Europe’s Investment Bank (EIB) has given its in-principle agreement to support the financing of the Continent’s first home-grown gigafactory for lithium-ion battery cells, Northvolt Ett, in Sweden.

On conclusion of the loan agreement, the financing would be supported by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.

The gigafactory will be established in Skellefteå in northern Sweden – a region home to a prominent raw material and mining cluster which has a long history of process manufacturing and recycling.

“The development of a competitive and green battery value chain within Europe can not only cut greenhouse gas emissions by decarbonising power generation and transport, but can also help protect millions of well paid jobs in European industries in the face of increasing global competition,” said EIB VP, Andrew McDowell.

“The EUR350m (US$391m) loan to Northvolt approved in-principle today by our board is the largest ever direct EIB financing approval for battery technology and we look forward to working with Northvolt over the coming months to finalise contracts.”

Northvolt Ett will serve as Northvolt’s primary production site, hosting active material preparation, cell assembly, recycling and auxiliaries. The construction of the first quarter of the factory will be completed in 2020.

Ramping up to full capacity, Northvolt Ett will produce 32 GWh of battery capacity per year.

“This EIB in principle approval is a key moment in the process of finalising our capital raise to support the establishment of Northvolt Ett,” added Northvolt co-founder and CEO, Peter Carlsson.

“Today, we are one step closer to our goal of building the greenest batteries in the world and enabling the European transition to a decarbonised future.”

The capital raise, in which the EIB loan would be included, will finance the establishment of the first 16 GWh of battery capacity production.

The batteries from Northvolt Ett are targeted for use in automotive, grid storage and industrial and portable applications.