German high-tech materials specialist Covestro has signed a long-term deal to buy production from Orsted’s planned Borkum Riffgrund 3 offshore wind project in the North Sea, in what is set to be the largest corporate power purchase agreement (PPA) to date in the fast-growing sector.
Through the deal, Covestro will offtake 100MW of the wind farm’s total 900MW capacity at indexed fixed price over ten years, starting in 2025.
“By purchasing green electricity, we are underpinning our comprehensive sustainability strategy and preparing ourselves for the expected rise in energy prices and CO2 costs,” said Covestro CEO Markus Steilemann.
Without green electricity, the chemical industry, but also industry as a whole, cannot make its contribution to ensuring that Germany becomes largely greenhouse gas-neutral by the middle of the century, as specified in the climate protection plan.”
“At the same time, we also hope that the cooperation with Orsted will stimulate the accelerated expansion of renewable energy in Germany.”
Martin Neubert, CEO of Orsted Offshore, said: “Our agreement with Covestro is the first tangible step to secure stable revenues for part of the power generated by Borkum Riffgrund 3 which will be built and operated without subsidies.
“At the same time, this corporate PPA shows that offshore wind can be a reliable source of green power delivering the large volumes required by energy-intensive industrial players. With this agreement, Orsted and Covestro support the German energy transition and the continued build-out of renewable energy which is urgently needed to reduce carbon emissions in the German industrial sector.”
Borkum Riffgrund 3, which is still awaiting a final investment decision, will be located next to the developer’s operational Borkum Riffgrund 1 and Borkum Riffgrund 2 projects.
The wind farm, which will be built and operated without subsidies, is made up three offshore wind projects originally awarded to in auctions in 2017 and 2018 under the names of Borkum Riffgrund West 1 (420MW), Borkum Riffgrund West 2 (240MW), and OWP West (240MW).
Thought corporate PPAs are common in onshore wind, the trend is only beginning to take off in the offshore sector, with Orsted pioneering the concept in February via a ten-year deal with UK utility Northumbrian Water to offtake power from the 573MW Race Bank project off England.
Web giant Google bought its first offshore wind power in September, adding 92MW-worth of output from the under-construction 370MW Norther wind farm in the Belgian North Sea under a deal with Engie.