The European Investment Bank (EIB) announced on Tuesday that it will finance Sweden’s Northvolt with a lending package of over $1.038B (€942.6M).
The lending package is a part of a $5B non-recourse project financing, the biggest green debt deal in Europe to date.
EIB Vice-President Thomas Östros states, “With backing from the European Commission, the EIB has supported Northvolt from the very beginning, starting with the demonstration line in Västerås in 2018 and continuing with the first phase of the gigafactory in Skellefteå. We recognised Northvolt’s potential and importance for the energy transition and have supported them on our way to becoming the EU climate bank. We should not underestimate the importance of this type of project in reaching Europe’s climate neutrality, and now we’re glad to continue our support for the expansion.”
The announcement comes two months after raising €138M in funding from CDPQ (Caisse de dépôt et placement du Québec), a Canadian global investment group to build a lithium-ion battery gigafactory in Canada.
The EIB financing is backed by the Swedish National Debt Office and the European Commission’s InvestEU programme, and partially intermediated through commercial banks participating in the project financing.
Around $500M (€453.6M) of the EIB’s financing package is provided under guarantee issued by the Swedish National Debt Office Riksgälden, with a further $400M (€362.9M) guaranteed under the European Commission’s InvestEU programme.
Additionally, $138.7M (€126.1M) of the full $1.0387B package will be provided as intermediated lending to Northvolt via participating commercial banks.
Commission Executive Vice-President Maroš Šefčovič, in charge of the European Green Deal and the European Battery Alliance, said: “We mean business when it comes to Europe’s battery industry. It is of strategic importance and a key battleground for global competitiveness. Northvolt, our battery pioneer, showcases that the EU has what it takes to build an innovative, sustainable, and globally competitive battery ecosystem. I am proud of Northvolt’s success story as well as of the other 160 industrial projects taking shape across the entire value chain while promoted under the European Battery Alliance. The EIB’s role is indispensable. We need to be strategic, bold, agile.”
The financing will support the expansion of Europe’s first circular battery production gigafactory, Northvolt Ett, in Skellefteå, Sweden.
The expansion is expected to increase the annual output capacity for battery production to up to 60 GWh.
Peter Carlsson, co-founder and CEO of Northvolt, says, “This financing is a milestone for the European energy transition. It will enable us to realise the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry.”
In 2018, the European Investment Bank (EIB) provided a loan of €52.5M to support the deployment of Northvolt’s demo line as part of the European Union’s InnovFin program.
This was followed by a loan of €319M backed by the European Fund for Strategic Investments (EFSI), the predecessor of the InvestEU program, to fund the first phase of the Northvolt Ett gigafactory.
Northvolt: Providing eco-friendly batteries
Founded in 2016 by Paolo Cerruti and Peter Carlsson, Northvolt is a lithium-ion battery manufacturing company that provides eco-friendly batteries.
It offers lithium-ion cells based on proprietary Lingonberry NMC chemistry in cylindrical and prismatic formats.
The company’s batteries are manufactured with a minimal carbon footprint and with recycling technology without compromising important ecosystems, enabling the auto industry to replace fossil fuels with electricity efficiently.
So far, the Swedish firm has secured $55B (approximately €51B) of orders from key customers, including BMW, Fluence, Scania, Volvo Cars, and Volkswagen Group.
To ensure a sufficient supply of raw materials for battery production, the company will produce cathode material at its Swedish site and build a recycling facility on-site to enable 50 per cent of its raw material requirements to be sourced from recycled batteries by 2030.
The company is currently delivering batteries from its first gigafactory, Northvolt Ett, in Skellefteå, Sweden, and from its R&D and industrialization campus, Northvolt Labs, in Västerås, Sweden, supported by over 5000 employees in Sweden, Germany, Norway, Poland, Portugal, the US and Canada.