Italian energy storage company Energy SpA has announced a partnership with Chinese lithium cell manufacturer Pylon Technologies to produce batteries in Europe.

The joint venture, Pylon LiFeEU, will be based out of Energy’s existing plant in northern Italy. Production of the cobalt-free lithium-iron-phosphate batteries, designed to store energy from renewable sources, will begin in late 2023. Energy will become the only Italian company to manufacture energy storage and battery systems in-house.

Over time, the two companies will construct a gigafactory in Veneto, north Italy, with an initial productive capacity of 600–800 batteries per day. This is equivalent to 3–4 megawatt-hours of storage capacity.

“It is an important step for Pylon Technologies to start localised production,” said Jinpeng Song, Pylon’s VP of international business. “Our partners, especially in Europe, are eager to have a more secure and stable supply chain. We have chosen Veneto as a starting point, and we believe in a bright future for the renewable energy industry in the European Union, leveraging global knowledge and local resources.”

The two companies have collaborated for ten years prior to this. In April 2020, at the outbreak of the Covid-19 pandemic, Pylon donated more than 14,000 masks and protective suits to local hospitals.

The move comes amid a number of renewable energy initiatives in Italy. Last week, Repsol agreed to build more than 1.7GW of renewable energy production capacity in the country. In February, Iberdrola received approval for $161m loan from the European Investment Bank to aid the completion of a number of solar projects in Italy.

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The Italian Government has pushed for renewable initiatives, putting into place an auction scheme in 2020 to allocate funding for renewable projects. The scheme contracted around 4.8GW of renewable energy capacity, aiding Italy in its target to achieve 55.4% renewable electricity by 2030.