The European Investment Bank issued a €350 million loan on Thursday (30 July) to a Swedish company that hopes to corner a significant share of the global battery market by building the greenest power packs available.
Northvolt is currently constructing its gigafactory in northern Sweden, where the firm intends to use 100% renewable energy and locally-sourced raw materials to manufacture lithium-ion battery cells, predominantly for use in electric vehicles.
The EIB already stumped up funding for a demonstrator project back in 2018, which did enough to convince the Luxembourg-based lender to team up with the EU’s European Fund for Strategic Investments (EFSI) on a much larger loan.
“I believe that EIB financing support for Northvolt has been a textbook example of how our financial and technical due diligence can help crowd in private investors to visionary projects,” said the bank’s vice-president, Andrew McDowell.
The bank is a big fan of battery projects and back in May, McDowell said that the EIB’s financing would top €1 billion this year. If all the investments come to fruition, Europe’s production capacity will more than double.
According to Northvolt’s plans, the factory will have an initial annual production capacity of 16 gigawatt-hours, which will be ramped up to 40 GWh. For comparison, China, the top global producer by volume, churned out 230 GWh in 2019.
European Commission Vice-President Maroš Šefčovič, who oversees the bloc’s Battery Alliance, said the EU is on course to show “global leadership” in the sector thanks to close collaboration between his institution and the EIB.
“By supporting this state-of-the-art project, we also confirm our resolve to boost Europe’s resilience and strategic autonomy in key industries and technologies,” the Slovak official said, citing the firm’s pursuit of a “minimal carbon footprint”.
Northvolt is quickly building a reputation as the EU’s go-to company for home-grown batteries, despite not yet having a fully-functional assembly line. In mid-July, BMW inked a €2 billion supply deal, while Volkswagen has agreed to fund a factory in northern Germany.
Battery regulation still needs work though and later this year, the bloc’s policymakers are due to launch a review of the rules governing power pack construction and recycling standards.