Battery sector: Unprecedented financing in Quebec for Northvolt

Swedish company Northvolt hesitated to set up in California or Quebec. What convinced the battery cell manufacturer? Certainly hydropower, but perhaps also financing conditions.

To attract the company, Radio-Canada has learned, the François Legault government is doing just like its Ontario neighbor. It means that it will set up a joint program with Ottawa to compete with America. The item will be part of an announcement scheduled for 11 a.m. upon Northvolt’s arrival in McMasterville, Monteregi.

For each product, subsidy. This is the same agreement reached between the federal government, Ontario and automobile manufacturers Stellantis-LGES and Volkswagen. They are eligible for performance incentives commensurate with production.

According to our information, Quebec and Ottawa will invest $2.7 billion for the construction of the Northvolt factory.

This is the responseInflation Reduction Act (IRA) in force in the United States. The legislation, passed by the Biden administration, is dynamically aimed at attracting billions of dollars in foreign investment.

So the Legault and Trudeau governments emulate the IRA. Each time a Northvolt cell is produced, a variable amount is subsidized. The federal government provides two-thirds of the funding and Quebec, one-third.

In total, we already know that public and private investment for the four-plant complex will be close to seven billion dollars.

As this financing program is intended to be similar to that of the United States, it works like this the mirror. That is, if the American IRA’s incentives are curtailed or eliminated — by the Biden administration or its successor — the same will happen in Quebec.

Investments paid off in nine years

According to our information, Quebec expects its investments to be profitable in a maximum of nine years.

A source familiar with the matter also adds to this estimate A traditionalist And Be carefulSince profitability is well presented up front.

To avoid criticism, Quebec used the methodology of the Parliamentary Budget Officer in Ottawa to create its estimate.

A few weeks ago, a report from the latter suggested that the $28 billion in subsidies granted to Stellantis-LGES and Volkswagen’s battery factories would not be profitable for 20 years.

That’s four times the timeline the Trudeau government projected, saying it would recoup its investment in just five years.

30 billion dollar investments

With the arrival of NorthVolt, which Finance, Innovation and Energy Minister Pierre Fitzgibbon considers “the largest private project in Quebec history,” governments and companies have invested at least $15 billion in Quebec’s battery sector. .

The projects have created at least 6,000 jobs so far.

The Legault government expects total public and private investment to reach $30 billion by June 2024, as phases 2 of the GM-POSCO projects in Beaconcore and Northvolt, south of Montreal, can be announced.

The Swedish giant plans to set up its factory in an area equivalent to 75 football fields by the end of 2026. Expansion is definitely possible, as he has bought double the surface area to 320 lots.

With information from Louis Blouin