The European Commission has announced that Swedish battery manufacturer Northvolt will receive €902 million of German state aid to develop a battery cell gigafactory in Heide, in the German state of Schleswig-Holstein.

France will also receive €2.9 billion to kick start production of batteries, solar panels, wind turbines and heat pumps, according to the announcement.

Northvolt’s 60 GWh lithium-ion battery manufacturing plant, Northvolt Drei, was first announced in 2022, with the company saying it aimed to produce its first line of locally made batteries by late 2025.

European Commission Executive Vice-President Margrethe Vestager said the €2.9 billion French scheme would also cover “key components and critical raw materials” for the zero-emission economy, and both countries were awarded subsidies as part of the European Commission's Temporary Crisis and Transition Framework.

Backdropped by soaring energy prices from Russia's war against Ukraine, the framework was established in 2022 to help member states strengthen their energy grids and develop their net-zero economies.

Vestager said Europe's entry into the renewables production race is of “strategic interest” to the region and the economy. She said it “has immense importance for achieving our goals in clean mobility, sustainability, and competitiveness.”