April 17, 2023 | 00:01 ET~
Fluence Energy
FLNC-NSDQ
Rating
Market Perform
Price: Apr-14
$21.35
Target
$24.00
Total Rtn
12%
Energy Transition & Infrastructure
Ameet Thakkar
Analyst
(713) 546-9741
ameet.thakkar@bmo.com
Initiating Coverage of FLNC at Market Perform and
$24 Target Price
Bottom Line:
Initiate coverage of FLNC at Market Perform and $24 target price. Fluence is
a leading global developer of energy storage systems. We see robust demand for
storage as rising portion of electricity is supplied by renewable resources taxing electric
grids. We believe tailwinds for hardware margins, IRA PTCs, and current investor
sentiment favoring utility-scale exposure are largely reflected in share price, which
has outperformed the S&P/TAN/ICLN indices by over 70% LTM. We could become
more constructive on signs software and service revenue are growing faster than our
estimates.
Key Points
We are going to need a bigger boat. FLNC's leading position in the energy storage
systems (ESS) sector offers investors leverage to robust revenue growth as grid-scale
operators increasingly adopt storage as a means to integrate renewables, enhance grid
stability, and increase operational capacity. ESS capacity for utility-scale and large C&I
users that FLNC targets likely expands at a CAGR +40% in the U.S. and +41% globally (ex
China) through 2030. This drives robust revenue growth for FLNC as we estimate that
FLNC hardware deployments will expand by 9x by 2030.
What keeps us on the sidelines for now. We think FLNC hardware margins are set
to improve as legacy lower margin contracts are starting to roll off and supply chain
conditions improve. We estimate FLNC hardware margins can expand to around
15% by 2025, which is likely meaningfully higher than other companies involved in ESS
hardware as the company enjoys strong relationships with key renewable developers.
However, we see future margin expansion not to mention diversification away from
potential longer-term competitive pressure on hardware predicated on increasing
service and digital (software) revenue growth which realize substantially higher
margins. However, even using our assumptions of a 95% service contract attachment
rate and digital AUM growing at a faster rate than product sales through our forecast
horizon (implying FLNC can expand its software to non-FLNC storage assets), we
see limited upside in our longer-term DCF valuation beyond what is currently priced
in. Additionally, we think some sell-side 2025+ service and digital revenue growth
estimates are too high.
Legal Entity:
BMO Capital Markets Corp.
40
2YR Price Volume Chart
35
30
25
20
20
15
15
10
10
5
5
Apr
LHS: Price ($) / RHS: Volume (mm)
Oct
Apr
Source: FactSet
Company Data
0
in $
Dividend
$0.00
Shares O/S (mm)
174.8
Yield
0.0%
Market Cap (mm)
$3,731
P/BV
(44.5)x
Net Debt (mm)
$63
BMO Estimates
in $
(FY-Dec.)
2022A
2023E
2024E
EPS
$(1.08)
$(0.61)
$0.03
$(3)
$101
$250
EBIT (mm)
$(177)
$(88)
$33
EBITDA (mm)
$(184)
$(99)
$20
Gross Mrgn
(mm)
Consensus Estimates
2022A
2023E
2024E
$(0.76)
$0.00
2022A
2023E
2024E
P/E
NM
NM
NM
EV/EBITDA
NM
NM
NM
EPS
Valuation
QTR. EBITDA
Q1
Q2
Q3
Q4
2022A
$(43)
$(53)
$(48)
$(40)
2023E
$(25)a
$(32)
$(26)
$(15)
2024E
$(1)
$3
$8
$10
Key estimates. Our 2023-2026 consolidated revenue estimates are $1.7 billion, $2.35
billion, $3.1 billion, and $3.9 billion. We estimate 2023-2026 gross margins of 6%, 11%,
15%, and 16%, respectively. We see 2025 EBITDA of $222 million excluding PTCs and
$276 million if included.
Our Thesis
For disclosure statements, including the Analyst Certification, please refer to page(s) 36 to 40.
FLNC is a leading developer of energy storage systems
used by utilities and large-scale C&I users. While we
forecast robust demand for energy storage, these
products offer limited gross margins. Additional
upside will need to come via service and software
growth; however, we believe consensus estimates are
predicated on unrealistic expectations for these products.
We take a more cautious view.
Fluence Energy - Block Summary Model
Income Statement
2022A
2023E
2024E
Revenues
$1,199
$1,708
$2,350
(3)
101
250
Gross Margin (%)
-0.2%
5.9%
10.6%
Consolidated EBIT
(177)
(88)
33
7
11
13
(184)
(99)
20
Interest Expense
2
1
0
Income Tax
1
(1)
0
(289)
(155)
(44)
Upside Scenario
173
176
179
Diluted Operating EPS
$(0.60)
$(0.88)
$(0.25)
Dividends per Share
$0.00
$0.00
$0.00
Cash Flow Statement
2022A
2023E
2024E
Operating Cash Flow
(282)
(170)
41
Our upside scenario reflects higher-than-expected demand
for the company's Fluence IQ software platform, as well as
a higher attachment rate on FLNC's professional services,
increasing both revenue and consolidate gross margins.
Our upside scenario also assumes more robust hardware
deliveries over our forecast period, driven primarily by
higher backlog conversion rates.
Investing Cash Flow
(148)
(20)
(19)
Financing Cash Flow
817
23
0
Net Change in Cash Flow
386
(167)
22
EOP Cash on Balance Sheet
430
257
279
0
0
0
Net debt issued/(repaid)
(103)
21
0
Free Cash Flow
(290)
(186)
22
(2)
(1)
0
Balance Sheet
2022A
2023E
2024E
Common Equity
436
339
345
Non-controlling Interest
193
178
178
0
0
0
Enterprise Value
$3,335
$3,534
$3,571
Common equity %
1.8%
1.6%
1.6%
0.0
0.0
Gross Margin
Depreciation & Amortization
EBITDA
Income from continuing operations
Weighted Average Shares
Outstanding
Common stock (net)
Free Cash Flow to Equity per Share
Total Debt
Preferred equity %
Total Debt %
(0.82)
(0.56)
(0.61)
Book Value per Share
$2.51
$1.93
$1.93
Source: BMO Capital Markets, Company Reports
Valuation
We value FLNC using a blended approach that combines our
DCF, EV/EBITDA, and EV/sales valuations. The implied equity
values under this approach are weighted 50%/25%/25%
to arrive at our target price. Our EV/EBITDA and EV/sales
valuations assume a 2025E multiple of 11x and 1.8x,
respectively. Our DCF assumes a 13% discount rate and 5%
growth rate. We include $2.74 of upside from PTCs under
the IRA.
$31.00
Downside Scenario
$14.00
Our downside scenario reflects slower growth in FLNC's
digital applications AUM, a reduced software ASP escalator,
as well as a lower attachment rate on professional
services. Our downside scenario also assumes slower-thananticipated hardware backlog growth and lower backlog
conversion rates, driven by reduced demand and longerthan-expected lead times.
in USD
-34%
+12%
Downside
Scenario
14.00
Current Target
Price Price
21.35 24.00
+45%
Upside
Scenario
31.00
Key Catalysts
We believe that battery module manufacturing tax credits
under the IRA could translate into a meaningful boost to
hardware product gross margins that are not currently
present in official estimates. Additionally, FLNC will have
the opportunity to double capacity of its U.S. module
manufacturing facility once online in 2024. Growth in the
company's digital applications segment will be important.
Company Description
Fluence is a leading developer of energy storage products
and services and artificial intelligence-enabled digital
applications to optimize grid and generation asset
performance. The firm also offers owners of its storage
systems the ability to contract for maintenance services or
outsource operation of onsite storage.
FLNC-NSDQ
Research
Fluence Energy Inc. | Page 2
Glossary
Company
Models
April 17, 2023
Table of Contents
Initiating Coverage of Fluence Energy at Market Perform and $24 Target Price ........................................... 4
Investment Thesis ............................................................................................................................................. 5
Business Overview ............................................................................................................................................ 6
FLNC Reporting Segments .................................................................................................................. 10
Peer Competitive Overview ................................................................................................................ 11
Energy Storage System Basics ........................................................................................................................ 12
The Daily Operation of an Electric Grid Is a Delicate Balancing Act Made Harder by Growth in
Renewables and Extreme Weather .................................................................................................... 13
Location Within Electric System Determines Range of Applications/Revenue Potential ................ 14
FLNC Investment Positives ............................................................................................................................. 19
We Are Going to Need a Bigger Boat: Storage Growth Will Be Robust Through End of Decade… . 19
….Which Should Drive Backlog Growth (More Revenue Visibility) and Eventually Larger Annual
Deployments for FLNC ........................................................................................................................ 20
Hardware Margins Appear Set to Turn the Corner Driving Attractive Rate of Change Story ........... 21
IRA Battery Module PTC Upside From Planned U.S. Site; Standalone ITC supports Acceleration of
Storage Demand ................................................................................................................................. 23
Investment Risks............................................................................................................................................. 24
Hardware Margins Have Limited Longer-term Upside and Service/Digital Growth Needs to Be
Outsized to Move Needle ................................................................................................................... 24
Concentrated Ownership and Limited Public Float Currently ............................................................ 26
Ties That Bind: Sales to AES Likely Represent Large Portion of Current Revenue ............................ 27
Supply Chain and Regulatory and Policy Risks .................................................................................. 27
Demand Is Strong for Solar and Storage, but Interconnection Delays Are Mounting ...................... 28
Valuation and Key Estimates .......................................................................................................................... 28
Management Overview .................................................................................................................................. 31
Fluence Energy Inc. | Page 3
April 17, 2023
Initiating Coverage of Fluence Energy at Market Perform and $24
Target Price
Initiate on FLNC at
Market Perform and $24
target. ESS volumes
growing fast but we
await more evidence
that software and
service demand can
expand consolidated
margins.
We initiate coverage of FLNC at a Market Perform rating and $24 target price. FLNC is a leading global
developer of energy storage systems used by utilities, renewable power developers, and large C&I
users. We see robust demand for energy storage as the portion of the electric grid both at the front of
the meter and behind the meter is supplied by more renewable resources. We believe near-term
tailwinds that will expand hardware margins, Inflation Reduction Act (IRA) production tax credit (PTC)
upside, improvements under a new management team, and current investor sentiment favoring utility
exposure are largely reflected in current share price, which has outperformed the S&P/TAN/ICLN indices
by over 70% LTM. We could become more constructive on evidence that higher-value product segments
such as software (digital) and services are growing faster than our estimates.
Exhibit 1: 1-Year Relative Performance Overview
Exhibit 2: 1-Year Forward EV/Sales Overview
Storage 1- Year Relative Indexed
Storage Forward 1 Year EV/Sales
140%
5.0x
130%
120%
4.5x
110%
100%
FLNC, 100%
4.0x
90%
80%
3.5x
70%
60%
3.0x
SPX, 2.8x
ICLN, 2.7x
50%
40%
2.5x
30%
TAN, 2.1x
20%
2.0x
10%
0%
04/13/2022
-10%
TAN, 5%
05/26/2022
07/12/2022
08/23/2022
10/05/2022
11/16/2022
12/30/2022
02/14/2023
03/29/2023
SPX, -7%
ICLN, -7%
-20%
STEM, 1.7x
1.5x
1.0x
FLNC, 0.9x
-30%
-40%
0.5x
-50%
STEM, -54%
-60%
0.0x
04/13/2022
STEM
FLNC
Prices as of 4/14/2023
Source: FactSet, BMO Capital Markets
TAN
SPX
ICLN
05/26/2022
07/12/2022
08/23/2022
10/05/2022
STEM
FLNC
11/16/2022
TAN
12/30/2022
SP50
02/14/2023
03/29/2023
ICLN
Prices as of 4/14/2023; *Multiples are based on fiscal year estimates
Source: FactSet, BMO Capital Markets
As shown above FLNC has strongly outperformed both the broader clean energy sector (TAN/ICLN) and
the broader market. This reflects improvement on the part of a new leadership team that has helped
more consistently deliver on expectations following disappointing results after its October 2021 IPO
under the previous management team. In addition, investors have gravitated towards
equipment/hardware suppliers that focus on utility-scale renewable developers that are perceived to
have greater leverage to the IRA and less interest rate sensitivity. While FLNC continues to trade at a
discount on one-year EV/sales to the broader clean energy sector, we assign a lower weighting on this
valuation metric, as discussed in the valuation section of this report. Perhaps more importantly and as
we have discussed in our prior work, we see greater potential for sustainable and more attractive
margins on equipment providers that target higher-margin customers.
In the exhibit below we highlight the public equity comparable universe we think is most applicable to
Fluence and Stem Inc. (STEM-NYSE, $4.69, Market Perform). Pure-play comps for the type of energy
storage development FLNC and STEM are engaged in are limited currently. We broaden our coverage
universe to include other solar equipment providers that are leveraged to many of the same
fundamental drivers as we see energy storage growing largely in tandem with larger solar
developments globally.
Fluence Energy Inc. | Page 4
April 17, 2023
Exhibit 3: FLNC Comps Include a Mixture of Energy Storage Developers and Solar Equipment Providers
Storage Developer Comp Table
Last
Market
Cap
Enterprise
Value
5-Year
Sales
EV/Sales
Consensus Estimates
EV/EBITDA
Consensus Estimates
Price
Millions $
Millions $
CAGR
2023E
2024E
2025E
2023E
2024E
2025E
P/E
Consensus Estimates
2023E
2024E
2025E
Storage Focused
STEM
Stem Inc
$4.69
$725
$1,019
98%
1.7x
1.2x
1.0x
-52x
31.4x
8x
-6.6x
-12.8x
33.6x
FLNC
Fluence Energy, Inc. Class A
$21.35
$2,481
$2,228
41%
1.2x
0.9x
0.7x
-30x
28.8x
9x
-37.8x
89.6x
20.8x
TSLA
Tesla, Inc.
$185.00
$585,359
$569,822
40%
5.5x
4.2x
3.4x
29x
20.8x
15x
46.9x
33.1x
26.6x
FREY
FREYR Battery
$8.26
$1,154
$608
-
115.4x
2.2x
0.6x
-4x
-5.1x
-18x
-5.8x
-5.3x
-4.5x
$9.44
$5,708
$6,103
6%
0.9x
0.9x
0.8x
9x
7.8x
7x
16.0x
13.4x
11.4x
WRTBF-US Wartsila Oyj Abp
Solar Equipment Suppliers
FSLR
First Solar, Inc.
$208.40
$22,217
$19,870
16%
5.6x
4.3x
3.5x
17x
10.4x
7x
30.4x
16.1x
10.4x
SEDG
SolarEdge Technologies, Inc.
$300.46
$16,870
$16,581
32%
4.0x
3.3x
2.8x
21x
16.7x
14x
33.2x
25.9x
21.7x
ENPH
Enphase Energy, Inc.
$208.90
$28,514
$28,216
45%
8.9x
7.0x
5.7x
29x
21.2x
17x
38.2x
28.4x
22.8x
ARRY
Array Technologies Inc
$21.39
$3,225
$4,170
24%
2.2x
1.9x
1.6x
16x
12.2x
10x
25.8x
17.4x
13.6x
NXT
NEXTracker, Inc. Class A
$34.84
$1,598
$5,452
-
2.6x
2.2x
1.9x
21x
15.7x
13x
26.0x
19.1x
16.3x
Storage focused Avg ex FREY
46.2%
2.3x
1.8x
1.5x
-10.7x
22.2x
9.6x
4.6x
30.8x
23.1x
Solar Equipment Providers
29.4%
4.7x
3.7x
3.1x
20.9x
15.2x
12.3x
30.7x
21.4x
16.9x
Prices as of 4/14/2023; * Multiples are based on calendar year estimates
Source: FactSet, BMO Capital Markets
FLNC’s ability to offer
service and software in
addition to hardware, as
well as lower margin
contracts rolling off
should allow product
margins to outpace
other storage providers,
but we see further
expansion dependent on
significantly higher
levels of software sales
growth and are
somewhat concerned
longer term that
consensus assumptions
on this front may be too
high.
Investment Thesis
Fluence today: Direct beneficiary of growth of large-scale energy storage demand in the age of
renewables. Energy storage systems (ESS) will play an increasingly vital and complementary role to
growth in front of the meter renewable generation as solar and wind generation will be developed in
tandem with storage or existing capacity is retrofitted to include it. In addition, growth in renewable
generation behind the meter is causing additional stress on electric grids with ESS likely a key resource
to alleviate it. Fluence’s leading position in the ESS sector offers investors leverage to robust revenue
growth as grid-scale operators increasingly adopt storage as a means to integrate renewables, enhance
grid stability, and increase operational capacity. We see energy storage capacity for utility-scale and
large C&I users that FLNC targets expanding by a CAGR of +40% in the U.S. and +41% globally (ex China)
from 2022 through 2030.
As a result, we estimate FLNC’s consolidated revenue grows at a 26% CAGR from 2022 through 2030
and FLNC’s storage deployments grow by 9x over this period. In addition, the company’s capital-light
operating model and our expectations for moderating operating expense growth means the company is
further along in generating consistently positive FCF and EBTIDA than many of its energy transition
peers.
What keeps us on the sidelines. That said, we see the majority of FLNC’s revenue and EBITDA growth
coming from its hardware segment where gross margins are improving in part due to contract roll-offs
of older, lower-margin agreements. However, we estimate gross margins in this segment will
eventually top out at ~15%. We believe most providers of energy storage hardware will likely realize
margins substantially lower than this. The actual battery or ESS hardware FLNC provides can be
commoditized to a certain extent; however, the company’s ability to overlay its Fluence OS and IQ
software solutions and service offerings to create purpose-driven ESS solutions in a variety of
Fluence Energy Inc. | Page 5
April 17, 2023
applications differentiates it from almost every player in the industry, save for Tesla (TSLA), and drives
loyalty to its platform.
However, additional margin expansion beyond when we see hardware gross margins crest needs to
come via FLNC’s higher-margin service and digital applications businesses where gross margins are in
the range of 20-30% and 70-80%, respectively. We assume a 95% service contract attachment rate on
hardware sales and software/digital AUM growing at a CAGR of 48%, which exceeds our hardware
volumetric outlook and assumes FLNC is successful in growing its software on third-party systems.
However, even using what we see as fairly optimistic assumptions we see the company’s overall
business mix significantly reliant on equipment sales to large renewable developers that have narrow
returns on projects. Given the still relative infancy of the energy storage sector and negative near-term
free cash flows, we see valuation of the sector dependent on longer-term estimates under DCF
valuations. In the case of FLNC and STEM (initiating at Market Perform also and $5.50 target price), we
believe consensus estimates in many cases imply valuations that are predicated on unrealistic
expectations for software and service revenue growth.
We could become more constructive if the company’s margins inflect higher than what we currently
forecast or if capacity growth further exceeds our already robust outlook.
While FLNC will begin to
produce its own U.S.made battery modules
in 2024, the company is
more an integrator of
storage systems and
provider of professional
services and software,
rather than a battery
OEM.
Business Overview
Based in Arlington, Virginia, Fluence Energy is a leading global developer and provider of grid-scale
energy storage systems (ESS), services, and AI-enabled software to optimize power dispatch. To be
clear, today Fluence is not a battery OEM or producer of battery cells but rather a full-service integrator
of the various components needed to develop on-site ESS and looks to increasingly overlay ongoing
services and software products. However, given incentives under the IRA, FLNC will begin to produce
battery modules/packs (not cells) domestically in the U.S. in mid-2024. We think what separates FLNC
from other players in the broader battery/storage space is its ability to call upon its extensive data and
experience in providing modular and customizable solutions. The company’s AI-driven software and
algorithms have been enhanced over time as the company has increasingly become one of the top
providers of large-scale storage systems.
Fluence’s energy storage hardware is built on the company’s sixth-generation Technology Stack, which
integrates Fluence’s proprietary operations software, Fluence OS, and AI-driven optimization software,
Fluence IQ. The company’s primary hardware offerings, Gridstack, Sunstack, Edgestack, and Ultrastack,
are purpose built for a range of applications, including grid-scale standalone storage, utility-scale solar
and storage integration, and behind-the-meter (BTM) commercial and industrial storage and
transmission. The company also offers a range of operational services, from simple hardware
maintenance to complete asset management and third-party ownership. Fluence is one of the largest
storage suppliers globally, with over 1.9 GW of cumulative energy storage assets deployed.
Fluence Energy Inc. | Page 6
April 17, 2023
Exhibit 4: FLNC Is an Integrator and Developer of Storage Systems and Storage Software
Key Hardware Housed in the FLNC "Cube" along with battery
racks, heating/cooling systems and other electric hardware
FLNC OS and other
custom software
products
customized to fit
asset operator
needs
Source: Company Filings, BMO Capital Markets
Ownership history. Fluence was originally formed as a joint venture between subsidiaries of German
industrial leader Siemens AG (SIE-GR, $80.31, not rated) and AES Corporation (AES-NYSE, $24.86, not
rated), a U.S.-based leader in global renewable energy development and utility holding company. In
December 2020 prior to FLNC’s October 2021 IPO, an affiliate of the Qatar Investment Authority (Qatar
Holding, LLC) invested $125 million for a stake in FLNC. The company’s shares are structured into class A
and B shares. AES is currently the sole owner of class B shares that results in a 34% share of economic
interest in Fluence and 72% of combined voting power. Siemens and associated entities own a 51%
share of Class A shares and 14% of voting power. Qatar Holding owns ~16% of class A shares.
Fluence’s sixth-generation Technology Stack. Fluence’s products are all built on the company’s sixthgeneration Technology Stack, which is comprised of the company’s modular hardware building block,
Fluence Cube, proprietary operations software, Fluence OS, and AI-driven optimization software, Fluence
IQ.
Fluence Energy Inc. | Page 7
April 17, 2023
Exhibit 5: Fluence Sixth-Generation Technology Stack
Exhibit 6: Fluence “Cube”
Source: Company Filings, BMO Capital Markets
Source: Company Filings, BMO Capital Markets
The Fluence Cube offers a low-cost, standardized, and easy to install unit that customers can scale up or
down depending on their project requirements. The Cube is battery technology agnostic and comes preinstalled with a heating and cooling system, battery racks and modules, power supply, controllers, and
safety components and is the housing for the company’s energy storage products.
FLNC’s energy storage
products are housed
within the modular and
technology agnostic
Fluence “Cube” and are
tailored for a range of
specific use cases for
both utility and C&I
customers.
The company’s key energy storage products include the following:

Ultrastack – Fluence’s newest storage product is designed specifically to meet the needs of
energy transmission and distribution systems. Ultrastack applications are designed to reduce
grid congestion, support stable system operation, and help operators increase utilization of
transmission assets (powerlines).

Gridstack – Fluence’s grid-scale standalone energy storage product is designed to aid utilities in
boosting grid flexibility and resiliency. Gridstack enables a range of functionality to customers,
including flexible peaking capacity, frequency regulation, renewable integration, and power
transmission and distribution enhancement.

Sunstack – The company’s large-scale solar-focused energy storage product is designed to
expand the capabilities of solar generation by optimizing energy capture and delivery. The
Sunstack system integrates batteries and PV on the same side of the DC bus in order to
maximize solar yields and comes equipped with all power conversion and controls needed to
send solar energy to the grid.

Edgestack – The company’s C&I-focused energy storage and transmission product is designed
to reduce monthly electricity costs by discharging when needed to flatten a facility’s energy
load profile. Edgestack is available in 500 kW blocks but is scalable to meet the needs of larger
facilities.
Each of the company’s hardware products comes with FLNC’s controls and operational software, Fluence
OS, which allows customers to view system information and operate storage assets in real time.
Additionally, Fluence OS can be used to manage storage operations according to configurable pre-set
models. Offered as an additional product is the company’s subscription-based digital platform, Fluence
IQ, which is meant to improve storage system performance and enhance customer revenue generation.
The key Fluence IQ applications are the following:
Fluence Energy Inc. | Page 8
April 17, 2023

Fluence Mosaic – FLNC’s automated bidding software for utility-scale storage and conventional
generation assets. The Mosaic application provides asset owners with a range of key energy
trading indicators, including advanced price prediction, automated trading, and optimized
bidding. Mosaic is technology agnostic and vendor agnostic and is delivered through a
software-as-a-service subscription model. FLNC acquired Mosaic from Advanced Microgrid
Solutions (AMS) in 2020.

Fluence Nispera – The company’s performance management software. The Nispera application
allows customers to monitor, analyze, forecast, and optimize energy assets. Nispera’s flagship
offering is a utility-scale-focused application that has 8 GW of assets under management across
450 wind and solar projects. FLNC acquired Nispera in 2022.
In addition to energy storage products and software, the company offers four operational services
packages:
The company currently
assembles its hardware
products at its two
dedicated contract
manufacturing lines in
Utah and Vietnam, with
plans to bring a
European location online
this year. The Utah
facility is also slated to
begin module
manufacturing in July
2024.
Fluence Energy Inc. | Page 9

Level 1: Guided Service – FLNC will offer comprehensive training to customers on how to best
use their products and how to perform preventative and reactive maintenance.

Level 2: Shared Service – On top of the offerings of level 1, the company will perform reactive
maintenance and offer 24/7 monitoring.

Level 3: Complete Service – The company will perform all preventative and reactive
maintenance and 24/7 monitoring of the system. Complete service includes performance
guarantees for time-based availability.

Level 4: Asset Management – The company’s third-party ownership, Energy-as-a-Service (EaaS)
offering. FLNC will provide complete asset management on behalf of the customer, including
contractual, financial, and risk management. The company will manage relationships with any
stakeholders, including grid operators, off-takers, and contractors.
FLNC contract manufacturing model. Today Fluence produces 100% of its products through a contract
manufacturing model, limiting both the capital intensity of adding manufacturing capacity and the
company’s direct exposure to fluctuations in the prices of raw battery materials and metals. The
company currently has two dedicated contract manufacturing lines, one in Utah (operational since
September 2022) and one in Vietnam (operational since 2020), with plans to bring online a third line in
Europe sometime in 2023. The company’s Utah facility, which currently serves as a manufacturing line
for the Fluence Cube, will begin producing battery modules starting July 2024, with over 6 GWh of initial
capacity. We note that aside from the manufacturing of the Fluence Cube, these facilities operate more
as final assembly lines rather than component manufacturing factories. Therefore, most of the battery
components and materials used in the company’s storage products are sourced from third parties often
located in Asia. Additionally, the company operates two spare parts hubs, one in Ireland and one in
Utah, to support ongoing maintenance of deployed storage assets.
April 17, 2023
Exhibit 7: FLNC Contract Manufacturing Sites
Exhibit 8: FY 2022 Revenue by Geography
FY 2022 Revenue by Geography
15%
49%
15%
21%
U.S.
Source: Company Filings, BMO Capital Markets
Other Americas
APAC
EMEA
Source: Company Filings, BMO Capital Markets
FLNC Reporting Segments
Fluence currently operates and recognizes revenue under three business segments:

Energy Storage Products and Solutions – Fluence’s energy storage products segment recognizes
revenue from all energy storage hardware, inclusive of the company’s Fluence Cube, Gridstack,
Sunstack, Edgestack, and Ultrastack solution, as well as any other delivered hardware from
third-party vendors.

Services – Recognizes revenue for service contacts on storage system hardware. Services
revenue is derived from the company’s Service Contracts AUM.

Digital Applications and Solutions – Recognizes revenue from the company’s Fluence IQ
software platform, inclusive of Nispera and Mosaic. Digital applications and solutions revenue
is derived from the company’s Digital Contracts AUM.
While we see opportunity for robust growth in the company’s digital applications and services segments,
we believe that, even looking longer term, the company’s hardware segment will continue to represent
the vast majority of revenue.
Fluence Energy Inc. | Page 10
April 17, 2023
Exhibit 9: FLNC Revenue Mix Dominated by Hardware Sales
FLNC Segment Revenue Share
100%
1%
2%
2%
2%
3%
99%
98%
98%
98%
97%
FY 2021
FY 2022
FY 2023E
FY 2024E
FY 2025E
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Energy Storage Products Revenue Share
Combined Digital Applications and Service Revenue Share
Source: Company Filings, BMO Capital Markets
Peer Competitive Overview
We believe the Tesla
Megapack, along with
Tesla’s comprehensive
energy management
software, competes
most directly with
FLNC’s product offerings;
however, we see FLNC’s
multiple use casespecific products and
varying service levels as
offering a more
customizable set of
solutions as compared
to the “all-in-one”
Megapack.
Given the relatively nascent nature of the industry, there are few grid-scale pure-play energy storage
companies and even fewer publicly traded companies that serve as good comps to Fluence. Our initial
battery coverage of FLNC and STEM is focused on energy system providers not battery manufacturers
such as CATL, LG, BYD, Samsung SDI, and others.
While far larger and multi-faceted, we believe that Tesla, and more specifically Tesla’s Megapack
product, represents the company’s most direct and significant competitor in grid-scale/FTM storage.
Similar to FLNC, the Megapack has a roughly equivalent installed base of ~5 GWh+ and offers similar unit
sizes to FLNC’s Gridstack and Edgestack offerings (2-3 MW) which are scalable to GW sized installations.
More importantly, the Megapack is coupled with Tesla’s proprietary software platform, Tesla Energy
Software, which houses multiple applications similar to those offered by Fluence IQ. The Tesla software
platform includes the company’s proprietary auto-bidding application, Autobidder, comparable to FLNC’s
Mosaic application, as well as a suite of monitoring and performance optimizing applications (Opticaster
and Powerhub), which offer similar functionality to FLNC’s Nispera application. Additionally, the Tesla
platform includes a tool that autonomously maintains grid stability and helps to reduce microgrid
operational costs (Microgrid Controller), as well as a program that can offer larger-scale grid stability by
virtually emulating the mechanical inertia the grid loses when replacing fossil fuel generation with wind
and solar (Virtual Machine Mode).
However, we believe that Fluence, through its multiple product iterations and service tiers, offers more
flexible and customizable solutions as compared to Tesla. While Tesla’s Megapack represents an “all-inone” storage product, we believe Fluence draws competitive advantage by being able to offer its
customers more use-case-specific systems, such as the company’s DC coupled Sunstack tailored for
maximizing solar yield or transmission-focused Edgestack for reducing C&I customers’ utility bills.
Similarly, While Tesla Energy Software offers a slightly more comprehensive suite of tools, the software
can only be paired with the Tesla Megapack or other Tesla products, whereas FLNC’s Mosaic and Nispera
Fluence Energy Inc. | Page 11
April 17, 2023
are not only hardware agnostic, but are able to be paired with pure renewable systems that don’t have
storage. Additionally, Fluence is able to provide O&M software to solar, wind, pumped hydro, and BESS
assets, further differentiating Fluence IQ from competing software products.
Beyond TSLA we think it’s important for investors to consider that other large U.S. renewable energy
developers, such as NextEra Energy (NEE-NYSE, $78.43, Outperform, $95 target price; covered by BMO
Power and Utilities Analyst James Thalacker), also have extensive expertise in developing energy
storage systems and well over 1GWh of capacity installed, implying more competitive players depicted
below. Elsewhere we see U.S.-based private storage developer Powin Energy, Finnish equipment
provider Wärtsilä, and Stem Inc. representing other direct competitors. In the exhibit below we offer a
side-by-side comparison of Fluence and its main competitors.
Exhibit 10: Peer Competitive Overview
Grid Scale Storage
Leaders
Hardware Offerings
Fluence Energy
• Gridstack
• Sunstack
• Edgestack
• Ultrastack
Unit Size
Hardware Primary Applications
Software Application
Software Tools
Key Geographies
Storage
Installed
Base
500 kW - 2 MW
• Traditional grid-scale storage
• Solar focused large-scale storage
• C&I storage and transmission
• Energy transmission and distribution
systems
• Fluence Nispera
• Fluence Mosaic
• Automated bidding and energy
trading
• Performance management
• Asset optimization
• Project forecasting
Primarily U.S., followed
by APAC and Europe
5.1 GWh
Primarily U.S., followed
by APAC and Europe
5 GWh
Primarily Europe, with
presence in the U.S.
2.5 GWh
Primarily U.S.
2 GWh
• Athena
• Automated bidding and energy
trading
• Performance management
• Asset optimization
• Project forecasting
• Solar asset monitoring and
optimization
Primarily U.S., small
presence in Europe
2.5 GWh
(AUM)
• Nextera 360
• Automated discharge and energy
trading
• Performance management and
asset optimization
• Project and portfolio planning
• Grid analytics
U.S.
1 GW
Tesla
• Megapack
3 MWh
• Grid-scale and C&I storage
• Tesla Energy Software
• Automated bidding and energy
trading
• Performance management
• Asset optimization
• Project forecasting
• Autonomous grid stability
Wartsila
• GridSolv Quantum
1.5 MWh
• Grid-scale and C&I storage
• GEMS Digital Energy
Platform
• Automated bidding and energy
trading
• Performance management
• Asset optimization
• Project forecasting
Powin Energy
• Stack 230P
• Stack 230E
• Stack 360E
• Stack 750
230 - 750 kWh
• Grid-scale and C&I storage
• Stack OS
Stem
No in-house hardware
offerings, acts as a third
party supplier offering
system design and
engineering
Nextera Energy /
Nextera Energy
Partners
No in-house hardware
offerings
N/A
N/A
• C&I Storage with focus shifting to utilityscale
• Grid-scale storage
• Battery/energy management
• Battery/system monitoring
Source: Company Filings, BMO Capital Markets
Energy Storage System Basics
For investors new to grid applications we offer a brief overview of some of the roles energy storage
plays in power markets. Energy storage systems (ESS) at its most basic level can be described as an
asset that charges (or collects) electricity from an energy-producing asset in order to discharge that
energy at a later time, to provide electricity or other grid services when needed or when more
economical to do so.
The key operating metrics in measuring battery storage systems include the following:
Fluence Energy Inc. | Page 12
April 17, 2023

Rated Power – The total possible instantaneous discharge capability (measured in kW or MW)
or maximum rate of discharge that a BESS can achieve, starting from a fully charged state;

Energy Capacity – The maximum amount of stored energy (in kWh or MWh);

Storage Duration – The amount of time a storage system can discharge at its rated power
capacity before depleting its energy capacity, with most batteries having a duration of 2-4
hours;

Round-Trip Efficiency – The ratio of the energy collected by the battery to the energy
discharged from the battery.
Additionally, a battery’s cycle life measures the number of cycles of regular charging and discharging a
battery can provide before failure or significant degradation. While several battery technologies are
commercially available, lithium-ion based batteries, due to their increasingly low cost, are the most
common battery technology used in ESS applications.
The Daily Operation of an Electric Grid Is a Delicate Balancing Act Made Harder by
Growth in Renewables and Extreme Weather
Electricity has traditionally been the most volatile energy commodity we follow. The reason for this in
part had been the inability to store electricity. In addition, other sources of volatility in power markets
are a result of the increase in renewable generation (solar + wind) that is intermittent and at times
deviates from forecasts or subject to intraday fluctuations from factors such as cloud cover or other
changes in weather. Add to this the increased number of extreme weather events, the global electric
grids are increasingly being tested. As a reminder, the U.S. grid operates at a frequency of 60 Hz with
most other grids operating at a frequency of 50 Hz, and deviations from this level can trigger wider
spread outages as either power plants are automatically tripped or load must be cut.
Fluence Energy Inc. | Page 13
April 17, 2023
Exhibit 11: Winter Storm Uri in Texas Demonstrates Grid Fragility – Energy Storage Systems Helps Alleviate
F
r
e
q
u
e
n
c
y
HZ
Source: ERCOT
For instance, if the amount of generation supply exceeds demand (load) on the grid generation, supply
needs to be lowered quickly as frequency will deviate from 60 Hz threshold. Conversely, and as shown
above, if frequency starts to fall below this threshold, load is cut or shed on a power grid. The example
above highlights how during winter storm Uri additional load shedding was trigged as the frequency of
the grid dropped as fossil generation began to fail and some wind generation was unable to operate.
We see batteries as providing an important stabilization mechanism for the grid going forward and as
needed to accommodate renewable generation growth and more extreme demand/supply fluctuations.
Location Within Electric System Determines Range of Applications/Revenue Potential
The U.S. grid, which is FLNC’s largest market, is a mosaic of different degrees of deregulation and market
designs with large sections of the grid managed by a regional system operator (ISOs + ERCOT) where
market-based pricing mechanisms for electricity (energy + capacity) and grid stabilization products
(ancillary services) are available to power resources like power plants and increasingly now ESS. A brief
snapshot of the types of ancillary service markets is shown below. For regions of the U.S. and elsewhere
globally where there is not a competitive market for energy, capacity, and ancillary services products,
the incumbent utility or grid operators will still see a significant need to procure storage particularly as
it’s paired with solar generation. In most instances we see utilities entering into bilateral contracts with
renewable energy developers who partner with companies such as FLNC as part of the utilities’
integrated resource planning process (IRP) where they increasingly procure additional generation
capacity and now energy storage.
Fluence Energy Inc. | Page 14
April 17, 2023
Exhibit 12: Energy Storage Products Contracted Backlog (MW)
Exhibit 13: Ancillary Services Markets
Source: ISO/RTO Council, BMO Capital Markets
Source: AEP
We can further bifurcate the storage market, similar to how we describe the broader solar sector, into
segments on where storage is deployed, either front of the meter/utility-scale or behind the meter. The
location of where storage resides, either at the front of the meter in wholesale power markets or behind
the meter, tends to provide the owner of the storage asset differing opportunities to extract value.
Front-of-the-meter (FTM) storage, which occurs outside of local distribution networks, is primarily used
by independent power producers (IPPs), utilities, and power and distribution systems operators and/or
very large industrial users of power. These tend to be significantly larger deployments of storage in
terms of MW and in some cases GW of capacity. Deploying energy storage systems allows for electricity
generated by a power plant or utility-scale renewable assets (i.e., wind and solar farms) to be stored so
that it can be later e introduced onto the grid depending on the grid’s needs for energy or ancillary
services.
Behind-the-meter (BTM) storage occurs within local distribution networks and allows commercial and
industrial (C&I) and homeowners to store energy produced by individual renewable assets co-located on
individual sites to reduce net electric consumption or send back to the grid to generate savings or
provide additional back-up power to the site itself if there are outages on the grid. Furthermore, energy
storage systems can be aggregated to participate in selling into capacity markets and resource adequacy
markets whereby load serving entities like electric utility distribution companies ensure they have
enough capacity to meet peak demand with a portion that can be called from large C&I customers or
aggregating a group of C&I sites.
Fluence Energy Inc. | Page 15
April 17, 2023
Exhibit 14: FTM vs. BTM
Source: Department of Energy, BMO Capital Markets
Key opportunities for storage assets in FTM. The ability of traditional, fossil fuel-based plants to generate
power continuously as well as the historical flow of power in one direction (from utility generation to
distribution) negated much of the need for utility-scale energy storage. However, as renewable
generation becomes more prevalent along the grid, this has enhanced the need for storage. When
combined with growth of distributed solar that allows for power to flow to the grid from both the front
and back of the meter, the need for grid flexibility and capacity further increases. Power from
renewable generation, particularly wind and solar, is more variable and intermittent than traditional
sources, introducing the need for systems that can smoothly integrate variable renewable energy (VRE).
ESS offers utilities and others to accommodate more growth of renewable energy. Other key
applications of storage systems for FTM users include the following:

Energy storage systems
offer a range of uses for
FTM customers, from
enhancing grid
reliability, ensuring the
smooth integration of
renewable energy
sources, and reducing
net loads and therefore
grid operating costs, to
name a few.
Fluence Energy Inc. | Page 16
Flattening the “duck” curve (i.e., load leveling). Throughout a typical day, the net load a utility
experiences (the total demand for electricity minus any renewable energy on the grid) will
decline during the day when solar assets, both at the utility and residential level, are
producing energy and spike in the evening as the sun sets and resident electricity demand
increases. These variations in net load both increase costs to utilities and introduce grid
instability. Additionally, the trough to peak in daily net load continues to widen as more
residential solar is installed. Utility-scale energy storage works to flatten the duck curve by
allowing utilities to store VRE during times of low demand and dispatch it to the grid during
peak hours, decreasing the variations in net load throughout the day.
April 17, 2023
Exhibit 15: Net Load “Duck” Curve: Solar Has Shifted the Net Load Profile for Electric Distribution
Source: CAISO, BMO Capital Markets

Fluence Energy Inc. | Page 17
Energy arbitrage. Similar to flattening the duck curve, storage systems allow utilities to store
energy when electricity prices are low and discharge during more expensive hours, increasing
income from power generated. Sudden deviations from predicted renewable generation
output or unexpected weather can cause significant volatility in shorter-term power markets.
The spot market for power consists of both a day-ahead market and a real-time market. In the
day-ahead market power is priced in 1-hour increments based on the expected hourly load
and dispatch of generation assets. In contrast, the real-time market is priced in 5- to 15-minute
intervals. Storage assets, particularly with AI-enabled software such as provided by FLNC and
STEM, can anticipate and quickly act to take advantages of shifts in real time. Below we show
how power prices spiked during February 2022 when wind gen fell below forecasted levels
while fossil gen ramped up.
April 17, 2023
Exhibit 16: ERCOT North Real-Time Average Hourly Power Prices, February 23-34, 2022
Power Volatility Comes From Demand and Shifts in Renewable Output
$4,000.00
30,000
$3,500.00
25,000
$3,000.00
20,000
$2,500.00
$2,000.00
15,000
$1,500.00
10,000
$1,000.00
5,000
$500.00
$-
1
2
3
4
5
6
7
2/23/2022 (Price $/MWh)
8
9
10
11
12
2/24/2022 (Price $/MWh)
13
14
15
16
17
2/23/2022 ( Wind MWs)
18
19
20
21
22
23
24
2/24/2022 (Wind MWs)
Source: BMO Capital Markets, ERCOT
Fluence Energy Inc. | Page 18

Capacity and resource adequacy markets. Load serving entities (i.e., electric utilities) are often
required to ensure a sufficient amount of reserve margin above forecasted peak demand
levels. Given the likely unavailability of a certain portion of generation assets due to outages
and/or maintenance and the shifting mix fuel costs that may make certain generation plants
dispatch power less than their capacity due to price, many power markets utilize a capacity or
resource adequacy market to ensure power demand can be met on demand in return for fixed
payments. Given the ability of storage assets to dispatch power to the grid, it allows both FTM
and larger BTM customers to participate in what serves as a de-facto insurance market for the
power grid.

Frequency regulation (reg up/reg down). An imbalance in power supply and power demand
can lead to a dip or rise in grid frequency beyond specified limits. Battery storage systems can
be used to regulate grid frequency, and while conventional plants take several minutes to
respond to system operators’ instructions, ESSs can typically respond almost instantaneously.
We note that FLNC’s systems have demand response times of around 100 milliseconds. Reg
down is a particularly interesting opportunity for batteries; when abundant solar generation
means excess generation on the grid, batteries can take this excess power and effectively get
paid to charge up.

Cleaner and cheaper “black start.” When starting up, large generators need an external source
of electricity (usually taken from the grid) to perform key functions before they can begin
generating electricity. However, in the event of a grid failure, generators must be started
through an onsite source of electricity (“black start”). An onsite ESS can perform this function
both cheaper and cleaner than traditional diesel generators located onsite for emergency
startups.

Transmission and distribution upgrade deferrals. The electric grid’s transmission and
distribution infrastructure must be sized to meet peak demand, which may only occur for a few
hours every year. When anticipated growth in peak demand exceeds the grid’s existing
capacity, investment in grid infrastructure is needed. ESS can defer or circumvent the need for
new grid investments by meeting peak demand with energy stored from lower demand
periods. Additionally, during peak demand distribution networks may become congested as
power flow-through exceeds the load carrying capacity of transmission lines. Instead of adding
expensive transmission infrastructure, storage systems located at congestion points can be
used as “virtual power lines.”
April 17, 2023
Storage for BTM (C&I). Although storage systems for commercial and industrial customers offer similar
functionality as utility-scale, these systems are primarily used for electricity bill savings through
demand-side management. C&I customers can utilize storage paired with a distributed generation
source (solar) to engage in energy arbitrage by storing power produced onsite during times of low
demand (when electricity is cheap) and using that power (or selling it back to the grid) during peak
demand (when electricity is more expensive). Additionally, an ESS can increase energy resiliency by
offering a reliable source of stored power in the event of a disruption to the grid. This can be particularly
important for customers in regions where grid outages are frequent or customers who cannot afford
interruptions in power supply (e.g., a hospital). Finally, for customers that require a consistent supply of
high-quality power, BTM storage systems can ensure power from the grid within tight voltage or
frequency tolerances. As C&I and residential ESS deployment they can be aggregated as virtual power
plants (VPPs) to support the grid by offering some of the capabilities normally found through the
ancillary services market. Finally, we see the substantial need for growth in EV charging infrastructure at
public and commercial locations as a potential large driver of C&I ESS growth.
FLNC Investment Positives
We Are Going to Need a Bigger Boat: Storage Growth Expected to Be Robust Through
End of Decade…
Our TAM and cumulative
capacity forecasts
indicate that we are on
the precipice of rapid
growth in the utilityscale and C&I ESS
market, where we see
FLNC as one of the key
beneficiaries.
We believe that the adoption of large-scale energy storage systems is still in its early stages and is set
for a period of robust growth. This will be driven by the need to pair new solar/wind generation with
storage, retrofit existing renewable sites that currently lack storage, and add standalone storage for grid
resiliency and power quality issues for behind-the-meter C&I sites. In the figures below we highlight
BNEF’s estimated energy storage growth for the utility-scale and C&I segments excluding China and
residential markets. Growth in renewables and energy storage within China are forecast to be at least as
big as the rest of the world combined, but given the geographic focus of our energy storage sector
coverage, we present a more conservative look at energy storage rather than an overall global forecast.
Exhibit 17: Cumulative Capacity by Region (GWh)
Exhibit 18: Cumulative Capacity by End-User Segment
Global Cumulative Capacity Growth Ex China (MWh)
Cumulative Capacity Growth by Region (MWh)
900
900
800
800
700
700
600
600
500
500
41% CAGR
400
400
300
300
200
200
100
100
0
0
2021
2022
2023
2024
Americas
Source: BNEF, BMO Capital Markets
2025
2026
APAC (Ex China)
2027
EMEA
2028
2029
2030
2021
2022
2023
2024
Utility-scale
2025
2026
Commercial
2027
2028
2029
2030
Other
Source: BNEF, BMO Capital Markets
We estimate that global cumulative storage capacity will grow at a ~41% CAGR (2021-2030), reaching
~780 GWh by 2030, up from ~35 GWh as of 2021. Additionally, we see the Americas, particularly the
U.S., as representing the largest storage market outside of China. We estimate cumulative storage
capacity in the Americas reaches 430 GWh by 2030 (90% U.S.). We see this growth expanding the global
utility-scale and C&I storage total addressable market (TAM) to ~$231 billion by 2030 from roughly $22
Fluence Energy Inc. | Page 19
April 17, 2023
billion today. We note that the majority of our 2030 TAM and cumulative capacity estimates can be
attributed to growth in the utility-scale segment where we see FLNC along with TSLA as the leading
players in storage development in these regions.
Exhibit 19: 203E Utility-Scale + C&I Storage TAM
2030E Utility Scale + C&I Storage TAM
Segment
Cumulative Capacity (GWh)
$/kwh
Americas Utility Scale
Americas Commercial
397
27
$300
$300
$119,181
$7,989
EMEA Utility Scale
EMEA Commercial
205
5
$300
$300
$61,450
$1,619
APAC (ex China) Utility Scale
APAC (ex China) Commercial
117
18
$300
$300
$34,964
$5,503
Total
TAM ($mm)
769
$230,707
Source: BMO Capital Markets
The EIA forecasts renewable energy’s share of U.S. power capacity growing from 27% in 2022 to over
64% by 2030.
Exhibit 20: 2022 U.S. Power Sector
Generation Mix
Hydro, 2%
Other,
1%
Renewables,
27%
Exhibit 21: 2025 U.S. Power Sector
Generation Mix
Exhibit 22: 2030 U.S. Power Sector
Generation Mix
Other, 3%
Other, 2%
Hydro, 2%
Hydro, 2%
CCGT - Gas,
25%
CCGT - Gas, 26%
CCGT - Gas, 25%
Renewables, 39%
Fossil Peaking,
20%
Fossil Peaking,
20%
Renewables, 64%
Fossil Peaking,
24%
Nuclear,
8%
Coal, 15%
Coal, 18%
Coal, 9%
Nuclear, 8%
Source: EIA, BMO Capital Markets
Source: EIA, BMO Capital Markets
Nuclear, 8%
Source: IEA, BMO Capital Markets
….Which Should Drive Backlog Growth (More Revenue Visibility) and Eventually Larger
Annual Deployments for FLNC
Driven by our growth
forecasts for the global
ESS market, we estimate
FLNC’s cumulative
deployed base expands
from 1.9 GW today to
~33 GW by 2030, driving
a 31% revenue CAGR
from 2021 to 2030.
As highlighted in the section above, the overall market for energy storage systems is expanding quickly
on high demand and will be further accelerated in response to policy mandates and other policy support
(e.g., IRA in the U.S.) in coming years. FLNC’s storage product backlog, which represents signed purchase
orders or contractual minimum purchase commitments, has already grown to over 4.3 GW as of Q1
2023, more than double the company’s current installed base of 1.9 GW. In our view this has increased
investor confidence that the company’s FY 2023 revenue guidance of $1.6-1.8 billion or +42% y/y at the
midpoint is well on track. Our FY 2023 revenue estimate is $1.7 billion. Although the larger storage
developments FLNC focuses on are often subject to longer lead times, we believe the visibility in
backlog and ability to increase the pace of moving storage from backlog to the field are net positives.
Our acceleration in deployed MW in the 2025+ timeframe reflects our belief that delays in utility-scale
development from supply chain disruptions are easing and interconnection delays in the U.S. should
alleviate.
Fluence Energy Inc. | Page 20
April 17, 2023
Exhibit 23: Energy Storage Products Contracted Backlog (GW)
Exhibit 24: Year-End Cumulative Deployed GW
40.0
Year End Cumulative Deployed GW's
36.8
Energy Storage Products Contracted Backlog (GWs)
35.0
32.7
35.0
31.7
30.0
30.0
27.4
25.3
25.0
25.0
21.3
19.0
20.0
20.0
15.4
13.9
15.0
15.0
11.1
10.0
7.7
5.0
1.9
2.7
3.2
3.6
3.7
3.7
4.3
9.7
10.0
6.6 GW
5.3
4.3 GW
5.0
1.0 GW
0.0
Q3
Q4
Q1
Q2
Q3
Q4
Q1
FY
FY
FY
FY
FY
FY
FY
FY
2021 2021 2022 2022 2022 2022 2023 2023 2024 2025 2026 2027 2028 2029 2030
1.8 GW
2.7 GW
0.0
FY 2021
FY 2022
FY 2023E
FY 2024E
FY 2025E
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
Year End Cumulative Deployed GW's
Source: Company Filings, BMO Capital Markets
Source: Company Filings, BMO Capital Markets
Looking longer term, we note that FLNC’s energy storage products pipeline (potential revenue from
contracts in process which have a reasonable likelihood of contract execution within 24 months) has
grown to over 9.7 GW (Q1 2023), much of this before the benefits of the U.S. IRA were clear or available
to developers. This is reflected in our estimates for forward FLNC backlog growth that will drive increases
in its cumulative deployed base, which we forecast will grow from 1.9 GW as of Q1 2023 to 6.6 GW and
33 GWs by end of 2025 and 2030, respectively. The growth in product deployment anchors our
forecasted revenue CAGR of 46% from 2021 to 2025 and 31% over the 2021-2030 timeframe.
Hardware Margins Appear Set to Turn the Corner Driving Attractive Rate of Change Story
We believe that visibility
to meaningful near-term
hardware gross margin
improvements creates a
clear path to
consistently generating
positive adjusted EBITDA
by the middle of 2024,
with margins continuing
to improve through FY
2025.
Fluence Energy Inc. | Page 21
We appreciate the investor community focus on potential margin expansion for storage developers like
FLNC and STEM to attach software and service-related products to a rapidly growing base of storage
assets that have been deployed. Software and service margins are materially higher and provide
potential longer-term recurring streams of revenue. However, our estimates and forecasts suggest that
hardware-related revenue will be the lion’s share of revenue and margins through the end of the
decade even using our assumed attach rate for service of 95% and 48% annual growth of digital assets
under management through 2030.
That said, we see meaningful product-related gross margin expansion through 2025, driven by legacy
contracts with meaningfully lower-margin contracts beginning to roll off. Combined with our bullish
outlook for storage demand and FLNC deployments means that going forward, the company’s storage
deliveries mix will begin to skew more towards newer, higher-margin contracts. Contracts signed today
appear to be around 10-11% gross margins (vs. Q1 implied product gross margins of <4%) and likely
will begin moving closer to ~15%. We believe this results in roughly 270 bps of hardware gross margin
improvement over the next few quarters. Additionally, we expect an accelerating cadence of highermargin contracts being deployed, driving hardware gross margins from an implied ~3.3% in Q1 2023 to
14% in FY 2025. This is the primary driver of our estimated consolidated gross margins rising from 4% to
15% over the same time period.
April 17, 2023
Exhibit 25: EBITDA Margin Improvement Driven by Product
Margins…
Exhibit 26: …And Benefits of Growing Installed Base Driving
Revenue Growth
FLNC Revenue vs. Opex % of Revenue
Adj. EBITDA Margin, Hardw are Margin
$3,000
45%
14%
15%
40%
10%
10%
$2,500
7%
35%
5%
5%
$2,000
1%
30%
0%
25%
$1,500
-5%
20%
18%
-6%
-6%
$1,000
-10%
15%
15%
12%
12%
9%
-15%
-20%
10%
$500
-15%
5%
FY 2022
FY 2023E
Adj. EBITDA Margin
Source: BMO Capital Markets
FY 2024E
Energy Storage Products Gross Margin
FY 2025E
$0
0%
FY 2021
FY 2022
FY 2023E
Revenue
FY 2024E
FY 2025E
Opex % of Revenue
Source: BMO Capital Markets
More importantly our estimates suggest that FLNC should begin to generate positive adjusted EBITDA
consistently its second fiscal quarter in March 2024. In an industry with many nascent companies or
technologies that operate at negative gross margins or operating earnings, we see the transition to
positive EBITDA as a differentiator. We forecast adjusted EBITDA margins from -8% in Q1 2023 to roughly
+7% in FY 2025.
Finally, our confidence on an inflection point for margins emerging near term is also based on
improvements in supply chain management. Potential emerging tailwinds from raw material prices and
transportation costs are another. In our view, greater supply stability was a key driver of FLNC’s
relatively new management team already raising FY 2023 guidance during its most recent earnings call.
As can be seen above with respect to FY 2022 EBITDA and gross margins, FLNC like many in the utilityscale development segment saw a sequential decline in realized margins. However, we think many of
the factors that drove tough conditions are starting to alleviate. First, as FLNC has highlighted earlier this
year, it has largely secured its supply of batteries for FY 2023 with all supply currently located in-country
or in transit. This should eliminate cost of delays incurred in 2022. In addition, we see shipping and raw
material prices declining which should provide a tailwind in 2023. We also believe FLNC has broadened
both the number of battery OEM makers and geography of suppliers. As an example, we note FLNC is
working with Northvolt in Europe.
Fluence Energy Inc. | Page 22
April 17, 2023
Exhibit 27: Shipping Costs Continue to Fall
Exhibit 28: Lithium Price Indexes Have Moderated as Well
Freight Container Shipping Index ($/40 ft box)
Lithium Price Index
$11,000
1200
$10,000
$9,000
1000
$8,000
$7,000
800
$6,000
600
$5,000
$4,000
400
$3,000
$2,000
200
$1,000
0
$0
Source: Bloomberg, BMO Capital Markets
FLCN has positioned
itself to be eligible for
battery module PTCs
under the IRA by mid2024, providing a
potentially significant
boost to margins that
we think is currently
underappreciated.
Source: Bloomberg, BMO Capital Markets
IRA Battery Module PTC Upside From Planned U.S. Site; Standalone ITC Supports
Acceleration of Storage Demand
As we have discussed in our previous work on the implications of the IRA, we believe that investment
tax credits (ITCs) under the IRA will drive additional storage penetration in the U.S., particularly now that
a standalone storage ITC is available for the first time, when previously ITCs were only available when
paired with solar PV. ITCs for storage are set at a 6% level but we see most projects meeting prevailing
wage and apprenticeship requirements reaching a base of 30% with potential for additional upside from
bonus adders for owners of storage projects, thereby increasing demand for FLNC products.
Exhibit 29: Summary of Key Battery Materials IRA Tax Credits
Exhibit 30: U.S. Demand for Batteries Enhanced by ITC for Storage
U.S. Cumulative Capacity Growth by Segment (GWh's)
450
400
350
Key Battery IRA Tax Credits
Type
Amount
Electrode Materials
PTC
10% of Cost
Battery Cells
PTC
$35/kWh
200
Battery Modules
PTC
$10-45/kWh
150
Critical Minerals
PTC
10% of Cost
100
Developer Investment
ITC
30% - 50%
50
300
250
0
2021
2022
2023
2024
Utility-scale
Note: ITC assumes wage and labor requirements are met
Source: BMO Capital Markets
2025
2026
2027
Commercial
Other
2028
2029
2030
Source: BNEF, BMO Capital Markets
Among storage developers we see FLNC as one of the best positioned to take advantage of U.S. PTCs,
which should drive upside to adjusted EBITDA estimates when its planned Utah contract manufacturing
facility begins producing battery modules in July 2024. Modules produced at the site will be eligible for
the 45X battery module manufacturing production tax credit of $10/kWh.
Fluence Energy Inc. | Page 23
April 17, 2023
Exhibit 31: 45X Credits Should Be Meaningfully Accretive to Product Margins and EBITDA From
Utah Facility
FLNC Potential U.S. PTC Impact
Metric/Assumption
Utah Facility Initial Production (GWh)
Utah Facility Initial Production (KWh) [a]
Low
High
6
12
6,000,000
12,000,000
Battery Module PTC Value ($/KWh) [b]
$10
$10
Assumed PTC Retention Rate [c]
90%
90%
PTC Value Retained - ($/KWh) [b*c]
$9
$9
Total PTC Value Retained ($mm) [b*c*a]
$54
$108
FY 2025 Model Energy Storage Products Revenue ($mm)
$3,002
$3,002
FY 2025 Model Energy Storage Products COGS ($mm)
$2,592
$2,592
FY 2025 Model Energy Storage Products Gross Margin
13.7%
13.7%
PTC Adjusted FY 2025 Model Energy Storage Products COGS ($mm)
$2,538
$2,484
PTC Adjusted FY 2025 Energy Storage Products Gross Margin
15.5%
17.3%
FY 2025 Model Adj. EBITDA
FY 2025 Model Adj. EBITDA Margin
$222
7.2%
$222
7.2%
PTC Adjusted FY 2025 Model Adj. EBITDA
PTC Adjusted FY 2025 Model Adj. EBITDA Margin
$276
8.9%
$330
10.7%
Source: BMO Capital Markets
With a planned initial capacity at the Utah facility of 6 GWh, these PTC credits will represent a potentially
significant boost to gross margins for the company’s hardware segment that we believe will increasingly
provide a boost to consensus estimates for gross margins and adjusted. EBITDA. While we currently don’t
include the PTC value in our official estimates (as the company is still in early negotiations regarding
levels of credit sharing), we incorporate the upside to our FLNC valuation and estimate adjusted EBITDA
with and without the benefit of the PTCs.
In the table above we highlight the estimated uplift to 2025 gross margins from modules produced at
the Utah facility. Our low case is based on the plant’s initial 6 GWh of capacity and assumes FLNC retains
90% of the upside with credit and shares 10% likely via lower ASPs with customers. In the high case we
assume the facility’s capacity can be doubled as outlined by management. At 6 GWh of capacity, PTCs
imply a 24% increase to standalone adjusted EBITDA estimates in 2025, and at 12 GWh of capacity 49%
additional upside compared to if PTCs were not available. The Utah facility is slated to begin production
of modules in mid-2024.
While we forecast no
shortage of storage
demand, we see margin
expansion beyond 2025
slowing as hardware
margins top-out and
think many of our peers
are over-estimating
growth in the
company’s digital and
service segments.
Fluence Energy Inc. | Page 24
Investment Risks
Hardware Margins Have Limited Longer-term Upside and Service/Digital Growth Needs
to Be Outsized to Move Needle
As we highlighted in our investment positives, we see a clear path for product gross margins to inflect
meaningfully higher the next few quarters based on a combination of out-of-the-money contract rolloffs and improving supply chain variables supported by high demand. However, we believe that gross
margins from the storage product segment are unlikely to expand beyond 15% and could eventually see
downside pressure. FLNC, as a trusted developer of storage applications for large utility-scale projects,
will have ample opportunities to grow its asset base, but we see solar and wind project IRRs similarly
April 17, 2023
range-bound within ~5% to ~9% as competition remains strong among large renewable developers and
often subject to regulatory approvals in IRP processes. Therefore, especially looking back at utility and
large-scale C&I equipment margins, we see potential for storage developers to see pressure on ASPs and
margins.
Exhibit 32: Despite Robust Digital and Services Revenue Growth...
Exhibit 33: …Hardware Comprises Bulk of GM, Even in 2030E
Digital Applications and Services Revenue ($ million)
Segment Gross Margin Contribution
$500
100%
$450
90%
$400
80%
5%
5%
4%
6%
16%
12%
70%
$350
60%
$300
50%
$250
90%
89%
40%
$200
80% Digital
CAGR
73%
53% Services
CAGR
30%
$150
20%
$100
10%
$50
0%
FY 2023E
$0
FY 2022
FY
2023E
FY
2024E
FY
2025E
FY
2026E
FY
2027E
Digital Applications and Solutions Revenue
Source: Company Filings, BMO Capital Markets
FY
2028E
FY
2029E
Services Revenue
FY
2030E
FY 2025E
FY 2030E
Digltal Applications Gross Margin Contribution
Services Gross Margin Contribution
Energy Storage Products Gross Margin Contribution
Source: Company Filings, BMO Capital Markets
As a result, FLNC’s services and digital segments represent key drivers for additional margin expansion
once energy storage products reach our expected 15% long-run equilibrium level. As a leading
developer of projects FLNC can build a growing amount of recurring revenue from providing service on
installed storage systems as well as layering on either monitoring software or providing competitive
bidding software, allowing for optimized dispatch of storage assets. We estimate service and digital
margins are roughly 30-35% and 80-85% through 2030, respectively. TSLA and FLNC currently enjoy a
significant lead on competitors for applications of larger storage systems. With respect to service
margins we see a reasonable likelihood of success that FLNC’s service contract AUM and associated
revenue can grow in tandem with our forecasted product volumes. We assume a 95% attachment rate
of service contracts on storage product sales that is likely consistent with consensus estimates. Any
deviation from this high level of service attachment rates could present downside risk to our
assumptions.
We believe in the 2025+ time frame consensus estimates for growth in IQ software sales (i.e., digital
assets) likely diverge and are subject to more uncertainty. As can be seen in the figures above and
below our assumed improvement to 19% gross margins by 2030 can in part be ascribed to our
assumption that digital revenue grow at a ~80% CAGR from 2022 to 2030, based on estimates that
digital AUM MW (volumes) grow at a CAGR of 48%. This exceeds the rate of growth we assume for
hardware deployments over the same time frame (+44% CAGR). This means that a larger portion of the
company’s software products are deployed onto third-party energy storage systems. We note our 2025
gross margins are likely ~100 bps below consensus estimates, as we believe some in the investment
community assume much higher levels of digital growth and third-party sales.
Fluence Energy Inc. | Page 25
April 17, 2023
Exhibit 34: Post 2025 GM Expansion Depends on Steep Acceleration of Software Expansion
Consolidated Adj. Gross Margins
25%
20%
+4%
19%
15%
15%
+15%
10%
5%
0%
0%
-5%
-10%
FY 2022
FY 2023E FY 2024E FY 2025E FY 2026E FY 2027E FY 2028E FY 2029E FY 2030E
Source: Company Filings, BMO Capital Markets
Concentrated Ownership and Limited Public Float Currently
As discussed earlier and illustrated in table below, FLNC’s founding shareholders that include affiliates of
AES and Siemens and pre-IPO investor Qatar Holding, LLC hold the majority of the economic and voting
power of FLNC shares. FLNC investors currently have to contend with a limited float % of total class A
shares outstanding. In addition, we note on June 2022 Siemens converted its holdings from Class B
voting shares to Class A non-voting shares but also transferred ~32% of those shares (18.8 million
shares) to one of the company’s pension entities that may opportunistically sell shares, which while
improving the overall public float, may pressure FLNC’s share price. In addition, while we are not aware
of any pending plans of AES, Siemens, or Qatar Holding LLC’s affiliates to trim their ownership stake, it is
not unusual among companies in the energy transition sector to see legacy founders opportunistically
monetize their holdings as these nascent businesses build an adequate track record as public companies.
Fluence Energy Inc. | Page 26
April 17, 2023
Exhibit 35: FLNC Shares Have a Limited Public Float and Concentrated Ownership Base
Shareholder(s)
Share Class
MM Shares
AES (AES Grid Stability, LLC)
B-1
58.6
Siemens AG
A
39.7
Siemens Pension Trust E.V,
A
18.8
Qatar Holding LLC
A
18.5
Shares Held By Pubilic
A
39.0
Total Diluted Shares
174.7
Class A Total
116.1
Class B Total
58.6
% of Class A Shares Held by Public
34%
% of Class A Shares Held by Public and Siemens Pension
50%
Source: BMO Capital Markets, Company Filings
Ties That Bind: Sales to AES Likely Represent Large Portion of Current Revenue
FLNC along with TSLA currently have developed strong relationships with key utility, IPP, and C&I
customers that are driving renewable generation development or others that have grid and power
quality needs and are often the first call for energy storage systems, software, and services. That said,
FLNC’s five largest customers in aggregate accounted for 77% of its FY 2022 (ending September 30,
2022) revenue and 61% of FLNC’s remaining backlog, as of year-end 2022. Of this amount orders from
AES accounted for 54% of the company’s FY 2022 revenue. Two customers accounted for 51% of total
sales in 1Q 2023 (quarter ending 12/31/2022) which we suspect likely incudes AES. That said, going
forward Fluence believes AES will represent roughly 25% of revenue over the next three years.
However, we continue to monitor AES’s renewable development pipeline as one barometer of growth
and progress in diversifying its customer base. As we also previously highlighted, we see the potential
for large renewable energy developers like NEE and others choosing to develop energy storage software
and hardware on their own.
Supply Chain and Regulatory and Policy Risks
We like FLNC’s capital-light operating model that is based upon the company’s use of contract
manufacturing for 100% of its production needs and provides an attractive path towards sustainable
positive FCF. That said, the company currently only has two primary contract manufacturing lines, one
located in Asia and one in the U.S. (a third in Europe is expected to come online sometime in 2023).
Should these facilities experience any disruptions, it could lead to delays in delivering its storage
products. FLNC currently relies on only three battery module suppliers, with one supplier accounting for
64% of FLNC’s module purchases in FY 2022. That said, FLNC will be adding module
production/assembly at its U.S. facility in order to take advantage of PTCs under the IRA.
Energy storage systems are dependent on the availability of key battery raw materials, including
lithium, nickel, copper, aluminum, and others that are subject to volatile pricing and supply disruptions
which can impact margins or cause project delays. Regulatory uncertainty particularly in the U.S. can
have an outsized impact on utility-scale renewable development given long lead times for procurement
of equipment and project development. FLNC and other utility-scale equipment suppliers had a tougherthan-expected 2022 given project delays caused by ongoing supply chain issues and, more significantly,
the uncertainty that was introduced by the Department of Commerce investigation of solar module
Fluence Energy Inc. | Page 27
April 17, 2023
imports from SE Asia that accounts for 80% of U.S. solar module supply. The threat of tariffs and
potentially retroactive penalties caused many utility-scale projects to be delayed. While the Biden
administration ultimately provided a two-year moratorium for potential AD/CVD (anti-dumping and
circumvention of duties) related to the Department of Commerce ongoing process, a bipartisan group of
legislators has introduced a congressional review act (CRA) resolution seeking to overturn the Biden
waiver of tariffs. The CRA resolution would only need a simple majority in both houses to pass but would
likely face a Presidential veto that would require 2/3 to overturn. We think odds favor the tariff waiver
continuing but this is a source of uncertainty.
Finally, while we have highlighted the passage of the U.S. IRA’s positive impact in driving renewable
and energy storage growth, application of tax credits and rules for which they may be claimed remain
subject to further clarification from the Department of Treasury. Key items such as potential domestic
content requirements will have an impact on project returns and therefore demand and pricing for
renewable and storage equipment.
Demand Is Strong for Solar and Storage, but Interconnection Delays Are Mounting
As we have highlighted throughout this report, demand for solar and storage particularly for the larger
customer segments that FLNC targets is very strong. However, we are increasingly concerned that the
pace of storage deployments can be delayed compared to estimates due to delays in interconnection
approvals on the part of grid operators that are increasingly overwhelmed by the number of requests of
new generation and storage capacity looking to come online in coming years. We point to:

In 2022 alone there were 700 GW of new interconnection agreement applications on the U.S.
grid.

There is roughly 2,040 GW of interconnection requests in the queue, of which 1,260 GW are for
solar and battery capacity.

Wait times for approval according to the DoE have risen to as much as five years (was less
than three years in 2015).

PJM, the largest ISO or grid authority in the U.S., has paused new interconnection requests until
2025.
Valuation and Key Estimates
Our valuation of FLNC implies $24/share based on our blended valuation approach (DCF, EV/EBITDA, and
EV/sales) and includes an estimated $2.74 of additional value for our estimate of the DCF of future PTC
benefits under the IRA.
Valuation metrics for energy transition and infrastructure are still developing and vary by subsector.
Some companies within the space, such as Fluence, have limited operating histories as public companies
compared with more mature energy sectors, such as power and utilities or oil and gas. As such, the
scope of their business and addressable markets are expanding quickly.
Valuation for pure-play energy storage providers can be especially challenging because our forecasts
imply negative EPS and free cash flow, and in FLNC’s case, negative EBITDA in the near term. We believe
there has been an overreliance among some to solely utilize an EV-to-forward sales approach two to
three years out in time when valuing emerging energy transition companies.
Therefore, we utilize a blended valuation approach that incorporates a longer-term DCF approach that
estimates future FCF to equity that accounts for the next few stages of the industry we think will
Fluence Energy Inc. | Page 28
April 17, 2023
emerge over the next 10 years as FLNC continues to scale its hardware, services, and software products.
This approach also allows us to monitor the portion of our DCF valuation owed to our terminal value
assumptions compared with the discounted cash flows over the next 10 years in our valuation models.
Our target price is based on our DCF valuation of free cash flow to equity of $20/share and we apply a
50% weighting in arriving at our $24 target price.
We note the following:

We adjust our FCF to equity estimates downward to exclude value for our estimates for stockbased compensation; we believe that some on the sell side do not adjust for this.

We use a 13% discount rate and 5% terminal growth rate.
Our valuation methodology, which can be seen in the exhibit below, also includes an EV/EBITDA and
EV/sales based multiple approach which we weight 25% each, respectively. Our EV/EBITDA valuation
utilizes an 11x multiple to our 2025 estimate for adjusted EBITDA while our EV/sales valuation assumes
a 1.8x valuation based on storage-focused comparable companies as well as solar equipment providers
that we see as subject to the same general industry trends as FLNC. A list of the comparable companies
and their respective and group average multiples can be found in Exhibit 3.
Fluence Energy Inc. | Page 29
April 17, 2023
Exhibit 36: FLNC Valuation
DCF Valuation
2023E
2024E
2025E
2026E
2027E
2028E
2029E
2030E
2031E
2032E
CFO
Less: Stock Based Compensation
Less: Capital Expenditures
($169.7)
(44.5)
(16.5)
$40.5
(50.0)
(18.8)
$228.4
(60.0)
(21.7)
$316.2
(70.0)
(23.5)
$360.7
(80.0)
(26.1)
$430.0
(80.0)
(28.2)
$516.5
(80.0)
(30.1)
$619.9
(80.0)
(30.4)
$685.7
(80.0)
(31.0)
$724.4
(80.0)
(31.6)
FCF
PV
($230.7)
($204.1)
($28.3)
($22.1)
$146.7
$101.7
$222.7
$136.6
$254.6
$138.2
$321.8
$154.6
$406.4
$172.7
$509.6
$191.7
$574.7
$191.3
$612.8
$180.5
DCF Through 2032
Terminal Value
DCF Value
$1,041
$2,257
$3,298
Less 2023 YE Adj. Net Debt
($188)
Equity Value
$3,486
2023 YE Diluted Shares
Implied Target Price
175.7
$19.84 Weighting
Discount Rate
Terminal Growth
EV/EBITDA
Adj. EBITDA
Enterprise Value
2025E
$222
11.0x
$2,443
Less net debt
Equity Value
2023 Shares
Implied Target
(188.2)
$2,632
175.7
$14.98 Weighting
EV/Sales
2025E
Sales
$3,100
1.8x
$5,424
Enterprise Value
50%
13%
5%
Less net debt
Equity Value
2023 Shares
(188)
$5,613
175.7
$31.94 Weighting
Implied Valuation
Plus DCF Value of Future PTC Value
$21.65
$2.74
Implied Valuation
$24.39
25%
25%
Source: BMO Capital Markets
A summary of key model assumptions and financial outputs used in our model can be found in the
exhibits below. As a reminder FLNC is on a September 30th year-end and our estimates reflect year-end
values as of this date.
Fluence Energy Inc. | Page 30

Our 2023-2026 consolidated revenue estimates are $1.7 billion, $2.35 billion, $3.1 billion, and
$3.9 billion, respectively.

Our 2023-2026 gross margin estimates are 6%, 11%, 15%, and 16%, respectively.

Our 2023-2026 adjusted EBITDA estimates are -$99 million, $20 million, $222 million, and
$311 million, respectively, and do not include the benefit of PTCs.

Key assumptions used to derive our estimates are shown in the table below and include our
estimates for cumulative deployed MWs, Service Contracts AUM, and Digital Assets AUM.
April 17, 2023
Exhibit 37: Model Key Operating Assumptions and Outputs
Exhibit 38: Model Select Financial Outputs
$ MM except per-share data
Model Key Operating Assumptions and Outputs
2022A
2023E
2024E
2025E
2026E
Revenue From Sale of Energy Storage Products
$1,180
$1,678
$2,295
$3,002
$3,760
Revenue From Services
$16
$24
$41
$67
$106
Revenue From Digital Applications and Solutions
$2
$6
$14
$30
$52
Other Revenue
$0.1
$0.4
$0.0
$0.0
$0.0
Total
$1,199
$1,708
$2,350
$3,100
$3,919
0%
6%
11%
15%
16%
Cumultive Deployed MW's
1,800
2,742
4,305
6,566
9,713
Service Contracts AUM (MW)
2,000
2,605
4,090
6,238
9,227
Digitial Assets AUM (MW)
13,700
30,758
63,780
100,359
136,537
Select Financial Outputs
2022A
2023E
2024E
2025E
2026E
Select Income Statement Items
Revenues
Gross Margin
EBIT (GAAP)
Adj. EBITDA
PTC Adj. EBITDA
$1,199
-$62
($276)
($184)
($184)
$1,708
$95
($157)
($99)
($99)
$2,350
$245
($30)
$20
$33
$3,100
$456
$162
$222
$276
$3,919
$605
$241
$311
$365
Inccome (Loss) (GAAP)
EPS
($289)
($0.60)
($155)
($0.88)
($44)
($0.25)
$147
$0.81
$226
$1.21
Gross Margin %
Adj. EBITDA Margin
-5%
-15%
6%
-6%
10%
1%
15%
7%
15%
8%
Cashflow Items
CFO (GAAP)
Capex
FCF
FCF to Equity Per Share
Cash Flow from Investing
Cash Flow from Financing
($282)
($8)
($290)
($2)
($148)
$817
($170)
($16)
($186)
($1)
($20)
$23
$41
($19)
$22
$0
($19)
$0
$228
($22)
$207
$1
($22)
$0
$316
($24)
$292
$2
($24)
$0
Balance Sheet Items
Cash
Total Debt
Net Debt
Net Debt/adj. EBITDA
$357
$0
($357)
$2
$188
$0
($188)
$2
$210
$0
($210)
($11)
$417
$0
($417)
($2)
$709
$0
($709)
($2)
Total Equity
$436
$339
$345
$553
$848
Minority Intereest
$193
$178
$178
$178
$178
Total Capitalization
Debt/Capitalization
$436
-82%
$339
-56%
$345
-61%
$553
-75%
$848
-84%
Diluted Shares
Market Capitalization
Enterprise Value
173
$3,703
$3,539
176
$3,752
$3,742
179
$3,813
$3,782
182
$3,884
$3,646
186
$3,967
$3,437
EV/Adj. EBITDA
P/E
-19.2x
-35.4x
-37.8x
-24.2x
193.6x
-87.0x
16.4x
26.3x
11.0x
17.6x
Book Value per Share
$2.51
$1.93
$1.93
$3.04
$4.57
Revenues By Segment ($ MM)
Consolidated Adj. Gross Margin
Key Segment Assumptions
Energy Storage Products Gross Margin
-6%
5%
10%
14%
14%
Services Gross Margin
25%
25%
30%
32%
34%
Digital Applications and Solutions Gross Margin
70%
75%
77%
80%
82%
Opex % of Revenue
R&D
5%
4%
3%
3%
3%
S,G&A
13%
11%
10%
7%
7%
Total Opex
18%
15%
12%
9%
9%
Source: BMO Capital Markets
Source: BMO Capital Markets
Management Overview
Fluence went public on October 28, 2021, with a management team that initially consisted of Manuel
Dubuc as CEO, Dennis Fehr as CFO, and Seyed Madaeni as Chief Digital Officer. The IPO was well received
and well supported by long-only investors. However, the post-IPO honeymoon did not last long as FLNC's
4Q 2021 earnings call held a little over a month following the IPO saw results miss consensus
expectations. The company quickly fell from its post-IPO high, trading down over 70% over the following
four months. Disappointing earnings results in Q1 2022 and Q2 2022 placed continued pressure on the
stock. Fluence’s current management team, consisting of CEO Julian Nebreda, CFO Manavendra Sial, and
Chief Digital Officer Krishna Vanka, were appointed to their respective roles in the summer of 2022,
following the resignation of previous leadership. We believe that much of the company’s recent success
can be attributed in part to this new team, which has helped Fluence more consistently deliver on
expectations, already raising FY 2023 guidance on the company’s most recent earning calls. We believe
that this team will be a key driver of Fluence’s success going forward.
Julian Nebreda, President and CEO
Julian Nebreda has served as Fluence’s President and CEO since being appointed to the role in August
2022, and has served as a member of the company’s board of directors since 2021. Prior to joining the
company, Mr. Nebreda was President of the South American Strategic Business Unit of AES Corporation
since 2018. He also acted as President of AES Brazil Strategic Business Unit from 2016 to 2018 and
President of the Europe Strategic Business Unit from 2009 to 2016. Prior to that, Mr. Nebreda has held
Fluence Energy Inc. | Page 31
April 17, 2023
various other senior positions at AES since 2005. He currently also serves as Chairman of the Board of
AES Andes and AES Brazil.
Manavendra Sial, SVP & CFO
Manavendra (Manu) Sial serves as Fluence’s SVP and CFO. Prior the joining the company, Mr. Sial served
as Executive Vice President and CFO at SunPower Corporation for four years. Prior to SunPower, he
served as Executive Vice President and CFO of VECTRA, a portfolio company managed by affiliates of
Apollo Global Management, from 2015 to 2018. Mr. Sial has also held various finance and operations
leadership roles at SunEdison Inc. and General Electric and earned his MBA from Duke University’s Fuqua
School of Business and his Bachelor of Commerce from Delhi University in India.
Rebecca Boll, SVP & Chief Product Officer
Rebecca Boll serves as Fluence’s SVP and Chief Product Officer. Prior to joining Fluence, she was Chief
Technology officer for the Digital Buildings business at Schneider Electric, where she led a team focused
on assessing technologies to make buildings more sustainable. She has previously held various other
leadership roles at General Electric, including Chief Technology Officer at GE Licensing and Technology
Ventures. Rebecca received her bachelor’s degree in applied mathematics from Boston University and
master’s in human relations from the University of Oklahoma.
Brett Galura, SVP Fluence Next & CTO
Brett Galura serves as Fluence’s SVP and CTO, where he leads the company’s technology selection,
integration design, controls development, and market & system modeling for Fluence’s storage
solutions. He also oversees Fluence Next, which focuses on advancing the company’s long-term R&D
strategy. Prior to Fluence, Brett held a number of roles at AES while working there for over 20 years,
including leading the company’s Energy Storage Solution Development team from 2010 until joining
Fluence.
Krishna Vanka, SVP & Chief Digital Officer
Krishna Vanka serves as Fluence’s SVP and Chief Digital officer, where he leads efforts to grow the
company’s digital applications business. Prior to joining Fluence, he served as chief product officer at
InCharge Energy, was founder and CEO of MyShoperoo, as well as worked at Telogis Inc. Mr. Vanka
brings with him over 16 years of experience and holds a Cum-Laude B.A.Sc. in Computer Engineering
from the University of Ottawa and an MBA from Georgia State University.
Fluence Energy Inc. | Page 32
April 17, 2023
Exhibit 39: FLNC Income Statement
$ MM except per-share data
Income Statement
2018A
2019A
2020A
2021A
2022A
Dec-22
Mar-23
Jun-23
Sep-23
2023E
2024E
2025E
2026E
Total Revenue
$92.2
$561.3
$680.8
$1,198.6
$310.5
$427.9
$458.2
$511.1
$1,707.7
$2,350.0
$3,099.7
$3,918.9
Total COGS
Gross Margin
100.1
($7.9)
553.4
$7.9
749.9
($69.1)
1,261.0
($62.4)
298.4
$12.0
408.7
$19.2
428.4
$29.8
477.6
$33.5
1,613.1
$94.5
2,104.9
$245.1
2,643.4
$456.3
3,313.5
$605.5
9.9
28.9
11.5
34.2
23.4
60.8
60.1
153.9
19.2
40.1
17.1
46.4
18.3
49.7
15.3
45.2
69.9
181.3
81.1
194.5
82.1
212.1
99.9
264.2
38.8
($46.7)
45.7
($37.8)
84.2
($153.4)
214.1
($276.4)
59.2
($47.2)
63.5
($44.3)
68.0
($38.2)
60.5
($27.1)
251.3
($156.7)
275.6
($30.5)
294.2
$162.1
364.1
$241.3
0.0
2.9
1.8
0.1
3.0
0.6
1.4
5.1
(0.3)
2.0
7.1
(2.3)
0.8
2.4
12.6
0.0
2.4
0.0
0.0
2.7
0.0
0.0
3.0
0.0
0.8
10.6
12.6
13.4
-
14.7
-
15.7
-
($155.5)
$225.7
$0.0
Research annd Development
SG+A
Total Opex
EBITDA
0.0
$0.0
Interest Expense
D+A
Other Income (Expense)
EBT
$0.0
($47.8)
($40.3)
($160.2)
($287.8)
($37.8)
($46.7)
($40.9)
($30.1)
($43.8)
$147.4
Income Tax Expense (Benefit)
(0.0)
(0.8)
6.4
1.8
1.4
(0.6)
-
-
-
(0.6)
-
-
-
Rate
#DIV/0!
1.6%
-15.9%
-1.1%
-0.5%
0.0%
0.0%
0.0%
0.0%
0.4%
0.0%
0.0%
0.0%
Net Income
($0.0)
($47.0)
($46.7)
($162.0)
($289.2)
($37.2)
($46.7)
($40.9)
($30.1)
($154.9)
($43.8)
$147.4
$225.7
($47.0)
($46.7)
($162.0)
(184.7)
($104.5)
(12.6)
($24.6)
($46.7)
($40.9)
($30.1)
($154.9)
($43.8)
$147.4
$225.7
0.0
1.0
0.0
84.2
8.5
51.0
0.9
1.7
1.3
-
1.3
-
1.3
-
4.7
1.7
5.0
0.0
6.0
0.0
7.0
0.0
Adj. Gross Margin
%
($7.9)
-9%
$8.9
2%
$15.0
2%
($2.9)
0%
$14.7
5%
$20.5
5%
$31.1
7%
$34.7
7%
$101.0
6%
$250.1
11%
$462.3
15%
$612.5
16%
Adjustments to EBITDA
D+A
Interest Expense (Income)
Intome Tax Expense
Stock based compensation
Other Non-Recurring Expenses
2.9
(1.2)
(0.8)
4.5
3.0
(0.4)
6.4
1.8
5.1
1.4
1.8
89.0
7.1
(0.3)
1.4
27.6
69.2
2.4
(0.7)
(0.6)
8.5
2.1
2.4
12.0
-
2.7
12.0
-
3.0
12.0
-
10.6
(0.7)
(0.6)
44.5
2.1
13.4
0.0
0.0
50.0
0.0
14.7
0.0
0.0
60.0
0.0
15.7
0.0
0.0
70.0
0.0
($41.6)
-45%
($35.9)
-6%
($64.7)
-9%
($184.2)
-15%
($25.5)
-8%
($32.3)
-8%
($26.2)
-6%
($15.1)
-3%
($99.0)
-6%
$19.5
1%
$222.1
7%
$311.3
8%
($184.2)
-15%
($25.5)
-8%
($32.3)
-8%
($26.2)
-6%
($15.1)
-3%
($99.0)
-6%
13.5
$33.0
1%
54.0
$276.1
9%
54.0
$365.3
9%
3.6
89.0
4.6
27.6
69.2
1.5
8.5
2.1
12.0
-
12.0
-
12.0
-
1.5
44.5
2.1
50.0
-
60.0
-
70.0
-
($69.5)
-10%
($187.8)
-16%
($25.1)
-8%
($34.7)
-8%
($28.9)
-6%
($18.1)
-4%
($106.8)
-6%
$6.2
0%
$207.4
7%
$295.7
8%
NCI
Net Income Atrributable FLNC
($0.0)
Adjustments to GM
Stock based compensation (incentive award)
Other non-recurring expenses
Adj. EBITDA
%
PTC Adjustment
PTC Adj. EBITDA
%
Adjustments to Net Income
Ammortization of Intangibles
Stock Based Compensation
Other Non-recurring Expense
Adj. Net Income
%
Adj. EPS
Basic EPS
Diluted EPS
Basic Shares
Diluted Shares
#DIV/0!
#DIV/0!
($0.40)
($0.40)
($0.40)
($0.40)
($0.59)
($1.38)
($1.38)
($1.08)
($0.60)
($0.60)
($0.14)
($0.21)
($0.21)
($0.20)
($0.27)
($0.27)
($0.16)
($0.23)
($0.23)
($0.10)
($0.17)
($0.17)
($0.61)
($0.88)
($0.88)
$0.03
($0.25)
($0.25)
$1.14
$0.81
$0.81
$1.59
$1.21
$1.21
117.17
117.17
117.17
117.17
117.17
117.17
173.46
173.46
174.66
174.66
175.37
175.37
176.07
176.07
176.78
176.78
175.72
175.72
178.62
178.62
181.92
181.92
185.82
185.82
Source: BMO Capital Markets
Fluence Energy Inc. | Page 33
April 17, 2023
Exhibit 40: FLNC Cash Flow Statement
$ MM except per-share data
Cash Flow Statement
2018A
2019A
2020A
2021A
2022A
Dec-22
Mar-23
Jun-23
Sep-23
2023E
2024E
2025E
2026E
(47.0)
2.9
(0.8)
6.0
(46.7)
3.0
1.9
(2.9)
(162.0)
5.1
14.2
(1.3)
27.2
(289.2)
7.1
0.8
2.5
44.1
0.5
30.0
(37.2)
2.4
0.2
(0.3)
8.5
(1.0)
(2.7)
(46.7)
2.4
12.0
-
(40.9)
2.7
12.0
-
(30.1)
3.0
12.0
-
(154.9)
10.6
0.2
(0.3)
44.5
(43.8)
13.4
50.0
147.4
14.7
60.0
225.7
15.7
70.0
(6.4)
(4.6)
1.3
(9.8)
(3.6)
12.4
65.5
4.3
2.7
4.9
(70.9)
(90.3)
1.2
(26.6)
(2.0)
63.1
29.7
122.8
0.8
3.0
1.3
(1.9)
(6.9)
(366.7)
(33.6)
73.9
153.0
21.3
7.0
4.2
(29.2)
(115.2)
(45.0)
(265.5)
(33.8)
230.9
201.0
(32.4)
(1.8)
12.6
33.5
(86.0)
8.0
(430.5)
(3.1)
252.4
196.0
(20.9)
(3.2)
(5.1)
(70.2)
54.2
(15.9)
115.8
(38.6)
(21.7)
(265.1)
9.1
5.7
17.0
(7.0)
(11.7)
(26.3)
(36.8)
27.7
(13.5)
(13.9)
257.2
0.8
22.1
(4.6)
2.3
(36.1)
(8.3)
29.8
52.8
(3.5)
13.9
(50.8)
(1.6)
5.6
(4.5)
5.1
(84.4)
(66.4)
(14.8)
(234.1)
(58.8)
230.8
137.3
8.2
12.5
4.7
(4.8)
(94.8)
(77.1)
(29.3)
(165.2)
(32.1)
147.5
218.6
6.1
38.0
6.0
3.5
(105.1)
(90.0)
(34.3)
(242.8)
(37.5)
161.6
283.9
4.4
55.3
7.0
3.8
(108.1)
(98.3)
(37.4)
(295.2)
(41.0)
201.0
296.7
6.5
67.7
7.6
4.7
$0.0
$27.7
($14.0)
($265.3)
($282.4)
($88.9)
($249.0)
$177.2
($12.7)
($169.7)
$40.5
$228.4
$315.6
$0.0
(2.7)
(20.0)
($22.7)
(1.8)
20.0
$18.2
(4.3)
(18.0)
($22.3)
(7.9)
(29.2)
(111.3)
($148.4)
(2.5)
(3.8)
($6.3)
(4.3)
($4.3)
(4.6)
($4.6)
(5.1)
($5.1)
(16.5)
(3.8)
($20.3)
(18.8)
($18.8)
(21.7)
($21.7)
(23.5)
($23.5)
$0.0
10.0
$10.0
2.5
$2.5
100.0
6.3
121.7
3.2
$231.1
(103.4)
920.4
$817.1
21.1
2.1
$23.3
$0.0
$0.0
$0.0
21.1
2.1
$23.3
$0.0
$0.0
$0.0
(0.8)
1.3
(0.5)
5.4
(5.8)
-
-
-
(5.8)
-
-
-
14.1
72.9
$87.0
8.0
87.0
$95.1
(57.0)
95.1
$38.1
391.7
38.1
$429.7
(77.8)
429.7
$352.0
(253.3)
352.0
$98.7
172.6
98.7
$271.3
(17.8)
271.3
$253.5
(172.6)
429.7
$257.2
21.7
257.2
$278.9
206.7
278.9
$485.6
292.1
485.6
$777.7
CASH FLOW FROM OPERATIONS
Net Income
Depreciation & Amortization
Amortization of debt issuance costs
Inventory provision
Stock based compensations
Deferred Income Taxes
Provision (benefit) on loss contracts
Trade Receivable
Unbilled Receivable
Advances to Suppliers
Inventory
Other Current and Non Current Assets
Accounts Payable
Deferred Revenue
Personnel Related Liabilities
Accruals and Provisions
Taxes Payable
Other Current and Non Current Liabilities
Net cash used in operating activities
CASH FLOW FROM INVESTING
Capex for PP&E
Acquisitions
Short-term Investments and Equity Securities
Net cash used in investing activities
CASH FLOW FROM FINANCING
Issuance / (Repayment) of Debt
Capital Contribution of Members
Equity Proceeds, Net
Other
Net cash provided by financing activities
FX Effects
Change in Cash and Cash Equivalents
Beginning Cash and Cash Equivalents
Ending Cash and Cash Equivalents
$72.9
Source: Company Filings, BMO Capital Markets
Fluence Energy Inc. | Page 34
April 17, 2023
Exhibit 41: FLNC Balance Sheet
$ MM except per-share data
Balance Sheet
2018A
2019A
2020A
2021A
2022A
Dec-22
Mar-23
Jun-23
Sep-23
2023E
2024E
2025E
2026E
-
84.1
13.6
9.7
0.0
0.0
4.0
10.7
26.1
148.3
93.8
84.5
100.0
0.0
0.0
2.9
37.3
8.9
327.5
36.8
80.0
102.0
0.0
0.0
9.7
389.8
43.2
661.5
357.3
198.8
138.5
62.4
110.4
54.8
652.7
26.6
1,601.5
286.7
165.3
224.5
55.2
109.9
55.2
1,083.6
29.7
2,010.1
33.4
235.5
170.3
55.2
109.9
71.1
967.8
68.4
1,711.6
206.0
247.2
196.6
55.2
109.9
107.9
940.0
81.9
1,944.8
188.2
283.2
204.9
55.2
109.9
78.0
887.2
85.4
1,892.1
188.2
283.2
204.9
55.2
109.9
78.0
887.2
85.4
1,892.1
210.0
378.0
282.0
55.2
109.9
107.4
1,052.4
117.5
2,312.4
416.7
483.1
372.0
55.2
109.9
141.6
1,295.2
155.0
3,028.7
708.8
591.2
470.3
55.2
109.9
179.1
1,590.5
195.9
3,900.8
0.0
4.0
28.8
4.7
1.6
1.5
188.8
5.2
26.3
4.7
0.0
0.4
364.0
8.2
36.1
9.2
1.2
1.5
717.7
13.8
51.7
24.9
3.0
50.8
1,745.7
15.2
51.5
25.8
2.6
46.8
2,151.9
17.0
51.5
25.8
2.6
46.8
1,855.3
18.9
51.5
25.8
2.6
46.8
2,090.3
21.0
51.5
25.8
2.6
46.8
2,039.7
21.0
51.5
25.8
2.6
46.8
2,039.7
26.4
51.5
25.8
2.6
46.8
2,465.4
33.4
51.5
25.8
2.6
46.8
3,188.7
41.3
51.5
25.8
2.6
46.8
4,068.7
0.0
78.7
53.0
5.0
17.8
5.2
0.0
1.1
160.7
78.1
146.3
8.5
137.7
5.9
0.0
1.6
378.2
158.4
299.3
12.9
186.1
12.9
100.0
1.9
771.5
304.9
579.4
21.3
183.8
11.1
8.9
1,109.5
505.6
827.2
14.4
160.2
7.9
0.0
11.1
1,526.4
483.9
562.0
23.5
165.9
24.9
0.0
4.1
1,264.4
470.0
819.3
24.3
188.0
20.4
0.0
6.4
1,528.3
483.9
768.4
22.6
193.6
15.8
0.0
11.4
1,495.8
483.9
768.4
22.6
193.6
15.8
11.4
1,495.8
631.5
987.0
28.7
231.5
21.8
14.9
1,915.4
793.0
1,270.9
33.1
286.8
28.7
18.7
2,431.3
994.0
1,567.6
39.6
354.5
36.3
23.5
3,015.6
0.0
1.6
0.1
0.0
0.9
2.6
1.8
0.3
0.2
0.8
3.0
1.6
0.3
0.0
0.5
2.4
4.9
2.1
7.0
3.5
23.1
26.6
3.5
23.1
26.6
3.5
23.1
26.6
3.5
23.1
26.6
3.5
23.1
26.6
3.5
23.1
26.6
3.5
23.1
26.6
3.5
23.1
26.6
$0.0
97.4
(1.3)
(70.6)
$25.5
99.9
0.2
(117.3)
($17.2)
$0.0
$188.8
$364.0
117.2
106.2
(0.3)
(279.3)
($56.2)
$717.7
537.6
2.8
(104.5)
$435.8
193.4
$1,745.7
549.6
0.4
(129.2)
$420.8
178.2
$2,151.9
561.6
0.4
(175.9)
$386.1
178.2
$1,855.3
573.6
0.4
(216.8)
$357.2
178.2
$2,090.3
585.6
0.4
(246.9)
$339.1
178.2
$2,039.7
585.6
0.4
(246.9)
$339.1
178.2
$2,039.7
635.6
0.4
(290.7)
$345.3
178.2
$2,465.4
695.6
0.4
(143.3)
$552.8
178.2
$3,188.7
765.6
0.4
82.4
$848.4
178.2
$4,068.7
ASSETS
Cash and Cash Equivalents
Accounts Receivables
Unbilled Contract Receivables
Restircted Cash
Short Term Investments
Advances to Suppliers
Inventory
Other Current Assets
Total Current Assets
PP&E
Intangible Assets
Goodwill
Deferred Tax Asset
Other Non-current Assets
Total Assets
LIABILITIES
Accounts Payable
Deferred Revenue Including Related Parties
Personnel Related Liabilities
Accruals and Provisions
Taxes Payable
Short Term Borrowings
Other Current Liabilities
Total Current Liabilities
Personnel Related Accruals and Taxes
Accruals and Provisions
Deferred Income Tax Liability
Other Non-current Liabilities
Total LT Liabilities
SHAREHOLDER EQUITY
Mezzanine Equity
Capital contributions
Additional Paid-In Capital
Accumulated other comprehensive loss
Accumulated deficit
Total Shareholder Equity
NCI
Total Liabilities + Shareholder Equity
Source: Company Filings, BMO Capital Markets
Fluence Energy Inc. | Page 35
April 17, 2023
Fluence Energy Inc. Rating History as of 04/14/2023
$40
$35
$30
$25
$20
$15
$10
$5
Jul 2020
Oct 2020
Jan 2021
Apr 2021
Jul 2021
Oct 2021
Closing Price
Jan 2022
Apr 2022
Jul 2022
Oct 2022
Jan 2023
Apr 2023
Target Price
Outperform (OP); Market Perform (Mkt); Underperform (Und); Speculative (S); Suspended (Spd); Not Rated (NR); Restricted (R)
Source: FactSet, BMO Capital Markets
NextEra Energy Rating History as of 04/14/2023
OP:$65.50
04/21/2020
OP:$63.25
05/21/2020
OP:$71.50
07/21/2020
OP:$73.25
09/14/2020
OP:$79.25
10/07/2020
OP:$89.00
01/25/2021
OP:$91.00
04/21/2021
OP:$89.00
10/19/2021
OP:$98.00
12/07/2021
OP:$101.00
01/10/2022
OP:$105.00
04/21/2022
$110
$100
$90
$80
$70
$60
$50
Jul 2020
OP:$93.00
06/13/2022
Oct 2020
OP:$92.00
07/20/2022
Jan 2021
OP:$100.00
09/15/2022
Apr 2021
OP:$89.00
10/25/2022
Jul 2021
OP:$91.00
10/31/2022
Oct 2021
OP:$96.00
12/19/2022
Closing Price
Jan 2022
Apr 2022
Jul 2022
Oct 2022
Jan 2023
Apr 2023
Jul 2022
Oct 2022
Jan 2023
Apr 2023
OP:$95.00
01/24/2023
Target Price
Outperform (OP); Market Perform (Mkt); Underperform (Und); Speculative (S); Suspended (Spd); Not Rated (NR); Restricted (R)
Source: FactSet, BMO Capital Markets
Stem Inc. Rating History as of 04/14/2023
$60
$50
$40
$30
$20
$10
$0
Jul 2020
Oct 2020
Jan 2021
Apr 2021
Jul 2021
Closing Price
Oct 2021
Jan 2022
Apr 2022
Target Price
Outperform (OP); Market Perform (Mkt); Underperform (Und); Speculative (S); Suspended (Spd); Not Rated (NR); Restricted (R)
Source: FactSet, BMO Capital Markets
IMPORTANT DISCLOSURES
Analyst's Certification
I, Ameet Thakkar, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or
issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views
expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and
their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in
generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service
to clients.
Fluence Energy Inc. | Page 36
April 17, 2023
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These
analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on
communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to NextEra Energy within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services for remuneration with respect to NextEra Energy within the past
12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to NextEra Energy within the past
12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from NextEra Energy within the
past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within
the past 12 months from NextEra Energy.
Disclosure 6A: NextEra Energy is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited
or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: NextEra Energy is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or
an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 9B: BMO Capital Markets makes a market in NextEra Energy and Stem Inc. in United States.
Methodology and Risks to Target Price/Valuation for Fluence Energy Inc. (FLNC-NSDQ)
Methodology: Our target price is based on a blended valuation approach that combines our DCF, EV/EBITDA, and EV/sales valuations. The
implied equity values under this approach are weighted 50%/25%/25%, respectively. Our DCF assumes a 13% discount rate and 5% terminal
growth rate. We include $2.70 of upside from PTCs under the IRA.
Risks: Risks to FLNC shares include the ability for the company to reduce lead times and increase backlog conversion, maintain low levels of
opex, as well as maintain a high attachment rate on service contracts and expand adoption of the company's software platform. Additionally,
significant changes to the implementation of IRA tax credits or eligibility requirements could negatively impact FLNC shares, in our view.
Methodology and Risks to Target Price/Valuation for NextEra Energy (NEE-NYSE)
Methodology: Our target price is arrived at using a sum-of-the-parts methodology. Our framework begins with the relevant sector average P/
E and EBITDA multiple using 2023E EPS as a base, which we then adjust (premium, discount, or no change) to reflect the relative fundamentals
of that segment.
Risks: NEE's regulated electric and gas distribution companies are subject to numerous state and federal regulatory agencies that determine
the rates it can charge for its services. Utility businesses are highly correlated to interest rate movements. NEE's development of solar and
wind generation assets is often dependent on the presence of federal and state tax incentives that may not be renewed. NEE owns and
operates multiple nuclear generation assets that are subject to federal and state regulatory on operational and safety standards.
Methodology and Risks to Target Price/Valuation for Stem Inc. (STEM-NYSE)
Methodology: We value STEM using a blended approach that combines our DCF, EV/EBITDA and EV/sales valuations. The implied equity values
under this approach are weighted 50%/25%/25% to arrive at our target price.
Risks: Risks to STEM shares include slower growth in contracted storage AUM, driven by slower adoption of the company's Athena software
platform, slower solar monitoring AUM growth, driven by solar permitting delays and contract cancellations, and the company's ability to
continue reducing opex levels.
Distribution of Ratings (April 16, 2023)
Rating category
BMO rating
BMOCM US
Universe*
BMOCM US IB
Clients**
BMOCM US IB
Clients***
BMOCM
Universe****
BMOCM IB
Clients*****
StarMine
Universe~
Buy
Outperform
48.0 %
17.9 %
50.6 %
53.6 %
59.0 %
57.7%
Hold
Market Perform
49.3 %
16.2 %
46.9 %
44.5 %
39.0 %
37.5%
Sell
Underperform
2.7 %
15.4 %
2.5 %
1.7 %
1.5 %
4.8%
* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.
Fluence Energy Inc. | Page 37
April 17, 2023
** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services
as percentage within ratings category.
*** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking
services as percentage of Investment Banking clients.
**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.
***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services
as percentage of Investment Banking clients.
~ As of April 1, 2019.
Ratings Key (as of October 2016)
We use the following ratings system definitions:
OP = Outperform - Forecast to outperform the analyst’s coverage universe on a total return basis;
Mkt = Market Perform - Forecast to perform roughly in line with the analyst’s coverage universe on a total return basis;
Und = Underperform - Forecast to underperform the analyst’s coverage universe on a total return basis;
(S) = Speculative investment;
Spd = Suspended - Coverage and rating suspended until coverage is reinstated;
NR = No Rated - No rating at this time; and
R = Restricted - Dissemination of research is currently restricted.
The total return potential, target price and the associated time horizon is 12 months unless otherwise stated in each report. BMO Capital Markets'
seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US Large Cap, US Small Cap,
Income, CDN Quant, and US Quant have replaced the Top Pick rating).
Prior BMO Capital Markets Rating System
(April 2013 - October 2016)
http://researchglobal.bmocapitalmarkets.com/documents/2013/rating_key_2013_to_2016.pdf
(January 2010 - April 2013)
http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf
Other Important Disclosures
For Important Disclosures on the stocks discussed in this report, please go to https://researchglobal0.bmocapitalmarkets.com/public-disclosure/
or write to Editorial Department, BMO Capital Markets, 151 West 42nd St, 33rd Floor, New York, NY 10036 or Editorial Department, BMO Capital
Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.
Dissemination of Research
Dissemination
of
fundamental
BMO
Capital
Markets
Equity
Research
is
available
via
our
website
https://
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services such as Refinitiv, Bloomberg, FactSet, Visible Alpha, and S&P Capital IQ.
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on the market price of the equity securities discussed. In some cases, the impact may directionally counter the analyst’s published 12 month
target price and rating. Any such trading or alternative strategies can be based on differing time horizons, methodologies, or otherwise and are
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Fluence Energy Inc. | Page 38
April 17, 2023
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Fluence Energy Inc. | Page 39
April 17, 2023
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Fluence Energy Inc. | Page 40
April 17, 2023