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February 2024

Northvolt's new gigafactory to open in Germany

Francesca Del Bello

The EUR 902 million in state aid approved by the European Commission is decisive
The Northvolt plant in Heide, northern Germany, is scheduled to start production in 2026. Its construction will be started thanks to the EUR 902 million in state aid approved at the beginning of January by the European Commission. But what makes this company so important to motivate such a measure? Northvolt, a Swedish company launched in 2017, produces batteries (for electric vehicles and others) and other high-performance technology components with a 90 per cent lower carbon footprint than traditional production. Not only that: the company has also set up an interesting project for the recycling and reuse of spent batteries. Not a minor player in a sector - the automotive one - aiming at (almost) complete decarbonisation, but also a strategic move to catch up in battery production - where at the moment China is leading the way.

But that's not all: for the construction of its new plant, in fact, Northvolt was ready to leave European territory to land in the United States, where it could have benefited from the aid provided by the Inflation Reduction Act, the plan adopted by President Biden in 2022 that supports the low environmental impact technology industries with substantial subsidies. Faced with this possibility, which risked reinforcing the American sector's industry and consequently weakening the European one, Europe decided to intervene: yes, because since it is a matter of State aid, the Commission has exclusive competence in the matter, which has the task of verifying that the balance between the negative effects on competition and the positive effects in terms of common interest is respected.

Margarete Vestager, European Commissioner for Competition, commented: "This €902 million measure is the first individual aid approved to prevent an investment from being diverted outside Europe, under the new possibility offered by the Temporary Crisis and Transition Framework", a temporary scheme to simplify state aid rules and promote support measures in key sectors for the transition to a zero-emission economy, in line with the Green Deal business plan. "This is an important step for the electrification of transport in Europe, while preserving a level playing field in the single market,"  Vestager concluded.

All’s well what ends well, in short: the Northvolt plant to be built in Heide will have an annual capacity of 60 GWh when it reaches full production in 2029, which is equivalent to between 800,000 and 1 million electric vehicles, depending on the size of the battery.

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