Borkum Riffgrund 3 Offshore Wind Farm : Ørsted and BASF sign historic 25-year PPA to propel offshore wind energy

In a landmark move for renewable energy, German chemical giant BASF and Danish energy powerhouse Ørsted have inked a 25-year corporate power purchase agreement (CPPA) centered on the Borkum Riffgrund 3 Offshore Wind Farm located in the German North Sea. This significant agreement positions BASF to offtake 186 megawatts from the 900 MW wind farm, slated to begin full commercial operation in 2025.

The agreement was facilitated by Ørsted’s recent attainment of planning approval from the German Federal Maritime and Hydrographic Agency (BSH). With this CPPA, Ørsted and BASF are not only reinforcing their commitment to renewable energy but also setting a benchmark for long-term industrial energy procurement. The Borkum Riffgrund 3 project, notable for being the world’s first large-scale offshore wind farm awarded with a zero bid, benefits from next-generation turbine technology, favorable site conditions, and high wind speeds, factors that collectively drive down costs and stabilize revenue through strategic partnerships like this one with BASF.

Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, emphasized the strategic nature of the agreement: “This supply agreement with Ørsted is another important step in securing additional renewable energy for BASF. We aim to reduce our CO2 emissions by 25% by 2030 from 2018 levels, and transitioning to renewable energy is crucial for achieving this goal. Ørsted’s commitment to building new wind farms is instrumental in supporting our energy transformation.”

Mads Nipper, CEO of Ørsted, highlighted the broader implications of the partnership for the climate battle, especially within the high-demand sectors like chemicals. “The chemical sector has a challenging path towards decarbonization, but it will also make one of the biggest contributions. For this reason, Germany must urgently expand its offshore wind capacity to meet the growing demand for renewable electricity,” he said.

The partnership aligns with Ørsted’s ambitious goals to achieve carbon neutrality in its energy generation by 2025 and complete value chain decarbonization by 2040. By 2030, Ørsted aims to have installed 50 gigawatts of renewable energy capacity, with 30 gigawatts from offshore wind. Concurrently, BASF is scaling up low-emission technologies and expects significant increases in renewable power demand due to innovations like CO2-free hydrogen production and electrically heated steam crackers.

This CPPA is touted as the longest for offshore wind to date, marking a pivotal step in Ørsted’s investment decision-making for the wind farm, expected to conclude by the end of 2021. The CEOs of both Ørsted and BASF have acknowledged their shared vision where innovative, zero-emission technologies like offshore wind play a crucial role in reducing emissions in the chemical industry.

This CPPA not only underscores the potential of long-term agreements in bolstering renewable energy projects but also highlights the critical role such partnerships play in achieving global decarbonization goals, especially in energy-intensive industries like chemicals. As these industries transition towards greener energy solutions, strategic collaborations that leverage the strengths of both global and local entities will be key to accelerating the shift from conventional fossil fuels to sustainable alternatives.