leverage to the storage thematic

Redflow has developed a cost-effective battery for the fast-growing electricity storage industry.

While lithium-ion batteries are the higher profile battery type in the sector, other battery technologies such as Redflow’s ‘zinc-bromine flow battery’ are highly competitive for some major applications, providing strong leverage to the storage thematic.


Solar and storage forecast to grow ten-fold within four years


- Continued growth of solar is now due to lower costs, not subsidies. As incentives expire, consumers will want storage rather than providing cheap electricity to utilities.

- Solar and wind energy is ramping up globally, and the fact that these energy sources are intermittent increases the requirement for storage.

- Cost reductions for batteries are expected to follow a similar path to photovoltaics, which have seen 50% cost reductions over the last 5 years, and 75% over 10 years.

- Solar + storage can already be cost competitive with grid power, and stands to be seriously disruptive.

- The global market for grid-connected residential solar + storage is predicted to grow tenfold, to more than 900MW by 2018, up from just 90MW in 2014.


Redflow positioned for key storage markets

- RFX’s zinc-bromine battery of 10kWh capacity is bulkier and heavier than lithium-ion batteries of the same capacity making it competitive for stationary applications such as home storage and mobile phone towers.

- If Redflow can capture just 5% of the Australian market for residential energy storage, this would translate to 10,000 units per annum within 3-5 years, representing annual revenues of $50-60m. The global opportunity is even bigger.

- There are about 5m mobile phone towers globally. At least 2m are located off-grid or in locations with unreliable power. While this is just one commercial application, it is a key market segment targeted by Redflow. Even 5% market share represents 100,000 towers, needing on average two batteries (20kWh), driving a revenue opportunity of over $1 billion.


Significant revenue opportunities

It is due to these significant revenue opportunities that we are presenting Redflow as a Canaccord Colt, with the goal to transition to institutional coverage in the coming 12-18months as the strategy de-risks.

We regard Redflow as very well placed to drive strong revenues during this immediate growth phase, with scenario analysis suggesting a 12–18mth price target in the range of A$0.41 – A$0.85.

 

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.

View full RFX profile View Profile

Redflow Ltd Timeline

Newswire
February 23 2016
Newswire
February 16 2016

Related Articles

electric vehicle charging
January 04 2019
AMP wants to add 25 sites in Greater London and extend its reach into the North-West around Liverpool and Manchester
remote meeting
Mon
LoopUp bosses said the first half of 2018 was a “transformational period" for the group.
Bitcoin coins in a wallet
December 22 2018
The payment processing company’s platform has continued to sign up merchants, unbothered by the notorious market volatility

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use