Salzgitter signs 122 MW solar PPA with Octopus for green steel project

Salzgitter Flachstahl and Octopus Energy have signed a 10-year power purchase agreement for 112 MW from the Schiebsdorf solar farm currently being built in Brandenburg state in Germany, it said Feb. 21.

UK-based utility Octopus, which manages a Eur7 billion portfolio of green energy projects, is to supply 126 GWh/year to Salzgitter for its Salcos green steel project.

“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,” said Ralph Schaper, Salzgitter’s head of energy procurement.

Salzgitter already secured a 50 MW PPA from EnBW’s new He Dreiht offshore wind farm, 114 MW from Iberdrola’s Baltic Eagle offshore wind project as well as an 80 MW hybrid wind/solar PPA with Friesen Elektra.

Salzgitter in April 2023 received a Eur1 billion state grant for phase 1 of Salcos to produce up to 1.9 million mt/year of crude steel from 2026.

The project includes a 100 MW electrolyzer to produce around 9,000 mt/year of the required hydrogen on site from 2026.

According to Salzgitter, full implementation of stage 1 of Salcos would replace some 2.5 million mt of CO2/year.

Octopus meanwhile plans to invest over Eur1 billion in Germany’s clean energy infrastructure by 2027, it said.

The company acquired the Schiebsdorf solar project in January via its Sky fund. The project is to enter operations later this year and is the largest solar farm in Octopus’ renewable energy portfolio.

Octopus Energy Generation’s fund management unit will also announce more deals “very soon,” said co-head Alex Brierley.

PPA consultancy firm Pexapark advised on the deal. According to Pexapark, some 18 solar PPAs with a combined capacity of 1.77 GW were signed in Germany in 2023 with the country expected to surpass Spain as the top market for PPAs in Europe this year.

The Platts-Pexapark PPA (3Pi) index for a standard 10-year solar PPA in Germany was pegged at Eur43.02/MWh on Feb. 19. This level would put the deal at a theoretical value of around Eur54 million ($57 million) over its 10-year lifespan.

Source and Photo: Salzgitter