Like its fellow Norwegian-founded peer Freyr, Morrow is – at least with its first phase – primarily selling into the energy storage system (ESS) market. It is selling lithium iron phosphate (LFP cells) to system integrators working in the commercial and industrial (C&I) and residential application segments. One of those announced last year was Eldrift.
In an interview at the Giga Europe conference in Stockholm this/last week, COO Andreas Maier explained why the company had gone this route, and how it expected it stay competitive in that market considering the price falls from Chinese suppliers and ESS’ lack of incentives to use European cells (compared with the EV market).
Giga Europe was put on by Benchmark Mineral Intelligence and brought together the continent’s battery supply chain, including gigafactory companies, critical material producers and traders and those active in financing.
Quicker route to ESS market
“It is about the the accessibility of the ESS market. Automotive customers have much longer lead times for qualifying batteries to their platforms, it could be a five-year lead time,” he said.
“Staying competitive – that’s a challenge for the market which is now flooded with cheap Chinese LFP batteries. There is still an opportunity for us to work with smaller companies not necessarily served by the big suppliers; specifically mid-sized companies that put an emphasis on sustainability and independence from the Chinese supply chain.”
Gigafactories in Sweden and Norway can benefit from being able to achieve 100% renewable energy from hydropower, with energy a massive portion of a gigfactory’s carbon footprint.
However, Morrow still needs to source its cathode active material (CAM) for LFP batteries from China. “The LFP supply chain is highly Chinese. However, we have a second generation chemistry we are looking at and talking to customers about, which is LNMO (lithium nickel manganese oxide). The LNMO supply chain is much more European, and we could produce the CAM for that.”
Like any battery manufacturer targeting the ESS market, there is also an opportunity to go into full ESS provision considering the cell is the biggest single part of that cost. Maier: “At the moment we are acting as a cell supplier but we are looking at strategic partnerships and maybe even a joint venture to become a full ESS supplier.”
Wider market
Maier spent six years at South Korea-headquartered Tier 1 battery supplier Samsung SDI from 2012 to 2018, so is well-placed to discuss the how competitive Europe will be with suppliers from China and East Asia at a high-level (on top of his comments about Morrow’s own competitive strategy). That competitiveness with both China and the US was a major theme at the Giga Europe event.
“If you look at the European gigafactory market’s incumbents – Northvolt, PowerCo, ACC, Verkor, Morrow – I think they will take their market share to the extent of the GWh capacity they have announced,” Maier said.
“Whether they will further scale will depend on how efficient those facilities will be scaled and how efficiently they will operate. There is also European production by Asian makers – the Korean companies are strongest but the Chinese and others are also coming in. How much they scale will be based on how much the European ones do.”
Maier claimed that the European premium for lithium-ion battery cells will only be 10-15% compared to Chinese ones, a bit higher in the ESS market because of the lower volumes, and that he expected that difference that premium to stay similar over time. One ESS player said the premium for European cells is more like 20-65%, even higher right now because of the lack of capacity.
All major European gigafactory projects are supported by a big European automotive OEM (original equipment manufacturer). Those European automotive OEMs over their history have moved away from manufacturing components to procurement components and assembling them with their technology know-how.
“Their role in battery production marks their re-integration back into production, though it’s not clear what their strategy is. But you could see it as a long-term game to eventually do their own production. If they don’t, I imagine a certain share of their cell procurement will be from existing suppliers in East Asia.”
Morrow’s main shareholders are Norway-based energy group Å Energi, PKA (Maj Invest), Siemens Financial Services, ABB, and Nysnø
