Redflow suspends battery delivery so it can address product failures

Australian battery storage developer Redflow has hit a speed hump on the road to commercialisation, after the discovery of a fault in its zinc-bromide flow batteries prompted the Brisbane-based company to suspend deliveries.
In an ASX market update published on Monday, Redflow CEO Simon Hackett said delivery of new batteries had been “paused pending the outcome of further testing,” after a small batch of delivered stock were found have electrolyte impurities.

Hackett said that tests on seven batteries, recently replaced due to a “different observed failure mode,” had found a impurities in the electrolyte “beyond acceptable levels,” a factor that could have caused the faults.
With deliveries suspended, further tests will gauge the extent of the problem, which the company believes may stem from a supply chain quality issue with a specific batch of source material used in the batteries’ manufacture.
The note from Hackett said the test results were expected to be returned in about two weeks and, if deemed acceptable, delivery of the tested batteries would resume.
Additional stock would then be tested, he said, until the issue was “fully characterised.”
All said, the development undoubtedly counts as a significant blow to the home-grown battery maker, which is already playing from behind in the potentially huge residential and commercial battery storage market.
While the company’s newly launched ZCell range is touted for its safety and environmental credentials, it is competing against a growing number of increasingly cheap and well tested lithium-ion and lead acid battery chemistries, including the much-hyped Tesla Powerwall.
Hackett, a long-time Redflow investor, took the reins at the company last September, at what he himself described as a “pivotal time” for the company, with delivery of the 5 and 10MWh ZCells were set to begin.
As ITK analyst David Leitch wrote at the time, the success of that rollout would be crucial, and the company had already flagged the possibility it would need to raise more money over the coming year.
To this end, Hackett injected another $2 million of “working capital” into the company just over a month ago, with an option to extend the advance up to an overall maximum of $4 million.
The good news, however, is that the faults seem to have been detected quickly, via the company’s apparently thorough monitoring and testing processes, and can hopefully be resolved just as quickly.
Hackett’s transparency about the company’s progress – and particularly its technical hiccups – also bodes well, although it may not inspire consumer confidence.
With about about $1 million worth of product backorders, 96 batteries in stock and another 120 batteries in transit from the factory, Hackett says a total of 23 batteries have been repaired or replaced under warranty so far this year.
Three of these replaced batteries had “minor mechanical issues,” 13 were not cycling properly and “were resolved via software updates”; and seven failed due to “unexpected stress.”
Hackett also noted that no other batteries had failed after the company issued a software patch.
“Most of these problems were resolved on an ongoing basis via ‘over the air’ remote deployment of updates to battery software,” the note said. “Thus, lessons learned from ‘real world’ customer deployments are being fed back into product improvement.”
As for the electrolyte issue, Hackett says that “based on manufacturing test data and ongoing operational product testing, Redflow expects the issue to be confined to a small subset of its stock.
The company also believes the affected batteries “can be remedied economically” through a simple chemical cleaning process – a position others in the battery industry seem to support.

“Redflow is now undertaking a trial to confirm this,” Hackett said. “If required, remedial action will be taken on any affected batteries before delivery.”
The company has also just completed a Strategic Review it started late last year, and is expected to release details of its planned operating path within the next few weeks.