The reorganisation plan for Markbygden Ett has been approved in Sweden’s Umea district court. Credit: Saklakova/Shutterstock.

Norwegian renewable energy company Hydro Energi has settled a long-term power purchase agreement (PPA) with the Swedish wind farm company Markbygden Ett.

Hydro Energi first signed the PPA in 2017 with Markbygden Ett for an annual baseload supply of 1.65 terawatt-hours (TWh) from 2021 to 2039, supporting the financing of the development of Markbygden onshore wind park in northern Sweden.

The park was projected to produce 2.2TWh annually.

However, Markbygden Ett then faced financial difficulties, with production levels significantly below expectations. The wind park stopped delivering power to Hydro on 6 February 2023 and entered a company reorganisation process in November 2023.

As of the third quarter of 2024, the undelivered power since February 2023 totals 2.5TWh.

The reorganisation plan has been approved in Sweden’s Umea district court.

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Hydro is entitled to compensation of €248m ($268m) for the wind park’s non-performance under the PPA and for voluntarily cancelling the agreement.

The final compensation depends on the future sale of the park and a value-sharing mechanism agreed upon by the parties.

The settlement plan, which is subject to closing requirements, is expected to be finalised in November 2024.

Despite these challenges, Hydro’s Norwegian smelters maintain a decent sourcing situation through 2030, based on an average annual equity hydropower production of 9.4TWh and a long-term contract portfolio of 10TWh annually.

The company is seeking alternative renewable power sources, including onshore wind, to secure cost-competitive energy for its industrial operations.