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A contract has been signed confirming the sale of a 49.5% stake of Vattenfall’s 1.5GW Hollands Kust Zuid offshore wind farm to BASF.

The purchase price amounts to €300 million ($358 million) and takes into account the achieved status of the project. Including its contribution to fund the wind farm construction, BASF’s total commitment amounts to around €1.6 billion ($1.9 billion). Closing of the transaction is expected in the fourth quarter of 2021, subject to the approval of the relevant authorities.

Construction of the wind farm will start in July 2021, and when fully operational in 2023 it will be the largest offshore wind farm in the world with 140 turbines and a total installed capacity of 1.5GW. The Hollandse Kust Zuid wind farm will also be the first fully merchant offshore wind farm in the world, which does not receive any price subsidies for the power produced. A significant part of the electricity production of Hollandse Kust Zuid is reserved for Vattenfall’s Dutch customers.

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BASF is acquiring the electricity from the wind farm for its ownership share through a long-term power purchase agreement. It will enable BASF to implement innovative, low-emission technologies at several of its production sites in Europe. BASF’s Antwerp Verbund site — the largest chemical production site in Belgium and the second largest BASF Group site worldwide — will benefit from the renewable power to a significant extent. The supply scheme to other BASF sites in Europe will depend on the further development of the respective regulation for renewable energy.

“This wind farm will be an important building block to supply our Antwerp Verbund site and other European sites with renewable electricity. It is the first major investment of BASF in facilities for renewable power. With this investment we are securing significant volumes of electricity from renewable sources for BASF, which is a key element of our transformation towards climate neutrality,” said Dr. Martin Brudermüller, chairman of the Board of Executive Directors of BASF SE.

The wind farm will also support the Netherlands in reaching its target share of renewable power generation and greenhouse gas (GHG) reduction targets.

“Vattenfall and BASF share a common objective of phasing out greenhouse gas emissions from our operations. With this cooperation, Vattenfall once more proves that partnerships with industries are a key element to accelerate the European energy transition across sectors. I am particularly proud that we can do this, while at the same time securing the delivery of fossil-free electricity to our Dutch customers,” said Anna Borg, president and chief executive officer of Vattenfall.

A cornerstone of Vattenfall’s growth strategy is to look for partners  to balance the significant investment costs of its future assets.  Strong investors will support Vattenfall to accelerate and drive the transformation of the energy landscape because it will open up financial space for new investments in renewables and decarbonization, according to a release.

BASF aims to reduce its GHG emissions by 25% by 2030 and achieve net-zero emissions by 2050. One important lever to further bring down emissions is replacing fossil-based electricity with fossil-free electricity. BASF will secure the required amounts of renewable power through a “make and buy” approach. This includes the intention to bring in financial co-investors to this project allowing for an efficient use of capital.

Originally published by Elizabeth Ingram on renewableenergyworld.com