Global Energy Transition Will Expand Utility-Scale Storage Demand

Key Takeaways

• Differentiated technology and regulatory tailwinds position Energy Vault for premium margins, recurring revenues, and strong earnings stability as grid needs evolve beyond lithium-ion solutions.
  
• Institutional funding and a surging project pipeline highlight accelerating demand and potential for substantial revenue and margin growth exceeding conservative analyst expectations.
  
• Accelerating battery advancements, technology doubts, volatile financing, regulatory uncertainty, and customer concentration all threaten long-term revenue stability and profit predictability.

Catalysts

Develops and deploys utility-scale energy storage solutions in United States, Australia, and internationally.

• Analyst consensus sees predictable recurring revenues from the new Asset Vault platform, but this may understate upside; Energy Vault is now positioned to deliver over $100 million in annual recurring EBITDA from just the initial 1.5 gigawatts of projects with funded project development and construction-suggesting operating leverage and scale efficiencies have barely begun to flow to earnings.
  
• Analyst consensus highlights growth from contract backlog and project pipeline, but the company's fast-growing backlog-up 120 percent year-to-date to $954 million alongside a $2.4 billion advanced pipeline-reflects accelerating demand tied directly to the accelerating retirement of fossil assets and tightening grid stability requirements, which could drive outsized revenue growth well above Street forecasts as renewables adoption surges.
  
• The $300 million preferred equity agreement not only facilitates nondilutive funding for over $1 billion in project CapEx, but, with exclusivity and milestone-based equity participation, signals strong institutional validation and a platform for ongoing funding rounds to rapidly convert Energy Vault's 3 gigawatt pipeline into recurring EBITDA and free cash flow, fundamentally transforming net margin trajectory and equity value.
  
• Technology leadership in long-duration energy storage-especially gravity-based systems-keeps Energy Vault differentiated as grid planners and utilities globally pivot away from lithium-ion and short-duration systems toward diversified, multi-day and low-lifecycle-cost solutions, opening up premium-margin segments less susceptible to price compression and capacity gluts.
  
• Structural changes in energy market design, with governments mandating storage for grid reliability and resilience in response to climate-driven volatility, should increasingly favor bankable, proven storage operators like Energy Vault, securing multi-year offtakes with investment-grade offtakers and providing exceptional earnings visibility and margin stability rare in the volatile renewable supply chain.

Energy Vault Holdings Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Energy Vault Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Energy Vault Holdings's revenue will grow by 119.3% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Energy Vault Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Energy Vault Holdings's profit margin will increase from -279.4% to the average US Electrical industry of 10.3% in 3 years.
• If Energy Vault Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $56.1 million (and earnings per share of $0.29) by about August 2028, up from $-144.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 7.6x on those 2028 earnings, up from -1.6x today. This future PE is lower than the current PE for the US Electrical industry at 31.1x.
• Analysts expect the number of shares outstanding to grow by 6.4% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.05%, as per the Simply Wall St company report.

Energy Vault Holdings Future Earnings Per Share Growth

Risks

• Acceleration in lithium-ion battery cost declines and performance improvements, together with increased adoption of distributed storage, could undercut demand for Energy Vault's large-scale, centralized mechanical storage systems, putting long-term pressure on revenues and market share.
  
• Persistent doubts about the scalability, reliability, and overall cost competitiveness of gravity-based energy storage technologies may discourage repeat orders and deter new customers, directly restraining revenue growth and limiting pipeline visibility.
  
• High upfront capital expenditures, long project lead times, and reliance on lumpy, milestone-based project financing make the company vulnerable to negative free cash flow and net margin compression, especially if bookings are delayed or outflows outpace inflows.
  
• Regulatory and policy uncertainties-such as shifting storage incentives, tax credits, and project approval risks-create volatility in the project pipeline, increasing unpredictability in earnings and exposing future results to political cycles.
  
• Customer concentration risk from dependence on a handful of high-profile demonstration projects and large utility contracts means that contract delays, cancellations, or failures in project execution could cause unpredictable swings in revenue and profit.

Valuation

• The assumed bullish price target for Energy Vault Holdings is $1.7, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Energy Vault Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $1.7, and the most bearish reporting a price target of just $0.5.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $545.3 million, earnings will come to $56.1 million, and it would be trading on a PE ratio of 7.6x, assuming you use a discount rate of 9.1%.
• Given the current share price of $1.44, the bullish analyst price target of $1.7 is 15.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.