100-MW Power Purchase Shows Unsubsidized Offshore Wind Taking Off in Europe
- Dec 9, 2019 8:56 am GMT
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The world’s biggest-ever contract for unsubsidized offshore wind, a 100-megawatt power purchase deal between Danish wind powerhouse Ørsted and German chemicals company Covestro, is being touted as a sign that the offshore industry is moving from the margins to the mainstream.
In a release, Ørsted, the company until recently known as Danish Oil and Natural Gas, said Covestro had signed a 10-year, fixed-price contract to buy a share of the 900-MW output from the Borkum Riffgrund 3 offshore wind farm when it goes online in 2025, Clean Energy Wire reports.
The deal makes Covestro “the first major chemical company in Germany to sign a long-term corporate power purchase agreement (PPA) from a new asset with a supplier of renewable energy,” Ørsted wrote. “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,” added Ørsted offshore CEO Martin Neubert.
Covestro CEO Markus Steilemann “said his company prepared for the expected rise in energy prices and CO2 costs with the agreement,” Clean Energy Wire writes.
Located in the German North Sea adjacent to two existing Ørsted wind farms, Borkum Riffgrund 1 and 2, the new installation apparently raised eyebrows when the company first announced it would be subsidy-free. “This is made possible by a set of cost drivers, including the installation of next-generation wind turbine technology, very good site conditions and high wind speeds, grid connection costs not being part of the project, plus the potential for stabilizing revenues through corporate power purchase agreements,” the release explains.
The PPA comes after Google signed up with French multinational Engie to buy 93 megawatts from an offshore wind project in Belgium, part of a bigger procurement in late September totalling 1.6 GW, Greentech Media notes.
“These days, hardly a week goes by without the announcement of another big corporate renewables deal, as companies move to lock in competitive energy prices while lowering their carbon footprint,” the U.S.-based industry newsletter adds. “So far this week, Amazon has announced three new solar projects totaling 329 megawatts in the U.S. and Spain, while EDF Renewables signed a 15-year PPA with Shell for a 132-megawatt solar project in California.”
Ultimately, “as much as corporations like to say they’re buying green power, cost remains the dominant factor in whether deals get done,” Greentech says. The story contrasts a U.S. offshore wind industry that is still “in its infancy” with faster development in Europe.
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