LyondellBasell takes another step toward energy transition with new power agreements
Rhea-AI Summary
LyondellBasell (LYB) has announced two significant power purchase agreements (PPAs) in Europe to advance its energy transition goals. The first is a 15-year agreement with Vattenfall to secure 450 gigawatt-hours (GWh) annually of offshore wind energy in Germany, supporting LYB's MoReTec-1 plant in Wesseling, which recycles plastic packaging waste from over 1.2 million German citizens yearly.
The second is a 10-year agreement with wpd for 79 GWh annually of onshore wind power from the Licata project in Sicily, Italy, starting in 2026. This will supply renewable electricity to LYB's Ferrara site, the world's largest Ziegler-Natta catalyst development facility, which produces polypropylene and advanced polyolefin resins.
These agreements provide LYB with long-term price stability for energy costs while supporting grid infrastructure and renewable energy integration.
Positive
- Secured long-term price stability for energy costs through PPAs
- 450 GWh annual renewable energy secured for German operations
- 79 GWh annual renewable energy secured for Italian operations
- Supports company's greenhouse gas reduction objectives
Negative
- None.
Insights
The strategic significance of LyondellBasell's new power purchase agreements extends far beyond mere environmental compliance. These PPAs represent a sophisticated approach to operational cost management and business risk mitigation in an increasingly volatile energy market.
The 15-year agreement with Vattenfall, securing 450 GWh annually, is particularly noteworthy as it powers the MoReTec-1 facility - a strategic asset in Germany's circular economy infrastructure. This facility's capacity to process waste from 1.2 million citizens positions LYB at the forefront of the European plastic recycling market, while the renewable power agreement enhances its ESG credentials and operational efficiency.
The financial implications are multifaceted:
- Long-term price stability in a historically volatile European energy market
- Reduced exposure to carbon pricing mechanisms and regulatory risks
- Enhanced competitiveness in securing contracts with sustainability-focused customers
- Potential premium pricing for products manufactured with renewable energy
The strategic decision to power the Ferrara research center with renewable energy is particularly astute. As the world's largest Ziegler-Natta catalyst development facility, this site's innovations directly influence the company's competitive position in the high-margin specialty polymers market. The renewable power agreement adds another layer of sustainability to products already important for medical, automotive and food packaging applications.
These agreements represent a well-calculated move in an industry where energy costs can significantly impact margins. By securing long-term renewable power at predictable prices, LYB is effectively creating a competitive moat while positioning itself as a preferred supplier for environmentally conscious customers in premium markets.
Houston/Rotterdam, Jan. 29, 2025 (GLOBE NEWSWIRE) -- LyondellBasell (LYB), a leader in the global chemical industry, announced today the signing of two significant power purchase agreements (PPAs) in Europe, further supporting its commitment to reduce greenhouse gas emissions. The PPAs offer LYB long-term price certainty, which helps stabilize energy costs and make renewable energy more attractive compared to fluctuating fossil fuel prices.
“Adding these long-term agreements to our portfolio supports price stability to increase the use of renewable energy in a value-accretive way,” said Chris Cain, LYB senior vice president, net zero transition strategy. “Our diverse global portfolio of renewable energy not only reduces our carbon footprint but also supports our customers’ ability to meet their CO2 reduction objectives.”
Under the 15-year agreement with Vattenfall, LYB will secure 450 gigawatt-hours (GWh) annually of offshore wind energy to support LYB’s circular and low-carbon solutions in Germany, including powering the company’s MoReTec-1 plant in Wesseling. The MoReTec-1 plant is the company’s first commercial-scale advanced recycling plant and is designed to recycle the amount of plastic packaging waste generated by over 1.2 million German citizens per year using LYB’s proprietary technology.
LYB also signed a long-term PPA with wpd, securing 79 GWh annually of onshore wind power from the Licata project in Sicily, Italy. The 10-year agreement is expected to begin in 2026 and will help provide a reliable supply of renewable and low-carbon electricity to the region, including LYB’s production site and research center in Ferrara, Italy. The LYB site is the world's largest for Ziegler-Natta catalyst development and production. The polymer manufacturing units at the Ferrara site produce polypropylene and advanced polyolefin resins used in a wide variety of applications including food packaging, medical products and automotive parts.
Both power agreements help integrate renewable energy into the grid, improving infrastructure and reliability and demonstrating the company's commitment to be a value-oriented leader throughout the industry’s energy transition.
About LyondellBasell
We are LyondellBasell (NYSE: LYB) – a leader in the global chemical industry creating solutions for everyday sustainable living. Through advanced technology and focused investments, we are enabling a circular and low carbon economy. Across all we do, we aim to unlock value for our customers, investors and society. As one of the world's largest producers of polymers and a leader in polyolefin technologies, we develop, manufacture and market high-quality and innovative products for applications ranging from sustainable transportation and food safety to clean water and quality healthcare. For more information, please visit www.lyondellbasell.com or follow @LyondellBasell on LinkedIn.
About Vattenfall
Vattenfall is a European energy company that has been driving the electrification of industry, powering homes and modernising the way people live for more than 100 years through innovation and collaboration. Our goal is fossil-free - a future where we enable everyone to live, move and produce things fossil-free. We want to achieve net-zero emissions across our entire value chain by 2040. We employ around 20,000 people across the Group, have around 14 million customers and operate mainly in Sweden, Germany, the Netherlands, Denmark and the UK. Vattenfall is owned by the Swedish state.
About wpd
wpd is one of the world's leading developers and operators (IRPP) of wind and solar farms. Founded in 1996, the company develops, finances, constructs and operates wind farms and solar parks in 31 countries. The IRPP business includes projects in its own portfolio with a total capacity of 3,192 MW. Thanks to its growing expertise, the company is considered a reliable partner for Power Purchase Agreements (PPAs). wpd is steadily expanding its activities in the German domestic market and internationally in Europe, Asia, North America and South America and has a project pipeline totaling 19,320 MW of onshore wind and 5,015 MW of solar energy.
FAQ
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