Battery cells company Freyr Battery (NYSE:FREY) on Wednesday announced it has received board clearance to proceed with the construction of a larger-than-planned Gigafactory in Norway concurrently with the state government’s presentation of the country’s first battery strategy.
Freyr said that its board of directors has approved the expansion of the planned Giga Arctic project in Mo i Rana to an annual nameplate capacity of 29 GWh. The decision comes “in response to improving battery supply-demand dynamics, ongoing commercial success, significant progress in developing supply chain channels for key raw materials and equipment, continued technical and product improvements, and project financing visibility,” a company statement says.
Giga Arctic would be Freyr’s first battery manufacturing facility. Under the current scheme, it combines plans for Gigafactories 1 & 2 and represents a 150% increase in nameplate capacity on a chemistry equivalent basis compared to the original plan. The expanded project is valued at an estimated total capital cost of USD 1.7 billion (EUR 1.61bn) and envisages the construction of eight production lines, a battery testing centre and administrative facilities.
Freyr says that Giga Arctic will be the most capital and operationally efficient battery plant in Europe. Capital expenditures on the project could rise further by USD 250 million if the company decides to adopt some additional enhancements such as module and pack manufacturing, recycling and other applications.
So far, Freyr has booked conditional off-take deals totalling more than 125 GWh from the planned start of production in the first half of 2024 through 2030. It also recently sealed a long-term power purchase agreement (PPA) with Statkraft.
Earlier in the day, the Norwegian government presented its national battery strategy, including ten steps that are needed to be made in order for the country to become a leader in the field. Among them is the reliance on renewable energy in the production process, as well as circular solutions, recycling and reuse.
“The National Battery Strategy that we just launched, defines ten areas of key importance that will facilitate private investments so that companies along the entire value chain can set up sustainable and successful businesses in Norway. Our unmatched access to renewable energy makes batteries produced in Norway the greenest in the world,” commented Jan Christian Vestre, Norway’s Minister of Trade and Industry.
The minister also stated separately he believes that should Norway seizes its opportunities, its battery value chain could benefit from a workforce of tens of thousands of people and generate a turnover of at least NOK 90 billion (USD 9.2bn/EUR 8.7bn) by 2030.
As part of that same strategy, Freyr will receive EUR 400 million (USD 422.4m) in financial assistance from Norway’s export credit agency Eksfin. All in all, the company has identified over USD 1.6 billion in potential debt financing backing, including the guarantees and/or loans from Eksfin and support from other European governmental entities, as well as a consortium of commercial banks led by Societe Generale and DNB. This banking duo is now formally launching the project financing process, Freyr said.
The company’s updated 2030 target is to achieve an installed annual production capacity of more than 200 GWh, which is twice the previous goal. In addition to the Gigafactory in Mo i Rana, Freyr plans industrial-scale battery cell production in Vaasa, Finland, and the US.
(USD 1 = EUR 0.947)
(NOK 1 = USD 0.102/EUR 0.097)
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Artist's impression of Freyr's projected pilot factory in Norway. Source: Flickr
