Zero-support wind farm secures world's largest offshore power contract
Clean Energy Wire
Danish offshore wind company Orsted and German chemical maker Covestro have signed the world's biggest purchase agreement for an offshore wind farm planned without support payments. Orsted said in a press release that Covestro will buy the output of 100 megawatts (MW) for a price fixed for 10 years from the planned Borkum Riffgrund 3 offshore wind farm, which is expected to be fully commissioned in 2025. "This makes Covestro [...] 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," the release said. Covestro CEO Markus Steilemann said his company prepared for the expected rise in energy prices and CO2 costs with the agreement. Orsted offshore CEO Martin Neubert said "this corporate PPA (power purchase agreement) shows that offshore wind can be a reliable source of green power delivering the large volumes required by energy-intensive industrial players."
Borkum Riffgrund 3 will have a total capacity of 900MW and will be located in the German North Sea adjacent to Orsted'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," Orsted said.
Operators caused a stir when they first offered to build offshore wind farms without support payments in Germany's first competitive auction for the technology in 2017. Many German companies keep a keen eye on green power purchase agreements in order to get a better handle on power prices and secure long-term price security.