Shoals Partners with TerraFlow to Power Data Centers with Giant Flow Batteries

2026-08-07 companies

Nashville, Friday, 7 August 2026.
Shoals Technologies signed an agreement with TerraFlow to support 5 gigawatts of long-duration battery deployments, targeting massive energy demand from power-hungry artificial intelligence data centers starting in 2027.

Strategic Partnership and Technology Deployment

Shoals Technologies Group (NASDAQ: SHLS) has entered into a Memorandum of Understanding (MOU) with TerraFlow Energy to deploy up to 5 gigawatts of vanadium redox flow battery storage systems annually across the United States [1][2]. This strategic agreement targets high-demand sectors including data centers, industrial manufacturing, and electric utilities to address grid stability concerns driven by artificial intelligence infrastructure [1][6]. Under the terms of the MOU, Shoals will provide power distribution equipment, including its PowerHub recombiner technology, to support TerraFlow’s energy storage installations [1][6]. The partnership also explores integrating Shoals’ AirLink data center power distribution solution within TerraFlow’s customer demonstration facilities to enhance efficiency [1].

TerraFlow manufactures vanadium flow battery storage systems that are scalable from 10 MWh to 5 GWh according to company specifications [1]. The Texas-based manufacturer claims its redox battery operates with less than 3.5% degradation over 20 years and is capable of 20,000 to 40,000 cycles [1]. Jon Parrella, co-founder and CEO of TerraFlow, stated the architecture was designed to integrate directly with critical power infrastructure [1]. Jeff Tolnar, president of Shoals, noted the technology could help customers address some of the grid’s biggest challenges [1]. This collaboration aims to create American-made solutions supporting utilities and AI data centers as electricity demand reaches unprecedented levels [1].

Second Quarter 2026 Financial Performance

Concurrent with the partnership announcement, Shoals Technologies Group reported second-quarter 2026 financial results ending June 30, 2026 [7]. The company reported quarterly revenue of $163.4 million, representing a significant increase from the $110.8 million recorded in the same period of 2025 [7][2]. This year-over-year growth rate is calculated as 47.473, reflecting the robust demand in the utility-scale solar and battery energy storage system markets [4][7]. Net income for the quarter was reported at $12.1 million, compared to $13.86 million in the prior-year period, influenced by costs associated with ramping up a new manufacturing facility [2][5].

Despite the revenue growth, gross margin declined to 30.3% from 37.2% in the prior-year period due to operational inefficiencies during the facility transition [5][7]. The company achieved a record backlog and awarded orders (BLAO) of $801.4 million, a 19% increase year-over-year [4][7]. Approximately $699.7 million of this backlog is scheduled for delivery between the third quarter of 2026 and the second quarter of 2027 [4]. Adjusted EBITDA for the quarter reached $31.6 million, up 27.9% from the previous year, demonstrating underlying operational strength despite margin pressures [4][6]. Management attributed some expense increases to payroll and employee expenses associated with higher headcount [4][6].

Future Revenue Outlook and Strategic Risks

Management has indicated that revenue generation from the TerraFlow partnership is expected to begin in 2027, with no anticipated impact on 2026 financial results [3][6]. The company is currently in the engineering phase with TerraFlow to develop engineered solutions for deployment [6]. Additionally, Shoals expects to have its AirLink product installed and live for testing purposes by the end of 2026, targeting a price premium over other market options [6]. The company reaffirmed its full-year 2026 revenue guidance of $600 million to $640 million and adjusted EBITDA guidance of $118 million to $132 million [2][7]. Third-quarter 2026 revenue guidance was set between $150 million and $170 million [2][7].

Investors should note potential risks including ongoing litigation costs related to wire insulation shrinkback matters, which are expected to impact third-quarter 2026 EBITDA [6][7]. The company has consolidated operations into a new facility in Portland, Tennessee, and expects to exit a redundant facility by mid-2027 [4][6]. Long-term projections for 2029 target $768.7 million in revenue and $88.5 million in earnings, requiring sustained annual growth [2]. Analyst consensus varies, with some estimates projecting lower revenue and earnings figures for the same period [2]. The company maintains that the U.S. market continues to be robust, evidenced by over $1 billion in discrete project quotes during the quarter [6].

Sources

Energy Storage Grid Infrastructure