European lithium-ion battery developer and manufacturer, Northvolt, has successfully secured a substantial non-recourse project financing package of US$5 billion (€4.6 billion) from various EU and Nordic institutions.The funding, inclusive of a refinancing component from a previous US$1.6 billion package obtained last year, is earmarked for the expansion of cathode and cell production (Northvolt Ett) and recycling facilities (Revolt Ett) located in northern Sweden.
This financial arrangement involves contributions from 23 commercial banks, as well as the European Union’s European Investment Bank (EIB) and the Nordic Investment Bank (NIB), an international finance institution established by the five Nordic countries.To mitigate risk, a significant portion of the package is backed by guarantees and direct funding from entities such as the Swedish National Debt Office, Euler Hermes, the Export-Import Bank of Korea (KEXIM), Nippon Export and Investment Insurance (NEXI), and the Korea Trade Insurance Corporation (K-Sure).
This funding comes at a crucial juncture when the emerging lithium-ion cell and material manufacturing sector in Europe faces challenges from the US market. The US has introduced lucrative tax credit incentives for clean energy manufacturing, such as the 45X tax credit, which directly pays US-based battery manufacturers US$35 per kWh of batteries produced, substantially reducing production costs.
In response to these challenges, Northvolt’s Norwegian counterpart, Freyr, has redirected its focus entirely to the US, pausing further investments in battery production facilities in Norway and Europe. Similarly, other gigafactory projects in Europe, like Tesla’s German gigafactory and the UK’s Britishvolt, have encountered setbacks.
Northvolt CEO Peter Carlsson emphasized the significance of the financing, calling it a “milestone for the European energy transition.” He highlighted its role in realizing the full potential of Northvolt Ett and emphasized the importance of circular and sustainable business practices in the industry’s success.
Northvolt has already secured offtake agreements totaling US$55 billion with companies primarily in the electric vehicle (EV) market.Additionally, the company has been manufacturing battery energy storage system (BESS) products at its factory in Poland (Northvolt Dwa) since the previous year.
With the new financing, Northvolt’s total equity and debt raised to date reach US$13 billion.Beyond its existing facilities in Sweden and Poland, the company aims to establish production facilities in Germany (Northvolt Drei), the US (Northvolt Cuberg), and Canada (Northvolt Six). Moreover, Northvolt is actively involved in developing sodium-ion batteries in partnership with technology firm Altris, claiming a breakthrough in energy density at the end of 2023.
