Lithium-ion alternatives are technically strong but financially fragile. Here’s how to evaluate non-lithium battery players and where they actually make sense.
Most grid-scale battery startups chasing lithium-ion alternatives are still burning cash faster than they ship product.
That single fact should shape how you evaluate green technology investments going into 2026—especially if you're betting on long-duration energy storage (LDES), data center power, or domestic clean-tech supply chains.
This matters because the entire clean energy transition depends on storage. Solar and wind are now cheap; storing their output at scale, safely and affordably, is the hard part. That’s where non-lithium chemistries like vanadium flow, zinc, and iron flow promise better safety, longer duration, and easier sourcing. But promise doesn’t pay interest or keep factories open.
Here’s the thing about lithium-ion alternatives: technically, many of them are compelling. Financially, most are on thin ice.
In this article, part of our Green Technology series, I’ll walk through what the numbers say about three listed players—Invinity Energy Systems (vanadium flow), Eos Energy Enterprises (zinc), and ESS Tech (iron flow)—and what that means for developers, investors, and corporates who actually have to make storage decisions in 2026.
Are non‑lithium battery companies financially viable?
Right now, lithium-ion alternatives are strategic bets, not safe harbors. They sit at the intersection of urgent system needs (LDES, fire-safe storage, domestic content) and brutal early-stage economics (high capex, small market, negative margins).
From the data in 2024–2025:
- All three companies—Invinity, Eos, ESS Tech—are loss-making.
- Operating margins are negative across the board.
- Capital expenditure regularly exceeds revenue.
- Cash burn is a constant threat, especially for ESS Tech.
Yet, they’re not science projects. Eos reported over 240% year-on-year revenue growth in H1 2025, driven by higher production and shipments. Invinity is winning UK long-duration energy storage tenders. ESS Tech is targeting the growing US data center market.
So the better question is: who can realistically survive long enough to matter—and under what conditions does backing them make sense?
Why lithium-ion needs competition in green technology
Lithium-ion still dominates battery energy storage systems (BESS). Over the past few years, the market has shifted from NCM (nickel-cobalt-manganese) to LFP (lithium iron phosphate), which is cheaper and safer, but it’s not a perfect fit for everything.
The limits of lithium-ion for grid storage
For the green transition, lithium-ion has three big weaknesses:
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Thermal safety risk
Even LFP carries non-trivial thermal runaway risk. That’s a political and social headache when you’re installing massive systems near communities, data centers, or critical infrastructure. -
Supply chain exposure
Lithium, nickel, and cobalt supply chains are exposed to geopolitical tension and concentrated refining capacity. For countries like the US and UK pushing energy security, that’s a red flag. -
Economics for long-duration storage
Lithium-ion works well for 1–4 hour storage. Once you push to 6–12+ hours, cell cost, degradation, and thermal management make it less attractive.
That’s why you see governments and utilities looking at non-lithium, long-duration energy storage technologies: flow batteries, zinc-based systems, iron-based chemistries, and beyond.
Where alternative chemistries fit in the green tech stack
Technologies like vanadium flow, zinc, and iron flow are not trying to “replace” lithium-ion everywhere. They’re competing in more specific use cases:
- 6–12+ hour energy shifting for renewables
- Daily cycling with 20+ year system life
- Sites with strict fire and safety constraints
- Projects chasing domestic content incentives or import-tariff relief
If you’re planning net-zero strategies, resilient microgrids, or low-carbon data centers, having chemistry diversity isn’t a luxury—it’s risk management.
The problem: the companies building these alternatives are still fighting basic financial gravity.
The financial reality: revenue growth vs. persistent losses
The three companies in focus share a pattern: early commercial traction, but no operating profits yet.
Revenue concentration and market size
Unlike large battery manufacturers tied into electric vehicle supply chains, Invinity, Eos, and ESS Tech are almost entirely focused on stationary energy storage. Over 80% of their revenue typically comes from energy storage systems.
That specialization has pros and cons:
- Pro: Strong alignment with grid-scale and commercial storage needs.
- Con: No EV revenue to smooth out down-cycles or early-stage volatility.
Non-lithium chemistries also have a smaller current addressable market than lithium-ion, which benefits from massive demand in both EVs and stationary applications. That smaller market slows the path to scale and keeps costs stubbornly high.
Company snapshots
Here’s where things stand based on 2024–H1 2025 data:
-
Eos Energy Enterprises (zinc)
- Began producing its
Energy Blocksolutions in 2020. - H1 2025 revenue up >240% year-on-year, driven by increased production and shipments.
- Net loss also grew sharply, from US$74.9 million in H1 2024 to US$207.8 million in H1 2025.
- Cost of goods sold was more than 3x revenue, which is unsustainable without a steep manufacturing learning curve.
- Began producing its
-
ESS Tech (iron flow)
- Started commercial shipments in 2021.
- Revenue declined 4% year-on-year, showing slower traction.
- R&D spending has been higher than revenue every year since 2020.
-
Invinity Energy Systems (vanadium flow)
- Formed by merging Avalon Battery and redT, bringing in a longer development history.
- Revenue declined 84% year-on-year, with performance expected to be weighted to the back half of 2025.
- Benefits from licensing and royalty agreements, which can diversify revenue and reduce capital intensity.
Both Eos and ESS have improving operating margins, but they’re still loss-making. That’s the nuance a lot of headlines miss: margins can improve while absolute losses get larger if a company is scaling rapidly from a small base.
For investors and developers, the message is clear:
Non-lithium storage players are still in the “scaling experiment” phase, not the “steady cash generator” phase.
Cash flow, capex, and the risk of running out of runway
Non-lithium storage startups aren’t just fighting physics; they’re fighting the calendar.
High capex and negative free cash flow
These companies are doing three expensive things at once:
- Building manufacturing capacity
- Funding intensive R&D
- Competing on price against scaled lithium-ion producers
In 2024, the average capex-to-revenue ratio for Invinity, Eos, and ESS Tech was about 118%. Compare that to just 17% for the top 10 energy storage suppliers, most of which are lithium-ion-focused and already scaled.
That kind of spending profile practically guarantees negative free cash flow until volume ramps meaningfully.
Burn rates and debt profiles
A few numbers matter a lot if you care about whether these technologies will be around long enough to fulfill long-term service contracts:
-
Eos Energy
- Operating cash burn rose from US$12.3 million/month in 2024 to US$15.83 million/month in H1 2025.
- Ended H1 2025 with US$153.9 million in cash, but that’s heavily supported by external financing.
- Secured up to US$305.3 million in US Department of Energy loan support and up to US$315.5 million from a private equity firm in 2024.
- Reported a worrying -1.63 debt‑to‑equity ratio, highlighting balance sheet risk.
-
ESS Tech
- More conservative on burn: reduced monthly cash use by 15% from 2024 to H1 2025.
- Ended H1 2025 with just US$0.8 million in unrestricted cash, later boosted to US$7.2 million via funding.
- Using the H1 2025 burn rate, that translated to a runway of around 1.4 months, a serious liquidity concern.
- Debt remains minimal (about US$0.87 million); new financing is primarily equity-based.
-
Invinity
- Reduced monthly burn by 7% from 2024 to H1 2025.
- Benefited from an £11 million UK government grant in 2023, easing R&D and capex pressure.
- As of May 2025, reported no external debt outstanding, relying mainly on equity.
From a pure bankability standpoint, Invinity currently looks healthiest: lower leverage, public support, and a realistic path to profitability over the coming years if it maintains discipline and wins enough projects.
Policy, incentives, and AI‑driven demand: why this still matters
If the story ended with “the numbers look rough,” you’d simply avoid non-lithium storage. But the context in 2025 is very different.
Policy is structurally tilted toward alternatives
Two policy themes are giving non-lithium players a real shot:
-
Domestic supply chain requirements
Eos and ESS Tech are US-based and lean heavily into domestic sourcing. As LFP imports face tariffs and political risk, “made here” becomes more than a slogan—it becomes a financial advantage. -
Targeted LDES support
- In the UK, the LDES Cap and Floor scheme is explicitly backing longer-duration technologies. Invinity and Eos have both benefited, with Invinity selected for multiple projects and Eos signing an agreement for 5 GWh of deployments with a UK developer.
- In the US, the Inflation Reduction Act includes a domestic content bonus on tax credits, which favors projects built with US-based non‑lithium technologies.
These aren’t marginal perks. They can move project economics from “unbankable” to “investment committee-approved.”
AI, data centers, and long-duration storage
There’s another force looming large over 2025–2030: AI-driven power demand.
Hyperscale data centers, especially those serving AI workloads, are:
- Power-hungry and growing fast
- Under pressure to meet sustainability targets
- Extremely sensitive to downtime, fire risk, and grid instability
Iron flow systems like those from ESS Tech, with long-duration capability and non-flammable electrolytes, are positioned as a tool for clean, resilient backup and load management. If AI infrastructure build-out continues at current speed, data centers could become one of the first large anchor customers for non‑lithium chemistries.
That’s a big reason why these technologies matter for the green technology story: they’re not just serving the power sector—they’re becoming part of the digital infrastructure stack.
How to approach lithium-ion alternatives as a buyer or investor
Most companies get this wrong. They treat non-lithium storage as a binary question: “Is it better than lithium-ion?” That’s the wrong lens.
The better approach is portfolio thinking: where do alternative chemistries create net system value, and how do you manage the residual risk of backing earlier-stage vendors?
For project developers and corporates
If you’re procuring storage for grids, microgrids, or industrial sites, here’s how I’d approach it:
-
Match chemistry to use case
- Use lithium-ion for high-power, short-duration, mature duty cycles.
- Consider vanadium, zinc, or iron flow for daily cycling 6–12+ hour applications, especially where fire safety or ambient temperature is a concern.
-
Interrogate vendor bankability, not just spec sheets
Ask concrete questions:- What’s your current cash runway at your present burn rate?
- How is your capex funded—debt, equity, grants?
- What’s your warranty structure and who’s backing it?
- Do you have licensing or royalty revenue that makes you less capital-intensive?
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Use structures that share risk
- Explore availability-based payments, performance guarantees, or step-in rights.
- Prefer projects where public funding, grants, or policy schemes de-risk the early years.
-
Think portfolio, not one-off bets
Mix proven lithium-ion assets with a smaller allocation to non-lithium pilot or early-commercial projects. You gain experience and upside without putting your entire strategy at risk.
For investors
If you’re looking at these stocks or related private deals:
- Treat them as high-beta transition plays, not bond substitutes.
- Focus on:
- Cash runway vs. shipment backlog
- Policy tailwinds in their core geographies
- Evidence of cost curve improvement (capex and COGS per kWh)
- Partnerships or licensing that reduce capital intensity
Personally, I’d rather back a company like Invinity, with cleaner balance sheet and public support, than a heavily leveraged one with spectacular growth but fragile finances.
Where lithium-ion alternatives fit in the Green Technology story
Non‑lithium batteries aren’t just a curiosity on the edge of the storage market. They’re a pressure valve for three of the biggest challenges in green technology:
- Integrating very high shares of wind and solar
- Reducing fire and safety risk in dense or sensitive locations
- Localizing supply chains in a world of geopolitical friction
The financials today are messy. But if the energy storage market keeps growing and long-duration needs keep piling up—as every credible decarbonization pathway suggests—they won’t stay niche forever.
From the three companies we’ve looked at, Invinity currently appears to have the strongest financial footing, with a plausible path to profitability. Eos and ESS Tech are more aggressive in growth and burn, which means more upside if they hit scale—but also more downside if capital markets tighten.
For businesses and investors serious about green technology, the smartest move isn’t to ignore lithium-ion alternatives, or to bet the farm on them. It’s to engage with them deliberately:
- Pilot early, where policy and use case align.
- Structure risk carefully.
- Track cash flow, not just press releases.
Because as the grid gets cleaner and AI loads rise, the real constraint won’t be generation—it’ll be storage. The players who understand when and where to back non-lithium chemistries will be the ones shaping that future, not scrambling to catch up.