Salzgitter Flachstahl, a German steel manufacturer, has entered into a 10-year power purchase agreement with Octopus Energy Generation.
According to the agreement, Salzgitter Flachstahl, a subsidiary of Salzgitter AG, one of Germany’s leading steel and technology groups, will receive 126,000MWh of clean energy annually from Octopus’ Schiebsdorf solar farm in Brandenburg.
Starting with the project’s commissioning later this year, it will secure more clean electricity and provide a hedge against rising electricity costs for Salzgitter Flachstahl, while also supporting the company’s goal of producing green steel.
The SAlzgitter Low CO2-Steelmaking (SALCOS) initiative, which was launched in 2018, aims to use green hydrogen produced with renewable energy in stell production to achieve a 95% reduction in carbon emissions from traditional production processes.
“As we work towards our strategic emissions reduction goal, this latest PPA adds another significant source of clean electricity to power our operations, create green hydrogen and ultimately produce greener steel for our customers,” says Ralph Schaper, Head of Salzgitter’s Energy Economy Department.
“Octopus, with its extensive track record in European renewable energy, is an ideal long-term partner for us.”
The transaction, which was facilitated by Pexapark, marks the beginning of Octopus’s increased investment in Germany, which is expected to exceed €1 billion ($1.1 billion) by 2027.
Octopus purchased the Schiebsdorf solar farm, the largest in its expanding renewable portfolio, last month on behalf of the Sky fund (ORI SCSp), which it manages.
Alex Brierley, co-head of Octopus Energy Generation’s fund management business, said the partnership with Salzgitter is a giant leap towards decarbonising heavy industry and propelling Germany’s clean energy transition.
“Germany’s shift to net zero has many huge opportunities to get involved, and we’re geared up to announce more deals very soon.”
Germany’s renewable energy PPA market is expanding in strength. Germany is expected to overtake Spain as Europe’s leading market for PPAs by 2024, owing in part to efforts to reduce industrial carbon emissions.
Source Salzgitter and Octopus Energy
