BASF wants to become climate-neutral by 2050. That is why we develop emission-free technologies at industrial scale, which will replace fossil fuels such as natural gas with electricity from renewable sources.
Electricity demand at our major sites, including the headquarters in Ludwigshafen will therefore increase sharply in the coming decade. From around 2035, it is expected to be more than three times the current electricity demand.
Due to the importance of renewable energy supply, BASF is bundling its activities in renewable energies under the umbrella of BASF Renewable Energy GmbH as of January 1, 2022. The wholly owned subsidiary’s business activities will focus on supplying the BASF Group in Europe with electricity from renewable energies, electricity trading activities in Europe and global consulting for BASF and its Group companies in the field of renewable energies. Website of BASF Renewable Energy GmbH
A precondition for the transformation of chemical production is the reliable availability of large quantities of electrical energy from renewable sources at competitive prices. At the moment, that is not the case in Germany. That is why BASF acts: We invest in energy production plants to meet our energy demand and we enter into contracts to ensure a direct supply of our sites with renewable energy. BASF takes these steps because we are serious about reducing our emissions to net-zero by 2050. Regulatory framework conditions are also essential for making this transformation economically feasible.
Purchasing renewable energy
Power purchase agreement with Ørsted
In November 2021, BASF and Ørsted have concluded a power purchase agreement, under which BASF will offtake the output of 186 megawatts from Ørsted’s planned Borkum Riffgrund 3 Offshore Wind Farm in the German North Sea.
The offshore wind farm will go into full commercial operation in 2025. The corporate power purchase agreement for offshore wind will run for 25 years. It will help cover the increased electricity needs of low-emission technologies for BASF and is a step towards BASF’s ambition of becoming carbon neutral by 2050.
Power purchase agreement with ENGIE
BASF signed a 25-year Power Purchase Agreement (PPA) in November 2021 with ENGIE, effective as of January 1, 2022. The agreement includes the provision of up to 20.7 terawatt hours of renewable electricity by ENGIE.
The energy from ENGIE’s renewable project portfolio in Europe will supply multiple European BASF sites. The electricity will initially come from various Spanish onshore wind farms. In the future, ENGIE will have the option to either deliver power from existing Spanish assets or from future onshore and offshore wind farms.
Investing in offshore windfarms
The current production of electrical energy from renewable sources cannot meet the expected future energy demand of BASF. For that reason, we invest in offshore windfarms. For example, we cooperate with RWE to build a new windfarm in the German North Sea and we have purchased shares of an existing Vattenfall windfarm.
Cooperation with RWE
An additional offshore wind farm with an output of 2 gigawatts (GW) is planned to provide the Ludwigshafen chemical site with green electricity.
To advance the joint project, the CEOs of BASF and RWE have signed a letter of intent covering a wide-ranging cooperation for the creation of additional capacities for renewable electricity and the use of innovative technologies for climate protection.
These plans could result in the avoidance of around 3.8 million metric tons of CO2 emissions per year, of which 2.8 million tons would be realized directly at BASF in Ludwigshafen. No public subsidies would be needed for the construction of the wind farm.
Realizing this plan will require a suitable regulatory framework. Policymakers have said they plan to significantly increase the expansion targets for renewable energies and accelerate capacity additions. For this to succeed, there will need to be a tendering process for offshore project sites where the current plans only foresee use after 2030. Together with RWE, BASF urges that these sites should be specifically designated for tenders focused on industrial transformation processes. Another important factor: Green electricity should not be subject to EEG surcharges.
Ownership share of Vattenfall offshore wind farm
In September 2021, BASF has purchased 49.5% of Vattenfall’s wind farm Hollandse Kust Zuid (HKZ). Construction work for the wind farm in the Dutch North Sea started in July 2021.
The subsidy-free offshore wind farm is expected to become fully operational in 2023. At that time, it will be the largest offshore wind farm in the world with a total installed capacity of 1.5 gigawatts.
It will enable BASF to implement innovative, low-emission technologies at several of its production sites in Europe. BASF’s Antwerp Verbund site will benefit from the renewable power to a significant extent. The BASF Antwerp site is the largest chemical production site in Belgium and the second largest BASF Group site worldwide.
BASF will sell 25.2 percent of the Hollandse Kust Zuid (HKZ) wind park to Allianz Capital Partners. This was announced by BASF in December 2021. BASF will continue to receive most of the electricity generated from its 49.5 percent stake originally acquired in HKZ on the basis of a long-term fixed-price power purchase agreement. This set-up fits perfectly to our make-and-buy strategy.