The PPA, closed with the support of the advisory team at Pexapark, will see Octopus - which manages a €7bn portfolio of green energy projects - supply Salzgitter with 126,000 MWh of clean electricity generated at the Schiebsdorf solar farm in Brandenburg, Germany, for a period of 10 years.
Starting when the project is commissioned later this year, it will secure more clean electricity for Salzgitter Flachstahl, hedging against rising electricity costs and underpinning its objective of producing green steel. Through its Salzgitter Low CO2 Steelmaking program - SALCOS, the company intends to use green hydrogen, electrolyzed using renewable energy, to achieve a 95% reduction in carbon emissions from conventional steel production processes.
Ralph Schaper, Head of Salzgitter's Energy Economy Department said, "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."
Octopus acquired the Schiebsdorf solar farm in January on behalf of the Sky fund it manages. Currently under construction and due to enter operation later this year, it is the largest solar farm in the firm's growing renewable energy portfolio in Germany and across the globe.
Alex Brierley, co-head of Octopus Energy Generation's fund management business, said, "This partnership with Salzgitter is a giant leap towards decarbonizsing heavy industry and propelling Germany's clean energy transition."
Pexapark's advisory team has hailed the efficiency with which the PPA was negotiated between Octopus and Salzgitter, with the deal concluded in around half the time of a typical PPA of this size and duration. This pointed to the strong commitment from all the involved parties throughout the process.
The German renewable energy PPA market is going from strength to strength – with solar power in particular rising in prominence. According to Pexapark's European PPA Market Outlook 2024 report, 3.73GW of PPAs were signed in Germany in 2023, of which 1.77GW (18 deals) were for solar PV projects.
In 2024, Germany is expected to surpass Spain as the top market for PPAs in Europe, driven in part by the sophistication of large industrial energy buyers such as Salzgitter making strides to decarbonise their operations.
