Norsk Hydro: Voluntary termination of power purchase agreement with Cloud Snurran AB
Rhea-AI Summary
Norsk Hydro (OTC:NHYDY) has reached a settlement agreement for the voluntary termination of its power purchase agreement (PPA) with Cloud Snurran AB, which entitles Hydro to receive up to EUR 90 million in compensation.
The original PPA, signed in 2018, was for 300 GWh annual baseload supply during 2020-2030 and 550 GWh during 2031-2049. Cloud Snurran AB has faced financial difficulties and hasn't delivered power since November 2024. The settlement includes compensation for both non-delivered volumes and future power deliveries, with the final amount depending on realized values from a future sales process.
Hydro maintains a robust power sourcing position for its Norwegian smelters through 2030, with 9.4 TWh annual equity hydropower production and 8.5 TWh yearly contract portfolio. The settlement is expected to be effective in July 2025.
Positive
- Compensation of up to EUR 90 million from the PPA termination
- Resolution of non-performing power contract with defaulting supplier
- Robust power sourcing position maintained through 2030 with 17.9 TWh combined annual capacity
Negative
- Loss of long-term power supply agreement extending to 2049
- Need to secure new power sourcing options after 2030 when existing agreements expire
- Final compensation amount is uncertain and depends on future sales process
News Market Reaction
On the day this news was published, NHYDY gained 0.68%, reflecting a mild positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Hydro has agreed to a settlement for the long-term power purchase agreement (PPA) with Cloud Snurran AB. In the settlement, Hydro is entitled to compensation of up to EUR 90 million for its voluntary termination of the PPA.
Hydro Energi AS signed a long-term PPA with Cloud Snurran AB in 2018 for an annual baseload supply of 300 GWh in the period 2020-2030, and 550 GWh in the period 2031-2049. Cloud Snurran AB has experienced financial challenges for the last few years and has as a result not delivered volumes to Hydro in accordance with the PPA since November 2024.
On July 17, 2024, the Svea Court of Appeal approved Cloud Snurran AB’s application for reorganization under the Swedish Restructuring Act, overturning an earlier decision by the Stockholm District Court. The reorganization process has now been terminated, and as part of a final settlement, Hydro has agreed to a voluntary termination of the PPA against a compensation of up to EUR 90 million, which includes compensation for non-delivered volumes and future power deliveries. Hydro’s ultimate compensation will depend on the realized values from a future sales process and an agreed value sharing mechanism.
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 contract portfolio of around 8.5 TWh per year. As several existing long-term power agreements will begin to expire at the end of 2030, Hydro is actively pursuing a range of available sourcing options to meet the demand for cost-competitive renewable power to its operations.
Subject to fulfillment of certain closing requirements, the settlement is expected to become effective during July 2025.
Investor contact:
Mathias Gautier
+47 94861597
mathias.gautier@hydro.com
Media contact:
Anders Vindegg
+47 93864271
anders.vindegg@hydro.com
FAQ
How much compensation will NHYDY receive for terminating the Cloud Snurran power agreement?
What was the original power supply volume in NHYDY's agreement with Cloud Snurran?
How much power capacity does NHYDY have for its Norwegian smelters through 2030?
When did Cloud Snurran stop delivering power to NHYDY under the agreement?
When will the NHYDY-Cloud Snurran settlement become effective?
