When Northvolt filed for bankruptcy earlier this year, it marked one of Europe’s most high-profile green-tech collapses.

Founded to create the most sustainable electric car batteries in the world, the Swedish firm attracted significant backing from pension funds across Europe.

Indeed, several of Sweden’s national pension buffer funds, through their joint investment firm 4 to 1 Investments, committed SEK 5.8bn in equity and convertible bonds – now written down to zero.

Such a significant loss of national capital has even led to a government review to examine whether the AP funds should be investing directly in unlisted assets – a development I am monitoring closely.

Yet Northvolt’s demise has not deterred all capital from green tech – far from it.
A recent example is PensionDanmark’s €112m partnership with Copenhagen Infrastructure Partners (CIP) to create a platform that will "bring the green transition of energy supply into a new phase” through microgrids.

Microgrids are independent electricity systems that supply large amounts of renewable energy directly to commercial customers, such as transport companies, without disrupting local electricity networks.

Indeed, many of Europe’s largest pension funds continue to treat climate and energy transition strategies as core portfolio components – not simply ESG add-ons – driven by both fiduciary and policy considerations.

Private markets are also proving more resilient. According to MSCI, private-market investments in low-carbon solutions have also outperformed in returns, achieving cumulative five-year growth of 123 per cent, far surpassing the 57 per cent seen in public markets.

Indeed, US-based Lyten’s acquisition of Northvolt’s assets in Sweden and Germany highlights the unwavering potential of this technology. Lyten gains cutting-edge manufacturing and research and development capacity in Europe at a fraction of the original build cost.

If it succeeds in scaling its lithium-sulphur technology, Lyten could yet deliver the kind of European-based battery production Northvolt promised – albeit under different ownership and capital structure.

For pension investors, the key lesson is not to shy away from green tech – even Northvolt under a different guise – but to invest smarter: Rigorously stress-test business models, diversify exposure across technologies and geographies, and structure deals carefully to mitigate early-stage risks.

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