Europe’s incentives a boon for silicon anode developers, but scale limits could affect growth

Financial incentives for companies developing silicon-based anodes in Europe are helping to support the sector, but the focus on innovation, not scale, risks them falling behind North America, experts told Fastmarkets

The battery industry is paying increasing attention to silicon-based anode materials because battery raw materials demand and the need for innovation in battery technology for the world’s net-zero transition and the boom in electric vehicles (EVs) has increased markedly.

Adding silicon to the anode of a lithium-ion battery increases energy density.

But silicon’s susceptibility to degrade during the charging and discharging cycle means it has historically been constrained to only being added in supplementary quantities to anodes made from graphite.

But recent scientific progress has helped catalyze silicon anode development across the world, including in North America and Europe.

Both are laggards behind China in terms of battery raw materials production and expanding silicon anode output.

Geopolitical tensions between the US-aligned Western world and China have seen a drive for the West to secure reliable supplies of the battery raw materials that China currently dominates.

Incentivizing silicon anode production

In the US, Amprius, Group14 Technologies and Sila Nanotechnologies announced they were set to receive grants from the Department of Energy totaling $250 million to invest in silicon-based anode production and innovation.

Incentives offered under the US Inflation Reduction Act (IRA) have also proved a boon for graphite anode material producers.

Meanwhile, in Europe, the European Investment Bank (EIB) has offered venture debt to innovative battery developers.

Among other recipients, the EIB in January 2024 announced a €20 million ($21.4 million) loan to US company GDI, which has an affiliate in the Netherlands and plans to produce silicon anode at an industrial scale in Germany.

And in 2022, Dutch company LeydenJar announced €30 million in EID debt funding to help build its €60 million, 100 MWh silicon-based anode foil producing facility.

Another silicon-based anode developer to receive EU funding is Netherlands-based E-Magy, a nano-porous silicon-based anode material developer.

A spokesperson told Fastmarkets the company has received funding “across a number of R&D programs […] specifically from EIT Raw Materials and the Dutch National Growth Fund.”

Asked about the benefits of the company’s European base, the spokesperson pointed to the proximity to existing metallurgical silicon metal producers. They said proximity allows “improved logistics and the ability to collaborate technically, locally.”

E-Magy benefits particularly from this owing to its use of metallurgical-grade silicon as opposed to projects which use other precursor materials, less widely produced in Europe.

Though Europe does import some silicon metal from China, the region has significant and established silicon metal and chemical producers. But only some of these supply materials to the anode sector.

Asked what Europe’s support for innovation in the silicon anode sector could mean, E-Magy’s spokesperson was positive, pointing to the prospects for scale and geographical expansion after new technology is developed.

“Such legislation stimulates the development of new technologies such as silicon anodes,” they said. “When scaling up production, these businesses can easily be expanded to other parts of the world.”

In an interview with Fastmarkets on Thursday February 15, Vincent Pluvinage, chief executive officer of North America-based silicon-graphite anode developer OneD Battery Sciences, which has plans to expand into Europe, also emphasized the importance of innovation for Europe to compete with China.

“You’re not going to compete with China on labor, so certainly you have to look at innovation to reduce costs and establish a sustainable battery supply chain in Europe that will enable the production of affordable EVs,” he said.

Falling behind North America

Despite E-Magy’s positivity, the scale and type of European incentives pale when compared with their North American counterparts, in particular the IRA.

A source at major silicon producer Ferroglobe warned this was leading to Europe’s planned silicon anode production falling behind.

“European incentives are more directed towards innovation than capacity deployment,” the source said. “In the US, the IRA is clearly focused on capacity deployment, which is very much needed in capex-intensive businesses such a battery raw materials.”

Incentives offered under the IRA have seen expected US lithium-ion battery capacity outstrip Europe’s, and the source said that battery raw material producers are likely to “head to North America.”

“The battery value chain places a lot of value on securing short supply chains,” they Ferroglobe said.

Ferroglobe produces anode-grade silicon metal in Europe and told Fastmarkets last year that it would increase silicon output to meet anode demand should it emerge.

The company aims to supply high-purity silicon raw materials to producers of silicon-carbon anode composites and to silicon oxide-based anode producers.

So far, the Ferroglobe source observed that demand for silicon anode materials in both Europe and North America is strengthening, with the US particularly being boosted by the IRA, which offers incentives for EV batteries produced using raw materials from friendly countries.

Following in solar’s footsteps

The European silicon-based solar cell production sector is also lagging behind that of the US.

In its Renewables 2023 report, the International Energy Agency (IEA) observed a lack of planned manufacturing for photovoltaic manufacturing in Europe compared with China, the US and India.

This, the agency projects, is causing Europe to fall behind in solar manufacturing self-sufficiency.

“In the EU, insufficient policy support for domestic [photovoltaic] manufacturers and a lack of demand-side policies promoting the uptake of EU-manufactured products resulted in a limited number of project announcements,” the agency wrote.

Keep up to date with market insights and data with our Fastmarkets battery material news and prices.

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