Diversified technology giant Honeywell International Inc. continued its expansion into the rapidly growing energy storage business by agreeing to purchase 19 GWh of lithium-ion battery cells from European battery upstart Freyr Battery.
The deal, announced Jan. 19, also includes the supply of Honeywell manufacturing tools for Freyr's battery cell production. The companies plan to use the cells in energy storage systems for commercial, industrial and utility-scale customers, including projects coupled with renewable energy projects.
Honeywell's portfolio of production tools and solutions can "fundamentally change" the cost of manufacturing, Ujjwal Kumar, CEO and president of Honeywell Process Solutions, said in an interview. The company has decades of expertise supplying critical separator components between anodes and cathodes.
Key elements of the cost reduction strategy include automation and reduction of scrap in the manufacturing process. In addition, Honeywell will supply software to help remotely manage operations at battery storage installations.
"That will drastically bring the cost of operations down beyond the manufacturing [improvements]," Kumar said.
Freyr CEO Tom Jensen said the agreement will accelerate its manufacturing plans.
Freyr plans to make a final investment decision on its initial factory in northern Norway this quarter. The plant is expected to have a production capacity between 18 GWh and 20 GWh of cells annually, Jensen said in an interview.
"We are now seeing, given the demand that we are experiencing, that we need to accelerate additional capacity beyond that first facility," the Freyr CEO said.
Freyr, which went public in July 2021 through a merger with a special purpose acquisition company, is licensing its cell technology from Massachusetts-based 24M Technologies Inc. The company plans to manufacture batteries at a still-undecided location in the United States through a joint venture with Koch Strategic Platforms LLC, possibly beginning in 2024, Jensen said.
The investment arm of Koch Industries Inc. was the lead investor in a $600 million transaction associated with Freyr's public listing, and has already established a joint venture with Freyr to manufacture lithium-ion cells in the U.S. for electric vehicles and energy storage systems.
In addition to manufacturing in Norway and the United States, Freyr is exploring production in Finland.
Investors reacted positively to the agreement, pushing Freyr's stock up roughly 10% in afternoon trading on Jan. 19.