The Inflation Reduction Act (IRA), signed into law just more than a one year ago, improves the economics for battery energy storage projects in the U.S. Standalone storage projects are now eligible for a 30% investment tax credit (ITC), a figure that could reach 70% with additional incentives around the use of domestic equipment, and for installations designed to benefit lower-income communities.
Energy storage systems previously were only available for tax credits when paired with a renewable energy resource, such as solar. Some analysts have said the IRA could spur as much as $1 trillion in energy storage investments over the next decade, as the legislation puts incentives in place through 2032. It also provides certainty to developers and investors when it comes to financing installations.
Of particular interest to many in the energy storage space are incentives to boost U.S. manufacturing of energy storage components, such as batteries. It’s a trend in U.S. energy policy that was earlier supported by the Infrastructure Investment and Jobs Act, passed in 2021. That move to provide more economic incentives for U.S. production of equipment caught the eye of foreign companies that saw an opportunity to either expand their current U.S. manufacturing, or build new factories, often through establishing U.S.-based subsidiaries.
Pomega Energy Storage Technologies is one of those subsidiaries. The Virginia-based company, a subsidiary of Turkey’s Kontrolmatik Technologies, is building a battery manufacturing plant in Colleton County, South Carolina, that is expected to begin producing equipment sometime next year. Bahadir Yetki, CEO-USA for Kontrolmatik Technologies and Pomega Energy Storage Technologies, sat down with POWER earlier this year to discuss his company’s U.S. plans, and more recently answered questions from POWER about how his group is navigating the U.S. and global markets for battery energy storage.
POWER: Why did Pomega build a U.S. manufacturing facility? Was it solely related to tax credits from the IRA?
Yetki: Even before the IRA, it was clear that the United States was going to be a huge growth market for energy storage. Pomega was already beginning construction of its first lithium-ion battery and energy storage systems factory in Turkey when it decided to establish Pomega in the U.S. in December of 2021. Our site search for the U.S. factory began in April 2022—well before passage of the IRA in August of that year (we chose South Carolina after considering sites nationwide). The IRA pushed us to increase the size of our project (from 3 GWh to 6 GWh), but it was not what spurred our decision to build in the U.S.
POWER: How many jobs will the South Carolina facility create?
Yetki: In advance of our factory construction being complete, we made the decision to begin manufacturing cells for our residential systems in an existing facility close to the construction site. We will therefore have two facilities in Colleton County. The first facility, for our residential systems, will create between 50-100 jobs, while our BESS (battery energy storage system) factory will create 575 new jobs.
POWER: What products will Pomega manufacture in South Carolina?
Yetki: Pomega in South Carolina will manufacture complete battery energy storage systems—meaning everything from the lithium-ion battery cell, the modules, the racks, and the turnkey BESS. As I mentioned before, we will also manufacture residential battery storage systems from a dedicated facility, including the batteries and the enclosures. We are unique in the sense that we are manufacturing our own lithium-ion cells, where most energy storage companies source cells from abroad.
POWER: How important is Pomega’s strategy to build lithium-ion batteries dedicated exclusively to the domestic utility-scale energy storage market, as opposed to the electric vehicle (EV) sector?
Yetki: It’s very important to us. In a rapidly growing market with many players, this is a differentiator for us. When you look at the gigawatt-hours of new battery manufacturing capacity slated to come online in the U.S. in the coming years, nearly all of it is either backed by legacy automakers or destined for the EV space. Even most of the companies who are planning on serving the stationary storage space are also focusing part of their efforts on the EV market. This means that in a competition for limited resources, the energy storage space is getting squeezed. Pomega will be the only company in the U.S. manufacturing exclusively for the stationary storage market, and that matters to our customers and partners.
POWER: How does Pomega look at the U.S. energy storage market—perhaps in terms of growth potential—as well as the global market for energy storage?
Yetki: [The] U.S. energy storage market is growing exponentially. It does not only promise an enormous depth but also sustainability and longevity. The same is valid for most of the global markets lead by Europe and Asia. The world needs energy storage to get closer to net-zero goals as soon as possible and the markets are responding very well.
POWER: How does the U.S. energy storage market compare to Europe and elsewhere?
Yetki: The U.S. market has a much deeper potential and faster growth rate compared with any other market. It has a strong booster such as IRA to support the growth and will be self-sufficient in a short time which will not be the case for European market for many years to come, if ever.
POWER: What are the major issues impacting the energy storage market?
Yetki: From our perspective, the biggest concern is the availability of all the base materials we need to build our batteries—most notably the lithium. Even this issue, however, isn’t a huge concern since existing untapped lithium deposits around the world (including in the U.S.) dwarf the current capacity being produced.
New deposits will come online at a rapid pace, and this will only accelerate with the push the IRA provided. On the other hand, technology is never static. While LFP is the best chemistry for energy storage today, this may not be the case in 20, 10, even five years. New chemistries and battery technologies will develop, and a challenge for companies like Pomega will be to make sure that they do not keep up with evolving science. We have placed a high importance on research and development, and are partnering with leading universities in South Carolina to continuously research battery chemistries and systems applications.
POWER: Would you characterize Pomega as a subsidiary of Kontrolmatik Technologies?
Yetki: Pomega is a subsidiary of Kontrolmatik, yes. Kontrolmatik, our parent company, has been in business as an EPC (engineering, procurement, construction) contractor and systems integrator for power generation installations since 2007. Over that time, it has invested heavily into research and development, spinning off several subsidiaries. Plan-S is a satellite company with several satellites currently in orbit. Controlix is an Internet of Things company that designs control sensors, which have been deployed at the new Istanbul airport. McFly Robotics designs and manufactures robotic arms.
Pomega is Kontrolmatik’s battery and energy storage subsidiary. Pomega in the USA is a U.S. entity, formed here, headquartered in Virginia, and focused on the U.S. market.
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).