Ann: Strategy Update, page-16

Buyback, not buy out. When a product has a significant fault, the organisation that sold the product might offer a buyback to the affected party. That's basically saying that the fault (or cumulative impact of multiple minor faults) with the product is serious enough that a reasonable purchaser of the product might not want a replacement or a repair, but instead might want to opt out of the product altogether.

The circumstances for me were that the battery became incapable of sustaining the expected 2-3 kW of output once the percentage of charge dropped below (if I remember rightly) about 30%. That steadily worsened over a period of some months until I was consistently seeing it not sustaining the load - around 1.5 kW - after the state of charge dropped below 70%. I also observed the maintenance discharge dropping below the usual 1 kW at a significant state of charge, rather than once it was below about 10%. All of this, plus a few other factors that are specific to me (and not necessarily relevant to others who might buy a Redflow battery), made me decide in favour of the buyback rather than a warranty replacement of the unit. In addition, there came a point where the battery would come out of its maintenance and fail to come back online properly without manual intervention by Redflow - by that point, Redflow had altered my battery's operating parameters to run maintenance every two days instead of every three, which meant (because of the specifics of my solar setup) that I could - and frequently did - have no solar power until the battery issues were dealt with by Redflow staff. And then, last week, the circumstances of the failure to come back from maintenance changed sufficiently that I don't think Redflow were able to clear the errors remotely, so I've been without solar power for a week or so now. Fortunately for me, this happened after the recent blackouts around Melbourne.

I don't have enough information to say whether the specifics of my battery's failure are common, or if the reasons for failure vary from site to site. I do have enough information that I would argue that the fact and quantity of the failures is material (as evidenced by the relatively large sum set aside for warranty provisions), and the company should be providing more information to shareholders about what exactly is happening and how investigations into the faults are progressing - whether there's a common failure mode across the board, or multiple failure modes, and whether the reasons for those failures have been identified and fixed adequately or not. It doesn't necessarily have to be completely detailed (though obviously, the more information the company can provide, the better it looks in the long run), but I feel that there should be significantly more than what we've been given to date, and I also would argue that it should be called out specifically rather than hidden in the details of quarterly or annual reports.

I've put a deposit down on an alternative battery system, which should be installed either later this week or early next week. I still hold out hope for Redflow; there are reasons to believe that they can work through the problems and be a significant part of the energy storage market. My fundamental concern here is about the lack of communication on matters that I consider to be of significant importance to shareholders; even if they have been identified and resolved properly, I believe the company has a responsibility to keep the market informed of the situation and resolution. Failures like this happen. That, in itself, isn't a concern. The lack of communication around them makes it a bigger concern than if the company acknowledged the problems and what's being done about them, IMO.