The European Bank for Reconstruction and Development (EIB) said on February 12 that it has approved a loan request from Northvolt AB for the construction and operation of a first-of-a-kind demonstration plant in Västerås, Sweden for the manufacturing of li-ion batteries.

The loan, which could reach  €52.5 million, is set to be supported by the European Commission through InnovFin, under the “Energy Demo Projects” (EDP) Facility, the EIB said.

European Commission Vice President for the Energy Union Maroš Šefčovič hailed the EIB’s decision to support the project. “Batteries are a strategic component of our competitiveness and to capture a new European market worth 250 billion euros annually as of 2025, we need to act fast. I, therefore, welcome the decision taken by the EIB, which will help this industry-led project take off the ground. It is important to pool all available instruments at the national and European level, such as InnovFin,” Šefčovič said, adding that the European Battery Alliance will continue supporting prospective partnerships throughout the value chain.

Research, Science, and Innovation Commissioner Carlos Moedas also welcomed the EIB loan, which enables “real market-creating innovation”. “With 40% of all patents for renewable technologies belonging to European companies, the EU is undoubtedly leading the fight against climate change. But many of Europe’s great innovations in clean energy technologies end up being produced elsewhere, meaning that others make much more money out of European innovations than we do. Today’s decision will help to correct this,” Moedas said late Monday.

According to the EIB, the parties will now finalise negotiations and after signing Northvolt is expected to begin the construction of its demonstration line in the coming months. This facility will serve to show the commercial viability of the concept and to qualify and industrialise products together with Northvolt’s customers, the EIB said, adding that the produced batteries are targeted for use in transport, stationary storage, industrial, and consumer applications.

The demonstration site will also comprise a research facility and employ between 300-400 people. The launch of the demonstration plant is a key step towards the establishment of Northvolt’s large-scale li-ion battery factory in Skellefteå, eventually targeting a production of 32 GWh worth of battery capacity annually.

“The Bank is fulfilling one of its main purposes by supporting this type of research and development in Europe,” EIB Vice-President Ambroise Fayolle said. “With the growing momentum of clean energy and electric mobility, batteries will become ever more important. Europe is currently lagging behind when it comes to battery manufacturing and this highly innovative and strategic project deserves European backing to fill that gap,” Fayolle added.

Northvolt CEO Peter Carlsson noted that Europe is moving rapidly towards electrification. “Northvolt’s objective is to build the world’s greenest battery to enable the transition. With the support from the European Investment Bank and the European Union, we are now one step closer to establishing a competitive European battery manufacturing value chain,” he added.