BASF Commits €1.6 billion To Wind Farm HKZ, Supports Zero Emissions By 2050

(Credit: Vattenfall)

by | Jun 24, 2021

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(Credit: Vattenfall)

BASF and Vattenfall have signed a contract for the purchase of 49.5% of Vattenfall’s wind farm Hollandse Kust Zuid (HKZ). BASF will contribute around €1.6 billion to fund the project, which includes a purchase price of €0.3 billion plus construction costs. The transaction is expected to close in the fourth quarter of 2021, subject to approvals, and offshore construction will start in July 2021.

The wind farm, when fully operational in 2023, will be the largest offshore wind farm in the world with 140 wind turbines and a total installed capacity of 1.5 GW. It will also be the first fully merchant offshore wind farm in the world which does not receive any price subsidies for the power produced.

The electricity from the wind farm, which BASF is acquiring through a long-term power purchase agreement, will be used for the company’s production sites in Europe, particularly its Antwerp Verbund site, which is the largest chemical production site in Belgium and the second largest BASF site worldwide. A significant part of the electricity production is reserved for Vattenfall’s Dutch customers.

The HKZ purchase plan supports BASF’s broader carbon neutral strategy. The company has pledged to reduce its CO2 emissions 25% by 2030 compared with 2018 and to cut them to zero by 2050. BASF anticipates it will make substantial GHG emissions cuts by steadily replacing its use of fossil fuel as an energy source with electricity from renewable sources such as wind farms. The company is also pursuing green hydrogen production and installing electrical heat pumps.

BASF faces escalating costs from a recent surge in the price of carbon emission permits under Europe’s Emissions Trading Scheme (ETS). In Europe, where BASF has about 40% of its sales, the cost of buying a permit that allows a company to emit 1 t of CO2 to the atmosphere has doubled in the past year or so to more than €40, and some analysts expect it to double again in the year ahead.

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