Syngenta, a global agribusiness giant, has signed with Nordic renewable energy producer Statkraft a so-called virtual power purchase agreement (VPPA) to purchase wind-generated electricity. The agreement enables Syngenta to hedge the electricity prices financially and also assist the introduction of renewable energy into the grid although the power is not actually transferred physically to its facilities. Syngenta is also engaged in a wider sustainability plan of VPPA to decarbonise its operations and stabilise long-term energy expenses amidst the volatile power markets.
Why a Virtual PPA Mattersh
A virtual PPA, in contrast to a physical one, is a financial contract-for-difference and, as such, companies are able to fund renewable projects without being committed to a specific grid location. In the case of Syngenta, it gives it flexibility in its multi-country operations whilst at the same time delivering quantifiable climate benefits. The structure also provides Statkraft with long term revenue security to finance and fund large scale wind projects in the competitive power markets in Europe.
The strategy aligns with the Climate and Corporate Goals.
Syngenta has made a commitment of reducing operational greenhouse gas emissions by 50 percent by 2030 and net-zero emissions by 2040. One of the main drivers towards these targets is the sourcing of renewable electricity. In the case of Statkraft, the contract enhances the company as a favored supplier of corporate renewable energy, as it supports its mission in enhancing a more rapid energy shift in Europe with the help of wind.
The Perception of the Industry has been improved via Broader Message.
The Syngenta-Statkraft VPPA points out that the demand of clean energy by corporations is a significant factor that is leading to increased renewable capacity. Such transactions are likely to be very critical in expanding wind energy, cutting down on emissions, and providing long-term price stability in the power industry as more multinationals resort to virtual PPAs.
