As we already explained in our previous post, Europe and most of its Member States are clearly betting on the development of the industry related to the manufacture of electric batteries, which is key to achieve the energy transition goals set for the coming years.

In this context, Spain has been one of the European countries that has made the least progress in this area in recent years. However, the impact that this industry can have on the country and its economic recovery is making Spain accelerate to make up for the time lost.

With 10% of its national GDP and 18% of exports associated with the automotive industry, Spain wants to join the rest of European countries in terms of developing this type of initiatives, which are key to maintaining a leading position in the automotive sector.

It is expected that by 2030 the annual demand for batteries in Spain will be close to 75 GWh, which would imply the need for 2-3 gigafactories in the country by that year, according to different estimations.

Thus, both the national government and the regional governments have already begun to work on the launch of their first initiatives related to this industry, all of them still in an embryonic status if we compare them with those announced in other neighboring European countries.

At the moment, up to ten regions are promoting initiatives, alliances and public-private consortiums aimed to attract investment and funding for the launching of this type of battery manufacturing projects.

Despite the announcements made up to date, it seems that no project is definitive, since in many cases its final feasibility depends on the European Funds that will allow the economic promotion of this type of strategic projects.

In fact, in some cases, the content of these initiatives is still pending to be specified, which could include only the manufacture of battery cells (as in the case of the Basquevolt project), or only the assembly of battery packs, or both activities. Some projects even consider, as part of their activity, giving a second life to used cells and batteries, with the aim of promoting the circular economy associated with the industry.

Among the cases that plan to manufacture the whole battery value chain, the Battchain project stands out above other similar projects. This project is committed to the deployment of 100% European technology, unlike some other full value chain projects where the cell technology -although manufactured in Spain- would remain in the hands of Asian capital.

Regional battle to host a gigafactory

As can be seen, at the moment the number of initiatives that are working on their development and launching exceeds the 2-3 factories that, according to estimates, Spain needs in 2030. This is due to the strategic nature and socio-economic impact that this type of project may have for the different regional governments in which these gigafactories may be located, which is causing a race and competition between different areas of Spain to be the ones to finally host these projects.

Not surprisingly, the high investment required for the implementation of these projects is combined with the high impact they can have in terms of employment, since they can generate thousands of direct and indirect jobs. For this reason, many regional governments have already announced their intention to host these factories, prioritizing them, in many cases, within their economic recovery plans and aid associated with the European Recovery Funds.

But it is not only the regional governments or the national government that are interested in launching these initiatives. Large private companies and entities associated with the sector are also seeking to participate in these projects, which are key to their roadmaps and future growth objectives. For this reason, many of them are part of the consortiums and alliances that are behind the implementation of these projects:

Many of these organizations, in fact, are already involved in synergic investments and developments with the battery industry, within the hydrogen value chain and the production of electrolyzers. For example, Iberdrola and Ingeteam are leading the Iberlyzer project, which, together with the recently announced electrolyzer company developed by Repsol and Sener, aims to launch the electrolyzer industry in Spain.

Several key factors in deciding the final location

When it comes to determining the final location of the gigafactories needed in the future, different variables can make the final decision in favor of one alternative or another. Although institutional, political and business support is essential to guarantee the feasibility of these projects, other geographical and logistical factors will play a key role in this competition.

Firstly, the geographical proximity of the projects to other key stages of the value chain, such as, for example, lithium extraction or, of course, the OEMS factories. In terms of the first criterion, locations such as Extremadura win out thanks to the existing mines in its territory.

However, it seems that the second criterion may be the most critical in this regard, since different OEMs such as Seat or Renault have emphasized the importance of the factories that supply them with battery packs to be located near their production lines in order to consider starting to produce electric vehicles in them.

In this case, locations such as the Basque Country, Navarre, Castilla y León or Aragón would have a certain advantage thanks to the fact that they have production plants in their territory and are near to those located in neighboring regions. Moreover, other logistical facilities such as rail infrastructures could be an additional element that could tip the balance in one direction or the other.

In short, a few months of regional "battle" lie ahead in which the different projects will seek to attract new partners and investments that will enable them to gain attractiveness and impact in their regions. In any case, the Spanish automotive industry is the big winner, due to the importance and strategic need to have this type of plants in the country in order to face the new challenges that are expected in the sector in the coming years.

In this way, and despite the incipient status of the initiatives, Spain is expected to contribute 2-3 gigafactories to the foreseen European map (a figure that may vary depending on the capacity and final activity of these plants). Thus, considering the State projects with the highest degree of progress according to the announcements made, this community map could be completed as follows:

In the next post of this series on gigafactories, we will focus on the Battchain consortium, an initiative that, as already mentioned, seeks to cover the entire value chain associated with electric batteries and which includes the Basquevolt gigafactory project.

 

 

Authors:

Nuria Gisbert, General Manager of CIC energiGUNE; Member of the Expert Committee of the Basque Parliament on the Basque Energy Agreement, member of the scientific advisory committee of the Vitoria-Gasteiz Green Deal and member of the Scientific Advisory Committee of the Basque Council for Science, Technology and Innovation of the Basque Country.

In collaboration with:

Iñigo Careaga: BCARE Business Analyst