Hydro Energi, one of the world’s largest Norwegian aluminium and renewable energy providers, has taken the plunge. They have made the welcome decision to voluntarily terminate their long-term power purchase agreement (PPA) with Cloud Snurran. This agreement entered into force in 2018. It signed a 10-year energy supply contract with the government committing to provide 300 gigawatt-hours (GWh) of baseload energy annually between 2020 and 2030. The PPA is slated to jump to 550 GWh from 2031-2049. This ambitious plan is a huge step forward in explicitly expanding the supply of energy.
The end of the PPA is in keeping with Hydro Energi’s plans, which have include expanding into low-cost renewable energy after a strategic review. The company’s looking to make its energy procurement more efficient. This push comes as it gears up for the expiration of its existing long-term contracts at the end of 2030. Our settlement with Cloud Snurran will be complete once we fulfill certain closing conditions. We hope that it will be in full effect by July 2025.
Background of the Agreement
Hydro Energi entered into the PPA with Cloud Snurran in 2018, marking a significant step in its commitment to sustainable energy solutions. The agreement was designed to secure a stable energy supply, which is critical for Hydro Energi’s ongoing operations in the aluminium production sector. The first stage of the contract provided a reliable baseload power source of 300 GWh. This supply not only sustained our operating requirements, but drove our growth expansion goals.
Unlike some of the other original terms, this provision vastly increased after 2030. The proposed expansion up to 550 GWh between 2031 and 2049 is an effort to diversify Hydro Energi’s portfolio. This acceleration of expansion will be critical in addressing global energy needs in the long-term. Unforeseen circumstances recently forced a second look at this relationship.
Strategic Shift in Energy Procurement
Hydro Energi is currently seeking partners and investors who can help the company acquire similar renewable energy sources that are sustainable and affordable long-term. Since Cloud Snurran is not economically feasible, the company has chosen to cancel the PPA with Cloud Snurran. This intentional step gives them the opportunity to re-evaluate where their energy is coming from and seek out more beneficial contracts.
Hydro Rein fits with the company’s other ongoing efforts. They began commercial operation at the Boa Sorte solar plant in April 2024. This facility in Paracatu, Minas Gerais, Brazil, represents a $100 million investment in renewable energy infrastructure. It unmistakably shows Hydro Energi’s commitment to building a broader base of renewable capacity.
Implications of Cloud Snurran’s Restructuring
The voluntary termination of the PPA also comes at a time when Cloud Snurran has faced recent financial difficulties. On July 17, 2024, the Svea Court of Appeal approved Cloud Snurran’s reorganisation. This ruling was made pursuant to the Swedish Rekonstruktionslag (Reconstruction Act). This latest development is a clear sign that Cloud Snurran is facing some major turbulence and that could affect its ability to deliver on contract wins.
Hydro Energi’s decision is indicative of a prudent approach to take with these uncertainties in mind. By terminating the agreement, Hydro Energi positions itself favorably as it navigates through evolving market conditions and seeks out new partnerships that align with its sustainability goals.