All agreed loans

Sweden. Northvolt Ett AB

Date of agreement: 28 Jul 2020
Country: Sweden
Customer: Northvolt Ett AB
Amount in USD: USD 44.3 million
Amount in EUR: EUR 39.53 million
Maturity: 10 years
NACE sector / loan type: Manufacture of electrical machinery and apparatus
Business area: Energy and water

This loan contributes to climate change mitigation: 100%

Project

NIB is providing a loan for financing the ongoing construction of Northvolt’s new, large-scale lithium-ion battery cell manufacturing plant in Skellefteå, northern Sweden.

Northvolt AB plans to construct a large-scale battery factory with a potential output of 40 GWh. The factory will be built in phases, with the first phase being operational in 2021 and annual capacity ramping up to at least 32 GWh by 2024 taking place. A special purpose vehicle (SPV) Northvolt Ett AB has been set up to develop, construct, finance and operate the factory.

In addition to producing battery cells, Northvolt plans to manufacture the active material needed for the production. The company also plans to start recycling batteries from 2022.

The special purpose vehicle Northvolt Ett AB is fully-owned by Northvolt AB. Northvolt is a European supplier of sustainable battery cells and systems. Founded in 2016 to enable the European transition to a decarbonised future, the company plans to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint and the highest ambitions for recycling. Among Northvolt AB’s owners, investors, industrial partners and customers are the founder Peter Carlsson, BMW AG, Stena AB, Siemens AG, Vattenfall AB and the Volkswagen AG.

Fulfilment of NIB's mandate

Productivity

The production facility will be a major employer in Skellefteå. Indirectly, the project will increase economic activities in upstream logistics and mining sectors in NIB’s member countries. In the downstream markets, the company’s deliveries will increase activities in logistics operations, and, in the case of Scania, Northvolt may become a key supplier of batteries and support the company’s product development. The company plans to invest significantly into its R&D activities in Västerås. The R&D intensity of the company will thus be high.

The regional implications of the project could be significant in Skellefteå. The construction and operational phases of the project will contribute to the development of skills, which might be broadly useful in many contexts, but mainly the knowledge spill-overs should benefit the member country’s higher-value added business clusters, such as the automotive and electric apparatus industries. These industries will also benefit from access to cost efficiently produced batteries with low transportation costs.

Expected productivity impact indicators:

  • Capital expenditures total 2018–2022: USD 1.7 billion
  • Staff at Skellefteå facility in 2022: 1,390 full-time equivalent

Environment

Two types of environmental benefits arise from Northvolt's battery production: the environmental performance of the production compared to similar plants, and the impact achieved by the products downstream in the value chain.

Northvolt will use 100% renewably produced electricity. The company plans to minimise the energy use by implementing a system with variable frequency pumps and motors, as well as real-time monitoring of electricity and heat use. Northvolt is also assessing the possibility for feeding excess heat from the plant into the district heating system.

Assuming the annual production capacity from the first phase is used for average-sized electric vehicle battery packs, the amount would correspond to 270,000 electric vehicles annually. Considering that this amount of electric vehicles would replace vehicles using fossil fuels, this could generate significant emission reductions, both in global greenhouse gas emissions and local air pollution (NOx and particulate matter).

Expected environmental impact indicators:

  • Annual battery capacity from the first phase corresponding to 270,000 electric vehicle battery packs
  • 100% renewable electricity for production

Sustainability summary

NIB has reviewed the sustainability aspects of the planned battery cell manufacturing along its entire value chain from material sourcing to production and recycling. An environmental impact assessment of the planned manufacturing facilities has been conducted and all main permits are in place. Negative impacts from the site operations on surrounding areas are mostly estimated to be insignificant or low. The plant is also classified as a Seveso upper tier site requiring a safety assessment that was prepared as part of the environmental permitting.

The following sustainability risks were reviewed upstream and downstream:

Supply of raw materials

A key sustainability risk in battery production is associated with the raw material supply chain, as sourcing of metals can typically take place in countries with high risk of breach of human and/or labour rights, and with lower environmental standards. To manage these risks, Northvolt has a Sourcing and Procurement Policy specifying requirements for ethical, environmental and social responsibility. This policy is integrated in the Environmental Guidelines for Suppliers, Environmental Policy and the Code of Conduct of the company. Northvolt follows the principles and recommendations issued by the United Nations, the International Labour Organization (ILO) Conventions, and the OECD in terms of ethical, environmental and social issues for the due diligence on the suppliers and the supply chain. A due diligence process to assess raw material suppliers is in place and Northvolt intends to source from mines and refineries exhibiting lower social and environmental risks.

Recycling of batteries

Production of lithium-ion batteries is resource-intensive. Therefore, prolonging the lifetime of batteries e.g. by reusing them from electric vehicles in a less demanding application, such as for renewable energy storage and recycling of materials at the end of battery life, are essential to improve the sustainability of business. The EU directives on end-of-life vehicles and batteries pose requirements for recycling, however, the recycling rate for lithium-ion batteries from vehicles is still low and the metals cannot yet be recovered at battery grade.

Based on the regulatory producer responsibility, Northvolt needs to ensure sufficient collection of used battery cells, e.g. via joining a compliance scheme for batteries. Northvolt also intends to set up a recycling facility for its batteries in connection with the production plant by 2022, for the recovery of raw materials from battery cells for re-use in battery production. To achieve this, it has established a recycling programme together with several universities, including Chalmers University. The programme, called Revolt, has been set up with the ambition to use 50% of recycled material in production by 2030, and a joint venture with Hydro will establish a feed of used batteries from the Norwegian EV market.

Press release

NIB finansiering för Northvolts batterifabrik i Skellefteå