Norway has spearheaded the e-mobility revolution in Europe, but so far has had little role in developing the underlying technologies powering up electric vehicles (EVs). Oslo-based, New York Stock Exchange (NYSE)-listed Freyr Battery wants to change this, capitalising on the country’s abundant, convenient supply of hydropower to produce lithium-ion batteries and become a catalyst for the development of a domestic energy storage value chain. 

“There is no reason why Norway, with its energy- and process-intensive industries, and availability of power, shouldn’t be at the forefront [of battery development],” Tom Einar Jensen, co-founder and chief executive of Freyr, tells fDi. 

Battery EVs accounted for 54% of total car sales in Norway in 2020, a percentage that grows to 76.6% when including plug-in hybrid vehicles, according to figures from the Norwegian Electric Car Association. No other country in Europe has such a high penetration of EVs, or even comes close — the average across the EU stood at 10.2% in 2020, according to database EVvolumes.com. 

Mr Einar Jensen believes Norway is not only a great place to sell EVs, but also one to manufacture electric battery cells. Following in the footsteps of another Nordic battery champion, Swedish Nortvolt, the company set up in 2018 and made its debut on the NYSE three years later, raising $704m through a ‘business combination’ with special purpose acquisition company Alussa Energy. 

The company will deploy the funds to develop its manufacturing base in Mo i Rana, in the north of Norway. 

“Now we have the equity capital to start building facilities and we have made a final decision on the first of five plants in Mo i Rana,” Mr Einar Jensen says. “Our ambition is to become a global champion in the battery cell manufacturing space with 43 gigawatt hours (GWh) installed by 2025.”

The five facilities with a total capacity of 35GWh planned in Mo i Rana will serve this purpose, as well as the targeted 8GWh to be developed through joint ventures in Norway and other Nordic regions. Overall, the company plans to invest $1.38bn in Mo i Rana and another $565m for joint ventures by 2025, according to its June capital market update. 

“There is a comparative advantage of producing batteries in Norway, where we have large availability of low-cost green power,” Mr Einar Jensen, pointing out that energy usage accounts for 40% to 50% of production costs of lithium-ion batteries. At $0.048 kilowatt hours, Norway offers business the lowest power rates among OECD countries, and one of the lowest in the world, according to database GlobalPetrolPrices.com. As a reference, electricity rates for businesses were 4.6 times higher in the UK, 4.8 times higher in Italy and 4.85 times in Germany. 

Cost is just part of the equation. Hydropower makes up more than 90% of Norway’s electricity generation, limiting the environmental footprint of the country’s energy matrix — at least to some extent, as the environmental footprint of hydropower dams is still a matter of debate worldwide. 

“If batteries are a catalyst for e-mobility, they themselves have to be decarbonised as much as possible,” Mr Einar Jensen says, adding that Freyr plans to reach net-zero emissions on the batteries it produces in the next five to 10 years, as all prospective clients are demanding it. 

Questioned over the doubts concerning the sustainability of upstream operations, such as the mining of key battery materials, Mr Einar Jensen says Freyr is pulling three levers when negotiating contracts with raw material suppliers: “We are demanding full traceability, decarbonisation and material recycling perspectives.” 

This article first appeared in the August/September print edition of fDi Intelligence.