As the world transitions to a greener future, locations are positioning themselves to be hubs for new technologies for how energy is generated, stored and used. A case in point is the German state of Saxony-Anhalt, where research institutes and businesses are working on everything from e-mobility to solar and battery technologies.

Tesvolt, a commercial energy storage system specialist, is a prominent example. In 2019, Tesvolt set up Europe’s first gigafactory for commercial batteries in Lutherstadt Wittenberg, where it produces batteries with capacities ranging from 10 kilowatt-hours to 100 megawatt-hours. 

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“We are fortunate to be based in Lutherstadt Wittenberg, which is perfectly positioned,” says Daniel Hannemann, Tesvolt’s managing director, who notes how the close ties he and his co-founder Simon Schandert have to the region made it appealing as a location. 

“We’re conveniently located between the hubs of Berlin and Leipzig, and this is key when recruiting talented young employees,” he says.

Fostering success

Founded in 2014, Tesvolt has established itself as a global player in energy storage systems, rolling out more than 2200 projects worldwide and growing to a team of more than 100 people. The state of Saxony-Anhalt has supported this growth since 2017 through venture capital funding from its investment company, IBG Beteiligungsgesellschaft Sachsen-Anhalt.

“IBG is always present in an advisory capacity, offering support on all matters relating to growth and financing,” says Mr Hannemann, adding that the €10m of long-term equity capital offered by IBG to start-ups gives them enough time to grow. “Saxony-Anhalt is a state that’s perfect for company founders,” he adds.

Tesvolt recently began work with German electronics parts supplier Stercom to develop a high-performance 44-kilowatt inductive charging station, aiming to enable electric vehicles (EVs) to be charged more efficiently over shorter periods. Mr Hannemann expects the product to be ready for the market in a few years.

Since 2019, the German federal government has fostered the development of large-scale battery production through a €1bn fund and an additional €500m to support research into next-generation EV batteries.

Battery value chain

Given battery gigafactories with a potential total annual production capacity of 600 gigawatt-hours have been announced across Europe, the demand for chemicals needed to produce them is expected to surge. Bitterfeld-Wolfen chemical park plans to become the first in Europe with a complete battery chemistry value chain, including recycling for a sustainable circular economy.

“We want to have every single step of the value chain after the raw material source,” says Patrice Heine, the CEO of Bitterfeld-Wolfen chemical park. This includes material conversion into specialist chemicals, and further processing into precursor and active material for electrodes, he adds.

For specialist battery chemicals, Mr Heine says that large amounts of inorganic base chemicals, skilled workers and experience will be needed to scale up the production, as well as renewable electricity and space for new factories: “We have all that here,” he adds.

AMG Lithium, a subsidiary of Netherlands-based Advanced Metallurgical Group, has already acquired land in the Bitterfeld-Wolfen chemical park to build a lithium hydroxide plant by 2023. 

“Through this cluster, the companies benefit from each other,” says Mr Heine, noting other tenants include the inorganic materials specialist IBU-Tec Advanced Materials. “We are also in advanced negotiations with a number of investors. But there is still room for a cathode manufacturer to settle here,” he adds. 

Since 1990, a total of 360 companies have located and invested €4.5bn at Bitterfeld-Wolfen chemical park. These include light-metal and plastic processing companies.

Solar Valley

In the nearby Solar Valley, a cluster of photovoltaic (PV) specialists has formed. Since being founded in 1991, more than €9bn of capital has been invested in the industrial area. In May 2021, Switzerland-based engineering firm Meyer Burger opened a factory to produce solar cells, which will be transported to its solar module production site in Freiburg, Saxony. 

Gunter Erfurt, Meyer Burger’s CEO, says that Thalheim’s Solar Valley is “the cradle of the solar industry” and will contribute to Europe’s path to “greater strategic independence” in PV technology. The state of Saxony-Anhalt provided an environmental protection grant of up to €15m and an investment subsidy of €7.5m for the project.

Meanwhile, South Korea-based Q Cells, Europe’s largest supplier of photovoltaic systems, plans to invest €140m over three years into its global research and development centre in the Solar Valley by 2023. The centre will develop Q Cells’ next generation of PV solutions, aiming to improve the efficiency of its solar technology.

Sustainable mobility

As part of Saxony-Anhalt’s drive to be a hub for research on e-mobility, the new method-development centre of the Otto von Guericke University Magdeburg will be built at Technologiepark Ostfalen by the end of 2023. Backed by €31m of public funding, the centre will host several test rigs and laboratories for electric, hydrogen and hybrid powertrains.

“One of the strengths of the location is certainly the convergence of knowledge and excellent infrastructure conditions,” says Martin Wolter, the chair of electric power networks and renewable energy at the university. He adds that conducting research on-site together with industry partners “will increase output and efficiency to bring new results faster” to market.

More than 140 companies are already set up at Technologiepark Ostfalen, including Horiba Fuelcon, a local battery and fuel cell specialist that was acquired by Japanese precision instrument manufacturer Horiba in 2018. The company has invested €30m into a new research centre at the park, which is set to create 250 jobs.

“At the newly founded technology park, local industry and research partners will keep developing new ideas, products and methods to improve sustainability, especially in the mobility sector,” says Mr Wolter. “This will certainly attract more national and international investors.”

Land constraints

But as Saxony-Anhalt attracts more investment into green technologies, some local onlookers are wary that land may need to be earmarked and more renewable energy investment is still needed.

“The pressure on the ground is too great, especially on cash-strapped municipalities, to hold on to the prime sites long enough,” says Mr Heine. “We urgently need more green electricity as we already see that as a knock-out criterion for international investors.” 

Despite these challenges, Mr Hannemann says that the shifts brought about by the Covid-19 pandemic have made Saxony-Anhalt an even more attractive place for companies to be based and people to live.

“[The state is] a shining example of how public organisations and institutions can supplement each other and offer funding, support, advice and infrastructure to start-ups during each phase of their development,” he says.

In association with the Investment and Marketing Corporation Saxony-Anhalt. Writing and editing were carried out independently by fDi Intelligence.

This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.