Vattenfall and Salzgitter AG have announced a significant electricity partnership to support the decarbonization of steel production. A new "Power Purchase Agreement" (PPA) will provide fossil-free electricity from the offshore wind park Nordlicht 1 for steel production starting in 2028.
Energy for the Steel Industry
Gunnar Groebler, CEO of Salzgitter AG, stated, "Green steel needs green energy: Therefore, this agreement is an important next step to secure our energy needs for low-carbon production. With Vattenfall, we have a strong partner at our side and we look forward to working together."
The technical details of the PPA include a connection capacity of 75 megawatts from Nordlicht 1 over a period of 15 years. The wind park is being developed in the German North Sea, about 85 kilometers north of the island of Borkum, and is expected to be completed in 2028. It is projected to supply approximately 300 gigawatt-hours of electricity per year for steel production, which is equivalent to the annual electricity consumption of about 120,000 households.
BASF holds a 49 percent stake in Nordlicht 1. Vattenfall, which holds a 51 percent stake, aims to supply customers in Germany with fossil-free electricity, thereby contributing to the national energy transition. The company is building and developing the offshore wind park Nordlicht 1 with 68 wind turbines and a total capacity of 980 megawatts.
Martijn Hagens, board member at Vattenfall and head of the Markets division, emphasized the importance of the partnership for the company's long-term strategy: "We want to decarbonize entire value chains with our fossil-free electricity and particularly support the industry on its path to a green transformation."
Investment Security Through Power Purchase Agreements
The significance of power purchase agreements like this one is increasing as they offer producers and consumers of renewable electricity investment security, price guarantees, and risk diversification. Observers expect the demand for such agreements to continue to rise.
An analysis by the German Energy Agency (Dena) predicts that the PPA volume in Germany could grow to 192 terawatt-hours by 2030, which would cover a quarter of the total German electricity demand. This is particularly significant for steel-producing processes in Germany, where a secure and competitive supply of clean energy is crucial.
