KORE Power expected to receive $850 million loan for $1 billion Phoenix metro battery factory

Coeur D'alene, Idaho-based KORE Power Inc. is expected to receive an $850 million loan from the U.S. Department of Energy for its new battery factory in the Phoenix metro.

The battery cell developer announced Friday that it has received a conditional commitment for the loan through the department's Advanced Technology Vehicles Manufacturing (ATVM) program, which provides loans for eligible vehicle and qualifying components manufacturing.

The funds will be put toward the construction of KORE Power's battery cell manufacturing facility called KOREPlex, which will total 1.3 million square feet in its first phase near State Route 85 and Baseline Road in Buckeye, about 40 minutes west of downtown Phoenix.

The first phase will represent an investment of more than $1 billion and produce 6 gigawatt-hours of high-density cells to support electric vehicles and energy storage systems in the U.S. using nickel manganese cobalt and lithium-ion iron phosphate.

The company has been working through the application process for the federal program for the past two years and has to meet certain requirements to close on the loan, which is expected to happen sometime this year.

Last year, the Inflation Reduction Act (IRA) that was signed into law removed the $25 billion cap on the total amount of ATVM loans that were established under the Energy Independence and Security Act of 2007 and appropriated $3 billion that will remain available through 2028 for the costs of ATVM loans, according to the Department of Energy.

"The goal of this legislation at the IRA level and associating processes and programs is to make sure we're bringing U.S. companies with U.S. product to deliver those products to U.S. users," Jay Bellows, president of KORE Power, told the Business Journal. "This has been our direction from the very beginning, is having U.S. battery manufacturing here so we're not dependent on the rest of the world."

The new battery factory has been in the works for several years including a two year-long search for a site. KORE started site work on its property in Buckeye along State Route 85 at the end of last year but now plans to move forward with vertical construction after the massive federal loan is secured. Construction of the facility will bring 700 jobs and is being led by Yates Construction.

KOREPlex is expected to start production by the end of 2024 or early 2025 and could eventually expand to 2 million square feet and 18 gigawatt-hours annually as demand for product increases.

"We're really focused on getting this first phase done. In this first phase, too, it brings in a lot of foundational pieces we need. That's electricity, water, gas," Bellows said. "That helps support the additional growth that we do on top of that."

Once the facility is completed, Bellows said they also expect to see suppliers and partners expand to the Phoenix area, including for recycling batteries and the three key components of developing a battery called anode, cathode and electrolyte.

The company said it also has a goal to domesticate sourcing its materials as much as possible and will otherwise look to free trade regions for minerals needed to manufacture the batteries.

The company said it has been working with the local education system to start training and preparing a workforce to support its operations. The first phase of the project will employ about 1,250 people and could expand to 3,000 as the facility grows.

It has hired a management team to lead the Buckeye factory and expects the hiring process to start within the next year for the majority of its positions.

The federal loan will also add to the $150 million in financing the company is expected to receive from lead investor Siemens Financial Services as well as Quanta Services, Nidec Motor Corp., Honeywell Ventures, Trog Hawley Capital and others, some of which could be customers for the new KORE Power factory in Buckeye.

Siemens Smart Infrastructure was also named as a technology provider for KORE Power's Buckeye plant earlier this year. Siemens will provide electrical infrastructure and energy management that automates the facility's production operations.

More battery manufacturers have made plans to build factories in Arizona, including LG Energy Solution's $5.5 billion facility in Queen Creek and two others that are building or expanding facilities in the Tucson area.

KORE Power said it supports and serves the utility, commercial, industrial and e-mobility industries including electric vehicle makers and charging infrastructure companies. It also recently announced offtake for energy storage projects in Arkansas and Illinois and currently has a manufacturing plant in China.

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