"We used to pray for a Saturday off. Now we just pray that we will get to work at all." —
Can a power systems company recharge a region?
The past decade is littered with allegedly innovative US battery-making ventures that went belly up despite government support. It's also littered with workers from the gradually declining coal industry who are tired of government support and just want jobs.
Energy storage company EnerBlü aims to change both of those dynamics, bring manufacturing back from China and move its HQ from high-cost California with one fell swoop into Kentucky.
The Riverside, California–based company in December announced it was accepting a multimillion-dollar, multi-year incentive package from the Commonwealth of Kentucky in exchange for moving its HQ to Lexington, creating a manufacturing campus in the Eastern Kentucky town of Pikeville and investing $412 million overall in the state.
The corporate headquarters, R&D, step-up line and labs in Lexington will be home to 110 new jobs, while the 1-million-sq.-ft. complex in Pikeville will create 875 jobs. The facility will make high-powered, high-cost lithium-titanate (LTO) batteries used in transit, aerospace and military vehicles, among other applications.
The Kentucky Economic Development Finance Authority (KEDFA) preliminarily approved the company for tax incentives up to $27.5 million through the Kentucky Business Investment program for the Pikeville project and up to $2.5 million for the Lexington location. According to Louisville's Courier-Journal, other states in the running for the investment included Idaho, Nevada, Utah and Washington. But a big move east happened instead.
"We are excited that EnerBlü has chosen Kentucky as home for its headquarters, research and development facility, and for the first lithium titanate battery facility in the United States," said Kentucky Governor Matt Bevin. "EnerBlü will help power our nation's transportation and defense industries, while providing job opportunities that will harness the highly skilled workforce of Eastern Kentucky."
The LTO is a rechargeable battery with a faster charge than other lithium-ion batteries, and provides high currents when necessary. Currently, more than 70 percent of the world’s LTO production is located in China. The Pikeville facility will be the first LTO factory in the US.
EnerBlü leaders noted the state’s logistical advantage of being within a day’s drive of 65 percent of the US population, the availability of a trained workforce in Eastern Kentucky and low costs for industrial power in the region.
Revitalizing a Region
That power base is still mostly coal-fired, but the area economy isn't so much anymore.
Just as Google recently chose to put a renewables-powered data center on the site of a former coal-burning power plant in Alabama, EnerBlü isn't missing a powerful opportunity for symbolism: The Pikeville campus will rise on the site of the former Marion Branch coal mine at Kentucky Enterprise Industrial Park, now rechristened as Energy Innovation Park.
According to One East Kentucky, there are over 10,000 skilled workers in the area who are ready and willing to work.
The company says it will partner with the University of Pikeville, the University of Kentucky in Lexington, and with other colleges and universities for research, materials science and technology development through incubation. EnerBlü says it will serve a global market from Kentucky that includes government, commercial and military customers, with interest secured in the North America, Southeast Asia, the Middle East and North Africa (MENA) and India.
"Creating a team that is building something meaningful that can benefit both the local and global community is not only exciting, but very meaningful to us," stated Michael Weber, EnerBlü executive chairman. "You cannot imagine how thrilling it is to play a part in helping revitalize a region and put coal miners back to work through retraining and durable jobs. It is tremendously gratifying to be more than just a company that sells products, but to also make an impact on people's lives."
EnerBlü is focused on electric transportation, PV hybrid microgrid, power grid and genset hybridization, and consists of three divisions:
The facilities built by EnerBlü will include a gigafactory for its eLTO™ batteries; production of the AESU System and other "grid-tied" products; and the manufacturing of its eTransport commercial vehicles. EnerBlü also expects to serve as the anchor to attract other firms working in the energy, power and transport sectors.
"The Commonwealth of Kentucky provides an innovative company like EnerBlü with the resources and support necessary for success," said Daniel Elliott, EnerBlü president and CEO. "It has a highly skilled workforce with strong understanding of direct current (DC) power, complex machinery, and robotics' operations in production environments."
That workforce also includes people whose past has nothing to do with working in a mine. An online comment on the web page devoted to EnerBlü's announcement put it starkly and clearly:
"I don't expect you to know you are not from here but coal miners have been giving to [sic] much special treatment," said the man eager to fill one of the coming job slots. "There is lots of people who need work not just laid off coal miners, I ask that anything you do to help coal miners should be open to the public. I ask please consider us all — for every one laid off coal miner there are dozens more that are not coal miners or even been giving a chance at a good life."
In 2016, Boyette Strategic Advisors completed a nine-month analysis of east Kentucky's workforce that featured these findings:
Chuck Sexton, president & CEO of regional economic development organization One East Kentucky, says the region is ready for EnerBlü and a whole lot more.
"As a regional organization, we have multiple industrial parks and available buildings. If you look at the location of east Kentucky compared to industry clusters, combined with the skill sets of our 10,000 available workers from the coal industry, one major industry sector rises to the top — transportation manufacturing," a sector including automotive and aerospace that is already well established in the state. "We have announced two heavy truck manufacturers in the past 18 months as well as an aviation maintenance firm," Sexton says of Kentucky's momentum. "And EnerBlü will be producing its all-electric, zero-emission Class 4 ~ 6 commercial trucks, shuttle buses and school buses in East Kentucky as well. Our focus will continue to be on promoting the fact that we have the available, skilled workforce for these industries in a location that allows them to access the majority of raw materials and customers within an eight-hour drive time."
Checking All the Boxes
About eight years ago, Kentucky was one of many locations eager to host new battery manufacturing and R&D investments, and hopes were high for the Kentucky-Argonne Battery Manufacturing Research and Development Center, a collaboration among the state, Argonne National Laboratory in Chicago, the University of Kentucky and the University of Louisville that would help build a cluster around new and improved lithium-ion batteries.
The coalition stalled out, and in 2016 the state stopped paying the contract of the organization's single remaining employee in Lexington.
With that baggage and the accumulation of other batteries-gone-bad stories from around the country (see A123 Systems), how did community and state leaders approach due diligence this time around?
"Stakeholders at all levels were involved with EnerBlü’s location," says One East Kentucky's Chuck Sexton. "Governor Bevin’s administration, the Kentucky Cabinet for Economic Development, the City of Pikeville, AEP Kentucky Power and One East Kentucky all conducted due diligence regarding EnerBlü and their executive team, including trips to their facility in Riverside. Most impressive were CEO Dan Elliott and Executive Chairman Michael Weber. Mr. Elliott’s background in developing this battery technology, as well as the largest company in the world currently manufacturing these type of batteries, certainly assisted our diligence process.
"It is worth noting that while many battery companies have come and gone, EnerBlü’s market is much different," says Sexton. "First and foremost, EnerBlü’s technology is highly sought after in the energy sector. Their power storage batteries, which are not the same as what powers an electric car, will assist in mitigating intermittency problems created by renewable energy sources on the grid. Most electric power companies in the United States are currently seeking a solution to this problem. Second, and more importantly, EnerBlü will manufacture more than just a battery. Their business model will include manufacturing both the battery as well as the end product. For example, these batteries may be used in EnerBlü’s Advanced Energy Storage Units (AESU) as part of the power supply for US military forward operating bases and other military deployments. EnerBlü will manufacture the battery as well as the hybrid generator system as a total package. This reduces susceptibility to thin margins on batteries and products, allowing EnerBlü the ability to compete within the marketplace."
Reporting by the Courier-Journal cited EnerBlü's CEO Elliott's assertion that "the company has commitments to purchase twice what Pikeville should turn out annually after it reaches full capacity."
Sexton says the most important piece of due diligence for area leaders was the confidence of American Electric Power and Kentucky Power. "Their leadership team is currently seeking this type of technology for use in the grid, and after reviewing many different types of solutions, their engineers were confident that EnerBlü could deliver the best product in the US today."
"Kentucky Power is excited by this opportunity for the community, not only for the jobs, but also for the location of such a promising energy innovation company right here in eastern Kentucky," said Matt Satterwhite, president and COO of Kentucky Power, at the December announcement. "This is further proof that eastern Kentucky has the highly skilled available workforce to attract top industry and further economic development in the region."
Back on the Mountain
The work is already under way. "EnerBlü is poised to have multiple contracts in place for their products already, with construction on their facility set to begin within the next three months," says Sexton. "They are also fast-tracking their headquarters and prep plant in Lexington to fill orders in the interim."
"EnerBlü is the future of energy, and I am thrilled to be a part of it," said Eastern Kentucky native Boyd Holbrook, an actor, philanthropist and EnerBlü investor present at the announcement. "Having grown up in Eastern Kentucky myself, EnerBlü will be a cornerstone for the region to reclaim its position as the energy leader for the US and expand that to be a global new-energy leader for the 21st Century. And most importantly for the people I grew up with, EnerBlü represents a brighter economic future for coal miners, veterans and their families."
Pikeville Mayor Jimmy Carter compared the investment to another seminal era in the region's history: the $77-million Cut-Through project that ran from 1973 to 1987 and moved 18 million cubic yards of earth to make way for a highway, interchanges and new development.
“This is a revolutionary announcement for the City of Pikeville and all of Eastern Kentucky,” said Carter in December. “It is the culmination of years of hard work by the Pikeville City Commission and many others. Pikeville is known as the ‘City that Moves Mountains’ and much like the Cut Through project, EnerBlü will change the landscape of Pikeville and Eastern Kentucky."