Vattenfall to build Germany’s largest offshore wind farm as BASF reshapes renewable strategy

Vattenfall has made the final investment decision to move forward with the Nordlicht 1 and 2 offshore wind farms, marking a major milestone in Germany‘s transition toward renewable energy. Situated 85 kilometers north of Borkum Island in the German North Sea, the Nordlicht wind cluster is set to become one of the most significant offshore wind developments in the country’s history.

With a total planned capacity exceeding 1.6 gigawatts (GW), the project is expected to significantly boost Germany’s renewable electricity output. Nordlicht 1, the larger of the two, will contribute approximately 980 megawatts (MW), while Nordlicht 2 will generate around 630 MW. Once fully operational in 2028, the wind farms are projected to produce roughly 6 terawatt-hours (TWh) of electricity per year, enough to power 1.6 million German households.

Helene Biström, Head of Business Area Wind at Vattenfall, highlighted the strategic importance of the Nordlicht wind cluster, describing it as a vital step in accelerating Germany’s energy transition and supporting industrial decarbonization. She emphasized that the project aligns with Vattenfall’s broader commitment to sustainability, innovation, and reducing reliance on fossil fuels.

Why Did BASF Sell Its Stake in Nordlicht but Secure a Long-Term Green Power Agreement?

BASF, one of the world’s largest chemical companies, has decided to divest its 49% stake in the Nordlicht wind farms back to Vattenfall. The decision is part of the company’s “Winning Ways” strategy, introduced in the third quarter of 2024, aimed at optimizing capital allocation and refining its renewable energy portfolio.

Despite stepping away from ownership in the Nordlicht cluster, BASF has secured a long-term power purchase agreement (PPA) with Vattenfall to ensure a continued supply of renewable electricity for its European chemical production facilities. This move reflects a growing trend in the industrial sector, where companies are opting for PPAs rather than direct investment in energy infrastructure to maintain flexibility while still meeting sustainability targets.

The transaction has resulted in a non-cash disposal loss of approximately €300 million in BASF’s first-quarter 2025 earnings. However, the company remains committed to reducing its carbon footprint, with renewable sources making up 26% of its total electricity consumption in 2024—an increase from 20% in 2023. The power agreement with Vattenfall will help BASF maintain its trajectory toward achieving its long-term emissions reduction goals.

How Does BASF’s Stock Performance Reflect Its Renewable Energy Strategy?

BASF SE (BAS.DE) is listed on the Frankfurt Stock Exchange, and its stock closed at €50.26 on March 26, 2025, reflecting a 0.83% decline from the previous trading session. The company’s 52-week trading range has fluctuated between a low of €40.17 and a high of €55.06, highlighting market volatility as investors weigh the impact of strategic shifts, including renewable energy investments and divestments.

While the disposal of the Nordlicht stake resulted in a financial loss, analysts view BASF’s decision as a calculated move to maintain capital efficiency while securing long-term renewable energy access. By focusing on power purchase agreements instead of direct infrastructure ownership, the company can mitigate exposure to project development risks while ensuring a steady supply of green electricity. Given BASF’s ongoing sustainability efforts and broader market conditions, investment experts suggest a ‘hold’ position on the stock, while closely monitoring its renewable energy initiatives and financial performance.

What Sustainability Measures Are Being Integrated into the Nordlicht Wind Farms?

Vattenfall is implementing several sustainability innovations in the construction of the Nordlicht wind farms. A key initiative involves the use of low-emission steel in the turbine towers, which is expected to reduce the carbon footprint of the wind farms by 16%. This is part of a broader industry-wide shift toward greener construction materials in offshore wind energy projects.

The final investment decision for Nordlicht 2 remains conditional, pending regulatory approvals. Vattenfall has a provisional agreement with Vestas for the supply and installation of 112 V236-15.0 MW wind turbines across both wind farms. These turbines, among the most advanced in the industry, are designed to maximize energy output while minimizing environmental impact.

How Does the Nordlicht Project Align with Germany’s Renewable Energy Goals?

Germany has long been at the forefront of renewable energy adoption, with offshore wind playing a critical role in the country’s strategy to phase out fossil fuels. The Nordlicht offshore wind cluster is expected to contribute significantly to the national clean energy targets, supporting Germany’s broader agenda of achieving climate neutrality by 2045.

Industry analysts see Vattenfall’s investment in the Nordlicht wind farms as a major step toward scaling up offshore wind capacity in the region. The collaboration between Vattenfall and BASF exemplifies how corporate partnerships can drive industrial decarbonization, with companies leveraging renewable power agreements to stabilize energy costs and reduce carbon emissions.

As offshore wind technology continues to evolve, projects like Nordlicht are expected to set new industry benchmarks for efficiency, sustainability, and regulatory compliance. With Germany aiming to expand its offshore wind capacity to meet rising industrial demand, the success of the Nordlicht wind cluster could serve as a model for future large-scale renewable energy developments.

What Does the Future Hold for Vattenfall, BASF, and Offshore Wind Energy?

The Nordlicht offshore wind farms represent a crucial step in Vattenfall’s long-term strategy to expand its renewable energy portfolio. As one of Europe’s leading energy companies, Vattenfall continues to prioritize offshore wind investments as a means of delivering clean, reliable electricity to both industrial and residential consumers.

For BASF, the shift toward securing long-term power purchase agreements rather than direct ownership of renewable projects signals a broader trend in industrial energy procurement. As global corporations seek to decarbonize their operations, PPAs are emerging as a preferred mechanism for securing green power while maintaining financial agility.

With offshore wind expected to play an increasingly vital role in Europe’s energy transition, the Nordlicht project could serve as a blueprint for similar collaborations in the future. As regulatory frameworks evolve and technological advancements drive efficiency gains, Germany’s offshore wind sector is poised for continued expansion, reinforcing its position as a leader in global renewable energy development.