New funding guideline to strengthen the battery value chain in Germany

According to the new funding guideline (10-page / 760KB PDF, file in German), which was recently published in the Federal Gazette, the BMWK intends to support strategic investment projects to build up production capacity along the entire value chain of rechargeable, electrochemical energy storage systems. ‘Value chain’ refers to as the entire path from the raw material to all intermediate and supplier products to the system integration of the battery as well as subsequent reuse (‘second life‘) and recycling.

One of the aims of the funding is to reduce Europe's structural dependence on fossil fuels and suppliers from non-European countries as far as possible and so accelerate the transition to a resilient and climate-neutral economy. In addition to the establishment and expansion of production capacity, research and development expenses that are directly related to the content of the production are also eligible for funding in addition and to a reduced extent.

"Batteries not only make an important contribution to the energy transition and have become an integral part of our daily lives," says Dr. Sönke Gödeke, an expert in energy law at Pinsent Masons. “A sustainable German and European battery economy is essential for the future viability of the business location."

The focus of the funding is on investment projects by private companies. Possible beneficiaries are companies that have their registered office, a permanent establishment or a branch in Germany at the time of payment of a grant. As a rule, the duration of the projects should not exceed 31 December 2030. The grant is awarded as partial financing.

The programme’s specific funding objectives are the development of capacities for the extraction, processing, and refinement of battery raw materials; production capacities in the upstream value chain of battery cell manufacturing; production capacities for battery cells, modules, and systems for mobile and non-mobile applications; and capacities for the sustainable recovery of raw materials from modern recycling processes.

In addition, the scheme is intended to promote contributions to the strengthening and qualification of mechanical and plant engineering (highly efficient production using the latest process technology); and to the avoidance or substitution of critical raw materials as well as to the resilience or reduction of dependencies (development of capacities for cobalt/nickel-free cathode materials, development of drop-in technologies accompanying the establishment of cell production).

The projects to be funded under this funding guideline must meet various requirements. For example, the projects must promote the competitiveness and sustainable growth of Germany and the EU, address social challenges of the EU, and contribute to strengthening the EU as business location. In addition, planned investment on the project should amount to at least €75 million. Projects, consisting of innovative products, processes, or services, are to consider the requirements of the EU Battery Regulation of 12 July 2023 at an early stage, and production facilities should primarily run on energy from renewable sources.

The BMWK has commissioned VDI/VDE Innovation + Technik GmbH (link in German) as the project execution agency. A two-stage application procedure is envisaged. In the first stage, the process begins with the submission of project outlines, which are necessary for the evaluation of funding prospects, to be submitted to the project execution agency in electronic form in German using the electronic sketch assistant (link in German) by 9 November.

"With the ‘Temporary Crisis and Transition Framework’ for transformation technologies, the European Commission created an important funding construct for science and industry in March 2023," said Dr. Anke Empting, expert on EU state aid law at Pinsent Masons. “After all, it is not only investments that are promoted, but also research and development tasks directly related to them – a combination that promises sustainability!"

If a project outline is evaluated as eligible, a recommendation for application will be made provided that sufficient budget funds are available. Upon receipt of complete application documents, the application procedure continues in the second stage and ends with the approval or rejection of the formal application.