A stride forward in transition to cleaner energy

As of beginning of 2024, Alpiq will annually supply 90 gigawatt hours (GWh) of renewable energy to power Borealis’ production facilities in Porvoo, Finland, over the course of nine years. The source of the renewable energy is the Finnish wind farm Merkkikallio, which is part of the renewable energy portfolio managed by Alpiq. This significant partnership takes both Alpiq and Borealis closer to achieving their sustainability goals. Alpiq acts here as enabler. The wind farm is owned by Renewable Power Capital, Alpiq takes off the power and supplies a specific amount of the produced green energy to Borealis. 

Sustainability is deeply embedded in both Alpiq’s and Borealis’ corporate strategy and purpose. With the long-term PPA now in place, both companies are taking a substantial stride forward in the transition to cleaner energy. The new PPA between Alpiq and Borealis is making a substantial contribution to the Finnish chemical sector's aspirations to attain carbon neutrality by 2045. 

“We are delighted to announce a first PPA with Borealis,” says Matti Ahtosalo, Head Northwest Europe at Alpiq. “The collaboration with the industry leader to support its sustainability goals is a milestone for us. With our Europe-wide origination business we can utilize our renewable energy portfolio and support industries in their journey to decarbonize their processes.”

Wolfram Krenn, Borealis’ Executive Vice President Base Chemicals & Operations states: “With the signing of this agreement, Borealis takes a significant step toward realizing its ambitious energy and climate goals, demonstrating its commitment to advancing the energy transition. This partnership holds special significance, as it propels Borealis beyond the pivotal threshold of sourcing over 50% of our electricity from renewable sources for our operations in Porvoo.”

“PPAs play a crucial role in the energy transition towards a carbon neutral future.”

Alpiq has recently signed two new PPAs (Power Purchase Agreements) in the Scandinavian markets. One is the contract with Borealis (link to press release), one of the world's leading providers of advanced and sustainable polyolefin solutions. Some weeks before another similar contract has been signed with the Norwegian company Norsk Hydro (link to press release), which is one of the world’s biggest aluminium producers.

What are PPAs and what is the importance of such PPAs for Alpiq and our sustainable energy business? The questions go to Matti Ahtosalo, Head Northwest Europe in Alpiq’s Division International.

Matti, what are PPAs and what role do they play?

PPAs are “Power Purchase Agreements” used in the renewable energy business. PPAs are long term contracts between a power producer and a power off-taker. They play a crucial role in the energy transition towards a carbon neutral future. With PPAs we find long term solutions that on one hand guarantee our client a carbon free electricity supply and on the other hand facilitate the integration of renewable energy sources into the electricity market by guaranteeing the off-take. PPAs often lead for both parties to price stability and planability, too.
 

How does this work?

Well, it’s actually quite easy. With the long-term contracts – they can range from around 5 to 25 years or even more – the producer can be sure, that the energy produced finds an off-taker to conditions that are agreed upon. Such contracts are providing revenue certainty for the producer and hence are reducing financial risks. On the other hand, such long-term contracts help the off-taker to meet sustainability and environmental objectives by getting the guarantee to have a fully renewable electricity supply for the terms of the contract which leads to stability, too. One can say that the PPAs play a significant role in the growth of renewable energy projects. Because without them, a lot of the wind farm projects for example would have never been built.
 

PPAs play an important role in the Nordics. Is this because there has not been the same subsidy scheme as in other regions?

PPAs are no form of financial subsidy or direct financial support from the government or other entities. Instead, they provide a market solution. It’s a marked based mechanism for renewable energy project developers to secure long-term revenue, which can, in turn, help them secure financing and make their projects financially viable. In the Nordics PPAs are popular for wind farm projects, while in Spain the focus is more on PV-projects. This is not surprising, as in the Nordics we have a lot of wind and in Spain there is a lot of sun to produce electricity.
 

What is important for Alpiq as one party of the PPAs?

Our purpose as a company is that we contribute with our sustainable energy business to a better climate and an improved security of supply. With the PPAs we do it on various levels. We support the other party - such as Borealis or Norsk Hydro in the latest contracts - on their journey to achieve the sustainability goals which is very often carbon neutrality. In the meantime, Alpiq can improve its sustainable energy business. We can expand little by little our renewable energy portfolio, support their integration in the market with our powerful and flexible hydro power assets in Switzerland and hence contribute to an enhanced security of supply. We are acting as an enabler. We do not own the Finnish wind farm Merkkikallio for example. It is owned by Renewable Power Capital. However, we take care, that this green energy is supplied to a customer to support their journey towards carbon neutral production facilities. So, we can say, we walk the talk.