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Northvolt, a Sweden-based manufacturer of lithium-ion batteries, announced the signing of a $5 billion non-recourse project financing to expand its battery gigafactory, Northvolt Ett, in northern Sweden.

The new debt financing package, which is said to be the largest green loan raised in Europe to date, includes refinancing of the $1.6 billion debt package that Northvolt raised in July 2020 and is backed by long-term offtake contracts with partners, such as BMW, Scania, Volvo Cars and Volkswagen Group, amounting to over $55 billion.

The financing is provided by a consortium of 23 commercial banks, as well as the European Investment Bank (EIB) and the Nordic Investment Bank (NIB), which are both supported by the European Commission’s InvestEU program. The InvestEU program aims to support sustainable investment, innovation, and job creation in Europe.

The financing will enable Northvolt to expand its cathode production and cell manufacturing capacity at Northvolt Ett. It will also support the expansion of the adjacent recycling plant, Revolt Ett, which is nearing the end of its commissioning and is processing its first materials. The plant recovers battery-grade metals from used batteries, with a claimed 70% lower carbon footprint than mined raw materials.

BNP Paribas served as senior debt advisor and Allen & Overy and Mannheimer Swartling served as legal advisors for the financing deal.

According to Mercom’s 9M And Q3 2023 Funding and M&A Report for Storage & Smart Grid. Corporate funding in the energy storage sector was down 31% in 9M 2023, with $15.2 billion raised in 94 deals compared to $22 billion in 93 deals in 9M 2022. Corporate funding in Energy Storage increased 67% in Q3 2023 with $8.2 billion in 35 deals compared to $4.9 billion in 32 deals in Q2 2023.

Recently, Northvolt, a Sweden-based manufacturer of lithium-ion batteries, received around CAD 200 million (~$150 million) from CDPQ. The funding is in the form of a convertible debt, which will help facilitate the Northvolt Six project in Québec.