10-year Corporate Power Purchase Agreement Between Ørsted and Covestro
Covestro, a world-leading supplier of high-performance polymer materials, has signed a 10-year corporate power purchase agreement with Ørsted to buy the output of 100MW from the planned Borkum Riffgrund 3 offshore wind farm.
Covestro, a world-leading supplier of high-performance materials headquartered in Leverkusen, Germany, has signed a 10-year indexed fixed-price agreement with Ørsted, the world-leader in offshore wind, to offtake green power produced from Ørsted’s planned Borkum Riffgrund 3 offshore wind farm which is expected to be fully commissioned in 2025, subject to Ørsted’s final investment decision.
This makes Covestro, who is listed on the Frankfurt stock exchange and employs 16,800 people world-wide, the first major chemical company in Germany to sign a long-term corporate power purchase agreement from a new asset with a supplier of renewable energy.
“By purchasing green electricity, we are underpinning our comprehensive sustainability strategy and preparing ourselves for the expected rise in energy prices and CO2 costs. We assume that this will enable us to inspire and motivate our customers and corresponding value chains towards sustainable industrial production,” said Covestro CEO Dr. Markus Steilemann.
“At the same time, we also hope that the cooperation with Ørsted will stimulate the accelerated expansion of renewable energy in Germany,” Steilemann added. “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.”
“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,” said Martin Neubert, Executive Vice President and CEO of Ørsted Offshore. He added: “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, Ørsted 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.”
Covestro will offtake 100MW of the planned wind farm’s 900MW total capacity for 10 years, which makes it the world’s largest corporate PPA for offshore wind. The PPA will be effective from 2025.
Facts about Borkum Riffgrund 3
- Subject to Ørsted’s final investment decision, Borkum Riffgrund 3 is expected to be fully commissioned in 2025.
- Borkum Riffgrund 3 will have a total capacity of 900MW and will be located in the German North Sea adjacent to Ørsted’s existing offshore wind farms Borkum Riffgrund 1 and Borkum Riffgrund 2.
- The wind farm will be built and operated without subsidies. 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 stabilising revenues through corporate power purchase agreements.
- Borkum Riffgrund 3 comprises three offshore wind projects which were originally awarded to Ørsted in auctions in 2017 and 2018 under the names of Borkum Riffgrund West 1 (420MW), Borkum Riffgrund West 2 (240MW), and OWP West (240MW). The three projects were renamed in September 2019 and will be built as one joint project under the name of Borkum Riffgrund 3.