Distributed Energy Resources, Energy Procurement, Industrial, Sourcing Renewables - November 16, 2021
BASF Signs PPA in Germany
BASF, the German chemicals company, and Ørsted signed a 25-year fixed-price corporate power purchase agreement (CPPA), under which BASF will offtake the output of 186 megawatts from Ørsted’s planned Borkum Riffgrund 3 Offshore Wind Farm in the German North Sea.
The offshore wind farm is expected to have a total installed capacity of 900 MW and begin full commercial operation in 2025. Danish power company Ørsted received planning approval from the German Federal Maritime and Hydrographic Agency.
The PPA will help cover the increased electricity needs of low-emission technologies for BASF and is a step towards BASF’s ambition of becoming carbon neutral by 2050.
BASF is working on scaling up low-emission technologies to industrial dimensions and plans to implement technologies such as CO2-free methods for the production of hydrogen and electrically heated steam crackers, which will significantly increase BASF’s demand for renewable power.
This is the longest CPPA for offshore wind announced and is an important step in enabling Ørsted to make a final investment decision on Borkum Riffgrund 3, which is expected towards the end of 2021.
Borkum Riffgrund 3 was the world’s first large-scale offshore wind farm to be awarded a zero bid. This was made possible by several cost-drivers, including the installation of next-generation wind turbine technology, favorable site conditions and high wind speeds, and anticipated revenue-stabilizing power purchase agreements with industrial partners such as BASF.
“This supply agreement with Ørsted is another important step in securing additional renewable energy for BASF,” said Dr. Martin Brudermüller, chairman of the board of executive directors of BASF SE in a statement. “BASF wants to reduce its CO2 emissions by 25% by 2030 compared with 2018. To achieve this ambitious goal, we will have to replace large amounts of fossil energy with renewable energy within the coming years. Ørsted can provide the required additional quantities through the construction of new wind farms to support us in our energy transformation.”
Ørsted said its goal is to be carbon-neutral in its energy generation by 2025 and reach full value chain decarbonization by 2040. By 2030, Ørsted aims to have installed 50 gigawatts of renewable energy capacity, including 30 gigawatts of offshore wind power.