Northvolt secures new billion-dollar loan
The new 5 billion US dollars will enable the expansion of the ‘Northvolt Ett’ gigafactory in Sweden and the implementation of Northvolt’s battery recycling plans. Even though the amount is stated in US currency, this loan is for corporate projects in Europe. It is not for nothing that the company itself refers to it as the “largest green loan in Europe to date”. Specifically, it includes the refinancing of a debt package of 1.6 billion US dollars taken out in July 2020 and was taken out on the basis of long-term purchase agreements worth over 55 billion US dollars with partners such as BMW, Scania, Volvo Cars and Volkswagen.
According to Northvolt, the loan is provided by 23 commercial banks as well as the European Investment Bank (EIB) and the Nordic Investment Bank (NIB), supported by the European Commission’s InvestEU program. “This financing is a milestone for the European energy transition,” comments Peter Carlsson, co-founder and CEO of Northvolt. “It will enable us to realize the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry.”
Alexander Hartman, CFO of Northvolt, added: “This has been an incredible team effort, involving long due diligence processes, new partnerships with strong institutions, and developing cutting edge financing structures focused on sustainability – all to close one of the largest green financing deals in history.”
With the new financing, Northvolt now has more than $13 billion in equity and debt to fuel its expansion in Europe and North America in the form of Northvolt Ett (Skellefteå, Sweden), Northvolt Dwa (Gdansk, Poland), Northvolt Drei (Heide, Germany), the Northvolt-Volvo Cars joint venture’s Gigafactory “Novo” (Gothenburg, Sweden), Northvolt Fem (Borlänge, Sweden), Northvolt Cuberg (San Leandro, USA) and the recently announced Northvolt Six (Montreal, Canada).
Of course, subsidies also play a major role in Northvolt’s business growth. Just a week ago, the EU Commission approved the German government’s funding for the Northvolt Drei battery cell factory in Heide under state aid law. This involves 902 million euros, which will be paid out in the form of a direct subsidy of 700 million euros and a guarantee of 202 million euros. “Without the aid, Northvolt would build the plant in the United States, where it would be supported in particular under the Inflation Reduction Act,” the EU Commission wrote a week ago.
According to Margrethe Vestager, Commission Vice-President in charge of competition policy, the €902 million grant is the first individual aid approved to prevent an investment from being withdrawn from Europe under the new possibility offered by the Temporary Crisis and Transition Framework (TCTF) since March 2023. This enables Germany to support the construction of Northvolt’s production plant. “This is an important step for the electrification of transport in Europe while maintaining a level playing field in the internal market,” said Vestager.
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