Norsk Hydro Concludes Settlement for Power Purchase Agreement
Norsk Hydro's Settlement Overview
Norsk Hydro has reached a significant settlement concerning its long-term power purchase agreement with Cloud Snurran AB. As part of this agreement, Hydro is set to receive compensation totaling up to EUR 90 million following the voluntary termination of said contract.
Background of the Power Purchase Agreement
Back in 2018, Hydro Energi AS entered into a substantial power purchase agreement with Cloud Snurran AB. This deal set forth an annual baseload supply of 300 GWh from 2020 to 2030, increasing to 550 GWh from 2031 to 2049. However, Cloud Snurran AB has faced ongoing financial difficulties, which have hindered its ability to deliver the expected energy to Hydro since November 2024.
Legal Developments
On July 17, 2024, a pivotal ruling by the Svea Court of Appeal permitted Cloud Snurran AB to proceed with its reorganization under the Swedish Restructuring Act, a decision that overturned an earlier verdict from the Stockholm District Court. Nevertheless, cloud Snurran's reorganization process has now concluded. In light of a final settlement, Norsk Hydro has agreed to terminate the power purchase agreement voluntarily in exchange for the compensation package that includes recompense for both the undelivered volumes and anticipated future energy deliveries.
Hydro's Energy Sourcing Strategy
Despite challenges from this PPA arrangement, Norsk Hydro's energy sourcing strategy for its Norwegian smelters remains strong and viable through to 2030. The company projects an average annual hydropower production of 9.4 TWh, backed by a diverse contract portfolio encompassing approximately 8.5 TWh per year.
Plans for Future Sourcing
As several existing long-term power agreements are approaching their expiration at the end of 2030, Hydro is actively exploring an array of sourcing alternatives to ensure it continues to meet the demands for competitively priced renewable energy necessary for its operations.
Anticipated Closing of the Settlement
Subject to the satisfaction of defined closing conditions, this settlement is expected to take effect in July 2025, marking a new chapter in the relationship between Norsk Hydro and Cloud Snurran AB.
Frequently Asked Questions
What is the nature of the settlement between Norsk Hydro and Cloud Snurran AB?
The settlement pertains to the voluntary termination of a long-term power purchase agreement, with Hydro to receive compensation of up to EUR 90 million.
Why was the power purchase agreement terminated?
The agreement was terminated due to Cloud Snurran AB's ongoing financial challenges that prevented them from delivering the contracted power since late 2024.
What are Norsk Hydro's energy sourcing strategies moving forward?
Norsk Hydro plans to explore diverse sourcing options to ensure a stable, cost-competitive supply of renewable power as existing agreements near expiration.
When is the settlement expected to take effect?
The settlement is anticipated to become effective in July 2025, pending the completion of specific closing conditions.
Who can be contacted for investor inquiries regarding this settlement?
Investor inquiries can be directed to Mathias Gautier at +47 94861597 or via email at mathias.gautier@hydro.com.
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