Norsk Hydro's Settlement with Cloud Snurran AB
Norsk Hydro has made a significant decision regarding its long-term power purchase agreement (PPA) with Cloud Snurran AB. Following discussions and negotiations, the company has agreed to a settlement that allows for compensation of up to EUR 90 million due to the voluntary termination of the PPA.
Background on the Power Purchase Agreement
In 2018, Hydro Energi AS established a long-term PPA with Cloud Snurran AB, aimed at securing an annual baseload supply of electricity. The agreement stipulated a supply of 300 GWh from 2020 to 2030, and an increased supply to 550 GWh from 2031 to 2049. However, Cloud Snurran AB has faced substantial financial difficulties over the past years and has failed to meet its delivery obligations, with no volumes provided since November 2024.
Recent Developments Affecting the Agreement
On July 17, 2024, developments took a turn when the Svea Court of Appeal approved Cloud Snurran AB's request for reorganization under Swedish law, which overturned a previous court ruling. The reorganization efforts have now concluded, and as part of this settlement process, Norsk Hydro has formally agreed to terminate the PPA, compensated by the aforementioned EUR 90 million. This amount covers both the volumes that were not delivered and expectations for future power supply.
Future Power Supply for Norsk Hydro
As a response to the evolving power procurement landscape, Norsk Hydro remains well-positioned with a stable sourcing base for its Norwegian smelters through 2030. This stability is expected to derive from an average annual equity hydropower production of approximately 9.4 TWh, coupled with a contract portfolio that maintains around 8.5 TWh of annual supply. With numerous existing long-term power agreements nearing expiration in 2030, Hydro is flexible and proactive, actively exploring various sourcing options to ensure that they can meet the rising demand for competitively priced renewable power.
Expected Effective Date of the Settlement
Pending the fulfillment of specific requirements, the settlement agreement is anticipated to take effect by July 2025. This timeline allows Hydro to adequately prepare for the transition in their energy supply framework and adjust their strategies accordingly.
Investor and Media Contacts
For further inquiries, interested parties can contact the following:
Investor Contact
Mathias Gautier
Phone: +47 94861597
Email: mathias.gautier@hydro.com
Media Contact
Anders Vindegg
Phone: +47 93864271
Email: anders.vindegg@hydro.com
Frequently Asked Questions
What is the recent settlement amount between Norsk Hydro and Cloud Snurran AB?
The settlement amount is up to EUR 90 million, compensating Norsk Hydro for the voluntary termination of their agreement.
What were the original terms of the power purchase agreement?
Initially, the PPA specified a supply of 300 GWh from 2020 to 2030 and 550 GWh from 2031 to 2049.
Why did Cloud Snurran AB fail to meet its obligations?
Cloud Snurran AB faced significant financial challenges that hindered their ability to deliver the contracted volumes.
When is the settlement expected to take effect?
The settlement is projected to be effective by July 2025 if all necessary closing requirements are fulfilled.
How is Norsk Hydro managing its power supply going forward?
Norsk Hydro is focused on securing a diversified portfolio of renewable energy sources to meet their operational needs beyond 2030.
