The information contained within this Announcement is deemed by Invinity Energy Systems plc to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

23 January 2023

Invinity Energy Systems plc

("Invinity" or the "Company")

Operational and Trading Update

Invinity Energy Systems plc (AIM: IES) (AQSE: IES) (OTCQX: IESVF), a leading global manufacturer of utility-grade energy storage, is pleased to provide an update on current trading in early 2023 and other recent progress across the Company.

Revenue and Backlog

Further to the announcement of 30 December 2022, Invinity confirms that it expects 2022 revenue to be in line with market expectations.

As a result of the significant number of contract wins and the remaining revenue to be recognised from the 8.4 MWh project in Canada and the 8 MWh project in South Australia, the Company has a current order book backlog for 2023 of £22.0m which underpins the majority of the Company's current revenue expectations for the year. In addition, the Company has an order book backlog for 2024 of £7.4m which Invinity would expect to significantly increase during the year, particularly if the Company is successful in the Longer Duration Energy Storage Demonstration ("LODES") competition Phase 2 application which was announced on 18 January 2023.

Commercial

This significant increase in closed sales over previous periods reflects the growing global demand for non-lithium, longer-duration energy storage solutions from proven suppliers. Invinity's large and growing fleet of operational VFBs has been a key factor in bolstering customer confidence.

This growth in demand is illustrated by Invinity's latest commercial opportunity pipeline for its vanadium flow batteries as at 20 January 2023 (all figures in MWh):

The decrease in the Base category reflects certain of the 31 MWh of sales that moved from Base to Closed since September 2022 partially offset as others had moved in from the Advanced category.

An increasing number of national and regional programmes across Invinity's core markets seek to accelerate adoption of longer-duration storage. Many Invinity projects have already been supported by the UK Department for Business, Energy and Industrial Strategy ("BEIS"), the Australian Renewable Energy Agency, the CEC and Emissions Reduction Alberta.

Finally, Invinity is pleased to note that programs funded by the U.S. government's $1.2 trillion Bipartisan Infrastructure Act have begun to be announced by the U.S. Department of Energy including a $349m call for proposals for projects featuring long-duration non-lithium energy storage. Invinity has engaged a broad range of partners to advance projects funded by these programmes and has submitted several expressions of interest with them. The Company will provide updates in due course.

Next-Generation Product Development Progress

Invinity continues to make significant progress in the programme to design and develop its next-generation vanadium flow battery. The ongoing achievement of developmental and engineering milestones has continued to validate the commercial and technical targets set by the programme. Invinity continues to expect contracts for a limited number of initial pilot projects to be announced in mid-2023, with publication of full product details, product certification and unrestricted sale of the product expected from H1 2024.

Bankability Report Completed

An independent bankability review of the Company's VS3 vanadium flow battery was recently carried out by DNV, the leading independent assurance and risk management company for the energy value chain. This report confirmed the VS3 to be suitable for grid-scale battery projects, especially those requiring multiple back-to-back cycles, long discharge durations or a combination of the two, and that Invinity is leading among flow battery suppliers and comparable with Li-ion battery suppliers for applications at a range of scales. This is an important achievement for Invinity, offering credible 3^rd party validation to prospective customers and project partners in respect of Invinity's technology. The Company provides the report to qualified prospective customers on a confidential basis.

Operational

The last six months have seen a significant expansion of Invinity's production capabilities to meet demand.

Invinity is pleased to announce that its new Vancouver factory shipped the first 23 VS3s destined for Elemental Energy's project at Chappice Lake, Alberta. This facility represents a significant expansion to the Company's previous manufacturing capabilities, and at its full complement of staff and equipment is expected to be capable of delivering over 200 MWh of VFBs per year.

Further, Invinity has successfully completed the previously announced transition to new manufacturing partner Baojia, who are currently delivering components to Invinity's factories in North America and the United Kingdom and completed VS3 products to customers across the Asia-Pacific region.

Finally, the Company is closely watching developments in the United States regarding domestic content requirements that could benefit Invinity's customers through the Investment Tax Credit introduced under the U.S. Inflation Reduction Act. Invinity is developing plans for domestic production with an expanding network of partners, including localised VS3 production.

Corporate

On 14 December the Company announced a $10m convertible loan note funding facility of which $2.5m was drawn immediately with the balance subject to the agreement of noteholders. The Company continues to manage its cash position carefully and as at 31 December 2022 had cash resources of £5.1m.

The cash resources, together with expected near-term customer receipts and the above facility if drawn, will provide additional support for Invinity's short-term working capital requirements as the Company looks to deliver on its order book, whilst continuing to close further deals and develop its commercial pipeline. As previously stated, Invinity also continues to actively manage its cost base as the Company progresses towards becoming operationally profitable.

Gamesa Electric S.A.U. ("Gamesa") continues to support Invinity's corporate development by reinforcing shared commercial interests with key Invinity stakeholders. In consideration of Gamesa's ongoing support, Invinity have agreed to extend the term of exercise of Gamesa's option to purchase Invinity shares to take account of those Options' exercise price. Those Options, granted by Invinity to Gamesa following execution of the Joint Development and Commercialisation Agreement ("JDCA") between the parties, will now expire 48 months from the date of signing of the Option Agreement, a 12-month extension over the initial term.

Strategic Relationships

Invinity continues to progress a number of strategic partnership and corporate growth opportunities with a range of potential partners. Invinity's strategy to enter new markets without incurring the expenses associated with a full corporate presence has led to successful relationships with distribution partners with significant local presence in Korea and Taiwan. These relationships have, in turn, already led to closed sales opportunities, with many more reflected in the sales pipeline.

The Company has opened up new opportunities through strategic relationships in Invinity's core markets, too, working with Dawsongroup plc to access the equipment rental market in the UK and with Indian Energy to access Defence and Tribal Nations projects in the North America. The Company has also been progressing toward higher U.S. domestic content through its relationship with U.S. Vanadium.

Market Outlook

Regulators around the world recognise that renewable energy without energy storage leads to grid instability. They have instituted policies designed to accelerate the adoption of energy storage. Mirroring the U.S. Inflation Reduction Act, which is now in effect as of 1 January 2023, Canada recently proposed a refundable tax credit equivalent to 30% of the cost of capital investment into stationary electricity storage systems. In Europe, the REPowerEU plan will see accelerated permitting for renewable projects that include standalone energy storage. The Scottish Government recently published its draft Energy Strategy and Just Transition Plan which included a case study on Invinity's activities and proposed broad reaching support for the further development of energy storage in the UK. In Australia, the government recently agreed to launch tenders for a mix of renewable energy and energy storage as part of their transition to net zero.

Corporations also recognise the need for energy storage alongside renewable energy. As VFBs are more widely deployed, the risk from being a new and rapidly developing technology recedes and the benefits unique to VFBs emerge: safety, longevity, robustness and more. We expect corporate opportunities to increase in number and scale, building on each successful deployment.

Larry Zulch, Chief Executive Officer at Invinity said:

"We believe Invinity provides the best, most proven alternative-to-lithium batteries for large-scale grid-connected energy storage and increasingly our customers share this belief as they see our growing fleet of successful deployments. We're proud of our growth in sales, our increase in manufacturing capacity, and largely unsung but highly significant advances in our technology and electrochemistry. We acknowledge the challenges from supply chain disruptions that we had underestimated and sales processes that took longer than we anticipated. But we are entering 2023 with the best technology we've ever deployed, the largest order book we've ever had, and the most sales prospects by far. At the same time, we have made great strides toward the development of our next-generation VFB which promises both improved performance and significantly increased margins. It is hard to contain our eagerness to make it available."

Enquiries:

Notes to Editors

Invinity Energy Systems plc (AIM: IES) (AQSE: IES) (OTCQX: IESVF) manufactures vanadium flow batteries for large-scale, high-throughput energy storage requirements of business, industry and electrical networks.

Invinity's factory-built flow batteries run continually with no degradation for over 25 years, making them suitable for the most demanding applications in renewable energy production. Energy storage systems based on Invinity's batteries are safe, reliable, and economical, and range in size from less than 250 kilowatt-hours to tens of megawatt-hours.

Invinity was created in April 2020 through the merger of two flow battery industry leaders: redT energy plc and Avalon Battery Corporation. With over 33 MWh of systems deployed to date across more than 50 sites in 15 countries, Invinity is active in all major global energy storage markets and has operations in the UK, Canada, USA, China and Australia. Invinity Energy Systems plc is listed on the AIM Market of the London Stock Exchange and on the Aquis Stock Exchange (AQSE). The Company trades in the USA on OTCQX Best Market under the symbol "IESVF".

To find out more, visit invinity.com or call Investor Relations on +44 (0)204 551 0361.