On 29 June 2022, the Ministry of Trade, Industry and Fisheries announced its strategy for development of a sustainable and profitable value chain for batteries in Norway. The strategy sets out a 10-step plan for unlocking industry opportunities, which according to the statement is believed to generate tens of thousands of new jobs in Norway and NOK 90 billion in turnover within 2030. The announcement follows the government’s recent publication of a public roadmap for green industry development (see here) and the government’s same day sanction of the construction of Freyr’s inaugural Gigafactory (29 GWh) in Mo i Rana.
The battery strategy is formulated as ten measures that will position Norway in the development of the battery industry in the coming years. The background for the strategy is, inter alia, that the demand for batteries has almost tripled since 2018, and that the global market may become, according to the government’s calculations, up to 20 times larger over the next eight years, with passenger electric vehicles (EVs) supported by stationary storage being the most paramount factor driving the global demand. The strategy follows up on the EU’s strategic action plan on batteries from 2019 and the European Commission’s proposal for a new EU regulatory framework for batteries by emphasising the importance of creating a value chain for batteries that is less dependent on Asia and compliant with the Paris agreement’s sustainability requirements.
The strategy also advocates that Norway has several advantages in becoming a leading host within the battery value chain, and accentuates among others the following strengths of Norway as a host country:
- Renewable emission-free power at competitive prices
- Competence in process / material / energy intensive industries with good resources / material utilization
- Norway is leading in the electrification of the car fleet – Unique age and composition of the Norwegian electric car fleet
- Stable political governance
- Strong R&D environments that are internationally oriented
The 10 identified measures are:
1. Leadership in sustainability across the battery value chain
The government states that it will work to ensure that Norway contributes to the development of a sustainable European battery value chain with high performance, high resource utilization with environmental benefits and a low climate footprint. Further, the government will present a mineral strategy during 2022 and contribute to the development of a European value chain for extraction, processing and recycling of critical raw materials.
2. Promote Norway as an attractive host country for green investments
The government will work to ensure that Norway is a good host for investments in green value chains with basis in Norway. The government will, inter alia, use the National Export Council to achieve this goal and provide Eksfin (Export Finance Norway) with a broader mandate to contribute with financing to export-related activities.
3. Enter into industrial partnerships with key countries
The government will develop strategic industrial partnerships with the EU and with key individual countries, including strengthening a broad Nordic co-operation on development of the battery value chain. The Government will also consider involvement in IPCEI (Important Project of Common European Interest) battery projects. The government also aims to find a solution to the rules-of-origin clause stemming from the Brexit agreement between the EU and Britain, which Norway has said could hamper its fledgling battery industry.
4. Ensure capital, loans and guarantees triggering private capital
The government will provide targeted risk relief, primarily through guarantees and loans to good, economically profitable projects. According to the announced policy, this may include different types of loans and guarantees, but also equity. The government intends to revisit and clarify the specific arrangements in the annual state budgets, but seems willing to offer increased risk relief where needed in order to mobilise private capital, and states that the need for governmental risk relief may be in the region of NOK 60 billion until 2025. The government will also look into ways to stimulate the growth of climate friendly investments.
5. Promote access to relevant expertise
The government will use the final report from the Batt-KOMP project to evaluate how the government can facilitate that the required expertise for the green industries, such as the battery industry, are available going forward.
6. Facilitate access to more renewable power
The government’s ambition is that the capacity in the Norwegian power grid is strengthened and the license processing time is shortened. The government will also continue to secure the Norwegian industry’s competitive advantages related to access to (relatively) cheap clean energy. The policy highlights, inter alia, the government’s initiatives earlier this year on offshore wind and revitalisation of Norwegian onshore wind (read more about that here and here), but also refers to increased hydro power production together with increased capacity with the license authorities. The strategy does not reflect extensively on the latest changes in the EU/Norwegian energy market, and it remains to be seen how the Norwegian electricity prices as a competitive advantage compared to the EU, will evolve, especially in the southern parts of Norway (NO1 and NO2).
7. Contribute to development of land and infrastructure
The government will consider whether Siva, together with Invest in Norway, may be commissioned to facilitate industrial establishments in Norway, and assist the industry in facilitating the necessary land and infrastructures. Further, the government will present a national strategy on land and infrastructure development for green industries (no timeline indicated).
8. Ensure predictable, efficient and coordinated public processes
The government will prepare (no timeline indicated) a brief guide which will show the Norwegian requirements for location, area assessments and studies in connection with establishment of green industry, especially aimed at the players in the industry and the relevant authorities.
9. Support prospering pilot municipalities
The government will assist and work closely with municipalities where there already are battery projects planned, such as in Arendal municipality where Morrow are planning to build their gigafactory with an annual production capacity of 43 GWh battery cells at Eyde Energy Park.
10. Leadership on tomorrow’s battery solutions and leveraging digital technology capabilities
The government adheres to the cluster-based approach of the EU where the EU has a coordinator role, but will work to stimulate Norwegian R&D initiatives in order to secure the completeness of Norwegian enterprises enabling development of «Norwegian IP».
Read the full policy here (Norwegian only).
CLP’s recent work within the sector
CLP has been involved and assisted in some of the most salient battery production and recycling projects in Norway, including the development of Morrow Batteries’ 43 GWh Gigafactory and the joint venture between ECO STOR, LI Cycle and Morrow Batteries to construct a lithium battery recycling facility to process up to 10,000 tonnes of lithium-ion batteries per year.
We also already have extensive experience in helping clients invest in battery technology companies in Norway and abroad.
Lars Gunnar Aas is the Managing Partner of CLP. Aas specializes in M&A and private equity, and his extensive experience covers a wide range of international and domestic transactions, strategic investments and cooperation between shareholders, where he represents corporates, private equity/venture capital funds and other financial sponsors and investors.
Amund focuses on renewable energy, and assists in acquisitions and mergers within the renewable sector and matters relating to energy law, water resources law and concessions. Amund also has substantial experience within the practice areas real estate and commercial dispute resolution and litigation.
Lars Strøm Killengreen works primarily with M&A (transactions), corporate and contract law, but also assists in matters relating to energy law, water resources law and concessions within the renewable sector.