Record offshore wind deal as BASF bags power from Orsted zero-subsidy North Sea project
Chemicals giant signs 25-year agreement for output from 900MW Borkum Riffgrund 3 in German waters
Chemicals giant BASF signed what is said to be the longest corporate power purchase agreement (PPA) ever seen in offshore wind in a deal that further underpins the commercial viability of a 900MW project Orsted will build in the German North Sea without any subsidies.
BASF will take output from 186MW of Borkum Riffgrund 3 under a 25-year fixed-price PPA that the Danish developer said is a record offtake term by a corporate in the sector.
Borkum Riffgrund 3 is an amalgam of three projects Orsted won in German tenders in 2017 and 2018 without any subsidies attached, leaving the capacity reliant on corporate deals or merchant power sales.
The BASF 186MW adds to 450MW of corporate deals already signed for the project, including a 250MW agreement with web behemoth Amazon. Orsted has also agreed the sale of half of Borkum Riffgrund 3 to Glennmont Partners, a unit of global asset manager Nuveen, in a move designed to minimise the merchant risk at the zero subsidy project.
Favourable cost-drivers
Orsted said: “Borkum Riffgrund 3 was the world’s first large-scale offshore wind farm to be awarded with a zero bid. This was made possible by several cost-drivers, including the installation of next-generation wind turbine technology, very favourable site conditions and high wind speeds, and anticipated revenue-stabilising power purchase agreements with industrial partners such as BASF.”
Orsted and BASF said after the Borkum Riffgrund 3 agreement the two “will look into where the interests of both companies can match in the future to support emission reductions in the chemical industry”, which is regularly named as among the toughest nuts to crack in the push to decarbonise industrial sectors.