Not just Northvolt: the green transition is a problem for European industry
The Northvolt crisis is worsening, but it is not an isolated case: the European industry – from cars to heat pumps, and beyond – is struggling to adapt to the energy transition and international competition
Northvolt Ett Expansion, a subsidiary of the ailing Swedish battery startup of the same name, has filed for bankruptcy. The decision is part of the parent company's plan to deal with operating losses , which in 2023 amounted to 1 billion dollars: the strategic review launched in recent weeks, in fact, involves layoffs, sales, plant closures and the suspension of many projects both in Sweden and abroad. Northvolt is trying to raise new financing, despite having already received $15 billion in funding.
The startup explained that Ett Expansion's bankruptcy will not have repercussions on the other entities of the group and that the priority remains the increase in production in the Skelleftea factory, which has a capacity of 16 gigawatt hours per year but an effective output of not even 1 GWh.
However, as the Financial Times points out, the bankruptcy of Ett Expansion will make it even more complicated for Northvolt to obtain the 1.5 billion loan guaranteed by the Swedish National Debt Office and intended for the expansion of the Skelleftea factory to 60 GWh, a to which the subsidiary should have contributed. In fact, the Office explained that, after the suspension of the project in September, “our assessment was that the loans will not be disbursed in the foreseeable future”.
Sweden's government has also ruled out a public bailout.
NOT JUST NORTHVOLT: THE EUROPEAN INDUSTRY FACING THE TRANSITION
That of Northvolt, considered Europe's great promise in batteries, is not an isolated case, but a story that is part of the more general moment of crisis of European companies that deal with "clean technologies" or that are in any case involved in the transition energy.
The European automotive industry, for example, has so far failed to convert to electric and registrations of these vehicles have plummeted, discouraged by the higher costs compared to models with combustion engines. Sales of heat pumps – another electricity-based technology that should replace gas heating systems but more expensive – fell by 6.5 percent in 2023: this was influenced by the collapse of installations in Italy (-44 percent), linked in turn to the reduction of the Superbonus. Meanwhile, manufacturers of wind turbines and hydrogen electrolysers are struggling to compete with China, which also dominates the sector of electric mobility and photovoltaic devices.
European companies, wrote Richard Milne in the Financial Times , fear that political decision-makers have not understood the costs of the transition, which requires billions in investments and subsidies to face competition not only from China, but also from the United States. The Inflation Reduction Act, one of the most important laws of Joe Biden's presidency, in force since August 2022, was convincing Northvolt to invest in America to access the tax credits offered by the provision: it was kept in Europe by aid from German state worth 902 million euros .
MONEY IS NOT EVERYTHING
Money, however, is necessary but not sufficient, and the Swedish startup is an example of this. In fact, Northvolt has received a lot of capital, yet it has still encountered problems with the production and performance of the batteries: the construction of these devices is a very complex activity and it is also complicated to develop it on a large scale.
WHAT MOLLER-MAERSK THINKS
Vincent Clerc, CEO of the maritime transport company Moller-Maersk (this sector will also have to reduce emissions, but as of today there are no ready technologies), told the Financial Times that "the green transition is a process that none of us have never tried and that none of us can achieve alone. It has a high level of complexity, it is long and laborious."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/northvolt-impatto-transizione-energetica-industria-europea/ on Sun, 13 Oct 2024 07:37:19 +0000.