The chemical industry accounted for 1.3 GW of corporate power purchase agreements (PPAs) last year, of which 90% were reported in Texas. Enerdatics understands that the rise in PPA activity is primarily attributed to the projected growth of the country’s cement manufacturing, petrochemical and fuel refining segments. In anticipation of the growth, companies are opting to lock in long-term PPAs at fixed prices, to reduce their power bills over the next 10-15 years and decarbonize their operations.
Recent deal: Orsted has signed a virtual PPA with Covestro for the 471 MWac Mockingbird Solar Center. Under the current 15-year agreement, Covestro will off-take 90 MW of the solar farm annually. The PPA will help the chemical company reduce the scope 2 emissions from its third largest production site, located in Baytown, Texas, and follows their previous agreement for 100 MW of capacity from the 900 MW Borkum Riffgrund 3 offshore wind farm in Germany.
The Mockingbird project is located in Lamar county, Texas. The project reached the final investment decision (FID) stage in Jan '23 and also has a 10-year corporate PPA with Royal DSM, signed in Aug’21. The asset is expected to reach commercial operation by late 2024.
Other significant deals: NextEra Energy recently signed a PPA with UK-based chemical company INEOS for the 310-MW Hickerson Solar Farm in Texas. Other major PPAs by off-takers from the chemical industry in the US in 2022 include TotalEnergies’ agreement with Saint-Gobain for 200 MW of solar capacity, Buckeye Partners’ deal with LyondellBasell for 160 MW of PV capacity, and EDF’s and Dawn Solar’s contract with BASF for 250 MW of renewable power.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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