Sweden’s NorthVolt wants to cut the cost of storing power in half with a $4.2bn lithium-ion battery factory.

The Stockholm-based firm wants to raise $1.06bn (EUR1bn) by 2018 in order to put the factory in place, according to founder Peter Carlsson, who was Tesla’s former head of sourcing and supply chains.
“Europe will be a very important market for energy storage,” Carlsson told Bloomberg. “There is a huge need for back-up power. There is also a sizable auto industry that has made big promises to go electric.”

Batteries are seen as the key ingredient in the global push for a zero-carbon economy, as they can fill power gaps caused by renewable intermittency.

Lithium-ion packs are also key for automakers banking on a new generation of plug-in vehicles.

Sweden’s biggest utility, Vattenfall AB, has been persuaded to invest around $550,000 and has raised $14m to date.

NorthVolt is also applying to the European Investment Bank for a loan and could also issue green bonds for funding.

 “There are 19 million cars sold in the European Union per year,” Carlsson said. “If even 10 per cent are going to be electric, which is a conservative estimate for 2025, that’s a huge opportunity for us.”

Batteries currently constitute the most expensive element in electric cars. Lithium-ion batteries cost about $200 kilowatt-hour and Bloomberg New Energy Finance projects average battery packs will still cost about $109 a kilowatt-hour by 2025. The research group estimates that Tesla will be able to crank out batteries for less than $100 a kilowatt-hour by 2026 from its US gigafactory.

NorthVolt’s initial facility in Sweden is planned to have capacity to produce about 8 gigawatt-hours of batteries per year, rising to 32 gigawatt-hours once the project is fully operational in about six years. The company expects to lower to cost of lithium-ion battery packs significantly, aiming to halve prices by 2022, Carlsson said.