BASF and Brookfield have concluded a deal to purchase the solar and wind power for the BASF Zhanjiang Verbund site in China.
The term sheet, which is for a 25-year fixed-price renewable electricity supply agreement, meets the Renewable Energy Trading Rules in Guangdong Province.
It is an “unprecedented long-term fixed-price deal for the trading of renewable electricity in China”, the companies said.
Upon the agreement, Brookfield will develop and build dedicated new solar and wind farms as well as possible storage solutions to support the renewable energy demands of the BASF Zhanjiang Verbund site with a fixed cost mechanism for 25 years.
“This agreement with Brookfield is another important step in securing renewable energy for BASF’s new Verbund site in Zhanjiang,” said Haryono Lim, senior vice president, New Verbund Site China, BASF and general manager, BASF Integrated Site (Guangdong).
“BASF is dedicated to building its Zhanjiang Verbund site into a role model of sustainable production and aims to already achieve 100% renewable electricity supply for its Zhanjiang Verbund site by 2025.
“This is part of BASF’s climate neutrality target and will also contribute to China’s carbon reduction goal.”
It is the first time that both parties will use the levelised cost of energy (LCoE) concept to reflect the pricing of the renewable energy projects being built.
It sets a “pioneering model” across the green power trading sector in China, stated the parties.
Announced in July 2018 and officially commenced in November 2019, BASF Zhanjiang Verbund site will be the company’s largest investment with €8-10bn upon completion and would be operated under the sole responsibility of BASF.
The site would ultimately be the third-largest BASF site worldwide, following Ludwigshafen, Germany, and Antwerp, Belgium. The whole Verbund site is planned to be completed by 2030.
The first plant from the initial phase will be operational by 2022.