Last fall, Swedish lithium-ion battery maker Northvolt announced it had raised $ 600 million in equity to invest in capacity expansion, research and development and large-scale recycling.
The capital increase included institutional investors Baillie Gifford, Baron Capital Group, Bridford Investments Limited, Norrsken VC & PCS Holding as well as private investors Cristina Stenbeck and Daniel Ek. He was joined by current shareholders of Northvolt, Goldman Sachs, the IMAS Foundation, Scania and Volkswagen AG.
The $ 600 million represented a substantial capital raise for a company that is not exactly a household name in the United States, but Northvolt CEO Peter Carlsson had previously made it clear the company’s intention to overthrow Chinese domination in the European market: flow of used batteries to China, and that’s stupid. It is important to maintain these flows within Europe.
Northvolt closed the biggest battery deal in 2020, but it has been a huge year overall for the rapidly growing industry. Mercom Capital Group, a global cleantech-focused communications, research and advisory firm, recently released its Q4 and full year 2020 financing and mergers and acquisitions report for the battery storage, smart grid and energy efficiency sectors.
Here are some of the main findings of the report:
- Battery storage, smart grid and energy efficiency companies generated $ 8.1 billion in corporate funding in 2020, up from $ 3.8 billion in 2019.
- Funding for companies in battery storage increased 136% to $ 6.6 billion in 54 transactions in 2020.
- Global VC [venture capital] Funding for battery storage, smart grid and efficiency companies in 2020 was 12% higher at $ 2.6 billion. against $ 2.3 billion raised in 2019.
The report noted that lithium-ion battery technology companies received the most venture capital funding in 2020, at $ 649 million. But other categories of storage have also received funding, including solid-state batteries, downstream energy storage, energy storage systems, and flow batteries. Related: Goldman Sachs: Historic Loom For Copper Shortage As Prices Soar
Investor interest in space is clearly on the rise. In 2020, 105 venture capitalists participated in battery storage deals, up from 78 in 2019. Breakthrough Energy Ventures was the top investor in 2020. Utilities and oil and gas companies participated in four deals of battery storage financing in 2020.
Highlights of the report also noted:
“In 2020, announced debt and public market funding for battery storage companies increased significantly to $ 5 billion in 22 deals, up from $ 1.1 billion in 10 deals in 2019. This is the highest amount raised in public market financing since 2014. Northvolt $ 1.6 billion and Plug Power’s $ 1 billion loan was the largest public market financing transaction in 2020.
There were 19 M&A deals in the Battery Storage category in 2020, two of which disclosed deal amounts. A total of 24 battery storage and solar storage plus mergers and acquisitions transactions were announced in 2020, up from 11 in 2019. ”
To date, China has dominated the lithium-ion battery space. The country has the major advantage of cheap labor, and China has more lithium reserves and greater lithium production than most countries. In 2018, Chinese lithium production was 7,500 metric tons, the third among all countries and more than eight times US lithium production.
But some of the deals announced in 2020 represent a significant shift in the development of a robust battery industry that is not entirely dependent on China.
Much of this strategy is reflected in Northvolt’s investment in battery recycling. A recent IHS Markit Report Noted:
“Large waves of end-of-life batteries (end-of-life batteries) are expected to start this year, creating a large repository of recyclable materials. IHS Markit expects more than 500,000 tonnes (57 GWh) of batteries to reach their end-of-life point in 2020. This figure is expected to rise to 1.2 million tonnes (121 GWh) by 2025 and reach 3.5 million tonnes (350 GWh) in 2030, or seven times more.
As the world moves more and more towards electric vehicles and with the expected explosion in the volume of batteries to be recycled, the significant investment in Northvolt seems perfectly logical.
By Robert Rapier
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