The recent bankruptcy filing of Northvolt—once heralded as one of Europe’s premier battery manufacturers—has raised serious questions about how due diligence is conducted in the rapidly evolving clean energy sector. According to a Bloomberg report, Northvolt accumulated over $6 billion in debt before collapsing, and the company’s downfall is far from unique. Of Europe’s 16 battery manufacturers, 11 have cancelled projects, all under the significant pressure exerted by entrenched Asian dominance in the market.
But to attribute every European setback to Chinese efficiencies alone is to overlook a critical factor: inadequate due diligence. The renewable energy landscape is shifting at breakneck speed. Traditional investment strategies that focus narrowly on European and North American conditions, or rely on historically stellar performance in these regions, are proving woefully insufficient. In this new era, a comprehensive, forward-looking analysis is essential—one that incorporates changing supply chains, global cost structures, and fluid policy environments, particularly in China and the broader Global South.
Conducting effective due diligence in clean energy development is a notoriously complex, “wicked” problem. The challenge lies in analysing multiple, interconnected variables—technical feasibility, supply chain reliability, market demand fluctuations, regulatory changes—simultaneously, and doing so without falling prey to tunnel vision. We see this same complexity in the hydrogen and Carbon Capture, Utilisation, and Storage (CCUS) sectors. The historically low percentage of projects reaching Final Investment Decision (FID)—somewhere between 7% and 20%, compared to Oil & Gas at 73%—stems largely from reliance on outdated due diligence methods that fail to accommodate the market’s need for greater agility and systems thinking.
At Olsights, we aim to help organisations navigate this intricate decision-making environment. Our approach to assessing hydrogen and CCUS opportunities involves evaluating the interplay of multiple factors: supply constraints, infrastructure distribution and transportation options, policy frameworks, cost structures, and evolving demand patterns. If Northvolt’s downfall shows us anything, it’s that burning through £15 billion on a single battery factory—when a comparable facility in China might cost just $1.5 billion—is a stark reminder that early-stage strategic missteps often arise from antiquated opportunity screening practices.
If your organisation is wrestling with the challenges of making optimal decisions in the fast-moving landscape of clean energy—be it hydrogen, CCUS, or energy storage—let’s talk. Reach out to us at hello@Olsights.com and discover how a more forward-looking, multi-variable approach to due diligence can transform uncertainty into sustainable, profitable growth.
