Germany approves bond for Northvolt factory in Heide

Members of Parliament Felix Banaszak and Bruno Hönel (both Green Party) told the news agency dpa that this concerns a convertible bond subject to repayment. The German development bank KfW will pay out the loan, while the federal government will assume the liability for it.

The planned Northvolt Three (Northvolt Drei) battery factory in Heide, in the German state of Schleswig-Holstein, was announced in March 2022. Construction was to begin in 2025, and in the final phase, the factory should employ about 3,000 people. The production capacity is 60 GWh, which should be enough for one million electric cars. In addition to battery production, Northvolt wants to set up a battery recycling facility on site. Less than two months after the initial announcement, in May 2022, the company received the IPCEI funding notice.

According to the funding decision, Germany will support Northvolt with more than 155 million euros. Seventy per cent, or about 108 million euros, comes from the federal budget, while 30 per cent, or about 46 million euros, is contributed by the state of Schleswig-Holstein. That is the maximum the EU had approved, German Economy Minster Robert Habeck said at the time.

In the meantime, the start of construction in 2025 is unlikely. Northvolt itself brought the cited high energy prices and is pushing ahead with a factory project in Canada to profit from the subsidies there and rising demand due to the Inflation Reduction Act in the US. However, the company and politicians have stressed that the goal to build the factory in Schleswig-Holstein still stands.

The convertible bond secured by the federal government is intended to support the project beyond the 155 million euros in funding. The funding is based on the new Temporary Crisis and Transition Framework (TCTF), which the EU Commission must then approve. If this is the case, it would be the first project in Germany to receive TCTF funding.

sueddeutsche.de (in German)