25/05/2024
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Building the European Battery Industry.

Northvolt is known as a cell manufacturer for the automotive industry, but it is also a producer of complete battery systems for two different market segments: industrial and grid.

By now, everyone has heard of the Northwest, Sweden-headquartered startup founded by Peter Carlson, a former Tesla executive who builds 150GWh lithium-ion battery factories in Europe.

But while investments and off-take deals from the automotive industry are a major focus of attention, its stationary energy storage division, Northvolt Systems, also has a story to tell.

At Northvolt Systems we are working on the future of clean energy by contributing to establishing a new industrial base for lithium-ion battery solutions in Europe.

Northvolt raises over half a billion euros from investors …

As we have seen with the development of the renewable energy industry, nurturing the domestic battery energy storage industry represents a significant economic opportunity for Europe, but also the security of supply for technology that is the linchpin of the transition to clean energy.

Setting up this new venture is not simple and there are certainly challenges in developing the components needed for a world-leading, sustainable supply chain, but we are way ahead of what people think.

From our perspective, Europe has all the right ingredients to become a global leader in battery energy storage solutions and it has every reason to accept this opportunity.

 The evolving European landscape for ESS

Although battery energy storage remains a young enterprise within Europe, it is fair to start with acknowledging that it is full of hope and potential.

The potential stems from the idea that Europe has all the right capabilities to support a complete, globally competitive battery storage supply chain.  By embracing these new business opportunities and driving them to their full potential, Europe could become a major global supplier of battery power storage to the global market, which is forecast to attract an investment of approximately US $ 262 billion by 2030.

Many in the energy industry recall how Europe was advised to lead the solar PV industry 15 years ago.  But for reasons including lack of engagement from the industry, to create favourable conditions from governments and the EU, the opportunity was lost.  We should avoid this in the battery industry.

As promised, we do not need to look further than case studies of deployed energy storage systems (ESSs) for evidence of what technology can do to accelerate the adoption Of smooth electricity and allow the transition farfar from fossil fuels. And indeed, there are pioneering European ESS companies operating within this landscape – although cells and batteries are sourced from Asia, which has long been home to the lithium-ion battery industry.

The relative immaturity of the ESS industry can be understood for two main reasons.  First, because the region has historically lacked upstream cell production, it is not in a position to develop synergies in battery capacity or battery solutions.

Second, the theoretical need for energy storage has been recognized for some time, but market demand has lagged behind.  Clear market structures and reliable revenue streams for ESS operations are a prerequisite for business-as-viable projects, but they also serve to encourage investment in industry units, including component suppliers and developers.

For both factors – the location of the cell and the feasibility of ESS – we see a change that will leave Europe in a better position and motivate it to mature its ESS supply chain, but to advance it.

Europe is making good progress in increasing its cell production capacity: Long-time champion of the European battery chain, European Commission Vice President Maros Sefkovic, has said that by 2025 Europe will become the world’s second largest battery manufacturer and will most likely supply.  90% of its domestic battery production is required.

In parallel, markets are more favourable for energy storage deployments.  To be sure, some markets are ahead of others, which can certainly highlight the UK and Germany in this regard;  But broadly we have the right foundations strengthened by EU commitments to decarbonization.

There are still challenges to the European supply chain, but above all there is opportunity.  In acknowledging its own preemptive need for batteries, the US government is saying it has recognized Europe’s approach towards growing the domestic battery supply chain.

Acknowledgment is well earned.  The EU has a proven track record for nurturing its battery industry – focusing on cell manufacturing, upstream materials manufacturing and recycling.

There is a particular focus on sustainability calls in the battery industry inherent in the EU’s approach.  This is prudent – placing a new venture into leverage that can be a differentiating factor for European products.  On this front, new legislation currently under development in Brussels, namely battery direction, is important.

Notable highlights include mandating carbon footprint labelling, new procedures to ensure the ethical origin of raw materials, and ambitions for battery recycling.  Stakeholders must first embrace sustainability for the emerging European battery landscape.

BloombergNEF forecasts installations in 1TWh energy storage mode by 2030, with more scheduled for Europe.  Beyond the value of directly enabling these European deployments, Europe is a real opportunity for leading ESS developers to serve the global market as we see it with wind energy and energy efficiency technology.

With the right approach, the time we can see in the European battery energy storage industry is a textbook example of the environmental, social and economic benefits of securing the restoration of industrial power to meet the demands of the world facing climate.  Emergency.

grid-connected battery system, Vรคsterรฅs, Sweden. Image: Northvolt

Build on cost, scale up

For the European ESS industry to scale towards global leadership, it is crucial to design manufacturing and product technologies to enable competitive pricing.

For this, one insight we have is the importance of modularity.  That is, designing a base module for integration into packs and systems that are easily scalable with minimal additional design requirements or components.

The goal of designing products for scalability and extending how we deliver new production capabilities.  Here we can be clever in how we set up factories.  You have to find a balance between CAPEX and OPEX.

There is an inevitable substantial upfront cost to deliver assembly lines, but we can be smart in selecting machinery and accessories that, when paired with well-designed products, will be immune to future battery system products.

Especially on the mechanical and assembly sides, leveraging large-scale manufacturing techniques and methods – Europe has considerable experience from other sectors – rewards unchanged with lower unit costs.

NorthvoltNorthvolt commissions its first public energy storage system

Reflecting on what the European Battery Systems industry should and should look like, Can highlight the Northvolt Systems Dua – a battery systems assembly facility under development in Gdansk, Poland. 

The facility also features more automated assembly lines for greater production of modules and module-to-pack integration.  A port city with excellent road access to the continent, the facility is well positioned for both inbound cells and outbound product flows from Northvolt et al.

Northvolt is investing US $ 200 million to build this new battery systems plant, the largest of its kind in Europe.  Development is already underway and is scheduled to begin production in 2022 with an initial annual capacity of 5GWh and a potential future potential of 12GWh.

Batteries are fast becoming the cornerstone technology of energy, mobility and social functioning.  For Europe to effectively transition to net-zero, it needs its own battery systems.  But more than chance.  We have lost our chance with solar PV, not to make the same mistake with batteries

This is the essence of an article that appeared in Volume 30 of PV Tech Power, a quarterly technical journal of the solar industry’s downstream solar industry.  Each version includes ‘Storage and Smart Power’, contributed by    the team at Energy-Storage.news and Emad Zand, president of Northvolt Systems.

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