Hydro Faces Power Supply Disruption as Markbygden Ett Enters Reorganization

Hydro Faces Power Supply Disruption as Markbygden Ett Enters Reorganization

(IN BRIEF) Norwegian company Hydro is grappling with a potential disruption in its power supply as Markbygden Ett AB, a power supplier with whom Hydro has a long-term contract, enters into a company reorganization process under the Swedish Reorganization Act. Markbygden Ett AB has struggled to meet its power supply commitments to Hydro due to significantly lower-than-expected production levels. As of Q3 2023, Hydro’s claims for non-delivered power since February 2023 amount to approximately EUR 12 million. While Hydro awaits further information on the reorganization process, it underscores that its power supply to Norwegian smelters remains secure through 2030 based on its robust sourcing strategy.

(PRESS RELEASE) OSLO, 15-Nov-2023 — /EuropaWire/ — Hydro has been informed Markbygden Ett AB has entered a company reorganization process in accordance with the Swedish Reorganization Act. The process may affect deliveries under the long-term power contract between Markbygden Ett AB and Hydro Energi AS, but it will not affect the security of supply to Hydro’s Norwegian smelters.

Hydro Energi AS signed a long-term power purchase agreement (PPA) with Markbygden Ett AB in 2017, for 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 and subsequent financial challenges, Markbygden Ett AB has not been able to deliver power to Hydro in accordance with the PPA since February 6, 2023. Today, November 14, an application by Markbygden Ett AB to enter into a company reorganization has been granted by the district court of Umeå in Sweden.

Markbygden Ett AB is owned by China General Nuclear Power Group Europe Energy (CGNEE) and BNR Infrastructure, owned by GE Capital and Silk Road Fund China.

As of Q3 2023, Hydro’s claims against Markbygden Ett AB for non-delivered power of 0.9 TWh since February 2023 amounts to approximately EUR 12 million. Hydro will seek compensation for the non-delivered volumes.

Hydro is in dialogue with the local court administration and awaiting information about further process and timeline.

Hydro has a robust sourcing strategy and portfolio. The power consumption at our Norwegian smelters is close to fully covered 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.

Media Contact:

Martine Rambøl Hagen
Head of Investor Relations
martine.rambol.hagen@hydro.com
+47 91708918

Anders Vindegg
Head of Media Relations, Group Communication
anders.vindegg@hydro.com
+47 93864271

SOURCE: Norsk Hydro ASA