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

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've got to build it and sell it, 3 gigawatt hours a year.

The US market is really going to start to develop. So by 2025, 2026, the US lithium market will be huge.

Just a step change in thinking around this problem. And also, the push for made-in-America 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 getting stuff to the right place and designing it and figuring it all out.

Hello, everybody. Welcome back to another episode. This week, we're recording in Austin, Texas. Q sits down with Louis Caso, vice president of Business Development at Pomega Energy Storage Technologies, USA. If you're enjoying the podcast, please consider hitting Like, Subscribe, or giving it a five-star rating. It really means the world to us. Let's jump in.

[UPBEAT MUSIC]

All right, Louis. 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.

[INTERPOSING VOICES]

That's how you're going to start?

That's how I'm going to start.

Wow.

Austin FC, I mean, how do you feel about that?

Not a fan. Definitely not a fan, Quinton.

QUINTON: And why would that be?

Because 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 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 someone in Bristol in the UK tried to buy Manchester United and move it to Bristol.

No.

QUINTON: Is it 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 and moved--

Moved the whole team down.

LOUIS CASO: --the 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

It's wild.

LOUIS CASO: --Los Angeles Rams are now the--

or the Los Angeles Rams were the Saint Louis Rams.

The Cleveland Browns, also Ohio, were moved to Baltimore. Cleveland got a new team. Yet they're still horrible. And they've always been horrible.

So I'm bringing--

there's a lot of trauma here. I'm not going to bring this up too much.

Well, there's a lot of trauma. But also, it ended really great. And Austin got their team.

Columbus kept their team.

Even there was a city councilwoman from here, Leslie Pool her name was. And she actually came to Columbus a few times because she saw through Anthony Precourt and saw that he was just a snake--

a Zima sipping snake--

and wasn't OK with the proposal. And so she was able to block it for a long time and buy Columbus time to--

there were a lot of ins and outs. It wasn't just the fan base mobilizing--

It sounds messy.

LOUIS CASO: --to save the team.

I mean, there was intrigue in the sense that Ohio, when the Cleveland Browns had originally left--

as I mentioned, they passed a law saying that any team that took public funds had to allow a local investment group to buy the team before they were allowed to move.

And so basically, Columbus was going to have a chance to have someone buy them. The NFL was very worried about that going through because it had never been tested in court.

So while it was dubiously legal, NFL didn't want to find out. Because if Columbus prevailed and teams couldn't move before giving a chance for local group, well, then their whole business model falls apart. So the idea is that the NFL may have kind of leaned on MLS a bit, like find a solution here--

Of course, no leaning. No.

And it was because the fan base made it such a high-profile thing that people knew about it. It became news.

Actually, we were talking about F1 earlier.

I don't know if you're familiar with the F1 stats man.

He's a Brit as well.

I'm blanking on his name right now--

oh my gosh. Sean Kelley. He lived in Columbus briefly and learned about the crew. And then he was there during the Save The Crew movement and made a documentary about it--

really, really good documentary that's on YouTube. I can't remember where it was published originally, but it goes through--

he flew back and forth Columbus, Austin and was involved in all the--

I love YouTube documentaries.

It's really, really good.

You get a quality and class of documentary on YouTube that you don't find anywhere else, right?

I think that's true. I mean, if you find--

Straight to VHS.

It can go either way. It can really go either way. But no, because it's--

I'm not trying to imply at all that this is half--

this is quality like this.

[LAUGHS]

Top production.

Yeah. Oh yeah, we wouldn't be seen dead on YouTube. We go straight to--

We go straight to Modo.

Straight to Netflix or whatever, all right. Cool. Louis, it's an absolute pleasure to sit down with you.

LOUIS CASO: Same.

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

And I'm really excited to talk to you about the business that you're part of 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 want to just explain who you are, and what the company is, and what you guys are trying to do?

Yeah, 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, recs, and turnkey battery energy storage systems.

So a big battery manufacturing plant. And the whole thing for stationary energy storage--

Stationary storage exclusively.

LOUIS CASO: --made in America.

Made in America stationary storage. So most of the--

Including the cells.

Including the cells. Including the cells. Most of the battery plants that are 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 worries is that with the massive growth in EVs, there isn't going to be that supply left over. All the investments going into EV is that the stationary storage space will get squeezed. So people are definitely intrigued 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 just--

Yeah, so a little background, I guess.

We are the subsidiary of Kontrolmatik Technologies, which is a large EPC company based in Istanbul.

So they've been around since 2008. They started as a control as an automation company.

They've grown into the 28th largest systems integrator in the world.

They work primarily in electrification, power generation, distribution, and transmission.

The company has also established several subsidiaries. So they have a low altitude satellite company, Plan-S.

QUINTON: 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, Controlix.

They have all the smart sensors at the new Istanbul Airport.

They have a robotic arm subsidiary called McFly.

And then Omega, which is the energy storage subsidiary. So they had integrated an energy storage project in Germany in 2017, I think. And our chairman, Sami Aslanhan, saw that this was going to be a huge sector and pumped a lot of R&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 to become as vertically integrated as possible. So in fact, Omega Turkey has completed their first factory. And they'll begin production in a couple of 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 big is the vision? How big is a factory? And how hard are you guys going at this?

So Omega's plans are in three phases, I suppose. Phase 1, which begins right now, construction is going to begin in a couple of months.

Should be complete October--

or no, end of next year. End of '24.

That's 3 gigawatt hour. So that's about 650,000--

Per year.

LOUIS CASO: --square foot per year. Three gigawatt hour total capacity of lithium ion battery cells. Phase 2 ramps that to 6 gigawatt hours.

QUINTON: So doubling it.

Doubling. And then phase 3 adds LFP processing on site. So we'll be processing our own LFP.

What does that mean?

LOUIS CASO: That's a deep--

so right now, pretty much all the LFP in the world comes from China. So LFP is--

Sounds good, yeah.

LOUIS CASO: --lithium ferrous phosphate.

Which is 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 LFPs. So you have to assemble the ingredients. 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 a 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 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, it was big news. We're going to 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 10 years ago, the idea of an electric car was still niche.

It definitely wasn't the growth we've seen really in the past couple of years. So while there were companies, most notably in Quebec, that were producing LFP, there wasn't much of a market.

You don't need cobalt for this, right? Or you do a little bit.

You don't need cobalt. No. So that's the NMC.

That's the distinction I want to make.

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

And there's a whole lot of issues about supply chain there. And most of the cobalt is in the Congo, and it's a controversial--

it's a tricky topic to navigate.

Yeah. It always is when you start talking about these sorts of elements and chemistries.

You guys don't need it, right? You don't need that.

LOUIS CASO: We don't need it. No, no, no.

So it purely LFP, which is lower energy density, but more suited to--

[INTERPOSING VOICES]

There's more cycles, so it lasts longer.

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

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

So if I've got this right, you guys are going to build--

so stage one, stage two. So stage one, three gigawatt hours.

LOUIS CASO: That's right now.

Stage two, six gigawatt hours. Stage three is doing the whole LFP processing and the recipe, if you like. And it's all in the US. And the company, Pomega, is actually--

it started out in Istanbul, but it's growing big stateside.

Yeah. So I guess it was January of '22 that Kontrolmatic was founded in the United States. Kontrolmatic US. Soon after, the Pomega subsidiary was also incorporated here.

It's a pretty young side of the business, then.

Very young. But obviously, Kontrolmatic has been around globally since 2008, mainly active in the EMEA region.

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

The idea to come to the US was that this was clearly a growth market for it. 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 of the decision was made to establish a company here to draw on all the engineering experience, construction experience, everything that Kontrolmatic has already demonstrated, bring it here to the US market. There was also a suspicion, I suppose, that there were going to 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 going to ask you about that. But before we get there, how--

let's put some shape around this factory. So how big is it? I mean, how many people is it going to employ?

Phase I 650,000 square feet, which is pretty massive.

We toured a bunch of factories and I was astounded at the size--

the sheer size--

vastness of these facilities.

So that's 650,000 square feet. It will employ 575 people.

And Phase II will add an additional 350,000 square feet for a total of one million square feet. So that's going to be gargantuan. And then after that, the LFP processing facility is going to be in the land just adjacent.

I haven't seen all the plans for that. Obviously that's Phase III, so let's--

But it's going to be big.

LOUIS CASO: --finish Phase I first.

And the technology itself, is it in containers? Or is it in--

The ESS?

QUENTIN DRAPER-SCRIMSHIRE: Yeah, yeah. Let's talk about that for a sec.

They're containerized systems, either in 20 foot or 40 foot containers. They have external access to all the racks of batteries that line the inside. There's an HVAC system that cools the entire unit. There's the energy management system and the battery management system. 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--

Are you making the inverters? Or are you going to buy them in?

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

LOUIS CASO: Yeah, exactly. And 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--

well, it's an American business in America, but it's owned by a Turkish parent, right?

Yeah.

So what's that like, working across what is quite a long--

there's a big time difference. That's the obvious thing. But also there's cultural differences, there's different ways of working. There's all sorts.

And what's that like for you?

For me it's great. 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 one of the big constraints is the time difference, obviously. Organizing meetings. The fact that Kontrolmatic has--

they have I don't know how many people working over there. 400?

60% 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 going to start attending these conferences and having a booth, like a stand. And we have some--

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?

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 business sphere, it all homogenizes.

[INAUDIBLE]

international. Yeah.

You know, 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 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 going to build three gigawatt hours a year to start with.

From the end of next year. So from the end of 2024. Three gigawatt hours of stationary battery energy storage for the North American market. And you've got to build it and sell it.

Three gigawatt hours a year. And what's the market like for stationary storage--

The market's--

QUENTIN DRAPER-SCRIMSHIRE: --in the US? And how--

LOUIS CASO: --very hot.

We've obviously [INAUDIBLE],, but I'm keen to hear from you, where are all these units going to Go

Right. So yeah, the market is very hot.

There's a huge demand for these systems, and we've had no problem getting in touch with people to introduce ourselves. And everyone wants to know when we're going to 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 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 energy storage. When you think of how much power they rip through, it just--

there's a real value added for high-power users to integrate energy storage.

Can I ask you about the Inflation Reduction Act? Many of our listeners will be international. So 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 a marketing spin by the Biden administration.

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

[LAUGHTER]

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 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 the storage by itself couldn't benefit from these tax credits.

There's a thing where--

this is why there's so many co-located sites developed, because if you--

there's a thing where--

I think it's 95% or--

a 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 relative to the environment in which it was located. Whereas this is going to allow right-sizing, 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 it was 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 30% 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. 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? Right? Or wind.

Yeah, it was really--

QUENTIN DRAPER-SCRIMSHIRE: But now it's standalone storage. A battery, on its own, connected to the grid without storage--

I mean, it can have solar. But even on its own, it still gets access to this 30% tax credit?

Yeah. And, very notably for us and for others like us, there's an additional 10% for domestic systems.

QUENTIN DRAPER-SCRIMSHIRE: OK.

There's also is an additional 10% for projects located in energy communities, which are defined, nebulously, as communities that have been affected by the switch to renewable energy. So maybe the closing down of coal factories.

Remote communities that were reliant on fossil fuels, for example.

So those qualify for an additional 10% if they get installations in there communities.

QUENTIN DRAPER-SCRIMSHIRE: 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, or--

you know. 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 the--

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.

LOUIS CASO: Sure.

And is that what's driving the investment in USA lithium and the investment in these companies like Pomega and other made in American companies?

I think in a large part--

Or are there additional tax credits for--

tax breaks for those folks as well?

For the base material?

QUENTIN DRAPER-SCRIMSHIRE: Yeah, and the manufacturers.

LOUIS CASO: Yeah, 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.

Don't expect you to know it all inside out.

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 a bit to go before everything is explained and clearly laid out.

Does it have to be made--

does it have to be made in the US?

Yeah, it has to be manufactured in the United States.

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

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, Powin has been around, Fluence has been around. These are massive companies with huge pipelines.

But what it's done is really just turbo-charged that market. They'll benefit of course, because they're already 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 important nowadays.

So that was all--

it wasn't that the credits by themselves are leading to these new developments. All they did was just light a rocket underneath it to really get it pumping.

And like I said, the base materials manufacturing is going to be a huge part of that. It's going to allow us, for example, when we begin processing our LFP, to source the lithium domestically.

So recently there was a news story--

I think was on 60 Minutes--

that the Salton Sea in California close to Palm Springs has over 300,000 metric tons per year of lithium. Now to put that in perspective, a couple of years ago, I think the entire global supply was 100,000.

So three times what the entire global supply was?

From a few years ago. Now the global supply is higher.

In Nevada there is evaporation ponds that are extracting lithium. Utah, they're doing liquid brine extraction. And these are all environmentally sustainable practices. It's not like coal mining.

There's a lot of recycling of the materials that go in. Re-injection of the water into the ground.

Obviously there's so many different ways that people are finding now to procure that lithium. And now, with this added focus on batteries, the US market is really going to start to develop. So by 2025, 2026, the US lithium market will be huge. And the supply constraints that exist today won't exist.

Then it'll be up to the individual companies, such as our self, KORE Power, 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 going to 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?

I mean, as you say, there were tailwinds before the Inflation Reduction Act, which is 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 thinking about this problem. And also the push for made in America is just so powerful.

I really hope that Europe does something to try and catch up, because this is--

it's restructuring the whole energy transition.

LOUIS CASO: Yeah. No, for sure. And I don't doubt that Europe will find their solution as well. I mean, there's already been so much discussion between the two countries specifically about that.

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

With essentially government intervention into markets, fiscal--

it's stimulation, right?

LOUIS CASO: Yeah.

And it's very unusual that the US is leading the way in that. That sounds like a more European thing to do.

LOUIS CASO: Sure for sure.

So 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 that demand for--

the gigawatt hour demand for storage last year was 700 gigawatt hours. And by 2030, it's going to be 4.7 terawatt hour.

The revenues last year were $85 billion, but by 2030 they'll be over $400 billion. Just US.

One hell of a market.

LOUIS CASO: Just massive.

How about building this thing? Right? So building--

the problem is, Elon made--

Elon has now set the bar, right? With building gigafactories in record time.

He's switching to LFP as well for--

I think maybe just the three.

Yeah, I saw that. I saw that. So yeah, building a factory from scratch in Carolina. North Carolina?

LOUIS CASO: South.

QUENTIN DRAPER-SCRIMSHIRE: 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 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, designed from a technical standpoint, that will inform then the construction. 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 700 potential locations, and we just got to work whittling it down. Ended up visiting seven states, 100 different sites. And South Carolina definitely rose to the top for both our needs and for just 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 the reprocessing. Albemarle, who's a big chemicals--

they actually are a lithium processor. A lithium mining company. And they're moving to South Carolina.

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

Gonna be a hot spot, North Carolina.

So we're also going to 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.

Now for the ultimate question. How much does all this cost? Right? This is one very large investment.

Yeah, well--

So I want to build--

say you and I want to go away and build a battery factory, right?

LOUIS CASO: Together.

Together. Yeah, let's do it, man.

We should.

At three gigawatt hours a year. We need a lot of space. What does it cost to--

what kind of investment is this in the US?

We'll need about $400 million.

QUENTIN DRAPER-SCRIMSHIRE: $400 million.

Beginning to end. And that's for a three gigawatt hour facility. Freyr is talking about 24 gigawatt hour.

So it's just the beginning. $400 million, just the beginning.

Just the beginning. You know, it's going be a continuous investment. But our CFO--

who is brilliant--

he's gone through these numbers. And when he first started working on it, he thought he was calculating something incorrectly. Like, this is amazingly profitable. This is like--

and the rate of return is also--

just when we pay things off, and just the speed of the project, he was very impressed.

It's a bold bet.

LOUIS CASO: I don't deal with the numbers, but it seems like 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. But that's not what's really happening here. It's hoovering up, sucking up, capital from the rest of the world.

Foreign investment--

you guys are a prime example of this. $400 million from Istanbul into the US for new capital infrastructure.

LOUIS CASO: Yeah.

Freyr is Norwegian. The factory in New York, iM3NY, 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-95 in South Carolina. But there's not a lot of jobs, so people are commuting 45 minutes, an hour one way, to go to work. And so the community is really excited about a factory like this going in. It's going to have steady employment for 575 people.

It's going to create all sorts.

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.

LOUIS CASO: It just continues to have effects.

Well, what a tailwind behind the business. And what a big, bold bet. I mean, we wish you the best of luck in it.

LOUIS CASO: Thank you.

be tracking you guys very closely. I want to ask you a couple more questions now separate to building a new gigafactory in South Carolina, right?

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

Contrarian view. Wow.

I don't know. In terms of a plug, I'll shamelessly Pomega Energy Storage Technologies.

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--

we're not part of the energy storage solution, we are the energy storage solution.

And we will be, most likely--

we're going to 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--

KORE Power might beat us to market. They're NMC. We will be the first LFP domestic manufacturing company.

So just thinking about this IRA in more detail--

sorry, we're going back into it. So does this mean that if you and I want to develop a site--

say in ERCOT, we want to develop a 100 megawatt battery, right? And we want to 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 CATL.

You can.

QUENTIN DRAPER-SCRIMSHIRE: Oh, we can?

You won't get the 10% added for domestic content.

We don't get the 10%.

LOUIS CASO: You're getting the 30%. So the 30% is just energy storage installation. It doesn't matter the source, doesn't matter the technology, doesn't matter where it's based. It's 30% 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 paired with solar. 30%.

10% 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 bit of a 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 you know, like 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.

When I met your guys team, Ed and Claire and yourself, and--

I'm 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 going to continue. It's not that--

we're going to start manufacturing these cells, it's not like, OK, this is what we do now. 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, honestly.

I bloody love this industry.

LOUIS CASO: Same.

Now for the last question. What do you or Pomega believe--

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.

[CHUCKLING]

The floor is yours.

Well, just to stay, I guess, in the sector, just so I don't say anything controversial--

Controversial is good.

LOUIS CASO: Like, really controversial. No, I think that US manufacturing of energy storage is economically viable even without the IRA.

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

Just 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 strengthen 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 I was going to ask you about this.

With the Inflation Reduction Act and that--

so you get 30% for your tax credit, and then you get an additional 10% if it's made in the USA. My initial thought was, you guys have basically got 10% of CapEx to play with to come in competitive--

LOUIS CASO: Exactly.

--against foreign suppliers.

LOUIS CASO: Exactly.

But actually what you're saying is, even without that 10%, 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 are leasing a temporary--

Oh, is this a hot--

is this hot news coming right now?

LOUIS CASO: Sort of.

Yes!

Yeah, I suppose it is. 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 '23. We will ship our cells 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 and--

QUENTIN DRAPER-SCRIMSHIRE: Does that count? In the Inflation Reduction Act?

LOUIS CASO: No, not for domestic content.

It doesn't.

LOUIS CASO: But with a Turkish cell, you're still undercutting a Chinese cell by 10% I think, with tariff. Just automatic. The Chinese cells are going to 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 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 24, 26 you said.

No, no, no. That's--

Freyr is 24. We have up to six gigawatt hour right now. For our first factory. Now the idea has always been second factory.

But we want to first get to our full six gigawatt hour capacity, begin processing our own LFP, and then we can look for--

Either way, eye 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.

Any time you're in the D.C. area. Yeah. And South Carolina, as well.

[THEME MUSIC]

We are now--

we're local South Carolinians.

Awesome. And I just want to say a massive thank you for you flying down and taking the time to be on the podcast.

It was a pleasure. This was great.

It's been a delight. And if you want to find out about Louis and Pomega, 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 drives us on to carry on going. Thank you very much. And see you soon.

[MUSIC PLAYING]