Vattenfall and BASF to continue as partners in the development of Hollandse Kust Zuid

Source: press release, 26 August 2021

photo: Vattenfall
photo: Vattenfall

In order to achieve the goal of fossil-free living within one generation, Vattenfall will continue to invest in renewable energy and fossil-free projects. Finding partners to share the investments costs of these projects is an important pillar of Vattenfall’s growth strategy. Recently, Vattenfall and BASF reached an agreement for the Hollandse Kust Zuid offshore wind farm. BASF will purchase 49.5% of the shares, generated power and Guarantees of Origin (GoOs) of the wind farm. Hugo Kamps, Commercial Project Manager of Hollandse Kust Zuid, was involved in the transaction and explains more about the process.

BASF’s total investment will be approximately EUR 1.6 billion, including their contribution to the construction of the wind farm. Kamps says, “It has been an intensive process leading up to this transaction. Immediately after Vattenfall took the final investment decision in June 2020, we started the preparations for this sale by hiring advisers to help us carefully analyse lots of different aspects related to technology, finance, and various legal aspects. The objective was to address as many questions as we could from a future partner through independent reports from advisers providing an ‘outside-in view’ of the project.”

Kamps adds, “As Commercial Project Manager, I was involved in almost the entire process, except for the technical part, which was handled by the Technical Project Manager together with the team of engineers. It’s not that I’m an expert on everything; I acted as a linking pin between the commercial team and the advisers and ensured that certain documents, like contracts and financial documents were delivered and all questions were answered. This work ran parallel to the preparations for the construction of the wind farm itself. So in a way my team and I actually had a double job for the past year.” The wind farm is scheduled to be fully operational in 2023. With 140 wind turbines and a total installed capacity of 1.5 Gigawatt, it will be the largest offshore wind farm in the world once fully commissioned.

Innovative and low-emission
BASF plans to use its share of the electricity to support chemical production at sites across Europe. BASF and Vattenfall have entered into a long-term purchase agreement for several years. This gives BASF the opportunity to apply innovative and low-emission technologies at various BASF production sites in Europe. BASF’s Verbund production site in Antwerp will benefit the most from the renewable energy generated by Hollandse Kust Zuid. The Antwerp site is the largest chemical production site in Belgium and the second largest BASF production site in the world.

The wind farm also makes an important contribution to achieving the Dutch objectives in the field of renewable energy generation and reduction of greenhouse gases. In the Netherlands, more than 1,500 people work for BASF, spread over various locations. BASF develops, produces and sells products for a variety of different sectors.

“In practice, the new agreement does not change our activities much,” explains Kamps. “Vattenfall and its suppliers will remain responsible for the construction, and later for the management and maintenance of the wind farm. The construction manager and I will update BASF on a continuous basis about the progress of the construction. Is everything going according to plan? Have there been any major changes? These kinds of questions are of course of great importance to our partner. It is great that we now have a partner on board to share the risks and benefits and supports us in realising the first subsidy-free wind farm in the world in which revenues are less certain. And it is of course important that Vattenfall now has more financial means to continue investing in new projects. To enable fossil-free living within a generation, we will have to keep growing, and partners are essential in enabling this growth.”

Financial space
Offshore wind energy plays a vital role in Vattenfall’s goal of enabling fossil-free living within one generation. Due to the high investment costs of offshore wind farms, it is important for Vattenfall to find like-minded partners. In this way, new investments in sustainable energy projects can be made accelerated, and investors help Vattenfall to speed up the energy transition.

BASF also has clear green targets and ambitions. BASF aims to reduce greenhouse gas emissions by at least 25% by 2030 and to achieve net-zero emissions by 2050. To replace fossil fuel-generated electricity with fossil-free electricity, BASF uses a ‘make and buy’ approach. In order to use their capital as efficiently as possible, BASF is looking for co-investors for this project.

Kamps continues, “These have been very busy months for many colleagues, but we are very pleased with BASF’s trust in us and in this project and are very much looking forward to further developing the wind farm together with them.”