Norsk Hydro: Reorganization plan for Markbygden Ett AB approved in Umeå District Court
29 Oktober 2024 - 8:00AM
As part of the reorganization plan of Markbygden Ett AB,
also supported by Hydro, Hydro has agreed to a settlement for the
long-term power purchase agreement (PPA) with the company. In the
settlement, Hydro is entitled to a compensation of up to EUR 248
million for its voluntary termination of the PPA.
Hydro Energi AS signed a long-term PPA with Markbygden Ett AB in
2017 for an annual baseload supply of 1.65 TWh in the period
2021-2039. The contract was a key enabler for financing and
developing the onshore wind park Markbygden, located west of Piteå,
in northern Sweden. The park’s annual production was estimated to
be 2.2 TWh.
Due to significantly lower-than-expected production levels,
Markbygden Ett AB has experienced financial challenges for several
years. The wind park ceased power deliveries to Hydro on February
6, 2023 and entered into a company reorganization process in
November 2023. As of third quarter 2024, non-delivered power since
February 2023 amounts to 2.5 TWh.
According to the approved plan, Hydro is entitled to a total
compensation of up to EUR 248 million as a settlement of the
ongoing dispute relating to the company's non-performance under the
PPA, and as compensation to Hydro for the voluntary cancellation of
the PPA. Any compensation to Hydro is subject to a future sale of
the park, with the ultimate compensation received depending on the
sale proceeds and an agreed value sharing mechanism. Hydro will
continue to work constructively with the company towards improved
operations and a future sale of the park.
The sourcing situation at Hydro’s Norwegian smelters remains
robust through 2030, based on an average annual equity hydropower
production of 9.4 TWh and a long-term contract portfolio of around
10 TWh per year. Hydro is actively pursuing available alternatives
for renewable power sourcing, including onshore wind, to meet the
need for cost-competitive power for its industrial operations.
Subject to fulfillment of certain closing requirements, the plan
is expected to become effective during November 2024.
Investor contact: Elitsa Boyadzhieva +47
91775472 elitsa.boyadzhieva@hydro.com
Media contact: Anders Vindegg +47 93864271
anders.vindegg@hydro.com
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