Form Energy says $760 million project will pay off for West Virginia

Form Energy’s cutting-edge battery factory represents a major investment in West Virginia — and also a major investment by West Virginians.

The $760 million initial phase on the site of the old Weirton steel mill in Hancock County is meant to produce 750 well-paying jobs. The iron-air battery manufacturing plant is financed by millions of dollars of private investments, but there are also millions of public dollars going toward the project.

West Virginia legislators will soon consider whether that’s a good deal as they vote on whether to allocate taxpayer dollars to support the factory’s infrastructure.

Mateo Jaramillo

“As to whether or not it’s a good deal for West Virginians, I certainly think it is. I think it’s a very fair deal,” Form Energy chief executive Mateo Jaramillo said in a telephone interview. “And on top of that, the people responsible for economic development within West Virginia also believe that.

“We’ve been through a very rigorous process with them. They’ve subjected us to due diligence on our people, on our technology, on our investors, on our commercialization pathways.”

The West Virginia Economic Development Authority voted to allocate $75 million toward the purchase of land and the construction of buildings in Weirton. Another $215 million in allocations by the Legislature are also anticipated for the project.

The deal means West Virginia will own the building and land, and Form Energy will lease it back. The property would transfer to Form no sooner than five years and only if the company employs 750 workers. The deal calls for workers making at least $63,000 a year in average salary.

“If we hire, if we bring those 750 jobs, then we get the benefit of those $290 million. But if we don’t then we don’t receive that benefit,” Jaramillo said.

The site, with its deep history, needs significant remediation.

“That site has been getting remediated for the last few years,” Jaramillo said. “The old works had to be taken down, had to be cleaned up. It’s going through an EPA clearance now, and so there’s a lot of work to be done to that site. So to make that site acceptable to any industry, Form or anybody else.

“There’s a road that needs to get built. There’s a lot of leveling that has to happen, and you’ve got to put in the basic infrastructures that are required to set up any industry — power and the buildings themselves.”

Much of the public money goes toward that infrastructure preparation, he said. Form is responsible for the equipment and material inside the building.

Form Energy expects to start construction of its Weirton factory in 2023 and begin manufacturing iron-air battery systems in 2024 for broad commercialization.

The company started its site selection process a year ago and looked at dozens of states and hundreds of sites. Over the first six months, Form narrowed the possibilities to the top three sites. “Weirton, West Virginia was in the top handful of those,” Jaramillo said, saying the location stood out because of its proximity to barge access, rail line access and accessible highway.

“And on top of that, there’s a deep history of utilizing iron for finished goods there, of course in the steel-making production that was happening at Weirton for a long time.”

This is a rendering of what the Form Energy plant could look like in Weirton.

The company says that it is “developing, manufacturing, and commercializing a new class of cost-effective, multi-day energy storage systems that will enable a reliable and fully renewable electric grid year-round.”

The company’s battery technology operates through a “reversible rusting” process. The battery breathes in oxygen from the air and converts iron metal to rust. When the battery charges, the reverse happens. An electrical current converts the rust back to iron, and the battery breathes out oxygen.

Among Form Energy’s financial backers is Breakthrough Energy Ventures, which includes billionaire investors like Bill Gates, Jeff Bezos and Richard Branson. Gates has touted the company’s work “creating a new class of batteries that would provide long-duration storage at a lower cost than lithium ion batteries.”

When Gates visited West Virginia last month with Senator Joe Manchin, the joint appearance made clear that Form Energy will benefit significantly from incentives under the federal Inflation Reduction Act, which lays out tax credits for battery storage and renewables for a decade.

So it’s a private development with major public resources.

Pat McGeehan

Delegate Pat McGeehan, a Republican who represents Hancock County communities bordering the plant site, has publicly raised questions about the use of public dollars as well as about the presence of any foreign investors in Form Energy’s financial mix. He wants to know if the project is a gamble for the state.

“I think there should be some questions that are answered, and there should be some concerns right from the get-go,” McGeehan said this week. “Form Energy is a startup company. It’s a non-traditional startup company, and those are typically much higher risk.”

Form Energy’s Jaramillo said the private investment is solid. He cited raising $800 million in private capital.

“It represents a fairly broad array of investors. There’s no single investor — in fact, there’s no single two investors that really determine Form. A relatively small percentage is owned by the largest investors, and so that’s common between a couple of them. So we have a coalition of deep-pocketed and capable investors, frankly some of the best investors in the world.

“These are entities that have invested in major transitions in the past and know energy investments as well. As far as investors who are aligned with West Virginians, these are investors who know how to stand up successful businesses that bring jobs to regions. That’s why they’ve invested in Form. They believe we are going to be successful and we are going to deliver on the promises we’ve made.”

Jaramillo noted that the economy is global and that money is fluid. But in responding to the question of foreign investment, he specifically noted that Saudi Aramco, officially the Saudi Arabian Oil Company, was an early investor that is now out. Of an initial investment of $800 million, the Saudi Aramco investment represented a million.

“It became clear that we were not aligned as entities, and they were bought out by another investor a couple of years ago,” Jaramillo said. “So they are no longer an investor in the company.”

Of other investors, Jaramillo offered general assurance. “As far as the other investors that may have connections to other entities, there is no aspect of control at all, and we do not have any undue influence by any entity into Form.”

He described a review  by the Committee on Foreign Investment in the United States, “and we subject all of our investors to very rigorous reviews and feel very confident that we’re not subject to any undue influence from anybody, frankly, to run our business in the best interests of our employees.”

Ryan Weld

Senate Majority Whip Ryan Weld, a Republican from Brooke County whose district includes the plant’s development area, said he is comfortable with Form Energy’s vision.

Weld suggested the Form Energy development on the initial 55 acres could serve as an anchor for additional investment by other companies on the remaining full 1,300-acre property.

“The value and what this means to the community can’t be understated,” Weld said from his office at the Capitol, where his office includes a vintage panoramic photograph of the industrial site to be developed.

“We’re talking about a massive investment of, at a minimum, 750 jobs in an area like downtown Weirton and what that would mean for the community.”

Weld said he is assured that the state will initially own the property until Form Energy hits its employment goals. He thinks the state investment is worthwhile.

“I get that this isn’t the way the world worked 30, 40, 50, 60 years ago, but we live in a world now where if the state of West Virginia does not provide this financial incentive package to a business like Form then the state of Pennsylvania will. I know that Pennsylvania is ready and willing to take Form Energy and provide them with a very sizable financial package. I know there are other states as well.”

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