The support follows an EIB loan to the Swedish company guaranteed by the InnovFin-EU finance for innovators initiative to build a battery demonstration plant. Once the new loan agreement is concluded, the forecast EUR 350 million in new financing would be supported by the European Fund for Strategic Investments (EFSI).
In 2014, the EU produced just 2 % of the world’s batteries and the rise of electric vehicles is making it increasingly reliant on imports from countries like China, Japan and South Korea.
‘Batteries are a strategic component of European competitiveness and to capture a new European market worth EUR 250 billion annually as of 2025, we need to act fast,’ says Maroš Šefčovič, European Commission Vice-President for the Energy Union, in announcing the financing.
Northvolt is contributing to the much-needed increase in European battery production with its construction of the Northvolt Ett lithium-ion battery cell factory in Skellefteå, north-east Sweden, which will employ some 2 500 people. The batteries from the factory are intended for use in automotive, grid storage, and industrial and portable applications.
In parallel, Northvolt is building a demonstration plant in Västerås, near Stockholm, where the batteries can be tested. Work on both plants began in 2018, followed by testing with industrial partners in 2019. Mass production is set to start in 2020.
‘The EIB and the Commission are strategic partners under the EU Battery Alliance,’ adds Šefčovič. ‘I welcome the significant support proposed by the EIB to Northvolt gigafactory as a stepping-stone towards building a competitive, sustainable and innovative value chain, with battery cells manufactured at scale, here, in Europe. Our two institutions are working closely with the industry and key Member States to put the EU on a firm path towards global leadership in this rapidly expanding sector.’
CEO Peter Carlsson had the idea for a battery factory while looking for a green venture in which he could use his experience from several years in the USA as head of supply chain with electric car maker Tesla. In 2017, he returned to Sweden, which is a good base for Northvolt due to its deposits of essential raw materials, such as graphite and nickel, cheap hydroelectricity and modern ports for exports.
Northvolt plans to improve the energy efficiency, energy density and power of batteries. Total capacity of its annual output will reach 32 gigawatt hours by 2023. The company also hopes to recycle batteries, thereby reducing use of minerals like cobalt.
“Renewable energy storage is the key to a carbon-neutral society, and batteries are the key to getting there,” says Carlsson. “I’m trying to show Europe that carbon-free energy can be better stored and distributed with higher quality and lower costs, and made more sustainable.”