Title: Northvolt Calls for Swift Action on German State Aid for Battery Factory
In a recent interview with the Frankfurter Allgemeine Sonntagszeitung, Northvolt's Germany Managing Director, Christofer Haux, emphasized the urgent need for clarity on the promised state financial aid for the Swedish investor's planned battery factory in Heide, Schleswig-Holstein. Haux pointed out that while the company trusts in the German government's commitments, a clear solution must be found within days to avoid delaying the project timeline.
The core concern revolves around the €550 million in state aid, initially allocated from the Climate Transformation Fund. However, the ruling of the Federal Constitutional Court has cast doubt on the feasibility of disbursing the funds due to the judges' declaration of the reallocation of funds in the federal government's financial planning as inadmissible.
Meanwhile, the Kiel state parliament has taken an emergency motion to utilize €137 million from promised state funds, previously earmarked for Ukraine aid, if necessary. Parliament had declared a budget emergency for 2023 and 2024, leading to this contingency plan.
Sources suggest that the €600 million convertible bond announced by the state bank KfW for Northvolt is not affected by the constitutional court ruling. Northvolt plans to start manufacturing battery cells for electric cars at its Heide facility from 2026, with an expected investment of €4.5 billion and the creation of 3,000 jobs. The company has already invested around €100 million of its own funds in the construction project, as per sources close to the project.
Beyond financial considerations, the success of the entire energy industry relies on stable financing arrangements. The uncertainty surrounding the financing of Northvolt's battery factory is causing apprehensions within the industry, with similar projects potentially affected by the wider challenges in European gigafactory financing.
Enrichment Insights:
These challenges are not unique to Nordvolt, but reflect broader trends in European gigafactory financing, following Nordvolt's bankruptcy. The lack of technical aptitude and management capacity of Nordvolt's subsidiaries, such as Nordvolt Germany, exacerbates the financing challenges they face, putting their future investments and financing for projects in doubt[1].
[1] Macau Business, "Swedish battery maker Nordvolt files for bankruptcy," accessed Jan 31, 2023.
