The American Battery Factory has just held a ceremonial groundbreaking on the site of its proposed $1 billion advanced battery “gigafactory” south of Tucson that will eventually employ about 1,000 workers if the company's plans come to fruition.
A rendering of the American Battery plant planned for Tucson.
Photo courtesy of American Battery Factory, Inc.
But the company has made progress on several fronts, including factory design, manufacturing automation and on-site equipment, and plans to begin full-scale construction this fall.
The company recently announced that the new factory will utilize Honeywell's latest artificial intelligence and automated manufacturing equipment to produce the company's proprietary lithium iron phosphate battery cells.
The battery startup also recently signed an industrial power supply agreement with Tucson Power for its factory site south of Tucson Airport, subject to approval by state utility regulators.
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American Battery Factory (ABF), a spinoff from Utah-based battery pack maker Lion Energy, plans to invest $1.2 billion in capital and create about 1,000 new jobs when construction is complete at its planned Tucson manufacturing complex on its research campus, which broke ground on the first phase of the plant in October last year.
ABF, which will be headquartered in Tucson, announced it has completed the design studies required for the first phase of its planned 2 million-square-foot manufacturing complex.
The company plans to build a single modular, rapidly deployable, fabric-covered building with a concrete foundation on its factory grounds at the Pima County Aerospace Research Campus.
ABF plans to create a network of such “gigafactories” – a term coined by electric car maker Tesla to refer to its battery factories – to make long-life cells for portable battery packs and storage systems.
The $1 billion Gigafactory is planned to employ 1,000 workers in Tucson.
Courtesy of American Battery Factory
Batteries made from lithium iron phosphate, commonly called lithium iron phosphate (LFP), generally have higher capacity and are less likely to catch fire than the most common lithium-ion batteries made from nickel and cobalt, and ABF says their flat “prismatic” cell design delivers more power per inch than cylindrical cells.
The first ABF Gigafactory, targeted for completion in 2025, will include the company's headquarters, research, development and innovation center, as well as a 1,500-foot-long initial factory module capable of producing 20 gigawatt-hours of battery cells per year, according to the company.
In early June, tech giant Honeywell announced it was partnering with ABF to deploy new AI software for industrial automation at its first factory in Tucson.
Honeywell says its Battery Manufacturing Excellence Platform is designed to optimize Gigafactory operations from day one by improving battery cell yields and speeding up factory ramp-up.
ABF announced last fall that Honeywell, a company that has been providing automated manufacturing equipment for more than 50 years, would supply equipment for the new factory.
American Battery Factory President John Kemm said Honeywell's battery MXP and its automation capabilities will help the company quickly establish the foundation for the gigafactory's network.
“This solution is critical to our manufacturing operations because it not only reduces waste and enables us to scale quickly, but also ensures we can meet U.S. and international demand for high-quality lithium iron phosphate batteries as we prepare for the unprecedented surge expected over the next decade,” Kem said.
Honeywell will work with ABF's production line partner, Wuxi LEAD Intelligent Equipment Co., Ltd. (LEAD), a leading manufacturer of energy equipment, to build and install a fully automated production line.
ABF is one of many companies planning to take advantage of new federal tax credits under the Inflation Control Act aimed at promoting new energy manufacturing in the U.S., including renewable energy and batteries, to reduce China's dominance amid a cooling in relations between the two countries.
The company is also looking to “onshore” its supply chain to North America, and has already signed a long-term supply contract with a Canadian company for lithium iron phosphate cathode material, as well as partnering with a U.S.-based company for a material used to separate cells in batteries.
ABF has also received an advance order for 18 gigawatt hours of LFP battery cells from the company's incubator, Lion Energy.
TEP Power Trading
In early June, Tucson Electric asked the Arizona Corporation Commission to approve a special contract to provide power to ABF.
While some details are redacted in public documents submitted to the commission, the agreement calls for TEP to provide 46-kilovolt high-voltage service to ABF during the first phase of plant construction, which is scheduled to be completed by Jan. 15, 2025, and for TEP to provide 138-kilovolt service in the next construction phase.
Factories in the first phase will be subject to TEP's Bulk Power Hours tariff, but will move to Bulk Power Hours – High Voltage in the second phase.
These rate plans feature usage-based charges based on total consumption and so-called demand charges based on peak usage, resulting in higher rates in the summer and during peak demand periods.
ABF will receive undisclosed discounts on energy and demand charges under both rate plans, according to redacted copies of the contract.
About 20 of TEP's industrial customers currently use the bulk power tariff, TEP spokesman Joe Barrios said.
But TEP argues that such large electricity users benefit all ratepayers because they have high “load factors,” a measure of efficient energy use calculated by dividing the average load over a given period by the peak load.
“Customers with very high load factors help smooth out the load profile across the system, reducing the total cost it costs TEPs to serve all their customers. As a result, TEPs can operate their generation assets in a more optimal manner while spreading their fixed costs over more energy,” the company said.
Nationwide, including in TEP jurisdictions, industrial utility customers generally have lower overall electricity rates than residential or small business customers, who utilities say have higher service costs.
According to the U.S. Energy Information Administration, TEP's more than 500 industrial customers paid an average of 8.64 cents per kilowatt-hour in 2022, while TEP's residential customers paid 13.73 cents per kilowatt-hour.
According to the agreement, ABF will also have to cover the costs of upgrading the facility's electrical equipment, will have to comply with undisclosed minimum load requirements and will be required to provide an undisclosed letter of credit to TEP as collateral.
TEP said in its filing with ACC that the special agreement with ABF substantially mirrors the package it offered to attract the company to the Tucson area and that the company is ready to welcome new customers.
In January, TEP received ACC approval for a three-mile transmission line connecting an existing TEP 138kv line to a proposed substation at the Aerospace Research Campus.
Oro Valley Biotech Companies
A Nevada-based biotechnology startup has won a sponsored spot in the University of Arizona Innovation Center's Oro Valley tech startup incubator program.
CellMedics Inc. will join UACI’s biotech-focused hub in Oro Valley as the winner of a “sponsored launch” sponsored by the Oro Valley Chamber of Commerce and the City of Oro Valley.
The UACI incubation program includes resources, facilities, services and expert mentorship to grow your business.
Privately held Cellmedics holds multiple patents for topical, transdermal (skin) and ophthalmic (eye) drug delivery systems for difficult-to-deliver molecular drugs and biologics, and has already developed formulations to treat skin diseases, arthritis, chronic pain and onychomycosis.
CellMedics CEO Scott Shapiro, a University of Arizona alumnus, has signed a collaborative research agreement with the university and is working with University of Arizona pharmacologist Todd Vanderahoff as principal investigator on development, testing and grant applications.
July Aviation Conference
The Arizona Technology Council will hold its 12th annual Aerospace, Aviation, Defense and Manufacturing Conference on Friday, July 12, from noon to 6 p.m., at the Pima Community College Aviation Technology Center (7211 S. Park Ave.).
The program will feature sponsored exhibits and panels on Arizona's aerospace industry, gaps and challenges in aerospace growth efforts, recent innovations in manufacturing, and more.
Admission to the meeting is $35 for council members and $50 for non-members. For more information or to register, visit tucne.ws/aero24.
Contact senior reporter David Wichner at dwichner@tucson.com or 520-573-4181. Twitter: @dwichner.
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