EU approves €902 million state aid to Northvolt’s German battery plant

Germany has been given the green light by the European Commission to allocate 902 million euros in subsidies to a battery plant by Sweden’s Northvolt in Heide, in the state of Schleswig-Holstein.

The plant in northern Germany, positioned to produce the cleanest batteries for EVs in continental Europe with a capacity of up to 60 kWh, would start in 2026 and run at total capacity by 2029, representing annual battery production for 800 000 to 1 million EVs.

‘Important step for electrification of EU transport’

Without the aid, Northvolt would build the battery plant in the United States, stresses European Competition Commissioner Margrethe Vestager. As part of the Inflation Reduction Act adopted in 2022, the government is providing massive subsidies to companies operating in low-carbon sectors.

“This German measure worth 902 million euros is the first individual aid approved to avoid taking investment out of Europe,” Vestager said. She called the Northvolt plant in Germany “an important step for the electrification of transport in Europe” in line with the Green Deal Industrial Plan.

€700 million in direct subsidies

Providing state subsidies is traditionally difficult within the EU, which promotes an open market and free competition. The fact that this is temporarily different is because of a particular regulation for “temporary crisis and transition situations” in force since March 2023 to make energy supplies less dependent on Rusland, in the context of its war against Ukraine, and to form a bloc against the growing competition from Chinese car and green tech factories.

The German government and Schleswig-Holstein provide 700 million euros in direct subsidies (some 564 and 137 million euros, respectively) and another 2002 million in government guarantees. The 4,5 billion euro investment will account for 3 000 new jobs.

Cleanest energy grid in Germany

According to Northvolt, Schleswig-Holstein hosts the cleanest energy grid in Germany, one which is characterized by a surplus of electricity generated by onshore and offshore wind power due to the west coast location of Heide and reinforced by clean energy provided through grid interconnections to Denmark and Norway.

Northvolt Drei will also target an on-site battery recycling plant, ensuring efficient reuse of byproducts from the battery production process. Northvolt and world-leading metal recycler EMR have already built a battery recycling facility in the region, namely in Hamburg.

No insignificant detail: Robert Habeck, the German Minister for Economic Affairs and Climate Action and vice-chancellor, is a native of Schleswig-Holstein. Habeck has played a significant role in making the region self-sufficient in green energy by developing an ambitious wind power program.

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