Modo Selects: Building BESS in the US with Louis Caso (VP of Business Development @ Pomega USA)

It was clear that energy storage was ready to really enter the mainstream here in the United States.

Three gigawatt hours of stationary battery energy storage for the North American market, and you gotta build it and sell it three gigawatt hours a year.

The US market's really gonna start to develop.

So by twenty twenty five, twenty twenty six, the US lithium market will be huge.

Just a step change in in in thinking around this problem.

And also the push for made in America Yep.

Is just so powerful. You guys have got so much to build. What's interesting is it's physical world stuff. Right?

It's building real factories and real Yeah.

Getting stuff to the right place and designing it and figuring it out all episode of episode of transmission.

In this conversation from May twenty twenty three, Hue is speaking to Louis Caso, vice president of business development at Pomega Energy Storage Technologies USA. Over the conversation, Q and Louis discussed a momentous shift that Aira has allowed for the production of battery storage and a view into what the demand of stationary storage looks like in the US markets. If you're enjoying the podcast, please hit subscribe wherever you listen so you never miss an episode. Let's jump in.

Alright, Louie. Thanks for thanks for coming down this morning. Pleasure. We are in Austin, Texas, of course, and this is a bit of a, special place for you, Austin FC. Oh, good.

That's how you're gonna start?

That's how we're gonna start. Wow. Austin FC. I mean, how do you feel about that?

Not a fan. Definitely not a fan, Quinn. And why would that be? Because their their horrible owner, Anthony Precourt, tried to rip my team, Columbus crew, away from Columbus and bring it here to Austin. And at that time, the Columbus fan base was obviously distraught.

They mobilized, thanks to some thanks to some very passionate and dedicated volunteers, and they were able against all odds to prevent the move, which is unheard of in American sports.

I don't know how much of your Is this like if, like, Bristol, sort of Bristol try in the UK, try to buy Manchester United and move it to Bristol?

No. Like that?

It would be like if Manchester United was sick of competing with City and decided they wanted to be in, I don't know, Bristol.

Moved threw the whole team down.

Club, built a new stadium, new team. I mean, right now you have, Las Vegas has a hockey team and a football team that were both so the football team was the Oakland Raiders.

Now they're Las Vegas. The hockey team, I don't know who they were before, but, Los Angeles Rams are now the or the yeah. Los Angeles Rams were the Saint Louis Rams. The Cleveland Browns, also Ohio, were moved to Baltimore.

Cleveland got a new team. Yeah. They're still horrible. They've always been horrible.

So I'm bringing there's a lot of, there's a lot of trauma here.

I'm not gonna bring this up too much. Alright. Cool. Louis, it's an absolute pleasure to sit down with you.

Same.

We haven't known each other that long, probably, couple of months.

And I'm really excited to talk to you about the business that you're part of and it's and some of the ambitious stuff you guys are doing. It's pretty insane what you guys are trying to achieve, to put it lightly, and, I'm sure it's challenging. So do you wanna just explain who you are and what the company is and what you guys are trying to do?

Yep. Absolutely. So I'm Louis Caso. I'm vice president of business development for Pomega Energy Storage Technologies.

We are an energy storage company based in Virginia outside of DC, and we are building a lithium ion battery factory in South Carolina to manufacture LFP cells as well as modules, racks, and turnkey battery energy storage systems.

So the a big, battery manufacturing storage. It's made in America.

Made in America. Stationary storage. So most Including the cells? Including the cells. Including the cells. Most of the, battery plants that are going on going in right now are backed by an automaker or they're focused really on the EV sector, massive percentage.

So we're differentiating by focusing exclusively on stationary storage.

I've spoken with a lot of energy storage companies the past year and a half, And one of the, one of the worries is that with the massive growth in EVs, there isn't gonna be that supply left over. All the investments going into EVs that the stationary storage space will get squeezed. So people are definitely intrigued with, with our focus, on stationary storage and are eager to talk with us.

And did you guys make the decision to do this before the Inflation Reduction Act?

Or was this Yeah.

So a little background, I guess.

We are the subsidiary of ControlMatic Technologies, which is a large EPC con company based in Istanbul. Okay. So they've been around since two thousand eight. They started as a controls and automation company.

They've grown into the twenty eighth largest systems integrator in the world.

They work primarily in The company has also established several subsidiaries. So they have a low altitude satellite company Plan S.

Oh, cool.

Yeah. They were in Florida a few months back, for a SpaceX launch. They hitched a ride to launch their satellites.

They have an Internet of Things company, ControlX.

They have all the, the smart sensors at the new Istanbul airport.

They have a robotic arm subsidiary, called McFly.

Yeah. Alright. And then Pomega, which is the energy storage subsidiary. So they had integrated a, energy storage project in Germany in two thousand seventeen, I think. And, our chairman, Sami Azanhan, saw that this was gonna be a huge sector, and pumped a lot of r and d funding into developing our own battery energy storage system.

And then once that decision was made, it was a short hop to say, well, let's make the cells too.

Become as vertically integrated as possible. So in fact, Pomega Turkey has completed their first factory, and they'll begin production in a couple months.

And so we are taking a lot of the know how, the institutional knowledge, their experience and we're replicating that here.

So how how big is the vision? Right? How, how big is the factory, and how, you know, how hard are you guys going at this?

So Pomega's plans are in three phases, I suppose. Phase one, which begins right now, construction is gonna begin in a couple months, Should be complete October or, no. End of next year. End of twenty four. That's three gigawatt hour. So that's about six hundred and fifty thousand square foot per year.

Three gigawatt hour total capacity k.

Of lithium ion battery cells. Phase two ramps that to six gigawatt hours.

So doubling it.

Doubling. And then phase three adds, LFP processing on-site.

So we'll be processing our own LFP.

What does that mean?

That's a that's a deep so right now, pretty much all the LFP in the world comes from China. So LFP is lithium ferrous phosphate.

It's a type of lithium ion battery. Right? Yeah.

So lithium ferrous phosphate is composed of iron phosphate, ferrous phosphate, lithium carbonate, and glucose. So those are the three elements that go into LFP. So you have to assemble the ingredients. Mhmm. And then you mix them with following a recipe, and you make LFP. So, that is the most important component of a battery cell, of lithium ion battery cell.

And it's obviously very sought after, but all of the supply is overseas. So the idea is that we will make our own. So once again, we're vertically integrating. We're bringing all our, our supply in house, the whole supply chain from beginning to end as much as is possible.

So that's something that has also I think the IRA has had a big inflation reduction act, which, provided all sorts of, financial incentives for stationary energy storage as well as solar and other, renewable energy. So you're seeing right now in the United States a lot of investment, a lot of talk about lithium production in country rather than sourcing it from elsewhere. Obviously, Chile has a lot. They just nationalized their lithium fields.

Oh, they did? Yeah. Yeah. It was big news. I couldn't see how that plays out.

China has a lot. Australia has a lot.

And it turns out the United States does have quite a bit. But over time, in the past, it wasn't valuable. Even ten years ago, the idea of an electric car was still niche. Mhmm. It definitely wasn't the growth we've seen really in the past couple years. So while there were, companies, most notably in Quebec, that were producing LFP, there wasn't much of a of a market.

You don't need cobalt for this. Right? Or you do?

You don't need cobalt.

No.

So the So that's the NMC.

Yeah. That's the one distinction I wanna know.

Manganese cobalt is a separate, chemistry, that's also used more in the EV space because it has a higher power density, less in less in, stationary storage, but it is as well.

And there's a whole lot of, you know, there's a whole lot of issues about supply chain there and Well, that's in the Congo, and it's a it's a controversial. It's a it's a tricky topic to navigate.

Yeah.

It it always is, when you start talking about these sorts of elements and chemistries and You guys don't need it.

Right? You don't need the We don't need it.

So you just No. No. No.

Purely LFP Yeah. Which is lower energy density, but more suited It has roadside.

There's more cycles, so it lasts longer.

You have a lower power density, but a longer discharge period. Mhmm.

It's easier to source the the key ingredients that you need. There's, yeah, the environmental concerns and the child labor human rights concerns that come with transparently sourcing based materials. It can be done, but it's an added Yeah. Hurdle.

So if I got this right, you guys are gonna build so stage one, stage two.

So stage one, three gigawatt hours. That's right. Yeah. Two, six gigawatt hours. Stage three is doing the whole LFP, processing and, the recipe, if you like.

Yep. And, it's all in the US. And the the the company, Pomega, has actually started out in Istanbul, but is growing big stateside. Yeah.

So I guess it was January of twenty two that Control Matic was founded in the United States, Control Matic US, soon after the Pomega subsidiary, was also incorporated here.

I see. Pretty pretty young side of the business then.

Very young. But, obviously, Contralmatic has been around globally since two thousand eight Yeah. Mainly active in the EMEA region.

Pomega is new in Europe as well, but they've done a couple projects, and they've already constructed their factory. They're about to begin production. Mhmm.

The idea to come to the US was that this was clearly a growth market for it. The the writing was on the wall, particularly with a lot of the things that the Biden administration had been saying. It was clear that energy storage was ready to, really enter the mainstream here in the United States. So that was when the decision was made to, establish a company here, to draw on all the engineering experience, construction experience, everything that Control Matic has already demonstrated bringing here to the US market.

There was also a suspicion, I suppose, that there were gonna be benefits, coming, but that wasn't the primary motivating factor. It was a business case by itself that being in the United States was important. And so that has been a great advantage so far for us because we began already searching for our factory location, getting things in place long before the IRA became law. And since that time, a lot of new entrants have decided as well to move forward.

I was gonna ask you about that.

I mean but before we get there, how let's put some shape around this this factory. So how big is it? I mean, how many people is it gonna employ?

Base one is six hundred and fifty thousand square feet Okay. Which is pretty massive. We we toured a bunch of factories and I mean, I was astounded at the size, the sheer size, vastness of these facilities.

So that's six hundred and fifty thousand square feet. We'll employ five hundred and seventy five, people.

And phase two will add an additional three hundred and fifty thousand square feet for a total of one million square feet. So that's gonna be gargantuan. And then after that, the LFP processing facility is gonna be in the land just adjacent.

I haven't seen all the the plans for that. Obviously, that's phase three.

So let's But it's gonna be big.

Finish phase one first. And what's the the technology itself? Is this is is it is in containers or is it in the ESS? Yeah. Yeah. Yeah. Yeah.

So they're Let's talk about that for a sec. They're containerized systems, either in twenty foot or forty foot containers. They have external access to all the racks of batteries that line the inside. There's an HVAC system that cools the the entire, the entire unit. There's the, energy management system and the battery management system. That's those are the smart controls that help, the system think when to charge, when to discharge, how to balance the battery so that their state of charge is all at the same level, alerts to any problems, overheating, whatever.

And so all of that, and then all of that is in these containerized units that are then paired with an inverter, an AC inverter, that will dispatch the power to the grid.

So these inverters or are you gonna buy them?

So we'll we'll source the inverters for now. That's a whole another business.

It'd be great to do that as well, and there's obviously been discussion, but you have to, you know One step at a time.

Yeah. Exactly. And there's there's some great domestic options that it should work fine. We'll probably pair with a couple different systems just for different applications.

So what's it like working for a, what is it? American business in America, but it's owned by a Turkish parent. Right? Yep.

So, what's that like working across what is quite a long there's a there's a big time difference. That's the obvious thing. Yeah. But also there's cultural differences.

There's different ways of working. There's all sorts. And what what's what's that like for you?

For me, it's great. I I mean, I have always worked in international, environments, so to me, that's an added bonus, to this. Of course, our work specifically is only North America. We're US focused because we have Pomega in Turkey that's focused on the European and Asian market.

So I think, as you know, one of the the big constraints is the time difference, obviously, organizing meetings. The the the fact that Control Matic has they have, I don't know how many people working over there, four hundred, sixty percent of which are engineers. They have their marketing people. They have their tech people, everybody. And then here in the United States, we're super small. There's eight of us in an office in McLean, Virginia.

So we have to kind of turn to them a lot to ask for things, for information, for files, for, we're we're gonna start attending these conferences and having us having a booth, like a stand, and we have they're really, really cool.

I mean, you've been to these things. You know how cool these things get, and ours will be right up there. So they have all that over there. We have to ask them, hey. Can you send us pictures of this so we can include it in?

But it's because we're new. So we're growing and we're growing fast.

We're able to learn a lot from what they're doing. Culturally, I don't know that there's much of a difference. I mean, once you enter the the business sphere, it all homogenizes. Natural one.

Yeah. Yeah.

You'll find little differences, but when we met in Austin a couple months ago, there were a few French people there that I was speaking with and, you know, although the language changes, the conversation doesn't, the focus, the way that you view things, I mean, there's not much of a difference there.

So you guys are gonna build three gigawatt hours a year of to start with Yep. From the end of next year, so from the end of twenty twenty four. Three gigawatt hours of stationary battery energy storage for the North American market. And you gotta build it and sell it three gigawatt hours a year.

And what's the market like for stationary storage The markets. In in the US?

I mean, how Very hot.

We've we've obviously done run our numbers, but I'm keen to hear from you, where where are these units gonna go?

Right. So, yeah, the the the market is very hot.

There's a huge demand for these systems, and we've had no problem getting in touch with, with people to introduce ourselves and everyone wants to know when we're gonna begin production.

Where these will go, we've spoken with integrators, So large integrators who have massive pipeline of storage projects that want either, the cells to integrate into their systems, modules, cabinets, some that want full turnkey systems.

We've worked with developers, so smaller developers, bigger developers who are, putting together these energy storage projects often paired with solar, who are looking to procure turnkey systems to use in their, in their installation.

We've spoken with commercial industrial clients, cold storage warehouses, for example, hospitals, large organizations that need constant power data centers are a huge, huge source of, demand for stationary underneath storage. When you think of how much power they rip through, it just, really there's a real value added for high power users to integrate energy storage.

Can I can I can I ask you about the Inflation Reduction Act? Yep. And what, for many of our listeners will be international. So what Yep.

Start with what it is and what the impact is on energy storage and particularly your business.

So the Inflation Reduction Act is a bit of a misnomer because it doesn't really address inflation at all. That was a bit of marketing spin by the Biden administration.

Well, it is printing money, isn't it?

Which I think is That could be that could be part of the problem.

But the idea generally is that it's a wide ranging infrastructure development bill that sought to encourage investment in renewable energy technologies, specifically in, solar and storage. So solar the solar sector has always benefited or has benefited for a long time, by investment tax credits and other, incentives to install and sell solar.

Storage was always exempt from that unless it was paired with solar. So storage by itself couldn't benefit from these tax credits.

There's the thing where this is where there's so many collocated sites developed because if you there's a thing where I think it's ninety five percent or so big number of the power that goes through the battery needs to come from the solar.

Right? And there's a fairly complex metering arrangement to do that.

Exactly. And often because that's the only way you could get the credits to install it, you would overbuild a storage asset, you know, relative to the environment in which it was located.

Whereas this is gonna allow rightsizing, I suppose, of these sorts of projects.

So that basically turbocharged the energy storage sector. And it was very timely because I think that the technology and the pricing, so the efficiency and the cost had hit an equilibrium point where it was finally commercially viable. The problem before was always either it wasn't powerful enough or was it too expensive relative to the power that it could store.

So just to be clear here, so the investment tax credits system, that we just talked about, what's changed in the Inflation Reduction Act around that?

So if you're a developer that's installing battery energy storage as a standalone or paired with solar, you have a thirty percent tax credit that you receive based on the cost of the energy storage asset that you install.

Based on the CapEx.

Yes. And that credit is fully transferable. So you can then sell that credit to whoever you want, and they can use it to offset their tax liability.

Wow. So it's There's a secondary market for these tax credits.

Oh, that's another thing altogether. Yeah. It's wild. It's wild.

So obviously And it used to just be around things that had solar on.

Yeah. Right? Or Yeah.

It was it was really strange.

Now it's standalone storage. A battery on its own connected to the grid without I mean, it can have solar, but with even on its own, it still gets access to just thirty percent Yep. Tax credit.

And very notably for us and for others like us, there's an additional ten percent for domestic systems.

Okay.

There's an also there also is an additional ten percent for projects located in energy communities, which are defined nebulously as, communities that have been affected by the switch to renewable energy. Okay.

So maybe the closing down of, you know, of coal factories.

Communities that were relying on fossil fuels, for example.

And so those qualify for an additional ten percent if they get installations in their Wow.

It's a bonanza, isn't it?

Yeah. So now investment groups are also very interested in energy storage because they can then acquire these tax credits and sell them off where, you know, it it's just, it's really interesting. But what it has also done is it has jump started the market for the base materials, in particular lithium. So, again, there's virtually no domestic lithium market to speak of. It's all overseas. That's changing extremely fast now.

Is that all because of changes in it? So these tax credits, essentially, they stimulate the demand side. Right? Because they stimulate people to build these assets, and that drives demand for that infrastructure, for the physical hardware.

Sure.

And is that what's driving the investment in, USA Lithium and the investment in these, companies like Pomega and other made in America companies.

I think in a large part.

Additional tax credits for tax rates for those folks as well.

For the, base material Yeah.

Yeah.

Yeah. And the Yes.

As well. As well. The entire supply chain, benefits from these credits.

The Inflation Reduction Act is a piece of US legislation, so it's extremely dense, complicated, verbose, and I expect you to know it all inside out.

But Well, it's just that it's not even clear. We're not even sure. The industry at large isn't sure what qualifies, what doesn't, what will define domestic content.

So there's still there's still a bit to go before everything is explained and clearly laid out.

Does it have to be made? So, does it have to be made in the US? Yeah.

Has to be manufactured in the United States.

In order to get these tax credits and the other bits and bobs?

Yeah. Yeah. Yeah. So that means that what has happened in the last year is this entire new industry has just risen.

I mean, it was there. There were obviously, you know, Powen has been around. Fluence has been around. These are, massive companies with huge pipelines.

But what it's done is really just turbocharged that market.

They'll benefit, of course, because they're already the the the big guys, but now it's allowed all these new entrants to also, if they're doing things correctly, to really make significant progress. And, obviously, the demand was there even absent the tax credits because of the emphasis on the energy transition. The whole move to renewable energy, that's obviously a very important consideration around the world.

So that was already driving corporate decisions in how they operate.

Obviously, ESG scores are are important nowadays.

So that that that was all it wasn't that the credits by themselves are are leading to these new developments.

All they did was just write a light light a rocket underneath it to really get it pumping. And like I said, the, the base materials manufacturing is gonna be a huge part of that because it's gonna allow us, for example, when we begin processing our LFP to source the lithium domestically. So recently, there was a a news story, I think it's on sixty minutes, that the Salton Sea in California, close to Palm Springs, has over three hundred thousand metric tons per year of lithium.

Now that to put that in perspective, a couple years ago, I think the entire global supply was a hundred thousand.

So three times what the entire Three times. Right? Global supply was. From a few years ago.

Now this global supply is higher.

In Nevada, there is, evaporation ponds that are extracting lithium. Utah, they're doing, brine liquid brine extraction, and these are all environmentally sustainable, practices. It's not like coal mining or, you know, there's a lot of recycling of the bait of the materials that go in, reinjection of the water into the ground. There's, obviously, it's all these it's there's so many different ways of that people are finding now to procure that lithium.

And now with this added focus on batteries, the US market's really gonna start to develop. So by twenty twenty five, twenty twenty six, the US lithium market will be huge and, you know, the supply constraints that exist today won't exist. Then it'll be up to the individual companies such as ourself, Corepower, Our Next Energy, American Battery Factory, who else? Freyr, who have all indicated that they're considering processing their own LFP as well.

It's gonna be up to the individual companies to get the recipe right, and to produce the best quality LFP they can, but it won't be buying it off the shelf from China anymore.

It's awesome. This thing is going so fast. Right? The I mean, as you say, there there are tailwinds before the Inflation Reduction Act, which is the the net zero move and renewable energy move.

I mean, there is no stopping this force. It is happening. But then the IRA is just a step change in in in thinking around this problem. And also the push for made in America Yep.

Is just so powerful.

I really hope that Europe does something to try and catch up because this is this is it's, restructuring the whole energy transition.

Yeah. No.

For sure. And I I don't doubt that Europe will find their solution as well. I mean, there's there's already been so much discussion between the two countries specifically about that.

And it is sort of a a funny, thing that the United States is leading the way here with our, you know, internally looking, national subsidies.

But essentially, yeah. No.

Government intervention into markets, fiscal it's it's stimulation. Right? Yeah. And it's it's very unusual that the US is leading the way in that. That sounds like a more European thing to do. Sure. For sure.

So I'm I'm happy to see it, and it seems like it's really having its effect. I was reading there was a McKinsey study that showed the demand for the the gigawatt hour demand for storage last year was seven hundred gigawatt hour. By twenty thirty, it's gonna be four point seven terawatt hour. That the revenues last year were eighty five billion, but by twenty thirty, they'll be over four hundred billion.

Just US.

What a hell of a market.

Just massive. How about building this thing? Right?

So, building everyone's Elon the problem is Elon made Elon has now set the bar, right, with building gigafactories at the factory.

As well for, for, I think, maybe just the three.

Yeah. I saw that. I saw that.

So, yeah, building a factory from scratch in Carolina North North Carolina? South? South Carolina, is one hell of a thing to do. Have you guys broken ground already? Are you already physically there?

We're physically there in the sense that we have our our team in place. We're working with Colleton County, which is where it's located.

Right now, we're finishing permitting, water mitigation, all the preliminary steps, land clearing, before we can start masquerading, but we'll start masquerading very shortly. We have a design team that's producing the entire, factory design from a technical standpoint that will inform then the construction.

The the site selection was a lot of fun, really. Really interesting. Went coast to coast.

We worked with JLL, the real estate management company.

They know what they're doing.

They know what they're doing. They're phenomenal.

And they identified seven hundred potential locations, and we just got to work whittling it down. Ended up visiting seven states, hundred different sites, and South Carolina definitely rose to the top for both our needs and for just the, the degree to which they really wanted us there. And you can see that in that there's, Redwood Materials is moving in there. They do battery recycling, end of life recycling, and they're reprocessing.

Albemarle, who's a a big chemicals, they actually are a lithium processor, a lithium mining company, and they're moving, to South Carolina.

AESC Envision is building there. And then, obviously, with Volvo and BMW, they're gonna be a lot of battery work.

Yeah. North Carolina.

So we're also gonna be working with a couple of the universities down there in research and development, so, setting up innovation labs where we'll be both testing new technologies and also, working on new applications for existing technologies.

And now for the ultimate question. How much does all this cost? Right? This is this is one very large investment. Yeah. Well So I wanna build, say, we wanna you and I wanna go away and build a battery factory. Right?

Together.

Together. Yeah. Let's do it, man. You should.

At three gigawatt hours a year Yeah.

This we need a lot of space. What does it cost to what kind of investment is this in the US?

We'll need about four hundred million dollars.

Four hundred million. Beginning to end.

That and that's for a three gigawatt hour facility.

Freyr is talking about twenty four gigawatt hour.

It's just the beginning. Four hundred million, just the beginning.

Just the beginning. You know, it's gonna be a continuous investment, but, our CFO, who is brilliant, he's gone through these numbers. And when we first when he first started working on it, he thought he was calculating something incorrectly. Like, this is amazingly profitable. This is, like, we're and the rate of return is also, just when we pay things off and just the speed of the project.

He's, he he was very impressed. So I'm old enough. Numbers, but it's it seems like, you know, it's a strong, financial decision.

This is the thing about the inflation reduction act. Because on the surface, it looks like a, it looks like a creation of new money by the government in the US to wash around internally. That's not what's really happening here. It's hoovering up, sucking up capital from the rest of the world, foreign investment.

You are you guys are a prime example of this. Four hundred million dollars from Istanbul into the US for new capital infrastructure.

Yeah. Freyr is Norwegian. The factory in New York, I m three n y.

They have Australian backers. Obviously there's a lot of Korean LG, is building a factory.

So yeah, there's a lot of foreign money coming in, but then also as these things are always intended, it creates a whole new infrastructure of new jobs, a new, ecosystem. So in Colleton County, Walterboro, South Carolina, it's a really cool little spot there right off I ninety five in South Carolina, but there's not a lot of jobs. So people are commuting forty five minutes, an hour one way to go to work, and so the community is really excited about a factory like this going in to have steady employment, for five hundred and seventy five people. It's gonna create all sorts we in fact, we were talking with someone who's buying land around there now to build housing because there's not a ton of apartments or new housing, and with all these new jobs that will surround the factory, this guy wants to get ahead and build housing.

So just as an example of how The second order effects too.

Continues to, yeah, have a have effects.

Well, what what is what a tailwind behind the business, and what a big bold bet. I mean, we wish you the best of luck in it, and we'll be, tracking you guys very closely. I wanna, ask you a couple more questions now, separate to building a new Gigafactory in South Carolina. Right?

We always ask folks on the podcast if there's anything they wanna plug. Is there any big announcement or anything that you wanna get out to our listeners before I ask you the hardest question, which is what your contrarian view is?

Contrarian view. Wow.

No. I I don't know. In terms of what you know, a plug, I'll shamelessly promote Pomega energy storage technologies.

We're we're really excited to be a reliable energy storage partner here in the United States for, turnkey systems, not just with reliable cells, but all the way to turnkey battery systems that, you know, we're not part of the energy storage solution. We are the energy storage solution.

And we will be most likely, you know, we're we're gonna see, but first to market in the United States with LFP cells devoted exclusively to energy storage. So obviously, there's factories already catering to EVs. There is a fact that CorePower might beat us to market. They're NMC.

We will be the first LFP domestic manufacturing company.

So so just thinking about this IRA in more detail, sort of going back into it.

So does this mean that if I if you and I want to develop a site, say in ERCOT, we want to develop a hundred megawatt battery, right, and we wanna access these tax credits for a standalone battery, We've actually got a very limited number of suppliers right now we can go to. Right?

We can't just buy in BYD or or CATL or You can.

Or we can.

You won't get the ten percent added for domestic content. You don't get the ten percent.

You're still getting the thirty percent. So the thirty percent is just energy storage installation.

Okay. Doesn't matter the source, doesn't matter the technology, doesn't matter where it's based. It's thirty percent for energy storage, flat.

Doesn't matter if it's a commercial industrial, if it's tied to a hospital, if it's grid based, if it's pair of solar, thirty percent. Ten percent is domestic, and there's very little, right now, domestic battery energy storage systems.

The companies that exist source largely from China, just because there is no domestic capacity. So, we will be among the first, and that is why our early entry into the United States before the IRA has given us a little cushion.

A little head start.

Yeah. And so it's something that we're definitely looking to, take advantage of. But there's a lot of cool companies doing cool things, in this sector. And when we were at the summit in Austin or when we go to these conventions, it's in New Orleans next month.

Meeting people, hearing what different companies are doing, it's so exciting, and it's such a great field, sector to be in.

Like when I met your guys' team, Ed and Claire and yourself and, blanking on the rest of the names, but you guys are so connected to everyone, you know everyone in the sector, there's an excitement, there's a real interest in what people are doing and the new developments, and it's gonna continue. It's not that we're gonna start manufacturing these cells. It's not like, okay, this is what we do now. Like, that technology will change. We're already researching our next technology.

Oh, it's still so early. I still pinch myself that I managed to get in on the ground floor and this I bloody love this industry. Same.

Now for the last question. What do you or Pomega believe? What's the what's the contrarian view which goes against what perhaps the majority of the market think? And it can be around your technology or it can be around the company or it could be around anything, really.

The the floor is yours.

Well, just to just to stay, I guess, in the in the sector just so I don't say anything controversial. It's Controversial. Really controversial.

No. That I think that US manufacturing of energy storage is economically viable even without the IRA.

I think that the movement was there. The the momentum was already there.

Just the when you consider the tariffs on Chinese products, when you talk of the lower, logistics costs, if you locate correctly, I think that everything is in place in the United States already without the IRA to successfully make a business case for energy storage manufacturing in the United States. What the IRA has done is just strengthened that argument and made it a no brainer, which is why we went from three gigawatt hour to six gigawatt hour, because when we're putting in there's no point not to. We already have the infrastructure in place. We have everything in place.

Three gigawatt hour can just as easily be six gigawatt hour.

And there should be economies of scale, you'd think. But what Sure. I was gonna ask you about this. With that, with with the inflation reduction act and that so you get thirty percent of your tax credit, and then you get an additional ten percent if it's made in the USA.

My initial thought was you guys have basically got ten percent of CapEx to play with to come in competitive Exactly. Against foreign suppliers.

Exactly.

But, actually, what you're saying is even without that ten percent, you guys could be in the money as well.

I think so. Yeah.

And also we will begin, I guess, kind of some news, but we're leasing a temporary Well, is this a hot is this is this hot news?

I mean, right now, there's a yes.

Yeah. Yeah. I suppose it is. We're we're leasing a temporary facility in South Carolina in which we will install the manufacturing equipment for the value added products, so for the modules and the containers.

And that will be operational by the end of twenty three. We will ship ourselves from Turkey and integrate them into modules and units here, so we will be actually producing, battery storage systems by the end of this year, They just won't have the domestic cells. But that still comes in in a Does that count?

It's in the inflation reduction.

What Probably not for domestic content.

Does it?

But you're still with a Turkish sell, you're still undercutting a Chinese sell by ten percent, I think, of tariff. Just automatic, the Chinese sales are gonna be more expensive in that regard.

So we've got everything to play for. It's absolutely fascinating. I can't wait to see what happens next. You guys have got so much to build.

What's interesting is it's physical world stuff. Right? It's building real factories and real Yeah. Getting stuff to the right place and designing it and figuring it all out.

And the scale is huge. Three gigawatt hours, six gigawatt hours up to twenty four, twenty six, you said. No.

No. No.

That's a Freyr is up to twenty four.

We have up to six gigawatt hour right now for our first factory.

Now the idea has always been second factory, but we wanna first get to our full six gigawatt hour capacity, begin processing our own LFP, and then we can Okay.

Okay. Look for Either way, my watering numbers. And, I can't wait to see how it plays out. Good luck to you and the team.

Thank you.

When we're in Virginia, we'll come and stop by and Anytime you're in the DC area.

Yeah. And, South Carolina as well. It's we are now we're, we're local South Carolinians.

Awesome.

And, just wanna say a massive thank you for you flying down and taking the time to be on our call.

Pleasure. This is great.

It's been a delight. And, if you wanna find out about Louis and Pomega, you can we'll we'll put in the show notes, a link. You can check it out at the bottom. And if you listen to this or watching this, as ever, please do hit like and subscribe. All the good buttons. That feedback means the world to us, and it it drives us on to carry on going. Thank you very much, and see you soon.

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