A groundbreaking ceremony was held on Feb. 7 for a South Carolina factory that plans to manufacture lithium-ion battery cells exclusively for grid-scale energy storage applications.

The plant will be operated by Pomega Energy Storage Technologies, a subsidiary of Kontrolmatik Technologies, with an initial production capacity of 3 GWh, the company said.

The 500,000-sq.-ft. facility is being built in Colleton County and is expected to begin production in mid-2024. The company plans to later increase capacity to 6 GWh and has secured land to expand operations.

Pomega will invest $300 million in upfront capital expenditures in the new facility.

GO DEEPER: FlexGen CCO Yann Brandt joined Episode 35 of the Factor This! podcast to answer your burning questions about energy storage. Subscribe wherever you get your podcasts.

The announcement should come as welcome news to the energy storage industry, which is in steep competition with electric vehicles for battery supplies.

Pomega will manufacture lithium iron phosphate cells designed exclusively for North American grid-scale energy storage applications. They will also manufacture and assemble turnkey battery energy storage systems, including modules, cabinets and final containerized energy storage solutions.

The company said it has already begun signing offtake agreements for its future capacity

As for the expected production tax credits expected to be collected as part of the Inflation Reduction Act, the calculation is based on an annual PTC of $35/KWh for battery cells and $45/KWh for modules.

Taking into account the company’s projected product mix for a total of 3 GWh of PTC for 2024-2029, phasing out at 25% per year between 2030-2032, the total estimated amount is $916 million.