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Clean energy: Demand for batteries ‘is quite strong,’ Freyr CEO says

Freyr CEO Tom Jensen joins Yahoo Finance Live to discuss the company's growth in the U.S. and Europe, how the Inflation Reduction Act will accelerate clean energy technology, and the outlook for battery development and manufacturing.

Video Transcript

- Well, the passage of the Inflation Reduction Act has been touted as a game-changer for renewable energy investment. Clean battery producer Freyr is one potential beneficiary. The Norway-based group says its strategy aligns seamlessly with incentives under the act. It's accelerated the timetable for its first US gigafactory, and it also just opened its first US-based tech center in Boston.

Let's bring in the CEO of Freyr, Tom Jensen. Tom, it's good to talk to you again. In addition to that accelerated timeline, you've also tapped your first head of US operations. Certainly things moving along here. But how does the IRA really change the game for your company, specifically?

TOM JENSEN: So, Akiko, thank you for having us. So of course, we already announced that we're open for business in the US after we went public on the New York Stock Exchange, raising $700 million. We already have a number of key US employees and are expanding fast, leveraging the US technology through the 24M platform [INAUDIBLE] partners and customers and, as you pointed out, the technology center in Boston. We're also in the final stages of our site selection for the first gigafactory with our partners Koch Strategic Platforms, and we will be announcing the site later this year.

The Inflation Reduction Act is very important for us. And it signifies that the US is deeply committed to the development of a decarbonized energy solution. It will accelerate and significantly increase the profitable development of battery manufacturing capacity in the US.

We are, we think, uniquely exposed to this development through being one of very few public pure play battery cell investment opportunities in the West. We have quite strong support from the governmental side in Norway and in Europe, and quite deep interest in financing our first gigafactory, which we're putting online in Norway, based on ultra-low-cost clean electricity. This is the blueprint that we're going to take to the US.

And with the Inflation Reduction Act, we can accelerate that deployment because we have the team in place, we have the blueprints for the facility. We're soon having the site in place, and we have increasing number of people available to push through an accelerated and, I would say, increased development of clean battery solutions also in the US. So we're super excited about the bill, and we will come to a theater near you very soon.

- I love that. Tom, I just want to take a step back because you make high-density, cost-competitive battery cells for stationary energy storage. What exactly does that mean? I think a lot of people, when they hear about batteries, they think of EVs. What exactly do your batteries do?

TOM JENSEN: So that's a great question, Brian. So most people think about lithium ion batteries as something that goes into an electric vehicle. But from our point of view, if you put a battery into an electric vehicle to reduce emissions, the batteries themselves need to be charged with renewable energy. And they need also to produced using renewable energy. If not, you're just shifting the point of combustion.

So you need to deploy huge amounts of solar and huge amounts of wind, which, by the way, the US has excellent properties in which to deploy. But when you do that, you're going to put a lot of stress on an already underdeveloped grid. And to that effect, you're going to need a lot of storage to store sunlight when the sun doesn't shine and to store wind when the wind doesn't blow.

And lithium ion batteries at four-hour storage solutions can basically make up a big part of that storage solution. And you can produce pretty much the same type of batteries that you're producing for EVs. You will adapt them for storage for solar and wind. But that's really what we are sort of focusing our initial efforts on.

And we've seen a huge uptick in demand, generally speaking, to basically decarbonize energy systems, again, driven in part by the fact that electric vehicles need more energy to be charged, but also because we need to decarbonize the energy systems in general. And batteries are in the middle of all of this. So producing clean batteries in a world that is decarbonizing is a fundamentally important value proposition, and we are in the center of it.

- Well, and Tom, we've talked at length in the past about that, about what this wide adoption of EVs is likely to mean for the grid. You're obviously going to play both sides here. It sounds like you think the timeline is going to be accelerated. But now that the IRA is in place, you've also got grander ambitions, not necessarily for the company, but you've got this extra push to renewables accelerated because of the tax incentives that are in place. How does that shift your ambitions in the US? And more importantly, what kind of scale are we talking about now?

TOM JENSEN: So we have already sanctioned the development of our first gigafactory in Norway. That's a $1.7 billion facility, slightly shy of 1,000 people. And we have the financing, this ability to sort of back that up. This is an eight production line system, which we can replicate pretty fast in the US. We already have sites lined up for that.

And what we are thinking about, Akiko, is whether we should increase and accelerate our ambition levels. We could probably replicate this many times over. And we do believe that demand is quite strong, in terms of adding more capacity. So what the IRA means is that you're going to see a massive uptick in the development of clean battery solutions also in the US.

And we have prepared well for this, I should say. And we're taking, in a way, the Norwegian footprint and replicating it in the US. How big this can be depends, but it will be definitely north of 30 gigawatt hours in capacity in our initial facility. And we can probably replicate that many times over.

- Really quickly, Tom, what about sourcing? If you're going to scale much bigger and your ambitions are greater in the US, how are you going to source all the materials? Does that shift, too? Is it going to be more in the US?

TOM JENSEN: So I think, generally speaking, you will see a localization of supply chains. Clearly, the metals and minerals that go into batteries depend upon what chemistry you use in your batteries. We are going to initially produce, at least for the energy storage market, what we label lithium ion phosphate batteries.

So it's not cobalt. It's not nickel. It's not some of these more challenging materials that we've seen at present. But we will be also bringing the upstream developments to support the rollout of our battery cell manufacturing facilities. It makes a lot of sense to be close to your customer. And for us, being a battery cell producer, our customers should be close to us.

So therefore, we will try to invest upstream so that we can also establish processing facilities in the US. And if we also can find raw material supply in the US, we will definitely go for that. But we don't really see a big supply chain issue in the sort of term that we are talking about here, in part because we're taking a different chemistry to market, but also because it's a little bit into the future, and then debottlenecking will happen.

- Well, I imagine that global presence certainly helps in that case. Freyr CEO Tom Jensen stopping by the show. Thanks so much. Appreciate it.