Europe Backs Northvolt With US$5 Billion Loan Package

Amid an extremely challenging macro environment which has seen project finance activity decline globally this year, European lithium-ion

battery gigafactory developer Northvolt has secured one of the largest green loans ever issued – this non-recourse project financing loan will support Northvolt Ett’s expansion plans in northern Sweden as well as their goal to develop an integrated supply chain from design/development/manufacturing/recycling in this industry.

Northvolt was established seven years ago and has already secured orders worth US$55 billion from customers such as Volvo Car and Tesla Motors for batteries totalling US$55 billion. Employing more than 1,000 workers with production capabilities of about 35 GWh per annum, its first products should reach customers by 2023 while their loan package, supported equally by commercial banks and institutional investors, should be completely paid back by 2024 upon maturity.

ING was among the lenders involved, providing Northvolt with both a EUR350m five-year term loan and letter of credit facility, as well as an EUR250m seven-year project financing tranche for their new plant. Both loans were secured with cash collateral with minimum 90% guarantee coverage from parent companies of participating banks in the deal.

The debt structure also features EUR150m in issuance premiums that will be distributed among investors, reflecting its risk profile. Investors in the senior tranche include several large sovereign wealth funds like AMF, AES and KfW IPEX as well as private equity firm EQT Partners.

Northvolt announced partnerships with Siemens and Britishvolt in Northumberland to support their plans for creating the UK’s inaugural lithium-ion battery gigafactory in Northumberland. Through Siemens, Northvolt can access electrification solutions, automation technology and Digital Twin manufacturing execution software to speed the time between lab scale production of cells and production scale mass manufacturing.

The company is also teaming up with the UK National Grid, who will supply them with 230MWh capacity connected to their EV charging network – helping meet London and other UK cities’ rising charging needs that is expected to double by 2030.

However, Spanish investment fund Bruc Energy recently successfully raised a EUR600m corporate financing facility to back construction of 6GW of hybridised wind and solar power projects across Spain and Italy. The financing is structured as a holdco level holdco loan sized at EUR60 million that will then be pushed down through project finance debt at each asset’s opco level – advised by Clifford Chance legal services and PwC tax and financial advice as well as syndicated with ING Santander Infranity underwriters with BNP Paribas acting as agent bank/hedging provider/hedging provider respectively. UK energy infrastructure fund Gridserve recently reached critical financing levels for its sun-to-wheel electric vehicle charging system project;