Swedish wind farm fails on PPA with Norsk Hydro, enters restructuring

Norwegian aluminium producer Norsk Hydro ASA (OSE:NHY) has been notified that Markbygden Ett AB, the owner of the 653-MW Markbygden ETT wind farm in Sweden, has entered a company reorganisation process.

Markbygden Ett AB’s application for reorganisation was granted by the district court of Umea on Tuesday, Norsk Hydro said.

The aluminium company has a power purchase agreement (PPA) with Markbygden Ett signed in 2017. The deal is for an annual baseload supply of 1.65 TWh in the 2021-2039 period. The wind project, part of the big Markbygden 1101 wind farm cluster in northern Sweden, was expected to produce 2.2 TWh a year.

Markbygden Ett AB’s owners are China General Nuclear Power Group Europe Energy (CGNEE) and BNR Infrastructure, owned by GE Capital and Silk Road Fund China.

Norsk Hydro said that due to lower-than-expected generation and subsequent financial troubles, the wind farm has not been able to provide the agreed-upon electricity since February 6. It added that as of the third quarter, its claims for non-delivered power of 0.9 TWh amount to about EUR 12 million (USD 12.9m) and that it plans to seek compensation.

Swedish media reported recently that Markbygden Ett had applied for restructuring because of its unprofitable contract with Norsk Hydro for a fixed volume of electricity, meaning it had to buy electricity at higher prices when the turbines are not spinning.

(EUR 1 = USD 1.072)

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