Swedish battery manufacturer Northvolt has signed a $5 billion non-recourse project financing to expand its gigafactory and adjacent battery recycling plant.
The funding is the largest green loan raised in Europe to date, the company said. The gigafactory, Northvolt Ett, in northern Sweden is also Europe’s first gigafactory. It manufactures lithium-ion batteries and uses 360 megawatts of renewable energy and has more than 3,000 employees. Lithium batteries are used in electric vehicles and expanding manufacturing is critical to bring more EVs to market.
Northvolt’s plan for a battery recycling plant, Revolt Ett, is currently approaching the conclusion of its commissioning and processing its first materials. The facility recovers battery-grade metals with a carbon footprint 70% lower than mined raw materials. According to Northvolt, such a circular battery production setup has not previously existed outside of Asia.
The funding also comes as the battery recycling market is expected to grow in value. In fact, the worldwide second-life electric vehicle battery market is expected to grow 44.7% on a compound annual rate from 2022 to 2031, reaching a projected value of $9.93 billion in 2031, according to Transparency Market Research.
The total $5 billion green loan includes refinancing of a $1.6 billion debt package announced in July 2020.
Plus, the new debt has been raised on the back of more than $55 billion in offtake contracts with partners including BMW, Scania, Volvo Cars, and Volkswagen Group. A group of 23 commercial banks provided the financing, plus the European Investment Bank (EIB) and the Nordic Investment Bank (NIB), both of which are supported by the European Commission’s InvestEU program. The program aims to provide support for critical technologies in the EU through funding, advisory support, or both.
“This financing is a milestone for the European energy transition,” Peter Carlsson, co-founder and CEO of Northvolt, said in a statement. “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.”
Northvolt has secured more than $13 billion in equity and debt to expand in Europe and North America. Its facilities include Northvolt Ett (Skellefteå, Sweden), Northvolt Dwa (Gdansk, Poland), Northvolt Drei (Heide, Germany), Northvolt and Volvo Cars joint venture gigafactory NOVO (Gothenburg, Sweden), Northvolt Fem (Borlänge, Sweden), Northvolt Cuberg (San Leandro, US) and the recently announced Northvolt Six (Montreal, Canada).
The company received the highest "dark green" rating for its Green Finance Framework, created in 2023. This is the first loan through its new framework. The rating was granted by external rating company CICERO and Northvolt is the first actor in its industry to receive the dark green rating.
“I’m proud to see how our ambition to mass produce the world’s greenest battery attracts top-tier financial partners, as global capital is looking to invest in electrification and climate change mitigation,” Emma Nehrenheim, chief environmental officer at Northvolt, said in a statement. “It has become obvious that the creation of a new industry standard not only attracts world-leading talent, but also major financial institutions that aim to align their strategy with long-term macro trends.”
