Energy Vault Holdings, Inc.NRGV
Energy Vault Holdings, Inc. Commitments Disclosure
COMMITMENTS AND CONTINGENCIES
Our principal commitments as of December 31, 2025 consisted primarily of obligations under operating leases, finance leases, a deferred pension, warranty liabilities, and issued purchase orders. Our non-cancelable purchase obligations as of December 31, 2025 totaled approximately $5.4 million, which is all expected to be paid in the next twelve months.
Loss Contingencies:
In the ordinary course of business, the Company is regularly subject to various legal proceedings. The Company has identified certain legal matters where the Company believes an unfavorable outcome is not probable and, therefore, no reserve has been established. Although the Company currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the Company’s business, financial position, results of operations, or cash flows, these matters are subject to inherent uncertainties and the Company’s view of these matters may change in the future.
Warranty Liabilities:
The Company provides a limited warranty to its BESS customers assuring that the BESSs are free from defects. The Company’s limited warranties are generally for a period of or three years after the substantial completion date of a project. These warranties are considered assurance-type warranties which provide a guarantee of quality of the products.
For assurance-type warranties in engineering, procurement, and construction (“EPC”) contracts, the Company records an estimate of future warranty costs over the period of construction. For assurance-type warranties in engineered equipment (“EEQ”) contracts, the Company records an estimate of future warranty costs upon the transfer of the equipment to the customer. Warranty costs are recorded as a component of cost of revenue in the Company’s consolidated statements of operations and comprehensive loss.
As of December 31, 2025 and 2024, the Company accrued the below estimated warranty liabilities, respectively (amounts in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Warranty liabilities, balance at beginning of period | $ | 1,391 | $ | 1,818 | |||||||
| Accruals for warranties issued | 926 | — | |||||||||
| Change in estimates | (891) | 2,938 | |||||||||
| Costs paid or settled | (959) | (3,365) | |||||||||
| Warranty liabilities, balance at end of period | $ | 467 | $ | 1,391 | |||||||
The key inputs and assumptions used in calculating the estimated warranty liabilities are reviewed by management each reporting period. The Company may make additional adjustments to the estimated warranty liability based on a comparison of actual warranty results to expected results for significant differences or based on performance trends or other qualitative factors. If actual failure rates or replacement costs differ from our estimates in future periods, changes to these estimates may be required, resulting in increases or decreases in the estimated warranty liability, which may be material.
Letters of Credit and Bank Guarantees:
In the ordinary course of business and under certain contracts, the Company is required to post letters of credit or bank guarantees for its customers, for project performance, and for its vendors for payment guarantees. Such letters of credit or bank guarantees are generally issued by a bank or a similar financial institution. The letter of credit or bank guarantee commits the issuer to pay specified amounts to the holder of the letter of credit or bank guarantee under certain conditions. As of December 31, 2025, the Company had $15.4 million in outstanding letters of credit and $16.0 million in bank guarantees issued through the Company’s credit relationships. The Company is not aware of any material claims relating to its outstanding letters of credit or bank guarantees.
Performance and Payment Bonds:
In the ordinary course of business, Energy Vault is required by certain customers to provide performance and payment bonds for contractual commitments related to its projects. These bonds provide a guarantee that the Company will perform under the terms of a contract and that the Company will pay its subcontractors and vendors. If the Company fails to perform under a contract or to pay its subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. As of December 31, 2025, the Company had $102.3 million in outstanding performance and payment bonds.
Other Bonds:
In the ordinary course of business, Energy Vault is required to obtain other bonds, such as for insurance and government payments. These bonds provide a guarantee that the Company will post the necessary reserves as required by banks and tax or licensing authorities. Additionally, bonds are issued to banks as support for letters of credit provided by those banks. As of December 31, 2025, the Company had $12.5 million in outstanding other bonds.
Asset Retirement Obligation
In connection with the acquisition or development of energy storage systems, the Company may have the legal requirement to remove long-lived assets constructed on leased property and to restore the leased property to its condition prior to the construction of the long-lived asset. This legal requirement is referred to as an asset retirement obligation (“ARO”). If the Company determines that an ARO is necessary for a specific energy storage system, the Company records the present value of the estimated future liability when the energy storage system is placed in service as an ARO liability. The Company accretes the ARO liability to its future value over the energy storage system’s useful life in the consolidated statements of operations and comprehensive loss. The initial ARO is recorded as part of the carrying value of the related
long-lived asset and depreciated over the energy storage system’s useful life. CRC is the only energy storage system currently subject to an ARO. The initial ARO for CRC was $1.0 million.
The Company measured the ARO for CRC at fair value (level 3) using an expected present value technique. This approach estimates the cash flows a market participant would require to perform the retirement activities and discounts those cash flows using a credit-adjusted risk-free rate (10.8% at initial recognition).
As of December 31, 2025, the carrying value of the Company’s ARO was $1.0 million. For the year ended December 31, 2025, the Company recognized accretion expense of $43 thousand, which is recognized within depreciation, amortization, and accretion (excluding amounts included in cost of revenue) on the consolidated statement of operations and comprehensive loss.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 18, 2026 | Showing above |
| 2024 | Apr 1, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Apr 13, 2023 | |
| 2021 | Feb 10, 2022 | |
| 2020 | Mar 26, 2021 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.