Manufacturing Biz #2 - Magazine - Page 20
Commission approves €902m
for German battery plant
The European Commission has approved
a €902 million German measure to support
Northvolt in the construction of a plant
for the production of batteries for electric
vehicles to foster the transition towards a
net-zero economy, in line with the Green
Deal Industrial Plan. The aid was approved
under the State aid Temporary Crisis
and Transition Framework, to support
measures in sectors which are key to
accelerate the green transition and reduce
fuel dependencies.
Germany notified to the Commission,
under the Temporary Crisis and Transition
Framework, a € 902 million measure to
support Northvolt in the construction
of a production plant for advanced and
high-efficiency electric vehicle batteries
in the city of Heide. The plant will have an
annual capacity of 60 GWh. This translates
to 800,000 to 1 million electric vehicles per
year, depending on the size of the battery.
The plant will start producing in 2026 and
will reach full production capacity in 2029.
Under the measure, the aid will take the
form of a €700 million direct grant and
a €202 million guarantee. Without the
aid, Northvolt would establish the plant
in the United States, where support was
offered in particular under the Inflation
Reduction Act. The Commission found
that the German measure is in line with
Article 107(3)(c) TFEU and the conditions
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set out in the Temporary Crisis and
Transition Framework, in particular
Section 2.8, which enables Member States
to support accelerated investments in
sectors strategic for the transition towards
a net-zero economy. More specifically, the
Commission found that:
- The measure concerns the production
of batteries, therefore it is aimed at
an investment project with strategic
importance for the transition towards
a net-zero economy. In addition, the
project is carried out in Heide, a city in a
disadvantaged area as defined under the
German regional aid map. The aid has an
incentive effect, as without the aid the
plant would have been established outside
the EEA.
- The beneficiary has set itself the goal of
building the world's most environmentally
friendly battery, which produces
significantly less CO2 emissions than other
companies when measured on produced
level including recycling at the end of life.
The reduction of the carbon footprint is in
particular achieved using fossil free energy
in the production and a circular design of
the production process, including recycling
of battery cell materials.
- The measure has a limited impact on
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competition and trade within the EU. In
particular, it is necessary and appropriate
to ensure the establishment of the battery
production plant and it will not lead to
overcapacity in the market.
- The aid is proportionate and limited to
the minimum necessary to trigger the
investment in Europe: it does not make the
investment in Germany more profitable
than the investment in the United States.
It will also not exceed the amount of the
subsidy that Northvolt could demonstrably
receive for the equivalent investment in
the United States.
- Finally, the aid will be granted no later
than 31 December 2025.
“This €902 million German measure is
the first individual aid being approved
to prevent an investment from being
diverted away from Europe, under the new
possibility offered by the Temporary Crisis
and Transition Framework since March
2023. It enables Germany to support the
construction of Northvolt’s production
plant of batteries for electric vehicles. This
is an important step for the electrification
of transport in Europe, while preserving
the level playing field in the Single Market.”
Margrethe Vestager, Executive VicePresident in charge of competition policy.