Good morning, everyone. Everyone here in the room at the ONS in Stavanger at 8:00 A.M. on the 30th of August, 2022. Today is a milestone and a very important day for Freyr . We are here to announce, I would say, a groundbreaking step forward in unlocking clean battery solutions for a decarbonizing planet. With me today, I have Laurent Demortier of Nidec Corporation. We are today announcing the establishment of a joint venture between Nidec and Freyr , where we're going to manufacture world-leading utility grade battery storage modules and packs, leveraging Freyr 's decarbonized battery solutions to be produced in Mo i Rana.
We want to take you through the basis for this agreement, which is one of the largest contracts entered into by a Norwegian company onshore in modern history in Norway. We are extremely proud to be here with Nidec on this joyous event. Let me just take you through the main points of the agreement. We are joining forces with Nidec, one of Japan's largest companies, to establish what we believe is the largest joint venture for world-leading low carbon energy storage solutions. The JV combines Freyr 's clean, next generation low carbon battery solutions with smart modules and packs delivered by Nidec, and we're integrating them into ESS solutions for industrial and utility grade customers.
We will supply 38 GW hours under a legally binding contract from our Giga Arctic facility to this joint venture between 2025 and 2030, with an option to increase it to 50 GWh , which basically will take up half the production capacity of Giga Arctic in the period. This sales contract has a gross value for Freyr in excess of $3 billion, so NOK 30 billion. I think it's fair to say that this is a large and important event, not only for Freyr , but also for the Norwegian battery industry, and I dare say, for the Norwegian industry as a whole. This is one of the largest, if not the largest, ESS contract so far. I think it represents a very large step forward in the decarbonization of energy systems globally.
Nidec, which we are extremely proud to be partnering with, is a leader in the energy storage system space across multiple geographies and close to 10% of the current ESS market globally. They are furthermore one of the largest producers of electric motors globally, if not the largest. Laurent will take you through some of the excellent characteristics of this multi-billion dollar Japanese company with a very high credit rating. The joint venture will be located in Mo i Rana. We will produce modules and packs next to our battery cell manufacturing facility inside Giga Arctic. This is truly a strong step forward in enabling low cost renewable energy to all. Let me talk a little bit about the market.
This was also a topic here at the ONS yesterday, where among others, Mr. Musk talked about the need for accelerating decarbonization. Not only to decarbonize, transportation sectors by having a lot of, electric vehicles on the road, but it's equally important to decarbonize the energy system. In a world that runs on renewable energy, and also provides affordable electricity for all, electricity generation globally will probably need to triple over the next 20-30 years. That will have to happen with renewable energy, and that renewable energy will also need to replace the existing predominantly fossil-based, energy generation or power generation. Which means that we will more than 20-fold variable, energy production globally. When we're 20-folding, renewable energy production, the amount of storage needed is exponentially growing.
You can see on the charts here that it's highly underestimated how much storage capacity is needed to balance out a renewable electricity system globally. For Freyr to partner with such a prestigious company as Nidec, who has world-leading experience in electric engines and motors, and also is a global leader in the ESS market space, could not have become a more fundamental partnership for Freyr . With that, let me then say what Freyr brings into this. Freyr , through its Giga Arctic facility and through our mission based on speed, scale, and sustainability, will be producing world-leading battery cells based on next generation technology, which builds larger and thicker electrodes. This is an example of such an electrode.
You can see the size of it, but we could probably also double or even triple the size of this in future generations of how we produce batteries. This is obviously critically important to put as much energy storing capacity into an energy storage solutions as possible. Besides that, we obviously need to wrap that with the relevant equipment and the relevant solutions, which is modules and packs and battery management systems. Partnering again with Nidec in this regard is an ideal fit to our production of battery cells. We are basing our production of battery cells based on 100% renewable energy in Northern Norway.
As many of the viewers and people here might know, we have entered into a long-term power purchase agreement with Statkraft, with dedicated hydropower for our facilities in Northern Norway based on power prices that I think most other battery, industry players would really envy us if they knew, the sort of number we're talking about. This gives us an opportunity to be at the absolute left-hand side of the cost curve, not only because of the low energy prices, but also because we have a superior technology that has dramatically lower capital expenditures. We use much less people per batteries we produce. In fact, we have 50% lower capital expenditures than the average of battery facilities in Europe, and we can produce three times as much batteries per employee as anyone else.
This is a fundamentally important point, but the low-cost renewable energy also puts us on the left-hand side of the carbon curve, which in a world that is decarbonizing is going to be extremely important. Freyr is targeting an initial 80% reduction in CO2 footprint along the entire value chain of battery cell manufacturing, and our ultimate ambition is to go to zero. I'm not talking about net zero, I'm talking to absolute zero, and this is an ambition that we are well advanced in being able to to accomplish. In a world where decarbonization is key, this is something that we're very proud of having as an ambition, and we're more than halfway to the target, ladies and gentlemen. We're extremely proud with that. With that, as you can see, quite excited today.
Let me now hand it over to Laurent to take you through Nidec, our now most important partner in this electrification journey.
Yeah, thank you. Thank you, Tom, and good morning, everybody. Let me go through a little bit who is Nidec, though. Nidec, we are a young company, created in 1973 by Mr. Nagamori-san, who is still our Chairman and CEO today, and very present on driving the development of the company and very excited by this joint venture. We are based in Kyoto, in Japan. We have $74 billion business, and we are all in the same thing, which is we are leading a company in energy solution. We do generator, we do battery storage, and we do plenty of things that goes around the electrification of the world. Next.
Okay, we have a global reach. One feature, I said we are Japanese, but we have a pretty impressive asset distribution of factories, R&D centers, sales development around the world. We have more than 300 different companies in the portfolio of the group, all doing the same thing. We are present in 46 countries around the world. With this joint venture, we add one country to our portfolio. That’s the 47 countries, so Norway is the newest country. Mr. Nagamori was quite excited to put the Nidec flag in Norway and very proud to do it with Freyr. 145,000 people around the world, so a pretty global reach.
I just highlighted here U.S. and Europe, which are going to be the key assets for this joint venture to develop and enable the fast and rapid development of solution that we will build here in Mo i Rana. Next slide. Now, what is this joint venture about? I think it's at the beginning when we met with Tom, which was a long time ago, we were developing a lot of ESS solution around the world, battery storage, to basically help the utilities and help customers to build this storage of electricity. We were buying the battery spot on the market, okay? Who do we buy that?
We buy to people that have built batteries. For what? For the automotive industry. Automotive is fine, but battery storage, when you talk to an automotive guy, compared to battery storage, if you talk to the utility, which is the market we target, you get a ratio of 100. A battery for utility-scale is 100 x bigger than the one from the auto. You might understand that when you build this large battery storage with these batteries made for the automotive, you assemble 100 pieces together. If you assemble, you put cable in the middle, you put an envelope, that another envelope, that another envelope, and at the end, you get a very costly solution.
The vision we had, we said, "Hey, we chose Freyr ." We scout all around the world. Again, we have been working with almost all the battery suppliers around the world, and we wanted. We said we need to design a product that will fit this industry, this growing industry, which is still big. I know 40 GW of battery today, it's still a big business, but is going to explode. To explode, we need to ensure that we have a cost-effective solution, performance solution. Performance, high density of power, and lower cost to produce, and Tom explained some of the scale. Freyr , we were impressed by the technology of Freyr , okay?
The semi-solid, which is also another innovation, I think that will come to the market that will enable us to deliver this and maybe bigger sales, which will even simplify the problem. From our side, Nidec is going to bring all this knowledge on the electronic side, I think on the installation, but first on the electronic in the JV. We're going to create. We are not going to assemble cells. We are going to create module, which will be smart module, that will be able to be integrated into the energy network. You can monitor this reserve of battery as a generation asset. It's going to be very helpful and it's going to be very efficient.
We will also. We'll create some new product, and the JV will create some new products that will be plug-and-play modules that we will distribute to the market. We might distribute to Nidec as a manufacturer of installation of solution we might integrate, but we will also sell that to the open market worldwide because we believe that those module will become a reference point in the industry.
This then sort of concludes the press conference today. Again, I'm extremely proud and
Thank you.
Pleased for this, joint venture. This really marks the start of Freyr 's commercialization journey. We have announced a number of so-called conditional offtake agreements to date. This represents our first firm offtake agreement, and with the optional volumes, 50% of the volume in Giga Arctic. That's obviously a massive milestone for us in terms of unlocking the project finance at favorable rates, which by the way, is also going very well, to those who are listening. We believe that this is just the start of an exponentially interesting journey for Freyr . Giga Arctic is our first massive facility. We have previously announced that we will leverage those blueprints, and replicate such facilities in the US market.
I can just confirm to everyone tuning in that we will shortly be coming with news also around our site selection process in the U.S., which basically will be a replica of Giga Arctic. Today we are proud, honored, and privileged to be standing here with Nidec, all for dreams. We had a dream when we started Freyr , and today it's becoming a reality. Thank you very much for your attention and hopefully you will tune in next time. There is more massive news to come from Freyr .