Build it, or buy it – Offshore wind CPPAs on the rise, ‘powered by renewables’ gains momentum

Is climate change pushing the corporate world to use as much renewable energy as possible? Or, is it because of financial reasons, such as long-term fixed prices? Or, is it „the brand kudos that comes with procuring energy from renewable sources“, as one recent report mentioned? If we are now moving faster toward a greener, cleaner world, the motivation is perhaps not even that important. One thing is for sure, more and more power purchasing contracts are being signed in renewable energy lately.

World’s largest corporate power purchase agreement (CPPA) in renewable energy was signed for an offshore wind farm in Taiwan on 8 July. The buyer is a semiconductor company, which inked the contract with Ørsted for 20 years for a project that will enter commercial operation in 2025/2026.

A few months ago, Ørsted entered a 15-year power purchase agreement (PPA) for the output of 31 MW from its Race Bank offshore wind farm with Nestlé UK, the UK subsidiary of the world’s largest food and beverage company.

Both PPAs come with a fixed price for the duration of the contracts.

Statkraft, former offshore wind developer that exited owning and building wind farms at sea in 2018, just signed a long-term PPA for 50 per cent of the output from the 1,075 MW Seagreen offshore wind project in Scotland, owned by Total and SSE Renewables. Statkraft said the Seagreen deal is the largest in its UK PPA portfolio.

According to a recent report from the Fieldfisher law firm, offshore wind is the third most popular choice for corporate renewables PPAs in Europe, with onshore wind and solar taking the first two places. In their survey of the European CPPA market, Fieldfisher found that 54 per cent of respondents would consider signing a PPA for offshore wind energy.

With renewable energy in Europe becoming increasingly subsidy-free, the market is set to create more and more opportunities for corporate buyers who are looking for long-term clean energy deals, according to the report.

While Total – ranked the world’s 4th international oil and gas company – is now also an offshore wind owner/developer, it will not stop at that when it comes to clean energy.

Namely, the company revealed its goal to get to net-zero emissions by 2050 in May. This will include both production operations and energy products used by end customers.

The supply chain in the offshore energy sector is also increasingly opting for renewables-powered production.

Subsea cable manufacturer NKT informed in June it was sourcing its power from renewables.

The company said it lowered its CO2 emissions from energy consumption by 66 per cent, compared to last year. NKT is now using clean electricity in its factories in Germany, Denmark, Sweden, Norway, Poland and Czech Republic, as well as for the cable-laying vessel NKT Victoria.

Furthermore, Greece-based subsea cable supplier Hellenic Cables decided to cover 100 per cent of its power needs with electricity from renewable energy sources.

To achieve this, Hellenic Cables recently signed a contract with Enel Green Power for all of its industrial facilities in Greece, including the submarine cables plant in Corinth and the high-voltage cables plant in Thiva. The two companies plan to later expand their cooperation beyond the power contract, which could involve partnering on renewable energy projects, among other things.

Hellenic Cables said the move to powering 100 per cent of its operations with clean energy came as the company wanted to minimise its environmental impact, which came after similar initiatives such as adoption of circular economy practices and waste reduction.

For NKT, lowering the CO2 emisions of its power cable business was a step forward in supporting the global transition to renewable energy. “We are taking our responsibility seriously as a key contributor to the infrastructure needed for the green transformation“, said Alexander Kara, President & CEO of NKT.

And when it comes to Total, it becomes even more clear that the world is more decisively moving toward a clean energy future, as the company states that its ambition is to get to net-zero emissions by 2050 together with society.

“Energy markets are changing, driven by climate change, technology and societal expectations”, said Patrick Pouyanné, Total’s CEO and Chairman of the Board. “We recognize that the trust of our shareholders, and society more widely, is essential to Total remaining an attractive and reliable long-term investment. And only by remaining a world-class investment can we most effectively play our part in advancing a low carbon future”.